Written by Katia Ponnampalam • Published 17th November 2015 • 5 minute read
If you asked someone to list the names of companies hit by crises in 2015, you wouldn’t need to be a mind-reader to predict the answers.
Volkswagen, Thomas Cook and Alton Towers are all corporate entities that have dealt with major consumer and media issues in the past 12 months.
Each are at different stages of handling those situations, which although may be different in terms of geographical reach and impact, do have certain similarities.
Yet crises are not exclusive problems to large corporations. They can – and do – hit Small and Medium Enterprises as well.
A quick look at the statistics shows us the possibilities.
According to the Federation of Small Businesses, at the start of 2015 there were an estimated 5.4 million businesses in the UK employing 25.9 million people and with a combined turnover of more than £3,700 billion, the majority of which are SMEs.
SMEs collectively interact with millions of people and, like bigger corporate cousins, rely on trust with those individuals.
External pressures, supply chains breaking down, human nature and other factors means that crises can–hit SMEs too.
The Guardian wrote recently an article, in which PHA was quoted, that small and medium-size businesses may not face the kind of firestorm as a VW, but they can certainly be thrust into the unwanted spotlight. This is certainly true. At PHA, we often advise SMEs on crisis situations. Very often they are situations which can be planned for, but simply haven’t been.
Here is a quick guide to where SME crises can spring from:
In most industries there are official regulators who observe and govern how businesses in certain sectors operate and oversee which rules they need to observe.
If the regulatory gaze falls on your company for whatever reason, it can very often result in media attention.
This can certainly be the case if the regulator has felt compelled to issue a press release announcing its investigation or action around it.
Often they can be acting on false information, but they may not reach that conclusion until they reach the end of their probe.
For an SME that has found itself under the spotlight, by this stage it can be too late, particularly if its name has already been publicised.
At PHA we have advised on many such situations, particularly where a regulator is under pressure to show public results in this age of increased scrutiny. One recent situation saw a company wrongly identified by the media as a result of a press release issued by a regulator.
It is very important to have a crisis plan in place to deal with possible regulatory situations.
Regulator’s crackdown on claims managers cold-calling and taking up-front fees. https://bit.ly/caxsgL
— Legal Futures (@legalfutures) August 27, 2010
Larger business partners
SMEs don’t always deal with other SMEs or small customer bases. Very often, particularly if they are specialists in their field and highly innovative, they can be trusted suppliers to larger companies.
That can increase exposure and the possibility of facing problems which can then lead to media exposure.
A crisis in this respect can come in many guises.
One example is a fall-out between the SME and the larger company. One live example of this is a UK family-run company which is currently taking a larger US company to court over a contact and IP dispute. The company was a supplier to the firm and now finds it an opponent.
Another situation could well be a “blame game” scenario where the larger company, facing media scrutiny over something which has gone wrong, points the finger at companies along its supply chain.
Again, these types of crisis require careful media handling as well as stake-holder communication and liaison.
— Involve Recruitment (@InvolveRecruit) June 26, 2014
Trade, local and regional press
For many SMEs, the customer base is local and regional.
Therefore, should something go wrong, there is the possibility of a situation – if it is newsworthy – being flagged up to the local or regional newspaper.
Should this happen, a media response plan is needed.
One important thing to bear in mind is that some, although not all, local and regional stories make it into the national press, should the detail merit it.
SMEs should also not dismiss the power of the trade press. In the UK, there is a plethora of trade media. Some are incredibly strong titles with a large audience reach.
Our advice around the trade press is to treat it very seriously and to act quickly to issue a response. Your customers may not always read these titles but your peers and staff may well do. Word can spread very quickly through trade, which can often have far reaching effects on your company’s reputation.
— TechCrunch (@TechCrunch) August 20, 2015
The modern world means that while you may have less than 250 employees, your business may have a large reach.
Data, telecoms and tech companies would fall into this category.
Modern technology means SMEs can have huge reach without having many – or even one – physical HQ.
It also needs to be aware it is open to a newer form of crisis management – that of data breach handling.
If you have a business that is in possession of customers’ personal data and that is held electronically, then forming a crisis plan around what to do should that be compromised is of huge importance.
Being slow to react in those situations is not an option. You may be an SME but you may be operating in an industry which suddenly catches the eye of the media.
This could be for various reasons – there may be a celebrity angle, there may be a situation in which something has gone wrong in the wider sector.
Again, this can be hard to predict but having an adaptable crisis plan in place would be advisable.
The Top 100 Brands for Millennials https://t.co/2YxA9WAxf5 <- the secret? Reach with social media = not one financial firm on the list
— Chris Skinner (@Chris_Skinner) November 17, 2015