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How Your Small Business Should Respond During a Crisis

How Your Small Business Should Respond During a Crisis
Credit: Gajus/Shutterstock

Everyone wants to avoid crisis at all costs, but despite our best efforts, we are bound to encounter it now and again. Our responses to crises big and small can make them better or worse, and the same is true in business. How you manage a crisis can determine whether it is brief and limited or far-reaching and catastrophic. These tips can help guide you through some of the crises your business might face, including natural disasters, public relations crises and cyberattacks.

A common form of crisis for brands is when some sort of wrongdoing, either by an individual employee or as a result of some company policy, has been brought to light and now the company is on the hook for it. In these situations, it is best to assemble a crisis management team and begin hammering out a plan, if one doesn't exist already, said Miné Salkin, a digital marketer for Absolute Marketing Solutions.

"The crisis communications team should include all resources you may need to call upon in the case of a crisis. This typically includes the top decision-maker, your spokesperson or someone designated to speak to the media, division heads/upper management, and your legal expert," Salkin said. "The team should also include anyone in charge of communication, including consultants."

When you're managing a public relations crisis, Salkin added that it's important to do the following as well:

  • Gather all the facts and share them with stakeholders in a crisis fact sheet.
  • Avoid making an evasive "no comment" statement; instead, explain that the company is still gathering all the facts and will soon make an official statement.
  • Take responsibility and be forthcoming. Never cover it up.
  • Apologize and establish a plan of action for preventing a similar future crisis.
  • Establish a post-crisis report to review the situation.

"Companies that have faced a public relations crisis often find reputations that may have taken years or even decades to build can be destroyed in just moments," Salkin said. "In some cases, a single event or incident can completely alter the public's perception of a brand. Taking steps to remedy and minify the damage is crucial to maintaining a company's position in the eyes of the public." [Read related story: PR Crisis? 6 Steps to Help Navigate the Storm]

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In the modern business environment, every company needs to be aware of cybersecurity risks. Attacks on company networks can cripple business operations and bring brands to their knees, especially if customer data is swept up in the attack. Of course, avoiding cybersecurity missteps with a strong defensive strategy is the best method, but what happens when malicious hackers circumvent your security measures?

Cristian Rennella, CEO and co-founder of oMelhorTrato, found out firsthand just how bad a cybersecurity crisis can be. When the company failed to update its cyber-defenses for years, the inevitable cyberattack struck and brought the company to its knees for nearly a month, Rennella said.

"This error cost us $1.2 million four months ago, because our platform was offline for 23 days," he said. "Since then, our entire cybersecurity plan has been updated."

Naturally, managing this crisis involved getting the network back up and running, followed by shoring up defenses to avoid a future cyberattack. Rennella said the company will stay vigilant and constantly adapt from now on to prevent future attacks. Businesses can also purchase cybersecurity insurance to further insulate them from the consequences of an attack, but this should not be viewed as a substitute for a comprehensive security strategy.

"If we had done this before, nothing would have happened," Rennella said. "Do not forget to update your strategies at least once a year."

When a cyberattack occurs, it also means you must repair any damaged trust with your clientele. Both business-to-business and business-to-consumer companies have an obligation to protect their customers' data, and a cyberattack undermines confidence in a company's ability to do so. Be transparent enough about the updates to your security policies and software to show your customer base that it won't be so easy to compromise your network the next time around.

If you're looking for more ways to mitigate a possible cybersecurity crisis –  and experts say it is not a matter of if a cyberattack will occur against your business, but when – check out Business News Daily's Small Business Cybersecurity Guide for expert advice on defending your networks.

Natural disasters are daunting prospects for everyone, businesses included. Many found this out recently when Hurricanes Harvey and Irma hit last fall. Luckily, Brad Plothow, head of communications for Womply, said that when businesses make minor preparations, they tend to bounce back from natural disasters rather quickly.

"When Harvey and Irma hit last fall, we analyzed the impact on small business revenue in the affected areas," Plothow said. "We found that for most businesses, revenue dipped dramatically during the apex of the storm, but then returned to normal levels within a week."

Plothow added that the results suggested small business owners should survive a natural disaster just fine if they take the necessary precautions ahead of time, these two chief among them:

  • Maintain cash reserves in case of emergency. "Have enough cash reserves to survive a week without income. Our research found that 1 in 5 small businesses would shut down within 30 days if sales stopped completely."
  • Buy the proper insurance to cover your bases. "In the same national survey, we found that while 81 percent of small business owners have general liability insurance, only a small fraction have disaster insurance and/or business interruption insurance. The best way to protect your business against damage to the physical store or a stoppage in sales is to insure against these threats."

Small businesses' ability to bounce back once a natural disaster ends and the community stabilizes once again brings new meaning to the phrase "weathering the storm," but to do so, it's important to ensure you can batten down the hatches at a moment's notice and get by without much (or any) revenue for a short time. 

Adam C. Uzialko

Adam received his Bachelor's degree in Political Science and Journalism & Media Studies at Rutgers University. He worked for a local newspaper and freelanced for several publications after graduating college. He can be reached by email, or follow him on Twitter.