The Wise Entrepreneur

Key Steps in Managing Crisis in an Enterprise

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It has been an entire eight weeks’ break without our weekly posts. The situation that led to this was quite unpleasant and I’m not keen to relive the details here. I don’t think narrating it would serve any good purpose. However, I deeply apologise to all our fans that have greatly missed the blog updates. The good news is that we are again up and running, and in good form to continue with our goals and objectives. Let me take this opportunity to wish everyone a belated Happy New Year! I believe that every focused entrepreneur will make new headways in this New Year! There are lots of opportunities around to take advantage of during 2018.

Today, I would like us to consider managing crisis in an enterprises or a business. Now, crisis is a term that is broad, and my intention is not to assume that I know the crisis facing your business now.  My only hope is that you really assign the word ‘crisis’ to something that deserves it, because some people use this word very liberally to mean anything and any challenge. That is up to you if you want to do that. I choose to be positive and only call few situations crises. Non-crisis is simply a challenge to me. Do you understand me? So, I’m going to provide a general guideline to help manage many types of crisis in your enterprise, whether it is financial, staffing, production, market, or whatever related, including potential disasters.

Business crisis or sudden and negative events, just like any other crisis, normally leads to danger or disaster, instability, stress, difficulties and challenges, disruption of normal functioning, confusion, difficult choices and actions. There are endless examples of crisis and disaster situations in a business but I’m not keen to start giving examples here. I believe as an entrepreneur you can easily jot down a list of things that can be described as crisis or disaster in the event that they suddenly occur in your business. Can’t you?  The earlier you understand potential crisis in your enterprise and prepare for them, the better! Isn’t this a truism?

Crisis can destroy the value of your enterprise and years of hard work that went into it. So, what are the key steps or considerations in managing crisis in an enterprise?

