Tag Archives: crisis management

What’s Your Plan B?

If you already have a disaster strategy in place for your business, congratulations!  Yours is one of the few that does.

What do we mean by a disaster strategy?  Think for a minute about the worst thing that could happen to your business today?  Or tomorrow or the next day or a week or a year from now?

Have you considered the implications of that crisis?  Have you derived strategies to deal with whatever happens?

Being prepared for worst case scenarios means you have a Plan B.

Let’s assume you have one client that represents 60% of your company’s business volume and, because that client loses a government contract, they have to end your relationship and cancel  your pending orders.  What do you do?

Odds are you have to scramble to replace that loss of business.  That means:

  • pushing the sales force to close more deals;
  • driving potential customers to get off the fence and commit;
  • trying to expand work orders from the other 40%;
  • perhaps reducing the work force temporarily;
  • finding another buyer for the materials you’ve already ordered;
  • potentially suing the client for outstanding order fulfillment;
  • offering incentives to potential customers to come on board; and,
  • increasing your marketing and advertising exposure, among other tactics.

So what should a Plan B look like?

Take a look at your industry and come  up with a ratio of what percentage of your business should be devoted to one customer.  By taking the time to think it through, you will most likely come up with the answer on your own.  The key is to find a natural balance that maintains cash flow while sustaining strong customer relations.  It could be 100 customers who each represent one (1%) percent of your business, ten that each account for 10%, four that are 25% each, or thousands that account for miniscule percentages of your overall business volume.

Think about the pitfalls and benefits of each scenario, and the multiple variations.

From the crisis perspective, losing one of those 100 customers only impacts one percent of your business while losing one of the four means a fourth of your business is lost.  It would probably be much easier to add one percentage point to one of the other 99 customers than to get one of the remaining three (or all 3) to pick up the difference from losing 25% of your business.  If you’ve got thousands of customers, what contingencies are in place for dealing with a major product recall or harmful defect?  Improper action could have a significant impact on your customer’s loyalty.

The actual disaster you plan for may never happen to your business, and that’s okay.  By taking the time to think through the repercussions and responses, you consider variables and prepare for actionable contingencies.  It’s a process that prepares you for events beyond your control.  Whatever they may turn out to be, you can cope with the consequences much more easily.

It is wise to review your disaster strategy occasionally, depending on the potential severity of the impact a crisis could have on your business.  What do you do if your building catches fire and employees are hurt?  What if flooding occurs or a tornado strikes?  How do you react if there’s a groundswell of negative publicity about your company in the social media outlets?  How do you handle a shareholders’ takeover attempt?

Diversifying your product line or adding additional services can also be part of your Plan B.  When you have a single service or product, your company is exposed to market swings, economic downturns, consumer trends, and a myriad of other factors that can impact your business.

Plan B may also be a long, hard look at your financial status, a frank discussion with bankers, accountants, investors, and shareholders and taking steps to sell or close the business.  Obviously, if the conditions are poor, selling may mean only minimum offers.

What happens if a trojan horse virus or malware shuts down your entire computer system – order processing, client records, and everything is contaminated?  How long will you be down, or technically out of business?  This is less of a treatise on the importance of backing up your data as it is on having a plan in place to deal with this potential crisis.

Brand Irons can help you put together a comprehensive disaster plan or crisis management strategy.  Call us at (920) 366-6334 for an engagement consultation.

Minimize Your Mistakes

We all make mistakes.  It’s in our human nature to be fallible.  My line is that if I were perfect there’d be no reason for me to be here.  In business, however, mistakes can be costly and may even be fatal for the company.

If you are familiar with the Tylenol case, there are some who believe the problem was perpetrated by an outside influence and the company made no mistake.  There had to be a failure somewhere, however, that enabled the perpetrator to infiltrate the system and contaminate product.  In either case, the incident could have proved fatal for Tylenol had they chosen a different way to respond or not responded at all.  Yes, it was costly to pull all of their potentially-contaminated products from the shelves and re-tool production to include protective seals, but those costs were made back up with the brand regaining its market share because of making the right decision.  The right choices were made … and steps were taken to correct the failure in the system.

You will make mistakes in business.  You can minimize those mistakes, though, with some preventative measures such as this limited list:

1. Internal Communication.  Your corporate mission and the vision you have for your company must be consistently conveyed to your management and employees frequently.  Supervisors should be talking to production people and dealing with issues the line identifies.  Sustaining a positive, supportive attitude within your team is far more productive than standing by and waiting for something to break.  I’ve always believed a pat on the back goes further than a kick in the pants.

