Everyone makes mistakes. Sometimes big mistakes.
And sometimes disaster happens.
What you do next can make the difference between surviving and thriving - or losing your business and perhaps your life's savings.
Business was growing nicely for Clarke and Nancy Gourlay's Little Qualicum Cheeseworks when disaster struck their Vancouver Island business in 2002.
A year after they began production, their cheeses were being sold through a local supermarket chain, in specialty shops, at farmers' markets and in restaurants on the island and in Vancouver, Richmond and Whistler.
Then a dozen people became ill after contracting a bacterial infection from eating one of their products.
The Canadian Food Inspection Agency issued a health-hazard alert and all their products were recalled.
"It could have killed our business," says Clarke. "It very nearly did."
An investigation was launched - but even before a cause was determined, Clarke and Nancy were busy mending fences.
"At no point did we ever try to hide," he says.
He and Nancy talked to their customers and took back product. They put up displays in farmers' markets where the product had been sold and reached a wider audience.
"We thought it was important to keep interacting with people."
They even undertook "some challenging visits" with customers after they had been released from hospital.
They did just right, says Jim Hoggan of James Hoggan and Associates, whose offices in Vancouver and Calgary advise clients - including oil companies, funeral homes, pharmaceutical companies and restaurants - on how to manage crisis.
"I tell clients first to do the right thing," says Hoggan. "And secondly, to be seen to do the right thing."
His advice is to "think more like a person, rather than a business person," when disaster occurs.
That advice helped Capers Community Markets in Vancouver recover following notification that a former employee who had handled food had tested positive for Hepatitis A, a communicable virus that can cause liver disease.
The company immediately identified 11 products and a couple of dozen perishable products that may have come into contact with the infected employee. Those products were pulled from the shelves.
Then it advised its 350 employees and thousands of customers who may have bought or handled the food products to get a vaccination. It took out ads that listed clinic hours and locations. It also set up a toll-free hotline.
Within a week, 6,000 people had been vaccinated.
"We took out ads in the Vancouver Sun apologizing - not because they'd done something wrong with the way they handled food, but to customers for the pain and inconvenience."
Hoggan and Associates received a Silver Anvil award from the Public Relations Society of America for its work with Capers.
In both instances, the businesses acted accountably for what happened - the Gourlays before they even knew what had happened, Capers even though they didn't know if any of their food products had in fact been contaminated.
When businesses take ownership of a mistake, "generally people will forgive you," says Shirley Lichti, a partner in Marketing Magic in Waterloo, Ont., who also teaches in the school of business and economics at Wilfrid Laurier University.
The message "is pretty simple. Just be honest."
Lichti contrasts Johnson and Johnson, which recovered market share following deaths of customers who'd used tampered, tainted product, to Source Perrier, which never recovered after some bottles of the product were found to have a higher than acceptable level of a contaminant, even though there were no reports of death or injury.
Listen to the experts: Tell people what you know, and what you're doing to fix it.
And what you're going to do to make sure it never happens again.
Little Qualicum Cheeseworks' website talks factually about the disaster and what was done - improving the water treatment system in the plant and developing a new uncontaminated source of water.
While the business was operating according to regulations, and the water treatment plant - and the cheese - had passed government inspection, "people still got sick. We certainly apologized," says Clarke Gourlay.
As well, they did a "comprehensive risk analysis of all other aspects of the cheese-making process" and developed a plan for minimizing risk at critical points in the manufacturing process.
They test their cheeses in their own lab and at an out-side, government-approved lab, "both for our customers' and our own peace of mind."
Within five months, they were making cheese again.
"I'm sure there are people still out there who won't buy our cheese" as a result of the incident, says Gourlay. But with goodwill, most customers came back.
"The majority of people were willing to give us a second chance," says Gourlay. "We got back into the grocery store" (the local Quality Foods chain).
And the business has grown five-fold since then, with annual sales now at about $700,000.
The Gourlays are grateful no one became seriously ill. They thanked those responsible for helping them get through those months financially and they thanked their customers for their loyalty.
A smart company, says Hoggan, sees such a crisis as a customer relations problem, not a legal problem. "If you circle the wagons, you're done for."
Capers' openness in dealing with the media and understanding of what their customers were thinking also paid off.
"Their sales were back up to normal within a year and the company resumed growth," says Hoggan.
Although companies the size of Capers often have crisis management plans and can afford to hire outside advice when disaster strikes, small companies can also handle difficult times well.
"Always have a crisis plan," says Lichti. "Think about the worst possible thing that can happen to your company, then ask yourself what you would do if it happened."
Here are some ways a small business can prepare itself to survive a big crisis.
* Practise crisis control. Imagine the worst thing that could happen in your business and decide how you'd handle it. Who would talk to the press? Who'd contact customers?
* Be accountable. Even if it's not your fault, you're the one who has to clean up the mess and rebuild customer confidence. Don't be afraid to apologize. Take a cue from funerals, where people often say, "I'm sorry for your loss.”
They aren't saying they caused the death, but are recognizing the hurt it has caused. You can do the same.
* Explain what you're doing to fix the problem. If your customer has had a loss because of the crisis, how are you going to make it up to them? If the problem was more a hassle than a hurt, consider giving the customer some token - a gift certificate, flowers, a card. Judge what's appropriate.
* Explain what you're doing to ensure it doesn't happen again.
* Seek closure. If this was a personal relationship, you would ask forgiveness, but that might seem sappy in a business relationship. Substitute, "Are we ok? Are we back to square one? Are we on the same footing as before this happened?" This should close the books on the incident. You don't have to keep apologizing.
From here, you can go on to build your business - and if you've done it right, your relationship with the affected customers.
See Related Story: Crisis management key to a company's survival.
(Sharon Adams can be reached at sharon@businessedge.ca)
