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While most large organisations will generally have a crisis management plan in place, smaller companies might often tend to ignore crisis management planning. It’s often only after a crisis that you will realise the value of a crisis management plan. During the crisis you’ll be too concerned with firefighting the problems and issues.

Generating a crisis management plan doesn’t have to be a cumbersome project. In fact a more concise and clear plan will prove more effect in the heat of an issue. Many of us don’t work for organizations that will ever have a crisis quite like the global giant BP recently faced, but that doesn’t mean we shouldn’t be ready to handle a negative situation that might come our way. The more efficiently you address a crisis that hits your company, the less damage will be inflicted on your business. Having a set plan in place will help significantly.

Here are some quick tips on how to develop your crisis communication plan:

• Identify areas of vulnerability/ draft some possible scenarios that would damage your company (examples: a product recall, accident at work, an employee does something illegal, etc.) – keep them realistic.
• Develop a clear action plan that best addresses these scenarios. A chain of actions that would best repair the situation and alleviate damage.
• Develop the crisis team – decide who specifically needs to be involved with your action plans. Create a chain of command in case someone is unavailable. All members of your team should be aware of the role they will fulfil.
• Simulate the scenarios and the action plan. For each scenario, go through the steps of the action plan, with each team member fulfilling their role
• Finally, learn from experience

And when things go wrong, as they do, keep three things clear. Find out what happened, why it happened and communicate what you are doing about it. The days of covering up are gone and the use of covert language or carefully crafted statements simply don’t wash. Companies, small or large, always need to face up to their responsibilities and one of them is to communicate effectively in a crisis.

Keep in mind that the nature of a crisis is that it will happen when you least expect it and it may take the form of an issue that you haven’t accounted for in your crisis plan. But with the correct systems and procedures in place you will be best placed to deal with it in an effective manner. Most importantly, conduct your business and procedures in a manner which will avoid putting you in danger in the first place. As Warren Buffet said, “It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently”. That’s good advice.

When I am asked about measuring small business performance, my first inclination is to quote Lewis Carroll. In Alice’s Adventures in Wonderland,Alice comes to a fork in the road and asks:

“Would you tell me, please, which way I ought to go from here?”

“That depends a good deal on where you want to get to,” said the Cat.

“I don’t much care where–” said Alice.

“Then it doesn’t matter which way you go,” said the Cat.

In other words, if you do not have a plan for where you want your business to get to, performance measurement does not matter much!

Management dashboard

Small businesses come in various guises and hence it is difficult to generalise when it comes to individual performance management. Metrics (also called Key Performance Indicators or KPI’s) can range from Software as a Service (SaaS) businesses focusing on Lifetime Value (LTV) and churn rates, to hotels measuring occupancy levels and average room yields. However the old adage holds, ‘What gets measured gets managed’, so it is important to have some metrics in place. A good starting point would be to try and understand what are the typical metrics that define success in your particular industry. After that, it’s a case of adding some additional metrics to the mix to ensure that all bases are covered.

The following represent a list of some of the more common elements that can make up a “management dashboard” which combine to help you manage performance. Of course, some may argue that profitability should be the main bellwether as to the performance of a small business. While there is merit in this view, it is better to use a combination of metrics which all support the primary goal of trading profitably while growing year on year. This way you have early warning systems in place, as an assessment of profitability based on financial statements can take some time given the reporting time lag.

It all starts with a plan

Creating a simple business plan is vital for all small businesses regardless of whether the business is looking to raise money or not. Planning is essentially about having the foresight to plot and manage your own future, in stark contrast to reacting to accounting data with its emphasis on past performance. While business plans have many purposes, they are not often associated with performance measurement, despite the fact they are a very useful tool with which to measure performance. By committing your thoughts to a business plan you can ensure that you (or your team) know what the priorities are, what activities need to be done, who needs to do them and by when. A business plan brings a lot of transparency to the business with accountability in the form of names, actions and dates.

Cash-flow management

Careful management of cash flow is a fundamental requirement for all businesses. The reason is quite simple–many businesses fail, not because they are unprofitable, but because they ultimately become insolvent (i.e., are unable to pay their debts as they fall due).
If you are a “cash-only” business, you can bank the income immediately. However, if you sell on credit, you receive the cash in the future and hence may need to pay some of your own expenses before that income hits your account. This will put a further strain on the company’s solvency and hence a well structured business plan will help you manage funding requirements in advance.

