Steven Bartlett and Dominic McGregor, the founders of Social Chain, found themselves in the most surprising and challenging business crisis they’d ever face. On the 19th August 2015 at 7.53 am, their whole internal company email system was hacked and horrible emails were sent to their shareholders and clients. Within minutes, they lost key investors, which put them in a fragile financial position, and 80% of their clients, who their team fought very hard to sign on.
They could have thrown their hands in the air and called it a day. Their clients were gone and they had no money, why not just quit now? Instead, as described in Bartlett’s book Happy Sexy Millionaire, they rolled up their sleeves and got to work. After months of apologising, tightening their cyber security, not affording to pay themselves anything and intentionally encouraging their team, they managed to overcome what could have been the death of Social Chain. Instead, they persevered and the company was valued at €200 million by the time they sold it.
How you deal with a business crisis matters deeply for several reasons. Firstly, on an internal level, your team needs to see strong and courageous leadership. How a CEO and executive team respond in the face of a challenge directly influences the attitude of your employees. How would you expect them to react when faced with a crisis?
By now, your company may have investors and other key stakeholders who can make decisions, also based on your response. They need to feel that their physical or emotional investment is in good hands. On the flip side, there are your customers and clients who may be the ones directly affected by a business crisis you’re experiencing, such as the example above. How you respond to them, taking accountability and making things right can make or break your business.
In this article, we break down the 5 key things you need to do to deal with a business crisis in an effective and entrepreneurial way.
- Face the problem.
Ignoring the problem or procrastinating out of fear is probably the worst thing you can do. As a leader, you have to face the crisis head on, because no one else is going to do it. The quicker you do this, the quicker you get to overcome the issue.
Saying that, make sure you spend some time thinking about the business crisis you’re facing before you react. It’s easy to jump into problem solving mode just to get to the other side but you want to think with clarity, not impulsion. Once you do, be brave and get to work!
- Speak to your team.
Whether it’s a financial crisis or internal emergency, there’s always the possibility that it could affect your team, so you need to make sure you alleviate that chance as much as you can. This goes for all team members, not just your senior team. Honesty and transparency is your best solution in this case. Not only will your team respect you for this, your vulnerability will inspire ideas – you’ll be surprised with the suggestions and effort they’ll pull together to make sure the company succeeds.
In a moment like this, it’s a great opportunity to refer back to your company values, showing your team how these should be enforced whether in a good or bad situation. At Seedrs, one of our values include to ‘think like an entrepreneur’ which not only inspires creative thinking, but perseverance in a business crisis. How can you encourage your team with your company values?
- Choose the right attitude.
Thinking of all the things that have gone wrong, or could go wrong, cannot reverse what’s already happened. If anything, negative thinking can only make things worse. Unless you’re reflecting on the problem to prevent future business crises’, this is the time to present an optimistic and solution-focused attitude. Especially if you have people looking up to you.
There’s also no time to play the blame game. Whilst you may need to understand how you got to where you are, as a CEO or senior leader, you have to take full responsibility. Not only will this help you focus on what’s important, it will also help you make sure the mistake isn’t made again.
- Have a PR crisis management plan.
If you’re facing a public business crisis such as a campaign perceived in the wrong way, how your company responds online can affect your business’ reputation. In a digital world, things move quickly. Customers take it upon themselves to express their views on social media, you have to be ready for this. 54% of marketers and PR professionals say one of their biggest challenges in a crisis is reacting fast enough. This means that your company must be ready with a plan to answer the 37% of consumers who expect a response in 30 minutes or less.
In this article, we cover how to deal with a PR crisis in more detail, looking at navigating social media, being conscious about the world around you and implementing rules for content. Including real life examples of PR management crisis responses from successful and not so successful companies.
- Prepare for next time.
It’s completely normal to experience a crisis in your business, in fact, it’d be worrying if you weren’t. That’s the roller coaster of entrepreneurship. However, at some point you have to learn from your mistakes. Whilst you deal with the crisis at hand, and once the dust has settled, it’s worth re-evaluating the issue to see how it came to play, what preventions can be put into practice, your plan moving forward and systems or processes to implement (or improve).
You may need to make difficult decisions such as replacing team members or cutting costs significantly to keep the business running. In other cases, you might need to provide extra training for sensitive but necessary topics such as diversity and inclusion. Either way, you’ve got to move forward and the only way to do that is to learn from your mistakes and do better, now that you know better.
For other articles on Seedrs Academy which may help you, see below: