Change and challenges are daily reality in any business—from critical team members out sick to important vendors unable to deliver to long-term customers suddenly moving on. I imagine you can fill in the blanks with the unending situations we all confront in our ever-changing business lives.

Then, sometimes out of nowhere, comes the crisis that could stifle your growth, damage your brand or threaten your business’ well-being, if not its existence and your livelihood.

For decades, I have specialized in the world of crisis management it’s always surprising how many ways crisis can exist in a business, from not meeting strategic goals to being underfunded.

One of the sad aspects of a true crisis is that it is often characterized initially as just one of the many normal challenges we experience. However, it could be global, like the pandemic. It can be strategically industry-wide where new competition or tangential product development brings new benefits to older resources. It can be the loss of a group of valuable team members. It can also be when the bank calls your loan.

Most people try to solve these crises themselves, even though it’s really beyond their skill base and experience. This often brings more chaos to the situation and elongates healing, with needed communication and teamwork getting put on hold.

To solve and resolve crises while continuing to move forward takes a laundry list of actions, strategies and planning. We’ll boil it down to three “must do’s” that make everything else easier.

People

The first essential is, of course, people. But not just team members of the business; there are other stakeholders that need to be involved, including bankers; other lenders such as equipment financing; friends and family who lent money; key vendors; your CPA; your attorneys; wealth management advisers; and consultants. Who to involve at any given time depends on the level of crisis and needs

Additional Funds

Input of funds—cash, revenue, receivables, loans, negotiated accounts payable that don’t normally bring dollars in, but slows down the need—helps buy time. I have heard many times that, if you need money and your banker or lender is supposedly being difficult, finding a new lender is your next step. Maybe down the road you do but that can and will take time—time that you may waste when you could have been reorganizing your business. Getting your proverbial ducks in a row prior to any crisis is key.

There are ways other stakeholders can help, too. Consider your vendors, who are in part dependent upon your business’s survival. They might be able help in all kinds of ways from funding to contract terms to new products. There may be other funding sources for specialized assets that might not be collateralized or assets that might have appreciated since last investigated.

For example, I raised substantial dollars on technical equipment that some customers were able and interested in additionally guaranteeing, which allowed other lenders to advance needed funds. Yes, it took some critical analysis and discussion to bring these assets forward. It was kind of a “who would have figured” scenario. It’s amazing how some assets go unnoticed until funds are needed.

Of course, additional funds can come from family, friends and associates—just be aware that this needs to be analyzed with a lot of understanding and compassion as you don’t want to hurt them financially because of their desire to help. Reduced salaries, often for owner managers, are not unknown; some are paid back, and others are glad to have a job. All these need to be reviewed to make sure they make sense, especially with legal oversight.

During a crisis, new revenue often languishes as the focus is on managing the crisis and not as much on sales and revenue. This might be instinct, but it’s important to intentionally help team members find the time continue meeting with customers, advancing on open sales and creating new sales and programs that historically brought new business.

Communication

Enhanced conversation brings a whole new life to any situation. Verbal interaction has probably eroded because management has become uncomfortable with discussing what has been happening—or not happening. That’s not to say normal communication, pre-crisis, was a glowing example of what people were needing, but it was probably better than what is happening in the middle of a crisis.

There is much to say and not to say during these times, but in general, more meaningful and authentic dialogue is needed about the reality of the situation. This may sound contradictory, but whatever is said about the situation or situations in play needs to be uplifting, not downtrodden.

This means being able to give the bad news as well as what is going to be done together to move from chaos to new success.

Starting with management, I suggest that an agreement be put together as to how things will be acted upon. For years, I have used a one-page agreement (that each member signs) developed jointly with the business team. It outlines what behaviors are acceptable and what are not. It’s worked out together and there is usually a standard list of each, but it is important for the group to craft their own.

One imperative that needs to be there: “Blame must stop at the door.” There is no good reason to get on the blame bandwagon. Accountability and finding out what happened must be forefront. When everything, ultimately, settles down, most people are surprised what really happened—there is no reason to presume anything going in.

Other agreements, like the one that management has can be put in place in other departments. The goal is to have an organization that is working from the same page so more can be accomplished. How this process is distributed will be determined by the size of the organization and the level of crisis.

Keeping the process and the communication flowing is essential. Telling the truth once is one thing, telling the truth all the time is another and staying on mark is essential. To do so, there needs to be a running meeting, starting daily of key people from the business’ most important areas of what has happened, what needs to happen and how can others help?

It needs to be in the 20- to 30-minute range -- so that people can get on to what’s needed done. Move forward, the meeting usually comes down to once or twice a week as new programs stabilize.

Communication is the most difficult and arguably the more important of the three essentials we are discussing. Poor communication, misunderstanding, poor data, people not being on the same page as well as poor decision making have probably added more to the crisis than one could imagine. Focusing on better distribution of information, ideas, feelings and actions must stay strong or the business might slip back and find itself in even more crisis than before.

Summary

While there are many other actions, strategies and ideas that will be needed to bring a business out of a crisis, having these three concepts in place is a good start. Without this tripod model, stability and effectiveness of what needs to be done is at risk of not being successful within the crisis or in the future. Build a good foundation with the strength of your people, the ability to garner the needed funds now and in the future, and communicate as a team by reinforcing everyone being on the same page.

It is also a time where the CPA world can add additional value by helping clients better understand what is going on and help them make the most effective decisions possible. CPAs know a great deal about clients and their ways; this is an appropriate time to reflect, analyze, cross-correct and move forward. It is a time to reach out, touch-base and add a personal touch to someone who might really need it.