2.  Quality Control.  The image your company portrays – through employees and your product’s packaging – creates the perception of your business to consumers.  By controlling that image you can minimize negative perceptions about your products and/or services.  It can be something as innocent as printing direct mail pieces when your printer is running out of ink that conveys the wrong impression.  Keep an eye on your image and encourage your entire team to do the same.

3.  Strategic Plan.  Your corporate mission and the other aspects of having a plan for where you want your business to go serves as the guidebook to avoid mistakes.  Take time to think things through.  Evaluate where you are in accomplishing your strategies on a frequent basis.  Spend time on the tasks that are important to the business for the long term and less time responding to urgent tasks.  It’s the proverbial but true statement about spending more time on the business than in it.

4.  Crisis Management.  An often overlooked element in your business and marketing strategy is a response mechanism for when crises occur.  Thinking through what might happen and devising methods for dealing with each of them can minimize risks, alleviate headaches, and keep your company in business when mistakes happen.  Keep in mind that in certain situations, your best crisis response may be to let the crisis pass without a direct response.  You must still be ready to act, however.

5.  Learn.  To keep from repeating errors that can prove costly, a great piece of advice is to learn from those mistakes you do make.  You are doomed to failure if your company continues to make the same mistakes.  Make sure your legal counsel knows the risks you face and does what he/she can to help you minimize them.  Trust your non-staff team to help you gain from the lessons mistakes teach us.  Stay positive and keep moving forward.  Understand that this, too, will pass.

Detach yourself from the desire to make a rush (and often rash) decision.  Distinguish the true from the false, the facts from the assumptions.  Then choose the right path.



Ready For A Crisis?

This week shifts to a topic that may be timely for some of you – handling a crisis – and serve as a wake-up call for those who have yet to establish strategies for dealing with the unexpected.

Let’s start with this question:  What’s the worst thing that could happen to your business?ship_sailing_off_edge_of_world

Would it be that your “trusted” bookkeeper embezzles a few hundred thousand dollars from your corporate treasury?

Would it be a significant manufacturing defect that causes customers to get hurt or sick because of your product?

Would it be a system malfunction that destroys your electronic customer database and financial records, including the back-up versions?

Those, to most of us, would be major catastrophes.  A crisis of any size can catch you unprepared.  You have no way of knowing when the unexpected will happen, but you can take the time now to think those eventualities through and develop a strategy for dealing with the unanticipated events that can have an impact on your business.

While there are people who insist you should only focus on the positive and ignore any negative impact on your business, that is a naïve approach.  Stuff happens!  If you are caught with your proverbial pants down, you are forced to scramble to come up with a way to brush off or embrace the embarrassment and get your pants back up again.  If anyone has ever “pants’d” you in gym class, you know the feeling.

Coming up with strategies for dealing with crises in your business can be simple or a complicated process that takes time and, in many situations, suggests that you bring in a professional to help you strategize and then implement the plans should the occasion arise.

Here is an example:  When I was going to take over management of a chamber of commerce, I received a call from a member of the board of directors.  She wondered what they should do since the chairman had just been indicted on child pornography charges.  Holy cow!  The potential for a black eye for the chamber was significant.  My advice was simple:  Distance the organization from the individual and go low profile … immediately but temporarily.

The chairman wisely resigned from the board and by going low profile, the chamber was rarely mentioned in any media coverage about the allegations and subsequent trial.  Low profile also meant the chamber had time to get its house in order and be prepared to come out stronger than ever when the wind blew over.

This type of incident may never happen to your business, but some other potentially disastrous event could cripple your business short, or long-term.  There are steps you can take to deal with everything from active shooters to negative publicity from a competitor, but going through every scenario is only important if your business may be susceptible to the situation.

There are numerous solutions to the myriad scenarios that can occur – far too many to deal with in this limited space.  Seek professional help to come up with the most viable and sensible strategies for addressing the highest potential threats to your operations, whether they seem insignificant or are potentially devastating.

You will rest easier knowing that, in the event disaster strikes, you have a plan to follow and steps to take in managing the crisis or, if nothing else, you know who you can call to help you out.  Make sure your strategy is customer and employee friendly because people are what’s most important.  Buildings and machines can be replaced.

It all starts by asking the basic question:  What is the worst thing that could happen to your business?

If you initially answered fewer sales, there’s an answer for that crisis, too.

Brand Irons can help you create the solutions to sustain and protect your brand and your business.