A business is only truly tested once it has weathered a major crisis. If you think that managing performance is all there is to running a business, you’re in for a rude awakening. It doesn’t matter if you’re a master of improving productivity and increasing profits. If you can’t successfully navigate your business through a storm, then it’s all for nothing.
It only takes one crisis for us to gain a better understanding of our company’s true footing. Just because a business looks strong on paper doesn’t mean it actually is. Our systems are more fragile than we originally thought, and a single kink in the supply chain or the sudden loss of human resources can erase years’ worth of hard work.
A business without a resilience plan is like a ship in the dark heading straight for an iceberg. Once they see the outline of the iceberg, it’s too late to make any meaningful changes. And the sad fact is most business schools don’t even teach future business leaders how to be resilient.
An unpredictable market and business environment mean entrepreneurs need to prepare for the next big crisis to survive. Even if you’re working with a firm that provides business continuity services, it pays to know the basics. Here are a few strategies that will help you keep your business afloat in the face of disruption.
1. Build a nest egg
The best defense against a crisis is money. You need to prioritize securing enough capital to ensure that business operations continue uninterrupted even during a bust cycle. Make sure to maintain good relationships with creditors, bankers, vendors, and potential investors. That way, you can build a strong cash reserve and secure an emergency source of funding when you need it.
However, not all businesses have the capacity to build a nest egg. Small businesses and startups, in particular, are more exposed to volatile market conditions. Undercapitalized firms may need to get creative to secure a line of credit. It also helps to have enough funds to cover at least six months’ worth of expenses.
2. Prioritize your employees
Part of any continuity plan is identifying the core parts of the business that need to remain operational during a crisis. All too often, the first to go in a downturn are the employees. However, a smart leader knows that a company is nothing without its people. How else are you going to produce goods and talk to your customers and vendors?
Business resiliency isn’t just about having enough money to weather the storm. It also means putting a plan in place that ensures employees, from the senior team down to the lowest-ranking worker, are cushioned from the effects of a crisis. Every member of the team must feel like they are responsible for the success of the business.
3. Take the lead
As the owner of a business, the responsibility falls on you to be in the front lines and help calm your employees, vendors, and customers. The best way to do this is to take charge and act quickly. A show of force and leadership can help stabilize things in the short term. Make a point to be seen and to communicate with all relevant stakeholders as often as possible.
Time will be in short supply during a crisis, and you and your senior team are expected to make decisions to help stem the flow of losses. If a decision is made in the morning, it must be fully disseminated within the day. That way, everyone operates on the best and latest information available.
4. Connect with your partners
The relationships you build today might save you down the line. Your business is more likely to survive if everyone likes working with you. If you can prove yourself an indispensable partner to your creditors and vendors, you may be able to secure a line of credit or revised payment terms for your bills and loans.
It might be a smart idea to think long-term when forging partnerships. The relationships you have can be an indispensable tool in your fight for survival. Building a good relationship with the people and business in your orbit might provide you the support you need to keep your business afloat. With that in mind, you may be called upon to extend assistance when they need help.
A final word
As the common adage goes, failing to plan is planning to fail. Business leadership means you have to prepare during good times to be better prepared in times of crisis. These pointers will help you build a stronger and more resilient company that can survive all sorts of disruptions.