How to Save Your Business & Survive a Small Business Crisis
Small business owners dread circumstances that could wreak havoc on their companies. At one time or another, businesses go through a crisis and wise owners or managers should be prepared to address this. Nat Wasserstein, a corporate crisis manager, shares with his Intuit Small Business Blog readers some pointers on how to manage a business crisis. Emotions blur one’s objectivity, he says. A smart manager can make better decisions and implement steps to save the business if he is calm and in control of his emotions. Identify the problem. If your business is losing money, stem the “cash bleeds”. Look for outside help if needed. Create a plan to turn the business around and stick to it.
1. Eliminate emotion. People almost never make good decisions when they’re angry or depressed. Once they’ve regained their objectivity, they can take action to save or reinvent their business, he says.
2. Breathe. The first step toward smart decision-making in distress is “to breathe,” Wasserstein says. “You’ve got to be calm and relaxed and [remember] that this is just a business.”
3. Stop the bleeding. “The whole goal [in a crisis situation] is to come up with a turnaround plan,” Wasserstein says. To create one, you need to identify your “cash bleeds” — those areas where your business is losing money — and stop them as soon as possible. That might include things like getting rid of products that no longer turn a profit, even if you’ve offered them for a long time. “If their margins are so thin, chances are they’re not making money — and if they’re not making money, they’re bleeding cash,” he says.
4. Get help. The ability to set aside ego and other considerations to find outside help can be crucial for business owners who lack the right skill set for managing a crisis. “Sometimes the owner can’t do this [alone]. It’s triage, and they’re not built to do it,” Wasserstein says. “Sometimes they need a professional to ‘block’ for them and have the confidence that they don’t have.”
5. Implement the plan. A strong plan lays out the critical objectives for turning around the business, the paths and timelines to reaching those goals, and the people who are responsible for executing them.
6. Save part of the business. A key reason some businesses fail after a serious crisis, according to Wasserstein, is that the owner takes an all-or-nothing approach when a compromise could have saved the company. Being willing to scale back today can ensure there’s still a business to run tomorrow. Maybe your very troubled $10 million operation could be a very profitable $2 million one? That might seem like a devastating loss on paper, but it could mean your business survives and thrives after challenging times …
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