Managing a business in a crisis
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There are many reasons why businesses go bust. Poor management is only one of them. I have seen a high-tech business that has much potential and a superb team of people working in it, heading for the rocks. The leader lost his sense of direction about eighteen months ago and started making mercurial decisions. I do not know what his objective was but it seems he thought by displaying enough creativity everything would come right. Mercurial behaviour causes crises, it does not prevent them.
I have much sympathy with this man who entrepreneurially set out to build a modern business. When things go wrong it is tempting to try outrageous solutions if only to relieve the monotony of the day to day pressing cash flow and insecure staff problems. Those at the heart of a business crisis have a belief that only they know how bad things are and they should at all costs try to avoid others knowing. This is a mistake.
Rumour is the biggest killer of enterprise. The “no smoke without fire” syndrome has caused more businesses to fail than any amount of bad management. Attempted cover-ups do not work in today’s world. There are too many social networks and investigative journalists out there to hide the truth. It is better to be transparent and demonstrate a cool head.
When a business starts looking shaky the first rule is to secure your most important employees. Depending on the nature of the business this may require one or more sessions. Key staff should be told the truth. Not all of them will stay but the ones that go were not going to help in the crisis anyway. The stayers will pull the business round if you give them a chance and listen to their views.
You lose no authority by enlisting others’ help in a crisis. You remain leader and have to demonstrate that you are doing so but you do not need to carry the weight of all the work yourself. Giving others a share of the problem makes them feel more responsible to see that the storm is weathered.
The biggest mistake about failing businesses is to think that a plan will not help and that everything has to be hand to mouth. A strategic approach to dealing with a crisis is vital. It should have begun before the crisis appeared. You do not start to recruit a fire brigade when someone shouts ‘fire’. Your preparation for a crisis is key to all successful survival. Nevertheless, a plan at any stage is better than no plan at all.
Businesses without crisis plans are foolhardy in today’s crisis world.
Lena Soh -Ng
There are many forms of crisis: losing a leader is one. Companies that show a strong supporting bench do better in a crisis.
LU Keehong
Dear John
It is indeed a very traumatic experience for anyone running a business and with the livelihood of many employees/associates at stake to go through a ‘falling’ stage of the business life cycle.
It is natural for the businessman or woman to try to keep the ‘bad news’ from the troop as some may have weak stomach for it.
When one is desperate, one may try anythng to grasp at the last straw, any straws that come along or created.
Again, it is human nature to become mercurial in behavior.
That is why the one who remained calm under pressure and RESISTed behaving instinctively but with deliberation and purpose that sail through stormy water is admired and rare.
Be open and being transparent goes a long way to allowing people to decide if they want to commit the cause(s) and stay on to fight or to leave and seek greener pasture.
In a listing ship, there is no need for uncommitted sailors. It may actually help it to go over faster.
If all jump ship, maybe it is another sign that the crew has no confidence in the plan (strategies and tactics) to right the ship. Maybe the captian (the owner) want to chart a new course.
There is no guarantee the crew is right as there were owners who succeeded eventually when all doubted them. At the same time, no paying heed to the crew, especially when they are a capable lot, may means ths skpper has missed something.
All the best to that business owner.
Best regards
LU Keehong Mr.
johnbittleston
Thank you, Keehong, all very true and helpful.
John
johnbittleston
Very true, Lena; it’s a bit of a chicken and egg problem, isn’t it?