Being a business leader can be like riding a roller coaster: You will always experience highs and lows. Even if things are running smoothly most of the time, there will still be the occasional problem. When this happens, your team will look to you for guidance.
When a crisis happens in a company, the leaders should have a plan to address the issue quickly and openly, instead of panicking.
What should you do if you’re feeling overwhelmed as an entrepreneur? We asked a panel of Young Entrepreneur Council members for their recommendations. The article lists nine ways you can stay calm and collected during a crisis.
1. Reflect On Your Mission Statement and Core Values
Companies should think about their mission statement and core values during times of trouble to help them figure out what to do. Leadership should provide clarification and direction to the company or customer base before a crisis occurs.
The importance of providing this kind of information quickly is clear, yet sometimes it can be difficult to maintain a focus on the mission. Clear objectives and communication are key for leaders in a crisis so that there is no confusion or discourse.
A strong mission statement and set of principles act as a lighthouse for a company during difficult times. z This is a time when companies can either grow stronger and more united, or divide and fall apart.
We don’t know what type of crises might come up.
I have found that the team will work out solutions and stand together against sudden crises and circumstances.
Make sure to take care of lower-level staff as well as senior leaders. Since people are the most important assets of any organization, it’s important to take care of them during the good times to protect the company during the tough times.
3. Focus On Solutions
Our approach is to divide the problem into three different questions, in order of importance, and to only move on to the next question when the previous one has been completed.
1. What is the Solution?
This is the most important question.Who is responsible is less important than actually fixing the problem.
2. Will the Problem Affect a Client?
A problem usually affects a client, but it can also affect an employee or the company.
How can we make it up to them if that is the case? At this point, you should already have a solution.
3. Why did it Happen?
You have already found a solution and spoken to your client about it. It’s time to investigate the cause of the issue so that it doesn’t happen again in the future. Esteban Kadamani, INFINITE WINDOWS LLC
4. Understand that Everything Comes in Waves
If you see a risk or crisis, it will always be followed by calm.
You can’t always predict when the best time will come, but you can work towards it by considering all the possible outcomes and coming up with a plan for each one.
Then communicate these plans to your staff and ask for their input—they will often help you by coming up with more outcomes or better plans, and you will inspire their confidence while alleviating your own isolation. – Vanessa Nornberg, Metal Mafia
5. Consider the Big Picture
To be a successful leader, you need to be able to see the big picture and always be looking ahead to the future. Decisions made during a crisis can have long-term effects.
Having a good relationship with your team and being able to communicate with them regularly will help them be able to handle a crisis situation. If everyone in the company is working together towards the same vision, they will be able to make better decisions that help realize that vision.
6. Be Organized
If you’re leading a team through a crisis, chances are you’re facing a lot of difficulties. During a crisis, it is especially important to stay organized because you can lose customers.
If a team is well-organized, productive, and coordinated, they will probably be able to handle a difficult situation. Therefore, it is important to encourage quick and easy communications, set weekly standards, and monitor the work of each employee.
When you stay organized, it shows your team that you have the situation under control. If you don’t take care of your employees, your company will fall apart.
7. Create a Response Team
If a company is experiencing an internal crisis, it will take more than one leader to take initiative and resolve the issue. The leader should create a committee to resolve the issue in a collaborative and transparent manner.
It is important to have a variety of stakeholders and decision-makers on the committee and to delegate responsibilities throughout the team. Crises cannot be resolved by one person alone.
Working with a diverse group of people in a committee setting can help you find agreeable solutions that fit the needs of each department in your company. This is done by delegating work to each committee member so they can communicate the results back to their department.
8. Tackle One Problem at a Time
Crises can be overwhelming because they can involve multiple problems at the same time. Although it may seem tempting and even healthy to try and resolve multiple issues at the same time, it’s better to focus on one thing at a time.
If you focus on too many things, you will not be able to concentrate on anything and are likely to make mistakes.
It is better to focus on one problem at a time rather than try to list out multiple problems. It is easier to solve one problem at a time so that you can proceed to the next issue more quickly.
The mental satisfaction of completing one task on your list will give you the energy and motivation to move on to the next.
9. Throw Away Your Perceptions of a Company in Distress
It’s very difficult to come up with a single definition of a company in distress, and it’s dangerous to think that you have one for your company. There are around 25 different signs that could indicate someone is in distress, depending on the situation.
The problem is seldom made up of just one or two things. It is not the result of a single factor, but the result of multiple factors interacting together and with other external factors.
10. Force Yourself to Criticize Your Own Plan
One of the best ways to avoid being overwhelmed is to review your business plans on a regular basis. Some key points that will act as triggers throughout the year or three-year cycle.
