The Costco Connection - September 2015

By Rachel Hartman

WHILE YOUR BUSINESS may not face anything so serious it has to shut down, occasionally bad things do happen.

“The roof could collapse on your shop, or you could take a serious social media hit,” notes Brian S. Vinson, a Federal Emergency Management Agency–certified professional continuity practitioner with more than 20 years of disaster recovery and business management experience.

Add equipment breakdowns, employees acting out of order, lawsuits and health scares: All of these can turn into crises, and dealing with them is not an easy task.

Getting through a tough stretch begins with the right focus, advises Vinson. Follow these strategies to handle the crisis and move on to a better, more promising future.

Assess the situation

Start by taking a step back to absorb the events. You may find an immediate fix can be made, such as repairing key equipment or calling a backup supplier.

If employees were affected, you might need to address them as well.

“We had a fire in our warehouse, and the timing couldn’t have been worse,” recalls William Bauer, a Costco member and managing director at Royce Leather (royceleathergifts. com), a high-end leather goods manufacturing company based in New York and New Jersey.

The fire hit in November, shortly before Black Friday, a day of huge promotions and big sales for retailers that takes place the day after Thanksgiving. About $10,000 of inventory was lost before the flames were put out.

“As soon as the firefighters left and it was safe for us to go back to work, the most important thing was to bring the entire team together,” says Bauer. Everyone was informed of the fire and assured that, by pulling together, the company would be able to carry on business.

Appoint a spokesperson

If you’ll need to address the media about the situation, select one person to handle all communication with the press, advises Vinson. This will help keep messages clear and consistent.

Also, “depending on the crisis, allowing legal counsel to speak on behalf of the company may be the best route to take,” he says.

Let employees know who the appointed spokesperson is. This way, they can guide any media inquiries in the right direction.

Take action

To start an upswing for your company, “make a plan and move forward,” suggests Sherri French, Costco member and founder of Spbang ( spbang.com), a company that produces reusable snack bags.

The Costco Connection Costco offers a number of business services to help small businesses survive and thrive.

Go to Costco.com and click “Services.”

TO DECREASE YOUR chances of a future crisis, “be proactive,” says Jon Zack, Costco member and founder of eight companies.

Here’s how.

1. Know your weakness. Start with an internal audit, suggests Zack, who is currently CEO of EggZack, an automated sales and marketing system. For instance, if your business depends heavily on technology, do you have a backup system?

2. Bring in outside help. Hiring a group to carry out a risk assessment can help you identify vulnerabilities, especially those that are hard to see when you’re close to the business.

3. Evaluate preventive action.

Based on your internal and external findings, decide what measures should be implemented to reduce the chances of future flaws.—RH

Three steps to
reduce risk
small business

That’s what French did when an error stalled production on a new bag design. The company planned to showcase the design, which had a back-to-school theme, at a key upcoming trade show. In addition to causing a $1,000 loss on production costs, the mistake couldn’t be fixed before the show.

Instead, French opted to display a picture of the new design at the trade show. In doing so, the company was still able to take orders from buyers interested in the bag once it became available.

Keep a vision

One blunder won’t necessarily drive away future sales, notes Bruce D. Sanders, a Costco member and consumer psychologist. “If you’ve treated your customers well in the past, they’ll want to move beyond the crisis as much as you do,” he says.

Furthermore, working through challenges can form resilience among workers, adds Bauer. “[It] becomes part of the company culture that nothing is too daunting to overcome.” C