Nobody makes a schedule or plans for their mistakes; they just tend to happen, often occurring at the worst time possible. While nobody wishes to anticipate failure, you must set your business to handle various types of crises if they ever occur. When your business messes up, it’s not always simple to resolve or notice. Small mistakes can quickly turn into a costly struggle that you or your team didn’t see coming. Whether it’s your fault or someone else’s, small business issues can get out of hand quickly until they have become a full-on crisis.
Business crises occur when an unforeseen problem puts the stability of your business or company at stake. Such problems can originate within or occur due to external effects. Little problems might permanently damage your business or contribute to its failure if left untouched. Therefore, ensure you learn how to identify a business crisis.
Besides that, companies of all sizes and types must develop crisis communication tactics to prepare for such events and save their business. One example of unsuccessful or damaging crisis communication is when two Boeing planes crashed in 2018 and 2019 in Indonesia and Ethiopia, respectively. Even though experts later discovered that the crash was due to a software glitch in the flight’s control, Boeing initially claimed that the crash was the pilot’s fault. As a result, Boeing had to pay compensation to safety officials for covering the real issues behind the incidents when there were electrical issues in their planes in 2021.
The organization should have communicated the right reason behind the crashes and come off as an honest, trustworthy company to its customers.
If your company is under threat of negative publicity, it is always better to kook up some crisis communication examples to help you take better action.
Below are some crises that a business might come across:
Financial Crisis
One of the crises a business can face is a financial crisis. It usually occurs when a business loses a large amount of money and value in its assets. As a result, this makes it hard to meet all financial obligations or pay off its debts. For instance, when a business loses three major clients that add up to most of its revenue, it can cause the business to face financial disasters.
Some elements that contribute to a financial crisis are:
- inflation
- low demand for products
- bankruptcy
- low levels of revenue
- loss of market
- sudden alterations in market trends
Financial crises can lower your business’s ability to serve potential customers effectively. It also increases the risk of talent loss, making it essential to be proactive in dealing with it. Hence, try sitting down with your team and finding the crisis’s cause before you start panicking. You must identify the main cause of the problem to find a proper solution. Moreover, make sure you monitor your cash flow to help you find the cause of the problem.
Technological Crisis
these days, businesses heavily rely on tech to perform daily operations. Hence, your business is likely to face a technological crisis if its tech tools fail without any warning signs. It can include hardware and software failures. For instance, if your business sells through a website or online store, you can instantly lose your revenue if your server tends to crash suddenly. Not just that, if your competitors start selling their products with a technology that helps them cut costs and launch faster, they are likely to get more popular. It’s not just a huge loss to the revenue but a hit to the business’s image.
An effective tactic to prevent and manage the technological crisis is investing in backups. Make sure you get backups systems that can fill the space if your main server suddenly crashes. Having professional customer service to sort complaints during downtimes can help you manage the perception of the crisis better.
Organizational Crisis
organizational crises are conditions where the business has significantly wronged its customers or employees. Rather than building mutually beneficial connections, businesses use their customers or workers to benefit themselves. There are various types of organizational crises:
- Crisis of fraud: This type of crisis occurs when a business lies about public-facing service or product information.
- Crisis of skewed management values: this type of crisis results when leaders emphasize short-run financial gains over social duties. They neglect the interests of external and internal stakeholders such as employees or customers.
The most effective way to address an organizational crisis is to assess your business’s culture and implement changes. As a result, it will ensure that your team’s focus is customer success above everything else. In addition, align your company and culture to those values that help you ensure your present and future workers prioritize customer needs and want.
Personnel Crisis
A Personnel crisis is when somebody from a business participates in illegal activity or unethical behavior, affecting the business’s reputation. The problem might be connected to the employees’ conduct at work or in their personal lives. The way your business manages the situation is crucial. Only by handling it effectively can you maintain a much more positive public image. For instance, your business might get bad publicity because of a workplace fight or an insensitive comment by a senior.
When your company faces a crisis due to an employee’s behavior, it’s vital to present a balanced plan that addresses the problem directly. With the help of all stakeholders, decide the appropriate disciplinary action to take against the worker.
Natural Crisis
A natural crisis is likely to occur when disasters like tornadoes, tsunamis, or earthquakes disrupt a company. Some businesses might get impacted badly, while others may not get affected. To avoid disruptions from any natural crisis, you must construct your buildings in a way that they can withstand extreme and harsh weather. Create plans to put work back on track as fast as possible. Moreover, ensure that your business has been insured and check its term and conditions to know what damage your insurance company covers.
Final words
Your business is likely to come across many crises throughout its lifetime. If your company faces a financial crisis, monitor your cash flow and expenses to see where all the money is going. In addition, make sure you have backed up all your data in case your business’s tech tools stop working suddenly. Crisis communication tactics hold great significance in case of a bad reputation or negative publicity. Make sure you employ the right personnel in public relations to effectively communicate internally and externally and limit the damage.
