External causes such as market or industry changes, global events such as the 2008 financial crisis, the consequences of COVID-19 or indeed business mistakes, can quickly land your company in trouble. If your company is in crisis, this not only impacts your business, it also has implications for your private life, for example for personal wealth creation. Read here how you as a woman entrepreneur can successfully navigate a crisis.
Start planning before the storm
Whether you’ve only recently set up your own business, have been running a successful SME for a long time, have taken over the family business or are planning a start-up, entrepreneurial risk is unavoidable.
What will I do if I lose my customers? What if someone with critical knowledge leaves the company? How do I react to crises, failures and impending bankruptcy? It’s worth asking yourself these questions and familiarizing yourself with crisis management before a potential crisis. Planning in advance will allow you to react more calmly when a crisis does occur – and to reorganize and reschedule your liquidity and investments.
Phased crisis management: ask yourself the following questions
Good crisis management is phased; the focus is not only on finding short-term solutions, but also on stabilizing your company in the medium to long term.
Consider the following questions at the start of a crisis:
- How do we “organize” crisis management?
Decide whether you need a crisis committee and who is responsible for what. Communication is also a part of crisis management. Examine or develop a concept for communication in a crisis to ensure close contact with the relevant stakeholders and clients.
- Which operative and structural adjustments are required to manage the crisis?
Address the main operative questions, including maintaining operations and delivery chains, liquidity management (see section below) or issues relating to employee protection. For crises with structural causes or consequences, examine your business model: Will the crisis affect your value proposition? Do you need to adjust your business model? Which opportunities arise due to the changes?
- How does the crisis affect your personal situation as a woman entrepreneur?
This aspect is often forgotten. But for a lot of woman entrepreneurs, business and private life are closely intertwined. A crisis can impact private wealth planning, for example due to non-payment of dividends or because you have to pay yourself a lower salary.
Securing your liquidity through liquidity planning
Nine out of ten insolvencies are caused by liquidity shortfalls. Careful budget and liquidity planning is therefore absolutely central to the survival of your company. Draw up plans in advance for accessing cash more quickly in a liquidity bottleneck. For example, you could
- issue invoices sooner
- shorten payment deadlines
- fully utilize your credit limits
Managing customer receivables via factoring can also help here. In the short term, you can also optimize your liquidity planning as follows:
- negotiate longer payment deadlines with your suppliers
- streamline production processes
- postpone new acquisitions and renovations
Examine your options for obtaining new money (for example via sales and loans or credits) or – in the absence of any other options – reduce your labor costs through shorter working hours, restructurings or redundancies.
Keep a constant eye on key figures
Even in successful times, make it a key priority to be aware of your financial planning, budgets, liquidity and investments at all times, for example using the UBS Liquidity Cockpit in E-Banking. Because being unaware of your own financial circumstances puts the continued existence of your company at risk, especially in times of crisis.
If your liquidity planning is adapted to the new circumstances, you should review your planned investments and adapt them to the new circumstances too. Whether, how much and in what you can invest, of course depends greatly on your available liquid funds.
Achieve stability through monitoring and planning
Crisis management is also about stabilizing your company. Introduce monitoring so that you can follow developments in the market, in the industry, or, if necessary, around the world. Develop different scenarios and infer the necessary measures from them. Depending on the cause of the crisis, you’ll need to take measures to prevent or mitigate a second crisis caused by the same issue.
In times when the economy as a whole is under major strain (e.g., in global financial crises, recessions or the Coronavirus crisis), it’s very important that you protect your company against criminal attacks, especially cybercrime.
Remember: a crisis can also be an opportunity
Don’t just work to stabilize your company – learn too how to take advantage of the opportunities presented by a crisis. The changes you make will allow your company to emerge stronger. You can be better prepared for future crises which may also give rise to innovations.