Coping with a business crisis

Every business needs a plan to survive in a crisis. Along with generic and industry specific risks, contingencies should be in place for unexpected disasters such as floods, terrorist attacks, and computer hacking issues.

Imagine you’ve been building a successful business for seven years and decide to launch a succession plan to move out of the day-to-day operations and concentrate on a new venture. After months of searching for and recruiting the right general manager to take over the business, you give them seven solid months of induction. This allows you to focus on growing a second business overseas, secure in the knowledge that you have a solid manager heading up the organisation in Australia.

A few days after landing in the Philippines to focus on building your business, an acquaintance comes into your office to use one of the computer terminals and maliciously changes the IP address on every web camera, voice over internet phone, data server, mail server and the network server—all to the IP address of the printer. Everything that connects your business to the web (and your customers) thinks it’s a printer. Your clients can’t even call or email you to complain.

Five days later, while you’re scrambling to rectify crisis number one, you receive an email from your new national business manager in Australia advising you of their resignation, effective the day before they sent the email (yes, a negative one day’s notice).

These aren’t examples of extreme crises that could occur in business. This string of events did actually happen to Andrew Ward, co-founder of corporate and event massage company 3 Minute Angels and staff hosting company Delegait, earlier this year.

What one business considers a crisis may be different to another—whether it’s crises similar to Ward’s, or an advertisement that has gone out with the wrong phone number, or a product which is faulty and needs to be recalled—in all cases, the effects on your business can be disastrous if not managed properly.

“You can do everything in the world to minimise your own stuff-ups by planning, but a crisis moment is when you get an interjection you hadn’t planned for, or that you’d failed to plan for. It’s how you deal with it that’s important,” says Ward.

His general approach to business crises prepared Ward well, even for the unexpected. “I have an attitude that ‘you can’t scream until the bullet hits you’. What I found was, in the first two years when we were starting up, cash flow issues or any particular crisis could potentially knock you out of the game completely. I would watch other people, who had also started businesses, and they would be preoccupied with the potential risk that might be an hour, a day, a week, or a month away, and they’d start screaming.

“Instead of that, we always took the attitude that if the bullet hasn’t hit you, you’ve got to keep managing, keep working, add the solution, and as soon as you commit to getting through it, it tends to be that you do get through it. As soon as you resign yourself to the fact that the bullet is coming, I think you get knocked out.”

That’s not to say Ward wasn’t rocked by the shock resignation of his GM in January this year. Adding to the crisis was the timing as December and January are the quietest months for 3 Minute Angels. “We found ourselves with no general manager and no cash flow and no opportunity to do recruitment. And obviously, with me being out of the country and the GM resigning, it left a ripple of panic among the junior managers.”

While Ward admits he’s learned to have more formal and binding management contracts in place—with a four-week notice period built in—he says he had the trusting, small business mentality that, after seven months of induction, he expected the GM to gallop out of the gates as soon as Ward left. The shock came because Ward expected to know if the manager had had any doubts.

“The truth is, throughout the week when the resignation happened, for the first two days I didn’t  know where the solution was going to come from, but I kept my cool and kept communicating with everybody about what the current thinking was and getting feedback.

“The worst thing I could have done would have been to stay in the Philippines and bury my head in sand. Inactivity would definitely have killed a business that has been going for seven years.

 “You have to be the one that’s calm and rational and keeping it in proportion,” he adds. “If your staff are feeling anxious, it’s only going to get worse if you are too.

“Now I realise that even though I had spent seven months trying to leave, given what I had to do in terms of the business’ overall health, that crisis really was the other side of opportunity.”