How To Recover From Business Setbacks
Every company faces business risks. Sometimes it seems like they’re waiting around every corner!
If your company is around long enough, you’ll probably experience business setbacks of one type or another. For example, in business, property damage is common. It might also be caused by a storm, an employee mistake, or some other incident, but you’re bound to encounter problems of this nature at some point.
Another risk companies face is business lawsuits. Something as simple as a customer or client slip-and-fall accident can lead to them suing for the cost of their medical care and other expenses. It’s also common to experience business theft—whether it’s money, products, or company property.
We’re not focusing on these issues to worry or discourage business owners! We’re just emphasizing the need to have plans for recovering from business setbacks. Companies that acknowledge the potential for these and other scenarios and consider how to address them if they occur respond much more effectively to problems when they occur.
So, let’s delve into some strategies for overcoming issues to keep your business moving forward!
9 Proven Strategies to Help Your Company Recover From Business Setbacks
Imagine your company experiences a significant issue. How you respond can determine whether the incident harms your business (or, in a worst-case scenario, bankrupts it) or you and your team take it in stride and minimize its impact on your operations.
Here are nine actions you can take to protect your business:
- Focus on resilience.
Having a resilient mindset is essential when you encounter business setbacks. When disaster strikes, it’s natural to have concerns about your company’s future—all owners do. But dwelling on them isn't helpful. In fact, it can delay your response, cloud your thinking, and drain your emotional energy. Companies (and people) navigate tough times better when they see setbacks as learning opportunities. They roll up their sleeves and say, essentially: “Hello, adversity. We’ve been expecting you!” - Assess and analyze the situation.
After experiencing a setback and taking any immediate action necessary to prevent further damage, you should step back and assess the situation objectively. What went wrong? What factors contributed to the incident occurring or worsened the consequences? Keep in mind that this isn’t about blaming someone. Your goal is to understand the problem so you can address it today and prevent a repeat in the future. - Pivot if necessary.
Successful businesses are agile—they have to be in today’s competitive business environment. That means continually adapting to economic changes, competitors’ tactics, and other circumstances. The great thing about having that skill is you can use it to find workarounds for the current issue. For example, imagine your delivery van is totaled in an accident and it’ll be a while before you can replace it. Maybe you temporarily shift your focus to encouraging customers to pick up their orders at your location by offering a discount, and your delivery drivers run orders out to customers in the parking lot to make the process more convenient. The key is to stay agile and open-minded about how to respond. - Protect your cash flow.
Business setbacks can devastate your finances, but you can offset their impact by doing things like reducing discretionary spending, renegotiating vendor contracts, and looking for alternative funding sources. You might also be able to create new temporary (or permanent) revenue streams. Suppose property damage means some of your team members can’t do their jobs. In the opposite of the pivoting example above, maybe you have to close a section of the dining area in your restaurant for repairs, so you start offering delivery with your servers as drivers. Note: Just be sure you have commercial auto insurance to cover their use of company vehicles or a hired and non-owned auto add-on for your general liability coverage or business owners policy (BOP) if they’ll be using their own cars. - Leverage your professional network.
Your business contacts can be excellent sources of support and guidance during challenging times. Some of them may even have gone through exactly what you’re dealing with! Reach out to them for advice and perspective. Learning how others have overcome similar setbacks can provide a roadmap for dealing with your current situation effectively. - Be open and honest with customers or clients.
It’s normal when an incident occurs to try to ensure nobody outside your company knows what happened. But people appreciate honesty and are typically willing to stay loyal to a business if they understand why service levels or product quality have dropped off. In fact, acknowledging that you’re facing significant challenges but working hard to overcome them can generate goodwill and increase customer loyalty. A sympathetic “been there” is what will pop into most peoples’ heads when they hear you’ve suffered an unexpected setback. - Encourage innovative thinking.
Innovation always benefits companies, and in difficult times, it can be a lifesaver. Who knows best how to innovate out of a tough situation? Typically, it’s the people doing the work. Ask employees affected by an incident how they might be able to do their jobs differently to stay productive until things get back to normal. You may even identify ways to grow your business after you’ve recovered from the setback. - Stay true to your vision.
You might have to modify your operations while bouncing back from an incident, but you shouldn’t give up on your goals just because you face new hurdles. - Carry adequate business insurance.
Some of the work to recover from business setbacks should be done before they occur. Most importantly, you should carry business insurance to cover all the risks your business faces. That way, if something happens, some or all of the expense can be paid by your insurer rather than out of your savings or revenues. It’s also critical to work with an insurance company that’s focused on helping your business recover. biBerk stands behind customers, promptly providing the service and funds needed to rally from adverse conditions.
Don’t Let Business Lawsuits, Property Damage, Thefts, and Other Incidents Harm Your Company!
Businesses experience setbacks. That’s unfortunate, but it’s also reality.
Another truth is that you have a lot of control over how an incident affects your business. Maintaining the proper mindset, leveraging your professional network, carrying adequate business insurance, and other essential actions can make all the difference in how quickly and successfully your company overcomes challenges.
So, take some time today to ensure you’re ready to respond to whatever circumstances you might encounter tomorrow and down the road!