Insight: Plan now for the next crisis

Any business is likely to face adverse circumstances at some point. It might be a major external crisis, such as a recession, the emergence of a new competitor or a change in customer demands.

“Entrepreneurs need to expect bumps in the road,” says Patrice Bernard, senior vice-president of financing and consulting at the Business Development Bank of Canada. “You may not know what lies ahead, but planning for challenges is important for business and should rank high on a leader’s agenda.”

Mr. Bernard notes many entrepreneurs fail to heed warning signs — developments that should be addressed early to head off trouble and keep the business on its growth path.

“Don’t wait for the next crisis. Plan for it. Create a sense of urgency before there is an emergency,” he says. “Successful entrepreneurs question everything in their business,” he says. “It is too easy to underestimate a situation, especially if the business seems to be going well. Tak- ing action may be difficult, but the longer it’s left, the more difficult it becomes.”

Keeping a close eye on the market and being alert to competitors’ offerings should also be a priority. “Scan your business environment constantly,” Mr. Bernard says. “Listen to your employees, your clients and your suppliers.”

Create a sense of urgency before there is an emergency

Reacting quickly to change is vital. Procrastination frequently leads to a worsening of the situation and fewer options for recovery.

“Entrepreneurs need to react rapidly to stabilize their finances, keep losses to a minimum and retain flexibility,” Mr. Bernard says. “Protecting your cash flow is essential in a time of adversity.”

He also recommends that entrepreneurs consider new strategic directions for the business that could draw on untapped employee skills. “Define where you want to go, what new skills you need to get there and whether your staff has those skills,” he says. “In my experience, every time a business is in such a situation, they can find within the company under-valued or under-used skills that become critical in moving on to the next cycle.”

Support from consultants, accountants or bankers can be of key importance to overcoming adversity. “A new pair of eyes from the outside can bring additional expertise and a fresh perspective to a situation and help a company set a new course.”

Finally, Mr. Bernard emphasizes the importance of communication with employees and stakeholders. “When leaders see the company at risk, they focus on a solution and an action plan and tend to forget that people are worried about the future,” he says. “It’s important to reassure employees, suppliers and customers and communicate your vision for a successful future.”