“First thing we do, let’s kill all the lawyers.” Shakespeare, Henry VI


My colleague ended up with a huge problem. The owner of a very popular local pub around for decades,  she never once ran into any major problems. For the most part, her employees were happy, and her customers were happy.


One day, a server dropped a tray and spilled a few drinks. No big deal – this is commonplace in the restaurant business. However, here’s where the story goes south: In the very small window between the spill and going to fetch the wet floor sign in the back, a customer slipped and fell. This is every restaurant owner’s worst nightmare.67504037_s.jpg


To complicate matters, her insurance company refused coverage, so when the customer proceeded to sue, my colleague suddenly faced a two-front war: A battle with her own insurance company and a lawsuit from a disgruntled customer. The legal fees she was facing were potentially enormous. My colleague was terrified.


She spent sleepless nights obsessively thinking about the problem. The legal fees were piling up. Social media was killing her. The stress was, too. In the end, although she had legitimate legal claims to rely on (the insurance company should have paid, the customer likely was at fault), she settled both claims, but not before almost going under.


It took two years, but eventually the business clawed its way back.


The fact is, every business eventually encounters big problems, sometimes catastrophic ones. It could be the big contract that got cancelled or a hurricane that severely damages the store.


What do you do? Here’s what:


1. Assessment: Even though it’s easy to panic, you can’t. The first thing when faced with a catastrophe is to properly assess the situation. Think rationally. What has happened? What is at stake? What needs to happen in the short term, and what needs to happen in the long term? What can you control and not control from this point forward? Make lists. Do your research.


Usually, insurance must be assessed immediately. Even if you don’t realize it, there’s certainly a chance that you are covered. Speak with your agent and your attorney. There are lots of stipulations and fine print when it comes to insurance.


2. Fix the immediate problem: There won’t always be a clear-cut solution like my colleague’s, and even in her case, it was not clear cut. But whatever the case, immediate issues must of course be addressed first.


3. Think long-term: This could mean finding experts or going through the correct bureaucratic processes. After a catastrophe, you will very likely need help. This likely means leaning more heavily on your staff. It can also mean asking your customers to give your business some extra love. People want to help, and you should let them.


4. Learn your lesson: Bad things happen. Sometimes the best you can do, like our restaurant owner, is to cut your losses, learn your lesson, and move on. Other times, it means gutting it out. Either way, surviving a catastrophe is typically a two-step process:


  • Initially, the big problem must be overcome.
  • Then, once things settle down, you need to make sure it doesn’t happen again.


If you lost that huge contract, that means diversifying your client base so you are not dependent on one customer going forward. If you were flooded, it might mean relocating.


While you can’t prevent bad things from happening, at least learning your lesson and making necessary changes reduces the likelihood that a particular problem will happen again.



Read next:    

The Types of Insurance Your Small Business Really Needs

Q & A : Fighting is Expensive. What to do if You Are Sued



About Steve Strauss


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Steven D. Strauss is one of the world's leading experts on small business and is a lawyer, writer, and speaker. The senior small business columnist for USA Today, his Ask an Expert column is one of the most highly-syndicated business columns in the country. He is the best-selling author of 17 books, including his latest, The Small Business Bible, now out in a completely updated third edition. You can also listen to his weekly podcast, Small Business SuccessSteven D. Strauss.


Web: www.theselfemployed.com or Twitter: @SteveStrauss

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