This is all good and well – and being able to motivate and inspire your team will get you a long way. But what happens when things go wrong? What happens when it turns out that you don’t have enough clients and you’re going to have to make cutbacks? This is when things get tough and this is when even your biggest detractors are going to start looking to you for some answers and guidance. 

How do you deal with a crisis as a good leader and what is the key to making sure that you come out of any situation relatively unscathed? 

Seeing the Unseen 

The best way to handle a crisis? That would be to avoid it entirely. Because if you are a truly outstanding leader, then the hope is that you will be able to actually anticipate problems that others don’t see and then make sure you avoid them. This is your job as a leader – to have one eye on the direction of your business and to be able to look out for obstacles. 

This is also why you need to be able to delegate and to set the work that’s necessary for your team. This way, they can work in the business, while you can work on the business. They can keep the machine running while you pilot it. 

You can do this by looking at potential futures for your business and thereby seeing what lies ahead. Here are a few techniques you can use to do this… 

Planning Fallacy 

The planning fallacy refers to the fact that we almost always underestimate how long things take and how much they will cost. When you ask your team ‘how quickly can this be done, they will very often tell you ‘2 weeks’ when the reality might well be ‘3 weeks’. That is simply because we can’t account for ‘unknown unknowns. They might not realize that their internet is going to go down for 3 days, or that one of the providers of a key material or tool might take longer than they should deliver. 

So your plan then is to keep this in mind when planning ahead and to insert that buffer so that you can survive even if things do take longer than expected. 

Scenario Planning 

Scenario planning is a form of ‘mental simulation’. Essentially, you’re going to imagine what you would do in a number of different situations, which is a great way to develop contingency plans while you’re not under pressure. Think about all the ways you’d deal with all the things that could go wrong – and even imagine your ‘doomsday scenario’ where everything that can go wrong, does go wrong. 

It’s also important to keep track of the risks that are currently on the horizon. Keep researching the competition, the markets, trends, etc. so that you can find those hidden risks. 

Resilience 

Resilience refers to a business’s ability to withstand hard times. A business can be made more resilient by ensuring it has: 

• Low outstanding debt 
• Low overheads and fixed costs 
• Multiple independent products, even multiple different brands 
• Flexible workers and employees 

• No ‘weak points’ 
• Fail safes, back-ups and reserves 

When things are good, you can work on improving the resilience of your team by improving the efficiency of systems to reduce overheads, by paying off debts, by creating your ‘rainy day fund’, by accumulating assets or by setting up more revenue streams. 

Now when something goes wrong, you should be able to survive for at least a certain amount of time before things turn critical. And when that is the case, your team will see the value in all the hard work you put in during those times of plenty! 

Financial Modelling 

Financial modeling means creating predictions of your finances based on your current situation. That means looking at your growth curve and how your profits are growing or decreasing over time. It also means inputting the point at which you’ll break even on any initial costs, looking at overheads, and more. 

Effectively, this allows you to make projections for your financial fortunes but you can also use these models (which are essentially just graphs and charts) in order to create ‘what if scenarios’. What if your rent were to go up 50%? What if a new competitor came on the scene and stole 30% of your sales? 

This also means having a good handle on your numbers. This might be work for your accounting team but just make sure that they have done this! 

Weathering the Storm 

But with the best will in the world, sometimes things will go wrong and there won’t be an obvious solution. 

So now what do you do? 

First and foremost, make sure that you never point the finger and dole out the blame. Doing this is a fast way to make your team resent you and it can also create in-fighting. 

Remember: you need to be responsible as a leader and that means that this is your fault. If it’s in actuality Jeff’s fault, then it’s your fault that you allowed it to be Jeff’s fault. Jeff should never have been in that position. Jeff is clearly incapable. 

So you need to take responsibility and that also means taking responsibility in the face of your superiors. This will immediately provide reassurance for your team and it will give them confidence in what you say in the future. It means your team will know that they can do what you ask and they won’t be held accountable if anything goes wrong. 

The next thing to do is to stay calm. When you panic, it makes the team panic. So be confident and calm and reassure your team that everything will be okay. That doesn’t mean lying though – if there is a chance people will lose jobs then you need to let them know that this is a possibility. 

What’s more though, you should make sure that everyone is working together and on the same page in a bid to get things back on track. Set out a clear course and explain how everyone has their role and everyone should work together. Create a light at the end of the tunnel and a clear plan so that your team can remove their fears by solving the issue.