Why Every Business Should Have a Crisis Management Plan

Any business owner will tell you that planning is crucial to growth and success. From the basic business plan to revenue models, building a reputation, customer service, and future business strategies, planning is one of the core principles of running a business. But it’s important to prepare for the bad as well as the good — a savvy business owner must be ready for the worst, and that means having a crisis management plan.

Why is it important to have a crisis management plan?

A crisis is a situation that falls outside your normal business and contingency plans. It might be due to something that was under your control, and it might not. Regardless of the origin, it’s vital to have a crisis management plan for your business, and here’s why:

• It’s inevitable. Every company is going to encounter a crisis sooner or later. A recent survey showed 69 percent of organizations have experienced a crisis within the last five years. The only question is whether or not it’s going to be manageable, or do irreparable harm to your company’s reputation and profits.
• Poor handling can make it worse. We’ve all seen the stories of bad situations that were made worse by inept PR or careless reactions. This can harm your reputation with stakeholders, investors, and customers — which in turn can make a major negative impact on your profits.
• A plan, and skilled people to help implement it, can help avoid the worst. Having a plan is almost always better than improvising or acting rashly when a crisis occurs. Managing a crisis requires staff members with certified communications skills, and it pays to have those kinds of people on your team.

What type of crisis should companies plan for?

Crises come in many forms, and optimally, you should be prepared on some level for any or all of them. Here are some of the most common examples:

• Company errors and blunders. Errors can take any number of forms, from bookkeeping mistakes to customer service errors.
• Flawed, defective or hazardous products.
• Posting of inappropriate social media content.
• Company leadership crisis, whether from a new hire or a trusted employee leaving.
• Legal crisis (lawsuits). The more success a business has, the more likely they will become a target for lawsuits.
• Natural disasters. While no one can control when a natural disaster will strike, you can be prepared for one.
• Economic and financial crisis.
• Civil unrest and terrorism attacks.
• Cyber attacks. Cyber attacks are on the rise globally and are unlikely to go anywhere anytime soon.
• Environmental impact crises.

How can your business be crisis management ready?

• Set up a crisis management team with key leadership and staff from different departments. Make sure every department is represented, as it’s likely none will be exempt from a potential disaster.
• Develop a crisis management strategy. Put your team to work drawing up basic templates for every kind of potential crisis, from PR and security to financial disasters or supply problems. If there’s a particular problem endemic to your field of business, make sure to place extra focus on effectively managing those kinds of incidents.
• Have a legal representative on the team, especially if the crisis is one that could lead to some legal liability on your part or has the potential for lawsuits (justified or not).
• Provide crisis management training for all team members, so that everyone can be better prepared in the future. This training should be an ongoing process, not a one-and-done proposition.
• Have a skilled communications team and appoint a spokesperson who will handle media interviews. This is where a skilled communications specialist can make all the difference. Good public relations and a clearly communicated response to a crisis can keep a bad situation from becoming any worse.

How do you handle a crisis?

• Act immediately and continue to be responsive. There’s no benefit in simply hoping a crisis of any sort will go away by itself. To manage it effectively, you’ll have to be proactive.
• Control the narrative and don’t become defensive. Poor reactions have a storied history of making situations worse than they need to be. It’s especially important not to get defensive if this is a customer-facing problem.
• Communicate clearly to customers and other stakeholders. Lack of communication can add fuel to the fire and result in false information circulating. This is where having a skilled communications specialist on staff can be particularly beneficial.
• Follow legal advice and/or processes. You pay those attorneys for a reason! Trust their expertise.
• Compensate customers, if necessary. Customers are the beating heart of your business, and keeping them happy and confident in your products or services is worth the cost.
• Conduct a post-crisis evaluation and take corrective steps to avoid a similar crisis happening in the future. This is a crucial part of any crisis management strategy, possibly one of the most important steps. Having handled a crisis successfully, you now have the experience to manage it better next time — but it’s important to formally address that experience and plan for the next time it should happen.