Both large-scale and SMEs go through a crisis, although some forms of crisis are predictable and can be prevented, others are sudden and need to be managed. SMEs in Africa are typically exposed to protracted periods of crisis due to several factors ranging from inability to access financial aids to corruption. Hence, learning to manage a crisis effectively is crucial to the longevity of your business.
Here are some crisis management tips for small business owners in Africa:
Identify The Source Of The Crisis
The first thing to do whenever your business is in crisis is to identify the source of the crisis. To do this, you need to accept the facts around you. In most cases, denying the obvious will only extend the period of the crisis you are going through. In other cases, ignoring and waiting for the problem to whisk away will worsen the situation that is already bad. Hence, amplifying the damage caused.
Every crisis has a source, and your ticket out of the problem is identifying the source of the crisis. The only way you can find the right solution is by identifying the problem.
Identify The Areas Affected By The Crisis
The next step is to identify the areas of your business that are affected by the crisis. In most cases, there are areas in your businesses that tend to suffer most whenever you are in a crisis. Your job as a business owner is to identify those areas. This will help you prioritise both financial and intellectual resources.
The rule of thumb here is that you salvage the highly affected areas first, then move on to the areas that are barely affected. Although going through a crisis is inevitable to all businesses, especially SMEs in Africa, getting acquainted with the right crisis management tips will help weather the storm.
Draw A Clear And Actionable Crisis Management Plan
The strategy you will need to employ to solve the problem your business is going through is unique to the problem it is facing. This is why identifying the source of the problem is important. It helps you in figuring out the way out of the crisis you are going through.
Drawing a crisis management plan will help you assess the affected areas in your business and smart solutions to scale through the issues at hand. Make sure your crisis management plan consists of short-term actions since your business is in a survival mode.
Keep The Right Attitude And Be Transparent With Your Employees
Ever heard the saying “attitude is everything”? This is especially true when your business is going through a crisis. A gloomy attitude will affect your business atmosphere and may eventually rub off on your employees. You need the right attitude to prevent any form of doubt, uncertainty, and fear that may come as a result of the rumours about your business.
Be transparent about the situation at hand with your employees. This will help curb further spread of false rumours that may disrupt productivity. Keep a hopeful attitude while doing so. This will help your employees stay hopeful and put on the attitude that is necessary to scale through the crisis.
Assess Your Team
There’s a huge chance that you will not have so many finances to spend irrationally whenever your business is going through a crisis. This is why you need to be smart about how you spend during this period. Assess your team and identify those who have little or nothing to offer during the crisis at hand.
This is not the time to be sentimental. While empathy is an amazing quality of a good business owner, not being realistic will leave you with no business to run. Trimming your expenses during a crisis will allow you to push finances towards solving the problem at hand.
Maintain Proper Cash-flow Management
The longevity of any business, especially SMEs in Africa, hinges on proper cash-flow management. You need to accurately forecast your cash-flow and devise an actionable plan to fill all funding gaps that may arise during the crisis.
This is the appropriate time to renegotiate payment plans and terms with your suppliers. It is also the perfect time to discourage selling your products on credit. The secret to maintaining proper cash-flow is minimising inventory levels and trimming expenses. Be humble enough to reach for financial help if you feel that the funding gaps are too large to fill with the funds available.
Have An Alternative Plan
This is one of the most crucial but often overlooked crisis management tips. You will need a plan B just in case things don’t turn out as you would expect. When developing your crisis management plan, develop them in three phases, all depending on the predicted outcomes of the problem at hand. The first plan should take a conservative approach, the second a realistic approach, and the third an aggressive approach.
This will help you switch plans when necessary. As a business owner, you cannot afford to be sentimental during a crisis. You have to be brave enough to be ruthless in your decision making. The goal is to save your business from drowning and nothing more.
Look Outward If You Have To
You need to be humble enough to seek external help when you need it. If your think tank (your crisis management team) isn’t coming up with the right plans, you may need to look elsewhere. Request help from experts who have a reputation for solving the issues your business is going through. This will help provide a unique and knowledgeable approach to solving the problem at hand.
Always keep in mind that there is a solution for every crisis you go through. All you need are the right crisis management tips to help you weather the storm. Each of the steps above has been carefully crafted to help SMEs in Africa sail through whatever crisis they may experience.