7 Types of Crisis Your Company Could Face

Crises in businesses are like those surprise guests that never RSVP. They show up uninvited, demand extra work hours, and affect your business in many other ways. A survey revealed that almost every business leader out there has faced a crisis at least once in the last five years. But here’s the silver lining—if you navigate these storms right, your business comes out stronger. In this article, you’ll learn seven potential crises your company might bump into, along with some tips to sail through with minimal scars. 

Image Credit: Shamblen Studios

1. Financial crisis

Financial issues can spell trouble for your business, making it tough to pay the bills or cover debts. Financial crises can arise from losing revenue, dealing with inflation, facing bankruptcy, market crashes, or unexpected market twists. For instance, situations like losing three major clients can make you hard-strapped for cash, leading to cash flow problems. It’s not just about the money, as your customer service might take a hit, and your best talents could jump ship. To steer clear of this, be proactive. Prepare for rainy days with crisis funds, find extra cash sources, assess how you make money, change up your business style, explore new markets, and have a solid plan to weather the storm and bounce back.  

2. Technological crisis 

Hardware hiccups, software glitches, or industrial downtimes can lead to significant technological crises that can slow down your business. If you’re in the online niche, a server failure could mean waving goodbye to heaps of cash. And you must be vigilant in such instances, as if your rival hops on a tech bandwagon that cuts costs and boosts up production, they’re stealing a slice of the market cake, leaving you with fewer clients. Stay ahead by having backup systems ready and top-notch customer service to smooth things over when the tech train derails. It’s not just about fixing bugs; it’s about keeping your cool and guarding your reputation. 

3. Personnel crisis 

Your employees are crucial to your daily operations and can make or break your business. Any wrong act on their part could damage your company’s reputation and can lead to a full-blown personnel crisis. Whether it’s on the job or off the clock, if an employee’s antics are out of line, it’s advisable to let your HR team step in. How they handle the mess can determine the situation’s outcome and potentially affect your public image. So, when your company’s in hot water over an employee’s poor behavior, it’s all about having a smart plan that stares the problem in the face. Consider bringing in conflict management mediators such as counsellors or even chaplains in the workplace, to resolve any type of personnel crisis. 

Image Credit: Amy Shamblen

4. Natural crisis 

Mother Nature can sometimes throw a curveball, potentially leading to a natural crisis you have no control over. For instance, an earthquake shaking your area, a tornado tearing through your city, or a contagious virus making the rounds. As far-fetched as it may sound, it’s best to remember that this can happen at any time. For instance, Hurricane Katrina in 2005 caused damage amounting to about $125 billion. Also, more recently, COVID-19, the global disruptor, shut down businesses and made remote work the new norm. Preparation is your best play in tackling these natural crises. Although you may not always be able to predict such events, it’s prudent to have an evacuation plan, remote work strategies, and solid data backups. Stay ahead so your business doesn't hit a sudden roadblock. 

5. Crisis of malevolence 

A crisis of malevolence involves people pulling out all the stops to undermine your company and grind operations to a halt. They mess with products to cause chaos, use them for sketchy stuff, or hack into the company’s system to steal encrypted data. It’s a wild ride, covering everything from cyber threats and hacking to kidnapping, spreading rumors, and sabotaging products. These are all usually geared toward one goal—disrupting your business and tarnishing your public image. To deal with this mess, ensure everyone, including your employees and customers, is safe first. That might require involving law enforcement, fixing tech issues, or pulling tampered products off the shelves. And then, hit the troublemakers with legal action whenever you can. 

Image Credit: Shamblen Studios

6. Organizational crisis 

Navigating an organizational crisis is like steering through stormy waters. It usually happens when companies intentionally pull a fast one on their customers. It’s a common scenario where businesses knowingly tamper with public info, venture into illegal activities for financial gain, or skew values where the company throws social progress, investors, and customer experience out the window for quick cash. So, what’s the antidote? It’s all about a cultural makeover. Transform your company’s culture by prioritizing transparency, customer satisfaction, and values. These crises often sprout from a disregard for customers, so build a culture that invests in them. When reshaping your organization’s culture, please start with the hiring phase, bringing in team members who share the same values and constantly training them to ensure they align with your company goals.

7. Workplace violence 

When things go south at work, and violence becomes a terrifying reality, it’s a gut-wrenching crisis. A typical example of this happened in 2017 when a UPS driver in San Francisco showed up with a gun, turning the office into a nightmare. Three lives were lost, five were injured, and the gunman ended his own story. Although motives can be a blur, nipping potential issues in the bud is key. Workplace violence is no light issue. It’s a looming danger that needs quick thinking to cool things down and a hotline to local authorities if lives are on the line. It’s an urgent call for action and a joint effort with law enforcement to find a solution. 

The seven crises highlighted above are potential situations your business can face, making it essential to be prepared in case any of them happen. It’s time to roll up your sleeves and craft a proactive crisis management strategy. Don't just stop there; let your imagination run wild, foresee future scenarios, and figure out how your team would tackle crises while keeping your customer’s love for your brand alive.