Pro forma profit and loss

A profit and loss forecast is an integral element of any business plan alongside a pro forma sales forecast and cash flow forecast. These statements are forecast in advance (broken down by month) and represent a reference point for actual data as it emerges. By forcing you to forecast and to document all expected revenues and costs, the process helps you produce a report detailing the likely trading performance for the year ahead. If you are an established small business, this data is easier to arrive at as you can use past performance data as a reference point. While brand new businesses’ lack of trading history makes this process more difficult, it also makes it more valuable – you need some references to know whether your new business is on track.
Once you commence trading and have actual real data, it is then easy to undertake some variance analysis (between the forecast data and the actual data) to assess whether or not you and your business are on track. With actual data it is possible to take remedial action before waiting for a full year of historic transactions to emerge, at which point it may be too late. For example, if sales in month one are significantly below the planned level you can make an early decision regarding what actions need to be taken as a matter of urgency (i.e. perhaps bringing costs into line, increasing marketing activities, pivoting the business, etc.)

Google Analytics

If you are running a website it is essential that you are running an analytics package in the background (Google Analytics is one of the more popular free ones). This enables you to gain a real insight into customer behaviour on your website. If you are an ecommerce site, you’ll be able to analyse details like the eCommerce Conversion Rate (ECR) and aim to improve this rate over time. Given that your revenue is essentially a factor of two elements (ECR * Number of visitors), improvements in these two will help you drive business performance improvements.

Peer analysis (ratios)

You can also assess your business performance by measuring some key financial ratios and benchmarking these against results from peers (which are typically aggregated to ensure anonymity).
This data is typically compared according to industry codes as determined by the North American Industry Classification System(NAICS) and its predecessor Standard Industrial Classification(SIC). This system helps facilitate peer analysis as companies are grouped according to industry sector. While these systems were well suited to analyzing relatively homogeneous industry groups in the 1930s, I do not believe they are well suited to modern organisations with multiple revenue streams, and disparate business models. However, some small businesses with straightforward, conventional business models may find such data comparisons useful.
In summary, measuring performance is an important element for all entrepreneurs and small businesses. However, given the huge breadth of products and services provided, it is difficult to assign blanket metrics. The above will give you some ideas as to the sorts of things to be thinking about and these can be added alongside key performance indicators specific to your industry sector. Once set up it is easy then to keep an eye on these to ensure that your business remains on course.

CRM, database management, loyalty programmes are the marketing terms you will have heard mentioned around the whole area of ‘Loyalty’. Managing customer loyalty usually falls to the marketing person or department in a business, but it should be the responsiblity of everyone in the organisation. When you boil it down a loyalty programme is simply a plan that helps you to acknowlege and talk to your customers directly.

Your customers are just like you, they want to be acknowledge and spoken to like a real human being, so using terms like ‘database’ and ‘CRM’ make the process sound technical or scientific….but it shouldn’t be!

Here are my top tips on how to manage loyalty in any business of any size:

Stay close

Make sure you know who your customers are and find ways to build a direct relationship with them. It always amazes me that so many businesses have no way of keeping in touch with their existing customers. They don’t know who they are or how many times they have purchased from them. Every day that passes and your business isn’t keeping track of who you are dealing with is a missed oppportunity. We have all heard the old addage that is costs 10 times more to acquire an old customer than keep a new one. So the more direct contact you have with your customers, the less you should have to spend on marketing to the masses.

Get their number!

Your business model will dictate how the data capture exercise happens. If you are a B2B company this will be more straight forward as you will have the main contact details on file – just make sure that you have the name and email address of your key contact, not just the accounts department. For B2C companies, you need to take any opportunities during the sales process to record the customers details and get them to opt in to any future communication. You must collect this information fairly and the customer must know:

• What information you will keep about them
• What purpose you will use the data
• Any other parties that you may disclose or pass on their details to

Always bear in mind the future when recording customer details. Just because your business doesn’t do any mobile marketing right now, this may change in the future. If you don’t capture your customers mobile number now, it may be expensive to do so in the future.

What to say to customers

Most businesses know how to market themeselves to potential new customers, but struggle to market themselves effectively to existing customers. Think about the insurance companies who regualarly offer savings and discounts to new customers, while existing customers have to pay the higher premiums! Marketing to those who know your product and serviceshould be easier, but it needs some careful planning. You need to think carefully about what you are offering to those people who have spent with you before. Do you offer them a discount on future purchaces? Do they get a free gift the next time they shop? Or do you give them access to exclusive previews or content before the general public. There must be something exclusive for them to enjoy.

Flatery leads to loyalty and sales

Don’t just sell to your existing customers, use them to test products, give you feedback on your new advertising or ask them what they think of your customer service. Involving this trusted group of customers in your business process will reap rewards. Imagine being asked as a customer to pick and new pack design for a product and then seeing that pack on your supermarket shelves a few months later – you would certainly have a deeper affinity with that brand than its competitor. Thinking of your own business, how could you utilise your customer base to help you improve your products and service?

