Now that we’ve presented a broad overview of the importance of crisis management plans for small businesses, it is time to address plans in detail for real-life possibilities. We will look at two crisis situations: natural disasters and supply chain difficulties.
Small businesses tend to be affected by natural disasters disproportionally to mid-sized businesses and large-scale operations. They are likely to have smaller amounts of cash reserves and insurance coverage to help mitigate small-scale, significant and total losses as a result of hurricanes, flooding, earthquakes and other acts of nature.
As a first step, proprietors must allocate part of their budget to addressing crises. Establishing a rainy-day surplus can help keep the store afloat when faced with severe damage and other financial catastrophes.
For instance, business owners should research insurance policies that specialize in natural disasters. These plans will include higher deductibles than traditional business protection plans, and due diligence is essential. Ultimately, for stores located in disaster-prone areas and subject to other substantial issues, the plans are worth the cost of your business’ survival.
In addition, create a continuity plan that allows the business to continue operating, whether it means setting up employees to work remotely or renting another location.
Another situation that could cause a business to spiral is a supply chain predicament. This was seen during the pandemic due to many problems, including labor shortages and production drop-off, and shipping and logistics issues. These crises, however, are not specific to pandemics. They could happen during a recession or due to natural disasters on the other side of the country or overseas that have a perilous ripple effect on your operation.
Preparation includes diversifying your vendors for business stability should your one supplier shut its doors. Building relationships prior to an incident is also helpful. A supplier with whom you have developed a strong connection may give you priority during disturbances.
In addition, consider using local, possibly more expensive suppliers. This can afford you the benefit of faster shipping times. And be sure to seek eligibility for government and other disaster relief funds, loans, and grants.
As you rebuild your business, work toward reestablishing your emergency fund. Depositing even the bare minimum each month will help you be ready for the next potential disaster, should it ever occur.
A business owner might want to also form a crisis management team. This dedicated group of staff would focus on preparation for disasters and be at the ready to take immediate action during a crisis.
By no means is this an exhaustive list of disaster responses; crisis management plans take many forms. It is essential to research as many as possible. A crisis management plan can help your business counteract disruptions, minimize operational slow-downs and ultimately enable a faster recovery so that you can resume operations. With a business crisis management plan, you greatly reduce the likelihood of your store going under after the flood.
