5 Steps to Respond to a Startup Crisis

Crises like these are individually preventable -- you could have foreseen them and worked to avoid them -- but you can't predict everything, and sooner or later a crisis will pop up to test your recovery skills and put your business on the line.
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In startups, crises are common, but how you respond to them can make all the difference.

No matter how optimistic you are, how good your ideas are, how skilled your team is, or how careful you are in the process, some things are bound to go wrong in your beloved startup. You might miss a crucial launch date, or accidentally push a massive bug to your software. You might realize a horrible defect in your product just after a new shipment goes out, or make a relationship-compromising mistake with one of your best clients.

Crises like these are individually preventable -- you could have foreseen them and worked to avoid them -- but you can't predict everything, and sooner or later a crisis will pop up to test your recovery skills and put your business on the line.

Whenever a crisis emerges, your first job is to respond properly. Not only will you have an early opportunity to begin recovering any damage, you'll also set a tone for your team to respond. Here's how to do so efficiently, and without any further damage:

1. Remain calm. This is arguably the most important step of the process. Your team is looking to you as an example, so remain calm to set a calm tone. Calmer people think more logically, more thoroughly, and are less prone to panic.

2. Communicate. Open your lines of communication, and be as detailed as possible. Get your team up to speed. Let your clients know what's going on. Start addressing the situation across the board, early and often.

3. Prevent any further damage. Some crises have lingering effects, so squash them as soon as possible. For example, if there's a flaw in your production run, try to stop it before any more products are made or shipped.

4. Start repairing the damage done. Some of the damage will have already been done, no matter how fast you are to act. Divvy up repair responsibilities -- whether that's smoothing things over with a client or making a public apology -- and get to work. All other priorities are secondary.

5. Learn from the experience. Lastly, take a look at what could have been done in advance to prevent this mistake from happening. Is there a process change, new rule, or new consideration that needs to be adopted?

If you apply these five steps, you'll prevent any further damage, keep your team in line, and begin the recovery process with a new outlook. You'll definitely make more mistakes and get thrown into more crises, but at least this one won't be repeated.

This blogger graduated from Goldman Sachs' 10,000 Small Businesses program. Goldman Sachs is a partner of the What Is Working: Small Businesses section.

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