If we could predict the future, life would be easy. We’d prepare for everything effortlessly, do what we wanted when we wanted, and have far fewer worries. Unfortunately no-one has this ability – all we can do is take plenty of steps beforehand to at least mitigate some of the problems should disaster occur. Here are three ways to deal with different types of crises.
Quite how you run your business will be up to you. Some founders choose to live with few funds in reserve and plough everything into growth and expansion, others are more cautious and look after every penny and pound. The former may have nowhere to turn if things crumble, the latter might struggle to grow the company without being a little more daring – but not necessarily.
Forbes featured entrepreneur professor Jeff Cornwall who said that keeping three months’ worth of operating cash to hand as a bare minimum, and keeping debt down to avoid being held hostage by looming rises in interest rates, was a way of “keeping their business as bulletproof as possible from the things they could not control”. Compare that to wannabe restaurant owner Robert Maxwell, who wrote about his efforts to open a successful diner and throwing tens of thousands of dollars at it; by not being wiser with his money he ended up broken, in debt, and without a business.
There are a huge number of packages available that can protect you a claim is made against your business. Public liability insurance will protect your business against claims from people who visit your premises; employers’ liability covers you against work-related injury and illness; and professional indemnity protects you in the event that a client believes they have lost money or customers because of advice you have given out. If you own your premises you must have buildings insurance, and it probably makes sense to have contents insurance.
Other insurances that you might consider will depend on the type of business you run, and even within an overall umbrella term there may be certain more prescriptive types of insurance that apply. Take cyber insurance, for example, which generally protects against cyber attacks and hacking attempts – but might also include data loss, protection against extortion, business interruption, and even forensic investigation.
The key when selecting commercial insurance from Know Your Money or another broker, is to select the exact package that, price permitting, best fits your business, and that sometimes means contacting the insurers directly rather than buying an off-the-peg solution.
If the general public and more specifically customers become aware of an issue, the damages to reputation and subsequently sales can be devastating – and sometimes terminal. Admitting that there is a problem and taking quick and decisive steps to deal with it might sound obvious, but some companies try to bury the issue or laugh it off – and that rarely works. When someone clearly takes responsibility and ‘fronts up’ the process of regaining trust can still be a slow, painful effort, but acceptance might be quicker than you may think.
A classic example, as referenced by the BBC, is that of Johnson and Johnson which faced a crisis in the 1980s when one of its medications was laced with cyanide. The company immediately recalled 31 million bottles. This quick action from the company’s chairman had the multiple effects of putting forward a human face and showing decisive leadership and care, which saved it from long-lasting damage; within a year the share price had virtually returned to its previous state. Hiding behind lawyers, and denying you’re in the wrong when it’s quite clear that you are, is a tactic that rarely works.