Most businesses will face an issue that could evolve into a PR crisis at some point, be it a serious incident, customer complaint, or legal issue.
While there are practical steps you can take to try and avoid things going wrong, by nature crises are often unexpected and unavoidable.
How you handle these incidents can make or break your business, especially for SMEs or entrepreneurs who are in the early stages of building their enterprise.
To help, experts at money.co.uk business insurance have offered their insights and tips on how to minimise the risk of a crisis, as well as how to deal with one effectively.
Tips on avoiding crises in business:
Risk assessment:
The first step in avoiding a crisis is conducting a thorough risk assessment of your business. This can help you to identify any potential risks and ensure the right protections and procedures are put in place to minimise them. Your assessment should include not only physical risks to staff and customers but also any legal considerations like copyright when posting on the brand’s socials and customer privacy when interacting with customers online.
Put together a crisis management plan:
Once you’ve fully assessed and noted down the potential risks your business faces, you can put together plans of how you would handle each situation. You should include details on tackling the cause of the issue, addressing and compensating the customer if applicable, handling any legal repercussions, and anything else relevant. Thinking this through in advance means that you can act quickly and effectively despite the pressure of the moment.
Proper training:
A crisis management strategy means nothing if you don’t have the right people in place to action it. Therefore, it’s crucial to include exactly who is responsible for what on each contingency plan you put in place, and ensure they have the training to carry their role out effectively when needed. It’s also important to refresh this training regularly.
Put adequate protections in place:
With some crises being unavoidable, it’s vital to protect your business against any incidents that could result in costly legal repercussions. Business insurance can protect your company against a range of claims, as well as typically covering legal fees if you need to make a claim. This can include legal costs and compensation claims if you’re sued or the cost of repairing or replacing damaged property.
Be proactive:
The best crisis management plans are constantly evolving with the business to continually meet the demands of a growing company, changing business landscape, and the resulting new risks. Make sure to regularly review your risk assessment and crisis strategies, especially after any major changes to the business, like launching a new service.
How to handle a business crisis:
Remove the risk:
As soon as you’re made aware of an issue, if possible, you should remove the risk element. This could mean removing a post from the business’ social media page if it’s caused a legal issue, or stopping selling a certain product or offering a certain service if it’s putting customers at risk. Acting fast means there’s less risk of the issue escalating by being seen by more people or causing more harm and complaints.
Communicate with the customer:
If the incident relates to a customer, engaging with that disgruntled customer quickly and empathetically can go a long way in resolving the situation and stop it from spiralling into a bigger issue. Showing genuine compassion, offering an apology, and explaining how you plan to rectify the situation, can help to rebuild your relationship with the customer and protect your business’ reputation as one that cares about its customers.
Prepare a statement:
If the incident is already public knowledge (for example, due to a poor online review) or you have a duty of care to make it public knowledge (such as if other customers could be at risk), then you’ll need to prepare a statement. Posting a statement on your brand’s website or social media pages can allow you to address the issue – as well as any public backlash – head-on. Showing transparency and commitment to rectifying the situation can help to build trust in your business and prevent alienating customers.
Talk to your insurer:
If the crisis has the potential to escalate to legal proceedings, you’ll want to speak to your business insurance provider and check the terms of your policy. You may need to claim on your insurance to cover legal costs, be it a legal infringement or being sued by a customer. Your insurer can advise you on how to handle the process and obtain the necessary funds without risking your business’s financial standing.
Take the learnings:
After making it through a crisis and the fall-out, you’ll no doubt want to move on and forget it happened. But one of the most important parts of crisis management is taking learnings from these incidents to avoid the same thing happening again, or to deal with it faster and more effectively next time. Make sure to keep a log of any incidents and the learnings, and update your crisis management strategy accordingly.
Common business crises by sector:
Depending on the sector your business operates in, you may face risks on a daily basis, making it even more important to assess and have a strong plan in place to deal with any issues.
Here are some common examples and tips on what business owners in these industries can do to mitigate the risk and tackle the issue:
Restaurants and catering businesses face the inevitable challenge of food hygiene and the risk of food poisoning. A negative online review about a customer getting food poisoning can ruin a small business in this sector. To avoid this:
Hairdressers and salons face the risk of causing injury to customers and being hit with liability claims, for example, when using bleach on the scalp. A claim of this type can seriously damage a brand’s reputation, customer base, and, ultimately profits. To avoid this:
Electricians have the potential to cause serious damage to a customer’s home if they make a mistake when wiring and create a fire hazard. A legal claim of this kind has the potential to close down a business in this sector. To avoid this:
Kyle Eaton, money.co.uk business insurance expert, comments:
“Crises require prompt action to deal with effectively, so it’s crucial that you try to anticipate any potential risks to your business and have contingency plans in place to help navigate any sticky situations that arise.
“These moments can be extremely stressful and challenging, but with well-thought-out plans and the right protections in place, you can minimise the damage to your business, finances, reputation, and customer relationships.
“Better yet, handling crises well can strengthen consumers’ trust in your brand and enhance your business’s reputation, leaving customers knowing that you’re honest and proactive in tackling issues and complaints.
“Business insurance is a crucial part of crisis management and ensuring your business can survive a PR nightmare by preventing the company’s finances from taking a hit from any claims. Talk to your insurer about your risk assessment findings to ensure you have the right types of policies in place to protect your business.”
