The Missing Playbook to Making Your Business Crisis-Proof
Business-ending crises happen all the time.
Opinions expressed by Entrepreneur contributors are their own.
What do you do when an earthquake, tidal wave, and nuclear fallout put your small business on the brink of collapse? When the Tohoku earthquake struck Japan a devastating tsunami formed, wiping out much of the Japanese coastline and causing the world's worst nuclear disaster since Chernobyl in 1986.
We had less than 45 days to solve an impossible problem or we'd be out of business. Years of building the entrepreneurial dream through blood, sweat, and tears about to vanish into thin air.
How did we solve the ultimate crisis with no resources, knowledge, or guidance and transform collapse into record-breaking sales and profit? The business I managed exclusively imported products from Japan. As a result, our business in the USA, while not physically affected, was put into crisis.
Every owner can relate to the current crisis and how it was impossible to plan for. Plus, finding people, ways, or information to guide you through the crisis is almost impossible when no one has a clear answer.
Crisis problems get tangled up and look like the impossible knots in a caught fishing line. The fisherman's solution to an impossible knot is "cutting the line." Cutting the line in business usually means you're out of business.
Our impossible knot problem was created from low inventory and a ruined supply chain, giving us no way of getting new inventory. The nuclear disaster caused widespread fear in customers about future contamination. Our cash reserves were tied up, low and banks wouldn't give us a workable loan. Then to top it all off the Yen to USD exchange rate tanked, so comparably $10,000 spent meant receiving $7,698 worth of product. We'd have to double our prices (in a competitive market where we were already the most expensive) and couldn't tell customers when they'd receive orders.
The following is the process I used, accompanied with tangible examples of our implementations and results.
Break complex problems into bite-sized chunks.
Complex problems are impossible to solve because they are always built upon dozens of smaller issues. Like many small businesses, we didn't have manpower, money, or time to throw at the crisis. Breaking up each problem into chunks made them easier to process and solve. When you're looking at one big problem it can be stressful, terrifying, and mentally taxing.
How I divided up the problems:
Sales and marketing
Smaller issues are easier to solve because you can quickly analyze and take action in a manageable way.
Through analyzing chunks, we were able to eliminate inventory and supply chain problems because we didn't control them. Then we realized that sales were really more of a symptom of the cash flow problem. Even the customer problem was a "symptom," caused by factors we couldn't control.
Solving the single problem we could control — cash — was magnitudes easier than trying to solve the impossible knot.
Get extremely bold and creative in problem-solving.
Business crises provide you with the opportunity to take on a liberating mindset. You already know the worst-case scenario (closing) and know it will happen if you do things normally.
This means you're completely free from the reservations you'd normally have of disrupting "what works." We have the freedom to make innovative moves that we'd normally call "too risky" because we're already in the riskiest situation. Being extremely bold and creative is now safer than operating normally because the risk has shifted.
While we had cash for inventory ordering, the problem was that we couldn't get inventory to us. The money would sit idle in the bank (and probably end up drained). But, we had partner businesses that we knew needed cash for expansion. So what did we do? We issued them 2-3 month loans.
Our idea was that "the money's gone and it ain't comin' back." But even with cash in the bank, we had that risk. We realized that making rudimentary loans and simply re-issuing them until we could order inventory was less risky. Solving a cash problem by getting rid of cash was a pretty counterintuitive idea that worked out.
Another implementation was with individuals that we knew wanted new ways to be invested. So we made a plan where they could buy products at wholesale and we'd just sell it for them as part of our normal operations out of our warehouse. We got the wholesale profit and they got the retail profit. It worked so well, even after the crisis most kept simply re-investing.
When we could eventually order again (nine months later) we bought significantly more inventory, all powered by wholesale investments and retail pre-orders. Larger orders reduced our costs and we got profit from the loans, wholesale investments, and customer retail sales.
Related: This Is What the Small Business Model of the Future Looks Like
Your website and email list are your most important tools.
All problems are solved, made simpler, or assisted by an effective website and a quality email list. They're more valuable than cash because they are vehicles that drive your ability to generate revenue on demand. They are the only assets you own directly and are critical to a modern stable business.
Social media serves a different purpose. It's for reaching an audience you wouldn't otherwise have easy exposure to. They offer the unique potential to gain sudden, explosive exposure and are critical components to building up your website and email list. Your website by itself isn't as capable of the same sudden exposure by simple math: You don't have a billion people on your website.
Unfortunately, there are two problems with social media. One: You don't own anything. Your profile, followers, and content are merely "rented." Everything can be taken away at any time, for any reason that the platform deems fit. Two: engagement results simply aren't as good as your website and email because you're fighting for attention with everyone else.
We had a YouTube channel with millions of views and the best Facebook page in the industry with 100,000 followers. They were crucial in growing our customer list and website. The problem was on social media — we got 1/10th the engagement compared to email and the website. While followers and views were a great ego stroke, by itself it wouldn't have been enough to save the business.
Only because we were able to grow, adapt and modify the website to fit the specific situation and provide focused contacts through email were we able to create business-saving results.
With no website or email? Our other solutions would not matter because we wouldn't have been able to reach the volume of people necessary to solve the problem. The incredible importance and impact these assets have on a business's ability to survive and thrive is what drove me to make website design and web development the core service of my company when I started it in 2015.
Related: How to Make Your Website Your Best Salesperson, and Not Your Worst Money Pit
Face problems head-on and be direct with your customers.
Everyone knows life is unexpected and imperfect. Acting as if nothing is wrong only makes the problem worse. A lot of the time, we'll put off talking to customers or hiding information because we're afraid of what the response will be. Inevitably, the situation comes to light, and if you hid it from your customers, you only lose their trust and faith.
Instead, take immediate action and be extremely straightforward with the situation. Be overly communicative, even if you don't normally have a reason to communicate a lot.
We had 8,500 people on our customer list. I called, emailed, and texted every single one. I treated them like trusted team members in our business. Warts and all, they were told everything — and in the end, they got so involved that we'd hold online "war-room meetings." Our customers started feeling they were in it with us, cheering our victories and sharing our setbacks. The result produced record-breaking orders, even if they had no idea when they'd ever get their order while paying double.
People have an infinite capacity for kindness, understanding, and loyalty. But no one gives it away for free. You've got to earn it.
Related: Four Ways To Boost Customer Experience (And Thus Hold Onto Your Clients)