4 Tools for Better Managing Business Crisis
Each company goes through a series of inevitable internal crises in its development. Therefore, anti-crisis management is needed to help the company avoid trouble with minimal losses. This article will analyze the most widespread tools for better managing business crises.
What is crisis management?
Anti-crisis management is a set of actions, methods, and tools aimed at preventing the negative consequences of a crisis or overcoming it. Anti-crisis management includes an assessment of the current position of the organization and the development and implementation of measures to stabilize the market position.
A crisis is the exhaustion of one or more resources or methods of work. It is a natural process in life and business. Every entrepreneur lives in a permanent personal crisis because he operates in a situation of uncertainty. He is forced to constantly look for answers to questions about how his company can earn enough to cover costs and make a profit, how to ensure the well-being of himself, his family, and his team of employees, how to stay afloat in difficult times caused by socio-political cataclysms.
The purpose of crisis management skills is to balance resources, help the company stay on the market, produce goods and services, and satisfy customer requests in any difficult situation. Anti-crisis management is required not only when the crisis has already happened but even before the first signs of its manifestation. In practice, company executives often try to ignore the crisis, skip the first warning signs, and believe that “everything will pass by itself.”
Basic tools to manage business crisis
A crisis at a particular enterprise requires an individual approach to its solution. However, there are traditional methods and tools of anti-crisis management based on which enterprises develop their anti-crisis strategy to deal with emerging problems. So, there are 4 basic tools for better managing business crisis:
1. Monitoring
It is a continuous observation of economic objects and analysis of their activities as an integral part of management. Continuous monitoring is carried out to detect early symptoms of a financial crisis. The analysis determines the degree of deviations, their causes, as well as the possible impact of such deviations on the results of financial and economic activities. Based on the monitoring results, a preliminary diagnosis of the nature of the development of the enterprise and its financial condition is carried out.
2. Controlling
The specificity of controlling is especially seen in the grouping and accounting of costs associated with the release and sale of products. It is based on a grouping system of expenses based on their relationship with the volume of production and sales of works and services, the amount of time worked, and other indicators that characterize the degree of use of the enterprise’s capabilities.
3. The marketing strategy
It serves as the engine of all other components of the strategic business management plan. Therefore, it should be aimed at maintaining and developing sales, improving production following customer requests, and developing new markets.
4. The financial strategy
Developing a financial strategy is aimed at building an effective financial management system. Reforming the enterprise, in this case, should solve such problems as profit optimization, growth in the value of net assets, optimization of the capital structure, and the formation of investment attractiveness.
In addition, the investment policy’s main strategy within the anti-crisis management framework is to achieve the maximum return on invested funds in a relatively short period while minimizing maintenance costs. The main goal of the investment policy of a crisis enterprise is to ensure conditions under which financial difficulties cannot be permanent.