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  • Dawn Reshen-Doty

Are You Always in Crisis Mode?

Entrepreneurs often find themselves reacting to various business crises, desperately working to put out fires. Reactive approaches to business issues are both inefficient and ineffective. Through careful planning, business owners can switch their approach to one that is predictive and preventative. They can then create positive change from the inside of their business out, seizing and creating opportunity.

Predict, Prevent and Create

Study the leaders in your field and look at the problems they have encountered. How did they address issues and move past them? Predicting potential problems can help you to plan ways to avoid them. You should simultaneously focus on taking advantage of changes that allow you to create opportunity.

The Story of Barefoot Wines

One great example is the story behind Barefoot Wines. The two founders were originally run-of-the-mill business people who counted among their clients a large number of people in the grape-growing industry. When the founders tried to help a client collect on a bad debt, they found out that the debtor company was nearly bankrupt but had a $300,000 wine inventory. They seized the opportunity and made a deal for the wine. Their client, however, told them he couldn't sell it. Instead of panicking, the pair created positive change, using that initial inventory to start what has become one of the world's largest wine brands.

Business Crisis Management: Predicting and Preventing Problems

Many companies create cultures that are focused on problem solving, rather than problem prediction and avoidance. To change, companies should start by hiring proactive, rather than reactive, leaders. Encouraging predictive behaviors should start from the top. This can help everyone at the company to think more creatively.

A simple way to predict and prevent cash flow problems is to analyze the business and its industry to determine seasonal income and spending trends. These often depend on whether the business is service- or products-oriented. Service-oriented businesses may experience a drop in income during the holiday season while products-oriented businesses may see an uptick. Identifying these cash-flow trends can help predict when they will occur and then allow the company to save money during more flush times in order to sustain itself when business is slow.

How to Create Opportunity

Barefoot Wines again provides an excellent example of creating opportunity. The company initially had little to no capital but needed to be able to market their product. The owners took an innovative approach to business crisis management by reaching out to charitable organizations and donating some of their wine for auctions. By doing this, the company developed an excellent reputation early on, and they enjoyed tremendous growth due to word-of-mouth reviews from the people who attended the auctions, as well as the nonprofits.

Good business crisis management involves analyzing potential problems and determining how a company might adapt to turn them into developments that will result in growth. Crisis mode is far too common. Predicting problems, planning to prevent them and creating opportunity can help you on your path to success.

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