What do these things have in common: a 60 Minutes reporter, product defects, a 100-year flood? They’re all crises that could put your organization in peril, unless you’re prepared. But the sad fact is, analysts say that less than 10 percent of small and midsized companies have a crisis management plan in place to ensure their survival and stability. Worse yet, 40 percent of organizations that experience a disaster will go out of business within five years of the event.

The time to prepare for a crisis is before it happens. Yet many executives believe that preparing for disaster is too expensive or too time-consuming, especially when weighed against the chances that a worst-case scenario might actually occur. In reality, many steps for crisis management cost little or nothing, and when one considers the cost of having no plan in place--closing the doors for good--a sound crisis plan is well worth an investment.

A blueprint for survival

Crisis management plans are well-thought-out strategies that outline how your company will handle various emergencies that might negatively impact your organization’s reputation, viability, operations, or affect the safety of your employees. It’s a prudent exploration into conceivable and unthinkable crises, from financial catastrophes to natural disasters. The exercise allows you to develop guidelines to manage and overcome the events, and to sustain your business.

Creating a list of what could go wrong is a starting point. Likely 80 percent of your list will include obvious scenarios based on your particular business vulnerabilities. For instance, financial institutions and retailers should develop crisis planning that includes the possibility of robbery, while manufacturers should have plans in place for product defects or tampering.

And while most companies have an evacuation plan that addresses how to keep people safe in the event of a tornado, earthquake, or fire, many stop short of creating a plan for keeping their businesses operating following such a crisis. It’s important to establish a crisis-management team consisting of managers and members with expertise in all areas of your operations. Their charge is to develop plans for dealing with the aftermath of a crisis, that is, sustaining operations and bringing business back to normal as quickly as possible.

Preparedness points for keeping the doors open

One of the first charges for your crisis-management team is to capture your organization’s operating procedures on paper. Having clear instructions regarding responsibilities and establishing backup personnel trained to perform them is critical. Smaller companies with fewer resources and people should cross-train their staff on procedures in case they’re required to assume the duties of designated individuals who cannot.

Among other things, your team’s plan should address rerouting phone calls, determining temporary relocation facilities, and ensuring protection for your organization’s crucial data. With plans in place, it’s imperative that they be acted on quickly--the first 24-48 hours in a crisis are the most critical.

Communication is essential

While the nature of a crisis can vary, all the experts agree on one essential component of every crisis management plan: quick and constant communication--to employees, to the media, to customers.

Be sure your plan includes an updated and easily accessible list of all employees and their contact information and establish a calling tree. Or consider the possibility of creating a toll-free crisis hotline whereby employees can call in for information.

Centralized communications is key to successfully dealing with the media. Identify which employees will be allowed to handle media inquiries and be sure they are trained for the task. Remember, telling the truth is vital, and many public relations experts maintain that taking the offensive by reporting potentially negative news before an information leak occurs will help support your company’s credibility.

Finally, keep your customers and suppliers informed. Some companies are prepared to quickly send letters, place ads in local newspapers, and even call their biggest customers regularly during a crisis to keep them informed.

Update and rehearse your plan

Plans are worthless if they aren’t updated, and constant reevaluation is critical. For instance, many organizations with good plans in place quickly revised them following the unimaginable events of 9/11. As a result, many plans now address possible crises such as bio-terrorism.

Practicing your plan will help your organization better handle the real thing should it occur. Rehearsal ensures familiarity, therefore when there’s little time to think in the midst of a crisis, routine will take over.