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A product recall. A takeover. A technical glitch. An investigation by the attorney general. Bad press. A “yourproductsucks.com” website.

Any of these events have the potential to destroy what you’ve built. How you handle it will make or break your business.

There are many types of crisis situations, but most fall into one of these categories:

• Messes you’ve gotten yourself into – You promised delivery of 1,000 bedazzled vests by Thursday without checking to see if that many are available. Now the Red Hat ladies can’t march in the parade and you have a major customer service crisis.

• Functional Boo Boos - Your chocolate chip cookie mix included too much vanilla and not enough brown sugar. The blech factor is high. What happened to your quality control? This is a crisis of function.

• The case of mistaken identity – a company that sells something that is “almost” the same as yours has a catastrophe. Your gourmet peanut butter is not affected by the recent quality issues that were widely publicized in the news – but nobody is buying peanut butter because of it.

• Screw ups that aren’t related to core competencies – Deemed such by Wharton operations and information management professor Maurice Schweitzer, these are those “acts of God” – a hurricane floods your warehouse wiping out your inventory and “unexpected catastrophe” – your CFO clears out your bank account and heads to Columbia. Neither is relative to your core business, but both damage your customer confidence.

The way your company responds to a crisis, especially in the early stages of the event, will determine whether or not your company can be trusted in the future. Are you prepared? Do you have a crisis management plan? A well-managed crisis can not only preserve your reputation and credibility – it can actually enhance them. Don’t panic. Look at it as an opportunity.

Plan for Panic

Can you plan for every possible event? Of course not. But you can be prepared to swing into action when one occurs IF you have a plan. Do it now! When a crisis occurs there is no time to think about a crisis plan. Immediate needs must be met. Do it well, and you will gain friends who will give you the benefit of the doubt and quite possibly help you. Do it badly and the negative perceptions will linger long after the crisis is history. Industry statistics show that a high percentage of companies who do not have a response plan in place will fail to recover from the crisis.

The plan does not have to be a highly-detailed document, but it should provide a flexible action plan that can be easily adjusted to the situation and implemented quickly.

In general, the crisis response plan should include:

• Who’s in charge? – Decide who is on the crisis management team by position not name, and who will speak for your organization.

• Who’s in charge of what? – List the responsibilities of the members of
the team.

• What happens first? Create a step by step action plan and checklist for everyone to use.

• How do we let everyone know what’s going on? Put together a communications plan that includes a list of key media and how you’ll get the information to them.

• When do we pull the trigger? Decide how and when the plan will be activated.

Get the Word Out

The most important part of your crisis plan is communication. Nothing drives negative rumors, innuendo, etc. faster than a lack of information or an insincere apology. In addition, good news travels at the speed of a click – and bad news even faster. The media will not wait while you meet with your attorney to craft a response. You do not have the luxury of time, which is why you must plan and even have a bare bones crisis release ready – one that includes the basics on your company, who the important people are and how media (and others) can get more information. Here are three steps in that process:

1. Determine who needs to hear your message – your customers, suppliers, employees, business partners, the media. Have the means to reach them in place – e-mail addresses, phone numbers, etc.

2. Determine how you want to reach them – with a statement on your homepage, a posting to your blog or to an industry blog, an e-mail blast, a press conference or media call. You will want to use as many communication channels as possible. Your response needs to be handled in hours, not days.

3. Determine what you want to say. This is the most important aspect of any crisis management response. State what you know and only what you know. Sincerely apologize. Let your audiences know you are gathering information as quickly as possible and describe what you are doing to resolve the situation. If possible explain why the crisis occurred – but do not speculate. You (senior leadership) are your spokesperson – do not delegate this responsibility. Update your information frequently. Above all, be truthful. You will gain respect and credibility by being transparent and open in your message and response.

Crisis Response Grading

Once the crisis is over, evaluate the effectiveness of your plan. What worked, what didn’t? How can you improve? What should you avoid doing in the future? Write it all down and incorporate it into your Crisis Management Plan. Then make sure everyone involved gets a copy of the revised document.

Finally, send out a thank you to your customers, suppliers and yes, the media. This common courtesy can go a long way towards rebuilding or enhancing your brand and reputation.

Solid Cactus, Inc. has designed or redesigned more than 3,000 e-commerce sites. Solid Cactus is an Inc. 500 company and was named one of the "Best Places to Work in Pennsylvania" in 2006 and 2007.

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