A reminder that we will review our progress and make sure we are on the right track if we do not hit certain milestones by a certain date.
Successful businesses should have trigger points that relate to both how well they are doing operationally and how well they are doing in the market, as well as to more fundamental financial measures like cash flow.
You should examine your company’s financial and cash milestones in order to see how it compares to other businesses in its industry.
If you don’t stay up to date with the latest industry trends, your plans may become outdated. Remember to look back at how you have performed in past cycles to see if there are any patterns. If you keep missing performance targets, ask why.
11. Expect More from Your Board
The usefulness of a board of directors is that they are far enough away from the company to be able to see the big picture.
Managers sometimes view their board as an annoyance that they have to deal with in order to continue with their work. However, this attitude prevents the board from fulfilling its purpose of alerting the company to potential problems.
Now what keeps you up at night?” The board of directors is responsible for ensuring that the CEO, CFO, and COO are working effectively and efficiently.
They also need to be able to communicate with these executives and make sure that they understand the company’s plans. What would it take to cut costs by not just 3 percent but by 20 percent?
But often, there are risks that could have been anticipated and mitigated We should discuss all the potential pitfalls of the business–the risks that could lead to its downfall. Although there are always unforeseen events that occur, many risks can be predicted and avoided ahead of time.
A company is usually in distress after having poor performance for 18 to 24 months, but the board is usually unaware or hasn’t asked the right questions. Truly independent board members can have a big impact.
The risks are maintained by the senior team in the company which includes the risks to the business, employees, and the plan. They meet with the board on a quarterly basis to discuss risks and ensure that everyone is aware of them.
It provides an excellent opportunity for employees to have conversations they might not otherwise have in a business setting.
12. Focus on Cash
The most important aspect of a successful turnaround is focusing on cash and cash returns.
Reestablishing a company’s core values is key to its future success. Is it generating cash or burning it? And, more specifically, which investments in the business are generating or using cash?
I think about this like I would if I owned a local hardware store.
This means asking yourself if there is enough money to pay for things like utility bills or paint, and if it would be worth it to invest in something like a new delivery truck.
When you focus on the core aspects of your business, it becomes apparent what needs to be done to get it back on track.
The management team and board in many cases are focused on complex metrics related to earnings before interest and taxes that exclude major uses of cash.
There are many variations of EBIT that exclude different things, such as depreciation and amortization, rents, or fuel. Although these metrics may be good, if no one is focused on cash, there could be unexpected problems.
It’s also important to be aware of how much cash you have on hand at any given time. Companies need to have a good forecast to avoid surprises, and this forecast should keep a view of the mid-term and long-term.
Failing to pay attention to the cash component of capital investments is a common cause of difficulty for companies.
Projects with different net present values can look the same if the return gradually increases at year two or jumps up dramatically at year five.
If you’re not focusing on the money that you’re spending while you’re waiting for more money to come in, you can suddenly find yourself without enough money to keep the business running, which can lead to a downward spiral that you might not be able to recover from.
13. Create a Great Change Story
Companies that are in trouble don’t spend enough time creating a story of change that everyone understands and makes them feel urgent. Here’s an example. I recently worked as a chief restructuring officer for a mining company.
This investment was profitable and returned a decent margin. It was also cash positive, meaning that it generated more cash than was spent on it.
The price of the commodity was dropping and the board was worried that there wouldn’t be enough free cash flow to cover the business’s capital needs.
But we have an opportunity to accelerate our top-line growth if we focus on improving customer satisfaction.” We created a story that said although we are profitable, we could improve our top-line growth if we focus on customer satisfaction. Profitability is important because it allows a company to expand, grow, and pay for operational costs.
If we don’t improve our manufacturing process, we will slowly start to produce less and less, and our equipment will break down.
If you can tell your story in a way that is short and relatable to the average person, then people will be more likely to listen.
The employees in this case wanted their children and grandchildren to be able to work for the company in the same remote mining location. The change story motivated them to take action. The key was a simple message, not fancy metrics.
14. Treat Every Turnaround Like a Crisis
Without a crisis mind-set, a company’s response to change is to avoid risk and stick to what has worked in the past. You are asking your workers to do more with less.
More aggressive ideas will be debated endlessly, and the implementation will be slow and careful.
A crisis requires immediate and decisive action, something a struggling company needs. As soon as managers realize that a turnaround is necessary, they need to start using words like crisis and urgency.
A company that is in real trouble will be willing to try things it would normally not consider, and it is these daring actions that change the company’s course. When a crisis hits, people are driven to take action. This causes managers to consider a wider range of options than they normally would.