Crisis Management for Small Businesses: What to Know

Published on Tuesday 5 August 2025

Table of contents

• What is crisis management?
• Why crisis management matters for your small business
• Key parts of a crisis management plan
• Tools and technologies you need for crisis management
• Manage your messaging during a crisis
• Building a crisis-resilient business
• FAQs on crisis management
• Stay prepared with Xero

Key takeaways

• Crisis management is the way your business responds to emergencies within and external to your business.
• Crisis management plans should include risk assessment, disaster response, crisis recovery plans, and strategies to manage your business’s reputation.
• Cybersecurity tools, backup storage for your data, media intelligence monitoring tools, and incident management software will help you manage and respond to crises
• Have an internal and external messaging strategy so you know how you’ll communicate with both your staff and your external stakeholders, and what you’ll do to preserve your business’s reputation.

What is crisis management?

Crisis management is the process an organization carries out to prepare for, respond to, and recover from events that threaten their stability or survival. In your business, it’s important to prepare for and respond to crises. These can be natural disasters, cyberattacks, public relations problems, staffing shortages, or a sudden drop in sales — all common types of crises small businesses face.

What is a crisis management plan?

A crisis management plan protects your business by being as forward thinking and detailed as possible. It should find possible threats, explain your responses to them, and show how you will reduce their negative effects on your business and show how you will reduce their negative effects on your business during a crisis situation.

Why crisis management matters for your small business

Small businesses on tight budgets are more vulnerable to major setbacks than larger ones – so small businesses need to notice potential risks and plan for them for their own security.

So if you want long-term success and stability for your business, start planning for crises that could affect you and prepare for them – with a crisis management plan.

Key parts of a crisis management plan

Design your crisis management plan so it’s forward-thinking and flexible enough for your team to respond to different situations.

Incorporate these five key elements into your plan.

Risk assessment

Think about the different types of emergencies your business could face. Rank these risks in order of their potential impact and the chance each emergency will actually take place — especially those that could lead to major operational disruption. Then focus on risk mitigation by creating response plans for the most serious threats first — an essential step in overall crisis mitigation.

Business continuity planning

How will you keep operating during and after the disaster? Use contingency planning and business continuity plans to outline how your business will stay up and running — and if that’s not possible, how you’ll manage the disruption. Consider how you'll deal with the financial fallout of a crisis: the reduced revenue, increased emergency expenses, and strained resources, and how these disruptions might affect your bottom line.

Team roles and emergency contacts

Who do you call when the unthinkable happens? How do you want each team member to respond? Carefully map out your response to different types of crisis, including the part each staff member will play. Remember to update this as you change employee roles or hire team members. Include project managers or key coordinators who will take charge during specific emergencies.

A crisis communications plan

After alerting your internal team, what will you say to your customers, shareholders, and the media, and how will you communicate it?

Determine who gets alerted, which means they use, and who they call next. It’s a good idea to draft sample responses for certain scenarios – for example:

• What will you tell the media if you lose client data in a cyberattack?
• How will you reach out to family members if an employee has a serious accident at work?

Your communications plan also supports your reputation management during a crisis. If you communicate clearly in an emergency, you stand a good chance of preserving your business’s brand.

Reviews and drills

Look over your plans regularly. Do they address current risks? Do they use the best tools or practices to respond to emergencies? If not, update your plans based on new threats, new tools, or improved knowledge.

And don’t forget to practice! Run drills, collate your responses to learn valuable lessons and implement continuous improvement in your plans.

Tools and technologies you need for crisis management

The right tools are critical whether you're addressing risk management in a small business or drafting a full-on corporate crisis response. Consider investing in tools that help you monitor risks, communicate during disasters, and track incident responses so you can improve for next time.

Here are some tools to think about.

Cybersecurity tools

Protect your data and network from cyberthreats, and get alerts if someone hacks into your network or compromises your data.

Cloud or back-up storage

Back up your data to preserve business continuity in the event of a cyber attack, data breach, or damage to physical storage systems. Set up regular automatic backups to minimize the amount of data you're at risk of losing.

