As a new business owner, it is obvious for you to focus on growth-oriented tasks in the initial stages. However, anticipating business downturns is extremely important since seemingly innocuous problems can turn into a major crisis situation. Business crises occur when some unforeseeable issues destabilize the business processes. These issues can emanate from internal operational problems or can be caused by external factors.
Once the business crisis situation goes out of the company’s control it becomes extremely difficult to resolve issues quickly. It may even lead to complete business collapse due to financial losses. Thus, it is important to be aware of the top five business crises a company is susceptible to.
Types of Business Crises you Need to Consider
Business crises could arise unexpectedly. It is important to identify all the early signs and to make prior plans for crisis management. Here is the list of top five business crises that you should know.
1. Financial Crisis
Financial crisis is one of the major business crises that are subjected to both internal and external factors. The internal factors can include drop of assets value, overhead debt, and operational fallacies and so on. On the other hand, external market forces like the fluctuation in demand for goods and services may lead to a financial crisis. In such situations companies need to rethink alternative and even multiple revenue sources to ensure a long-term income flow.
2. Organizational Crises
Organizational crisis is caused by company’s malpractices. These include:
- Company chooses to deceive customers with wrong product information in order to generate profit. Instead of creating a mutually beneficial business relationship, companies abuse their employees for the good of the company.
- Company deliberately engages in illegal activities.
- Management heads prioritize short-term profit generation, neglecting social responsibility, and ignoring the interest of employees and customers.
Establishing a healthy work culture that aligns with the company’s value is the only way to avoid such crises. However, it is a long term and challenging task. It is recommended that you take professional advice from certified turnaround consultants.
3. Technological Issues
In today’s digital world, businesses are more and more dependent on online data driven campaigning and transactions. A sudden technical crash can lead to serious disruptions. The company would definitely lose millions of leads every minute. This seriously hampers the company’s reputation and revenue generation. Technical glitches must be resolved as soon as possible in the shortest possible time to restore normalcy. Once it is restored, companies must evaluate their internal processes to identify the cause of the temporary technical glitches. This would enable them to prevent such episodes in the future.
4. Natural Crises
Natural crises are crises on which businesses have no control. It involves incidents like natural disasters, disease outbreaks, unfavorable climatic conditions and so on. For instance, Covid-19 caused immense business destruction due to government imposition of a sudden lockdown. Companies need to have a robust plan that would enable them to take proactive action during emergency situations. This proactive action would enable them to reduce the destructive impact of such a situation on businesses.
5. Workplace Violence
To enhance productivity, workplace unity among employees is crucial since all the projects are handled by a team. If any employee feels unsafe due to a hostile work environment then their productivity is bound to be hampered. As a result, it would seriously affect revenue generation.
For example, many a time lack of consensus regarding decision making triggers employees to generate violence towards one another. Violent incidents not only affect the parties involved in the altercation but also hampers the entire work ambience of the workplace. To ensure a conducive environment companies must practice team building activities.
Conclusion
Business crises can arise anytime and thus, it is important for companies to be aware of possible crisis situations. This enables them to take proactive steps to mitigate the crisis and minimize the level of damages. The blog has discussed the top five business crises. Hope this proves useful for you.
