Running a small business is challenging. But now, these challenges have multiplied thanks to the Coronavirus pandemic. So, how can you keep your business afloat over the next few months until this is behind us? Here are eight crisis management strategies you can use to keep your business strong.
What is Crisis Management?
Crisis management is the way by which businesses and other organizations deal with highly disruptive events or disasters—essentially what they do to navigate and minimize the effects of the crisis.
The most effective way to do this is by creating a formal crisis management plan or risk management plan that addresses the key risks a business will face in the event of a crisis. This response plan basically lays out all of the risks and the steps they will take to minimize each of those risks.
Such plans needs to look at a crisis from all angles, including how it could affect your customer base, employees and suppliers, as well as your general ability to continue your operations and generate revenue. As we’ve learned during this crisis, it’s important to consider what your crisis management process would be if your business is forced to shut down temporarily or operate remotely during a crisis situation.
How Small Businesses Survive Recessions
No small business is completely recession proof, of course. But those that have created a crisis management plan (often part of a general business continuity plan) are much less exposed during a recession because they have a roadmap they can pull out when a recession strikes—or even better, when it appears likely to strike in the near future. They don’t have to scramble to figure out what to do or how to react because their crisis management strategies are planned out and ready to be enacted.
During the Great Recession of 2008 to 2009, small business owners who had a business continuity plan were able to navigate the economic crisis much more successfully because they had already thought through the key challenges a crisis situation such as a recession would bring, such as fewer customers willing or able to spend money and a lack of business financing available. Because they had created those plans in advance, they didn’t find themselves caught off guard and were able to quickly make the changes they needed to survive.
Thinking through all of the ways a crisis could affect your business is imperative. The following eight tips provide a starting point for small business owners to build their own crisis management strategies and make a plan—not only for this crisis, but the crises that will inevitably happen down the road.
8 Things to Have in Your Crisis Management Plan
Get an SBA loan.
The Small Business Administration is now offering very low interest loans to small businesses in need through its Disaster Assistance program. Because these loans are issued directly by the SBA, approval times are significantly less and the red tape is significantly lower.
Get money from your state.
Many states have setup funds, grants and loan programs for small businesses in need of assistance during this pandemic. Every state in the country is providing information, advice and counseling. Go to your state’s website to see what’s available for you.
Get money from your city.
Many cities and regions have setup funds and loan programs for their local small businesses as part of their crisis management plan and you might be in a region where you can benefit. We’ve put together a comprehensive small business assistance guide on how to receive aid and keep your business open in each state.
Talk with your accountant.
Tax return filing deadlines have been extended through July 15. The same goes for payment deadlines for your final amounts due from 2019. Talk to your accountant about this. Adjust your estimated taxes for this year. Consider filing your taxes early if you’re looking at a refund. Also, if you’re offering paid time off to your employees under the new federal legislation, get familiar with the tax credits you can get back.
Push your banker.
Reach out to your banker. Confirm your available lines of credit. Ask if your bank is offering any special loans or financings for small businesses related to this pandemic. Many larger banks are already doing this, and it’s likely that your bank will work out new payback programs to defer cash outlays for the short term.
Push your big vendors.
Your smaller suppliers are likely suffering through these times, but your bigger vendors have more resources to weather this storm and many of them are open to helping. Don’t be shy. You should be calling your largest vendors and suppliers and discussing extended payment terms to help alleviate your cash flow challenges during this small business financial crisis. You will be surprised at how open they are to doing this.
Educate your team members.
Communicating during a crisis is essential. Communicate frequently with your staff, even if they’ve been furloughed, like so many restaurants and merchants have been forced to do. Why? Because they need to hear what’s going on and you need to keep them close for when you’re back in business and needing staff. Keep them posted on company developments, but more importantly educate them on all the benefits that you and the government have made available for them to get through these times.
Finally, use the downtime.
Hopefully you can steer the ship enough so that things are fairly settled for the next month or so. If that’s the case, then use the downtime wisely. Check out our small business resource center and our list of small business survival resources. Plan for the future. Get some employee evaluations done. Clean up your data. Do some online training. Rest.
I believe the Coronavirus pandemic is a short-term event. I also believe that when it’s behind us, the economic snap-back will be significant. Those are my beliefs and I’m running my business with this in mind. I’ve taken all the steps mentioned above, as part of my crisis management plan, to keep me going until then and I hope you’ll do the same.
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View Comments (34)
Sorry, but there are better ways to manage the valleys of business. We have a family business of 70+ years and we have weathered many ups and downs. Here are some tips.
First, make sure your business is making healthy profits. It should be able to make a gross profit from day 1! You will work on the net profit but you should be profitable immediately as well. If not check your products, services, and take a hard look if your idea/product, and services are really worth the return. It better be because you are going to work hard so make sure it is a big healthy return.
Second......Do everything you can NOT to borrow, especially for payroll. Get out of debt and lower your overhead. View your business similar to a person in real life. Live within your means. So many businesses have so much debt they will never survive a slump in sales let alone something out of their control like the pandemic. I know, I know.....you need something that you don't have money for and need to borrow.....well you better be sure you pay it off immediately from the sale or efficiency it brings you. Remember step 1.....make healthy profits and debt will be in your rear mirror.