Social media monitoring apps or media intelligence tools

These tools help you follow online conversations for mentions of your brand, so you can notify your team if your reputation is at risk, and be ready to respond to negative press, social posts, reviews or complaints quickly.

Incident management software

Critical incident management becomes easier with the right tools in place. Dedicated software helps you detect emerging crises and respond quickly, with features that support team collaboration, real-time incident tracking, internal (and sometimes external) reporting, and compliance management.

Train your teams on how to use these tools before disaster strikes. That way, you're not trying to manage a crisis and learn a new tool at the same time. This supports your overall incident management process, making responses smoother and more efficient.

Apps for team coordination and communication

Help your team manage a crisis with productivity apps that offer centralized communication, file sharing, task management, and real-time updates. Clear task management is especially important during a crisis, helping everyone stay aligned and focused on what needs to happen next. Consider mapping out your crisis plans using the tools your team already relies on.

You can explore apps that integrate with your workflows through the Xero App Store, which features tools to support team coordination and productivity.

Managing your messaging during a crisis

The way you communicate in a crisis is closely tied to how effectively you manage it. A strong crisis communication strategy also shapes how your business is perceived by outsiders, directly influencing your brand reputation. This helps prevent reputational damage that could have long-term effects on your business. That’s why your internal and external communication plans need to be clear, consistent, and well thought out.

Your internal communication plan should:

• Identify your crisis leadership and response team
• Outline who gets notified and how
• List each team member's responsibilities in a crisis
• Explain how your team communicates with each other and which tools they should use
• Outline how you’ll protect customers and stakeholders from future incidents

Make sure everyone on your team knows how you’ll plan to communicate with outside stakeholders – your customers, vendors, shareholders, the media, and others. Think carefully about how your communication strategy affects your reputation. Focus on preserving trust and maintaining strong relationships by contacting stakeholders individually (rather than collectively).

Park University has more tips on how to communicate during a crisis.

Building a crisis-resilient business

Think of risk management as a mindset your team brings to work — something that’s woven into your everyday operations. Embedding risk management into your regular business processes helps your team act quickly and confidently when crises arise. It’s not about being paranoid; it’s about staying prepared. You create this positive outlook by cultivating a culture of preparedness, where risks are understood, discussed, and planned for.

When your business is ready to deal with a crisis, you’ll be more confident and in control. And your customers and stakeholders will feel reassured, knowing they can trust and rely on you — even when things don’t go to plan. That confidence – across your team, customers, and partners – is the foundation of strong business resilience.

Stay prepared with Xero

Xero has the tools to help you know where your business stands financially – great information for building your crisis management strategies and business continuity planning. Xero helps you save for emergencies, manage your cash flow when responding to a disaster, and know how much a crisis might cost your business.

Try Xero for free today.

FAQs on crisis management

Here are some FAQs on how to manage a potential crisis at your organization.

How can I prepare my small businesses for a crisis with limited resources?

If your resources are stretched, it’s best to focus on your strengths: your flexibility, local networks, and loyal employees. Assess your risks to figure out which crises are most likely to happen — then rank them by how seriously they’d impact your business. Then make sure you have the right insurance policies in place, and create incident response plans that set out your communication plans, who will do what if disaster strikes, and how you’ll deal with reputation management in a crisis. Also think ahead to crisis recovery — how you’ll get operations back on track, support your team, and rebuild customer trust once the immediate threat has passed.

How often should I update my crisis management plan?

Keep your plan current so it’s ready for the most relevant crises using the best tools, processes, and practices. Review your plans at least once a year or whenever there's a major change to your business, like – new staff, a move into a new space, or if you roll out new services. And look again at your plans after a crisis strikes to understand what worked and what didn't, and modify your plan accordingly.

What is the first thing I should do in a crisis?

The first thing to do in a crisis is stay calm, and stick to the plan you’ve set up. Always put safety first – make sure your staff and customers are physically safe. Then follow the rest of the plan, which should include notifying team members, documenting the event, and communicating with customers and the media if necessary. Even if everything feels chaotic, take a breath and follow the steps you’ve prepared – it’ll make a huge difference.