Market research is a very important step for all startups as amongst other things, it helps you understand whether your offering is likely to generate demand. Once you have a clear sense of who your customers are the following represent some additional things to think about:

• Where these customers are?
• How many of them there are?
• What they require from your product or service?
• How you intend to reach them?

Let’s use a Coffee Shop and software development as two examples to best illustrate these points.

Understand where your customers are.

If you are planning on opening a coffee shop in Dublin it is important to recognise that the primary market you’ll serve will largely be a function of the footfall in that area. Given the intense competition, for what is essentially a commodity offering, people do not travel far, so your addressable market will largely be a local one. Hence in this instance the proposed physical location will be a significant determinant of success. While coffee is a high margin product, the importance of locating in high footfall areas means rental rates per square foot tend to also be very high, so you need to factor this into your plans. Finally, you need to be very clear on your basis for competing as it is likely there will be many other coffee shops where you plan on opening. This is not necessarily a bad thing. Opening in an area with no coffee shops could be a signal that there is insufficient footfall in the area.

Looking at a different example; in the context of software development (or simply Internet websites), product managers will often create detailed personas of typical customers which then help inform subsequent decisions made when developing the application. For Irish developers it is important to have a global outlook from day 1. The domestic market is small and does not offer the scale software companies need. Hence you’ll see examples with Irish startups targeting non Irish customers from the start i.e. the social recruitment software player, Zartis.com prices in $’s (despite being based in Cork) so as to market effectively to their largest customer base.

Estimate the size of the market you can serve.

Once you obtain an assessment of the size of the market that you can realistically target, you can then ensure that you have commensurate resources in place. Similarly, if you do intend to seek external investment, the size of the market will be of significant interest to prospective investors and the level of investment they will consider.

With a coffee shop, the market size will be a combination of people residing within say a square KM of the premises, married to the footfall or passing traffic. One easy way to get some plausible estimates for the market size is to do some primary market research. For example, you can call in to an existing coffee shop, order a coffee and count the numbers of customers passing through in an hour. You can come back at different times to account for the cyclicality of the business (customer numbers typically peak around rush hour commutes). This data can then extrapolated out to help you assess a range for the likely customer demand on a particular street.

With software developers, the market size will clearly depend on the actual product and feature set. Given customers do not need to be locally based, the reach can be far wider (and largely a function of the inherent demand for the offering, the language on the site and the placement in Google’s’ search engine). Again there are a number of tools that can be used to assess likely demand ranges i.e. analysis of keyword competition, number of competitors etc.

Be clear on what your customers require.

It is important to recognisethe different requirements of different customer groups. Customers of coffee shops at a busy train station may simply want a fast service as a key element of the offering. They will probably consume ‘on the go’ so a simple kiosk may offer the best return. Customers in a coffee shop in the suburbs may want somewhere to spend some time. Some will place a high value on wifi access, others on the ability to fit a buggy in the door. While the core product is the same, the service offering can vary greatly. Having a clear sense of your different customer groups and their requirements will help you meet the needs of the different niches profitably.

For software developers, it is best to meet the requirements of the largest niche with a main offering. Once the application is available the key will be to solicit feedback from all early users and to then decide if their varying requirements can be merged into new features which may take the shape of a different product versions. So ‘power users’ may opt for a premium offering with an enhanced feature set over the main version.

Create a marketing plan to target them effectively.

Location is everything for coffee shops, so this will be a key element of your business plan. Once that has been decided, external branding and signage will help you communicate the offering to the market. The internal set up of the store will also signal the markets catered for. Listing in local business directories, handing out flyers and placing local newspaper adverts will also help create brand awareness. Social media will also increasingly play a role as the adoption of smart phones continues apace, and users increasingly rely on geo-targeting applications to find services they need while on the move.

For software developers it is important to identify the 5-10 keywords that are likely to generate traffic and to optimise the site for those. PPC advertising will also represent a cost effective means to market to prospects. After that, a whole mix of marketing activities can be considered for your marketing plan ranging from print advertising to trade show attendance to social media marketing (blogs, Twitter, LinkedIn and Facebook activity).

In summary, having a clear sense of who your customers are from day 1 will help ensure you can define your market accurately. You can then market to these customers effectively while also helping you ensure that your cost base is not out of kilter with the likely demand levels. The more you know about your customers the easier it is to meet their needs and to target them with appropriate messaging. Finally, it will also help you understand the wider landscape i.e. who you do not intend to target and also who the main substitute and competitive offerings are.