Third.....manage your payroll better. Payroll sinks many companies. They are flat out paying themselves incorrectly. Payroll is one of your largest expenses so you better watch it. YES, it is an expense for your company. Again.....point #1, if you are making healthy profits everyone is going to get paid, but you better save for a rainy day too. Be modest and make your company healthy first.
Advice like PUSH your vendors.....no way. In fact we pay everything promptly. This yields better service, putting us ahead of other businesses and we get larger discounts. Our suppliers absolutely love us and bend over backwards. Although I pay out to them, they are critical to our profitably. In essence they feed us low cost products that we can resell. They are the last person we want to push around. Push them only as a last resort and you better show them you will stay in business and buy from them.
I know a lot of people are in tough times and we share going through those tough times....business down 70%+, but that 30% keeps the lights on and we maintained and pushed through only because we had all of the above in place.
If you are in a rut now get some help while revampng your business and adapt to get to the above. Business is not easy and probably the most difficult thing to endure but you can make it happen. If you have an employee mind set you better start thinking like an owner and sharpen your skills.
We can go on and on, but be fiscally responsible. People will say, right you don't know what you are talking about.......I'll say thanks for the compliment. I am not a know it all and I am always learning, but our experiences and what we shared above will help. Good luck to all.
Thank you for sharing all these insights and personal experiences, Karl. We appreciate your comment!
Hello. This post was extremely interesting, particularly because I was looking for thoughts on this topic.
That's great to hear! We're glad we could provide information that was useful!
Responding to Katie Allison | April 28, 2020 at 11:02 pm who posted:
Is anyone else tired of people recommending the same resources like we’ve never even heard of them? It sounds like there are less hoops we need to jump through but that’s not the case! We’ve applied for every loan we can find: PPP through 3 banks and 2 other organizations, SBA’s EIDL, and a local city loan… all are taking a long time. All the advisors say “get in line”! If 1 PPP loan comes through, we’ll cancel the other applications. But we’re hoping for multiple loans because help with payroll and utilities alone aren’t going to save us and cash is running out! Sorry for venting but e reality if this is much different than the SBA likes to share!!
Yes, Allison, I agree that the same resources are being regurgitated by everyone with whom we attempt further clarification, but in my opinion, each time you review these resources and/or documents, you will be able to glean even more information and additional insight.
For example, the SBA clearly spells out that you may only receive one PPP loan per tax ID (company/business). So, unless I misunderstood your post, you cannot hope for more loans...at least not the PPP, as of right now. You may of course apply for OTHER loans but only one PPP per company is allowed or will be granted.
Don't rest! Sequestering is not a vacation. Use the time to learn. There are hundreds of webinars out there, mostly free, conducted by vendors, manufacturers, etc. that can teach you how to use their products better, safer, more economically.
If you can enter your workplace, spend some time making it better, more attractive, more productive, more competitive (and in my case, getting rid of the stuff we never use).
If you have control of your website, study it for ways to improve it - most websites have a few sentences with misspellings, unclear phrases or language that can be improved.
If you are able to communicate with your customers/clients, spend some time letting them know you care about them and finding out what they like most or least about doing business with you. At the least, make sure they know you you will be back when the COVID-19 craziness subsides.
Forget the Big Banks... go to Square.com and apply for the PPP through them. Applied and got the loan approved in 2 days. Keep in mind we were/are a client, but only run about 90K through them per year.
Also apply through PayPal.
We have applied for both EIDl and PPP. Basically they say wait in line. SBA Website states "First Come First Serve". Clearly this is not the case as I know businesses personally who applied after us and have already heard and received money.
This whole process is such a crock! The big banks cater to the bigger small businesses, not the 3 people businesses who are really struggling.
Small businesses with 1-50 employees should never be grouped together with businesses of 500 employees.
I applied for the disaster and SMA and have not heard from them. I applied early April.
I also called my Liability and Worker's Comp and they told me I do have the business interruption policy and that it does not cover Viruses. I called them back and told them we are not inflicted with the virus. The claim is about the Pandemic. I can't believe any policy says virus. Any help you could give me would be wonderful.
Hi Theresa, Thanks for your question. As the federal government and states implement new regulations, we will adjust our approach wherever needed. You can find updates here as more information becomes available. We understand these are challenging times and want to make sure that if you have any other questions pertaining to your policy to contact our customer service center or your agent so that we can discuss what options might be available to you. Our representatives are available M-F: 8 a.m. to 8 p.m. ET at 866-467-8730 or you can visit our online service site. Thank you!
I got a SBA loans for 7,000. can I apply for a PPP loan also, and where?
I have small tea house in NYC and had applied for SBA Disaster loan on day one it was available, to PPP and Face Book grand as soon as those were available (didn't hear about any other programs available from the city or the state). I have not heard back from any of the sources. It feels like a big illusion that there is some help to small business. My insurance company sent me a disclaimer that no business interruption caused by virus was covered..
That would be "lay" off your employees.