  1. Keep a clear head and never rush for the sake of it. First, think about how the crisis can impact your business and all other stakeholders. You see – unguarded speed in action can make you look stupid sometimes. You could even run deeper into problems if you are not careful. Get me right here. I’m not stopping you from rushing to the fire hose to fight fire in your premise. OK? Some things don’t need meditation but others do. You need to make use of your head depending on the crisis at hand, in managing crisis. You might even decide to take it easy and give the crisis some time, as time is a natural solution to many things. Not every crisis demands for quick action. You are not going to rush to recruit some fellow the following day because your key staff has decided to leave your business. Also, you are not going to dispose of your stocks at 75% discount to get some quick cash because the bank manager has deferred approving the loan you very much needed, by a month. Come on Mr. Entrepreneur!
  1. Communicate with wisdom and with honesty to all stakeholders if you need to communicate. In managing crisis, you need to communicate with wisdom and honesty to your staffs, market, suppliers, investors etc. depending on the nature of the crisis. Consider also the frequency of updates depending on the crisis and the effects on various stakeholders. This will add value as you manage your enterprise crisis. In this modern age of internet and social media, news spread like wild fire and you need to know this. Never ignore social media because hundreds of thousands of people could know in minutes that your products are contaminated and are not fit for consumption. It is better if you inform your stakeholders first than allow them start asking you all sorts of questions after them getting a hint through social media. Isn’t this a smarter approach? This also helps eliminate internal rumour mongering. Your communication should address various aspects of the crisis in terms of the what, the why, the when, the how and who!
  1. Understand the problem and the causes. My dear entrepreneur, your good understanding of the problem and its causes is a good starting point to get a good solution. There are people who blame everybody and everything for a problem, without narrowing down on the root cause. In this way, they sometimes don’t get the right solutions and instead proffer solutions to other problems altogether. Let me give an example to illustrate my point. A food manufacturer could have a crisis in the market because the foods are found to have salmonella (or some other bug harmful to humans). The problem here could have originated from the inputs to the production process, or the production process itself, or packaging materials etc. In this case a smart understanding first focuses on what stage the problem exists at. Causes at the input stage require corrective actions at the input level; while causes at the production stage require corrective actions at the production level. Don’t you agree with me? If you are not a smart entrepreneur, your failure to understand the problem and the causes, might make you spend time and money providing the wrong solutions. You might tear down your material supply chain when the problem is in your manufacturing or processing outfit. Don’t you think so?
  1. Consider options and resources required to solve the problem. Get good and reliable information for sound decision making. Don’t just rush for one solution you dreamt about and stick to it like concrete. Ok? Explore options and think in a smart way. Consider also the various short, medium and long-term implications of the options and choices you are making to address that disaster in your enterprise. In fact, sound and logical managerial decision making requires considering options together with their pros and cons before choosing the optimal or best and cost effective course of action. Set free your mind. Think out of the box. Never quickly brush off some ideas without analyzing them. Have an analytical and renaissance (rebirth of knowledge) mentality. It will save you time and resources. If for example your solution costs you an arm and a leg, then you need to think twice. Additionally, don’t be a copycat – following solutions that every Tom, Dick and Harry is using. Your case might be unique.  What do you think? Be objective and not biased in your assessment or analysis of solutions.
  1. Develop a good plan – organise and coordinate in preparation for implementation. Here you are basically positioning yourself and your enterprise to give a good blow to that crisis. Are you following me? Don’t come up with some lousy plan that simply gives momentum to the crisis, or simply glosses over the matter. A good plan helps your business continuity. It guides your impact assessment including actions and effect on various stakeholders. The components and depth of this plan will vary depending on factors such as the nature and size of your enterprises, the complexities involved, the nature of problem or crisis etc. The need for organization and coordination becomes vital as under normal circumstances several people are involved in managing crisis in an organization. The quality of crisis management plan you develop determines to a large extent the quality of implementation and eventually solutions to the crisis.
  1. Implement solutions expeditiously. The selected solution or steps to address the crisis is vital in managing crisis. The solutions arise from your identification and analysis of options above, and the implementation planning. Normally you follow a project approach in this, with focus areas and timelines. You identify action areas and assign these to responsible people so that you have accountability. Take note also that along the implementation path you might need to revisit your implementation plans to ensure that you are on the right course. You need to be focused to ensure that at the end of it all, you have provided a successful solution to the crisis or disaster. Avoid surprises and embarrassing situations, including waste of time and resources pursuing a dead end. This reminds me of some story I heard about in the past, relating to pilots missing their directions and landing in wrong airports sometimes hours away from their planned destinations. This is terrible. Now, I’m not a pilot and I may not be one in the future – but I think these are signs of half-consciousness and terrible lack of focus while in charge of that sky machine. I would have a good laugh first at such a pilot, before regaining stability to offer some stern rebukes. I promise. What about the crew and travelers reactions after knowing this? You cannot avoid some unprintable words and even sanctions. I’m not saying piloting is crisis management. I’m talking about focus here in light of the gravity involved in crisis management in an enterprise. I mean crisis – not a semblance.
  1. Review and consolidate or modify actions. Someone said that anything that is not measured cannot be corrected and improved. Mr. Entrepreneur, one important point in managing crisis is the need to evaluate your actions during and post crisis. Will you stick with that or will you modify it as time goes by? Would you do the same thing if a similar situation happens again in the future? Self-review is vital in crisis management and generally in enterprise management. Organisations that do not practice this always give free monies to ‘business consultants’ who simply come to tell them what they (the entrepreneurs) should have known and corrected by themselves in the first instance. Candidly, do you need someone to come and tell you that you missed the point on something very basic? Must someone tell you where to change or modify your actions? If the nature of activity is very specialized and complex then I can forgive you. Ok? Otherwise you need to get going carrying out a comprehensive self-review. You will probably get some good learning points in the process.
  1. Update your crisis and disaster management plan. By the way, I pretty much know that some entrepreneurs are clueless about crisis and disaster management plans. Let’s be honest with each other because honesty is good and it often saves from bigger problems. There is no shame about this. If you already have such a plan in your business, congratulations; but if not, you’d better start working on it today. Consult if you have limited ideas. Don’t be mean with money because you will spend countless times more than what you would have paid a consultant when the real crisis hits. Do you understand me? Depending on the size of your business, your crisis advisers could consist of people from various areas of business, such as your bankers or financiers, your lawyers, your customers, your staffs etc. If you are the only staff in your business, you simply have your own head to use but you can supplement that with other advisers and stakeholders. Two heads are better than one. Ok? A crisis today is a learning point to avoid another crisis tomorrow and this is why you should update your crisis management plan. Those plans expire – for your information. Change is the only permanent thing. Training your staffs in crisis and disaster management is part of the plan. Understanding your risks adds value to your planning.

Now – just one more piece of advice before I conclude! You can minimize and eliminate most potential crisis and disaster situations in your business with business risk profiling and analysis, forward thinking and purposeful forward planning. You can manage by objective and peep behind and around the bend and corner for potential hazards. Can’t you see how road constructors guide you of potential hazards ahead as you drive? They are not dumb – and ignore their advice at your own cost. The world is never perfect, and you cannot entirely avoid crisis, but at least you can avoid looking like crisis itself when faced with one. Insurance is another forward way of managing potential crisis. Some people have this backward thinking that they will face a crisis at it comes. Some are even weirder in their thinking, believing that planning for crisis is inviting it. By the way, let me remind you here. We are talking about business and not superstition.

So remember this. A crisis or disaster could happen in your enterprise even if you don’t invite it. A crisis could kill your business or seriously damage it. A crisis needs to be prepared for in advance and properly managed when it occurs. Crisis preparation and management can be enhanced with the above points. Period!

So, wishing you a crisis-free 2018 in your enterprise – and till then,

The Wise Entrepreneur

Picture of Clayton W. L. Mwaka

Clayton W. L. Mwaka

Clayton W. L. Mwaka, a Ugandan chartered accountant and motivational speaker with 24 years of diverse experience, specializes in business administration, international consultancy, and lecturing. He advocates for personal empowerment through balanced living, qualitative leadership, and paradigm shifts, aiming to unlock individual potential globally.

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