Business crises are inevitable but by preparing for them you can minimise their impact on your business. Yes, there are some crises which will catch you off guard, but many crises can be prepared for if they occur. Let’s look at how to ward off a business crisis.
1. Assess your risk
Using the PISTOL method, you can look at your business’s internal and external risks. PISTOL stands for political, economic, social, technological, legal, and environmental.
In each section, we need to view internal and external risks. Let’s look at a few examples:
- Political: Here we can look at if the business has internal politics which is causing problems in teams or departments or the business as a whole. Externally, we can look at the local political climate and the global political climate and its impact on our industry.
- Economic: Your customer’s spending power will be affected by the country’s economics. If the interest rate goes up and you sell luxury goods, customers may have less disposable income to spend on luxury goods. The global economic scenario may also impact your business or industry especially if you sell across borders.
- Social: Are there any changes in society and social groups that could impact your business or industry?
- Technological: Besides new technologies which may help to improve your business, you must be aware of the different types of cyberattacks which may happen.
- Legal: If your industry has permits and other government requirements, you need to ensure you adhere to them. If you do business overseas, you need to ensure you follow the country you are trading in government and industry protocols.
- Environmental: What impact does your business have on the environment? What impact does the environment have on your products? This might be of particular concern for companies in the agricultural arena.
2. Create a strategy
Now that you have created a list of the risks that impact your company, how do you deal with them? You need to create a strategy for each risk and rate the different risks. You should start with the most immediate and impactful risks and then work your way down the list. You should create clear policies, plans and procedures.
3. Communicate clearly
It won’t help your business if you keep these policies, plans and procedures a secret. You must communicate them clearly to your staff and other stakeholders. Ensure when you speak to the different stakeholders in your company, you share the piece of information which is important to them, and you use language and tone which is appropriate for the communication.
4. Train your team
Spend time with your team and train them in their areas of weakness. If you want to have an effective team, they need to be trained in how the procedures work in your business. This should be reviewed yearly and can be implemented quarterly to keep everyone sharp and knowledgeable about their part in the business.
5. Review your mistakes
The biggest mistake in business is not examining a mistake and learning from it. You need to review your mistake and see what could have been prevented. This will help you to assess your procedure and change it if necessary. Mistakes are lessons which will repeat if you don’t learn from them.
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