All business leaders have had to respond to a financial crisis at some point in their lives. Oftentimes, the difference between a good and bad leader lies in how they handle a crisis scenario. Good leaders understand this. For example, a good leader with expertise in operations management will not waste time on recruiting an accountant. Instead, they will reach out to a firm offering finance staffing solutions, and concentrate on what they do best. Knowing what to do and when to do it helps good leaders tackle a financial crisis.
5 Steps for Business Leaders to Tackle a Financial Crisis
It is human nature to let others take the lead. Whether it is a life-or-death scenario or a trivial business matter, most members of your workforce will look to you to tackle it. The most difficult but accurate test of leadership usually comes in times of crisis. Running a business smoothly while the economy is booming and cash is coming in is relatively simple. But when the going gets rough, that is when the real leaders rise to the challenge. This blog explores the following five steps that can help you navigate your business through a financially challenging time:
- Carefully Assess the Situation
- Crisis Response Should Be Measured and Agile
- Reach Out to Experts in Your Network
- Engage With Your Team
- Be Flexible
Let’s dive right into the details.
Carefully Assess the Situation
A financial crisis can be an emotionally challenging time, especially for top leadership. Of course, it is understandable that as the CEO of a company, you feel the most pressure since you have to make all the major decisions to tackle the crisis. But reacting without all the information and perspectives can often be devastating for a business facing a financial crisis. In times like these, there is no room for emotionally charged or biased decisions. You need to be able to see multiple perspectives and take the least emotional and most informed course of action.
Crisis Response Should Be Measured and Agile
When a business is facing a financial crisis, almost everyone has their finger on the panic button. Yes, in such times, timely decisions are crucial for business survival. But rushing into a course of action can have the opposite effect. This is why after assessing the situation in the first step, you need to carefully weigh your response before acting with thoughtful urgency. You need to look at all viable and sensible options to create a plan that is tailored to your business’ current financial hiccup.
Reach Out to Experts in Your Network
There is no harm in getting help, especially in the face of something as challenging as a business financial crisis. You are bound to have a small group of experts, mentors, and seasoned business veterans in your network. Cultivate your relationship with them, and don’t hesitate to reach out to them for advice on your current situation. At the very least, they can offer a fresh perspective and an objective outlook on your problem. They may also be able to help you frame a concrete plan of survival.
Engage With Your Team
Remember, you’re a leader of a business organization, but that doesn’t mean that you have to do everything yourself. Even without a financial crisis, there is likely a huge list of tasks you need to work on. What you should do is commit to a plan of action and then delegate responsibilities to your team. Once your troops have your marching orders, you can focus your attention on other important responsibilities and keep the business running. For example, you have to handle a crisis, run a business, and urgently replace your worst-performing employees. You should delegate the responsibilities of high-volume recruitment as well as crisis management implementation. This leaves you free to manage profitability.
Remember that strong crisis management always requires a great deal of flexibility on your part as a decision-maker. Even if you do come up with a concrete plan to handle the financial crisis, the situation can fluidly change as you go along. This means you need to be ready to pivot in response to changes in the crisis scenario. Don’t make the foolhardy mistake of committing to a plan that obviously isn’t working.