Over time every company will experience various crises, and each will be unique. Still, some business crisis management principles apply universally. With the global coronavirus pandemic as a backdrop, successful entrepreneur Adam Ferrari discusses five strategies for guiding your company through any crisis.
Stability and the ability to weather the storm are the keys to any crisis. A cash reserve is often what you'll need. Whether it's the death of an essential company leader, a public scandal, a financial downturn, or a pandemic, the ability to stay afloat depends on having ready access to cash.
A crisis is not the time to add to your risk profile, nor is it the time to entertain opportunities that carry risk and yet do not have an immediate impact on the business's survivability. Be conservative in your choices and remember that you can't predict when the crisis will end. How many leaders were confident that the current pandemic would be a thing of the past within a few months? Hopefully, they didn't make crucial financial decisions based on that intuition.
Hasten your digital transformation
Digital transformation was well underway before the COVID-19 pandemic. Still, if that global crisis taught us anything, the further along the transformation path a company is, the more resilient it is as well.
Digital transformation looks different for each business, but it should include leveraging technology to perform any task that doesn't have to be done by humans. From chatbots on a website to automated manufacturing to applying artificial intelligence to data processing, the more you can isolate your company from labor shortages and supply chain disruption, the easier you will manage any crisis.
Step up collections
Every dollar on your accounts receivable ledger is a dollar that is costing you money, and this is especially untenable during a crisis. Extended terms are sometimes necessary to close a deal, but after you have met the terms of the sale, do what you need to bring those dollars home.
Access to capital is what will carry your business through a crisis. The levers you can pull to increase capital are reduce spending, sell assets, and step up collections, and you may need to pull all three if the crisis persists.
Listen to your customers
Above all else, listen to your customers. While this is always critical for success, it is imperative during a crisis. Depending on the nature of the situation, your customers may be affected too. Even if the trouble is contained within your business, your customers will likely have some questions about what the future will hold for your brand.
Reach out proactively to let your customers know what's going on and what your plans are. Be honest. Don't underestimate your customer's ability to detect deception or half-truths. If they feel you have been less than forthcoming, they will likely exact a severe price sooner or later. Don't exacerbate the problem by covering up the extent or severity of the problem.
Leverage your strengths
Your company is better at some things than others, and it is better than your competitors in some ways but not in others. A crisis is a time to get back to basics and focus on what brought you success in the first place.
Expanding your core competencies can be expensive, and mid-crisis may not be the right time for a move like that. If your most compelling value proposition is quality, for example, don't try to become the low-price leader in response to a crisis. Your customers expect a certain quality, and if you comprise that, they may never trust you again. Value seekers are probably already shopping elsewhere, so you are not likely to gain much from them.