CHECKLIST · Crisis management

Crisis consulting: a checklist for leaders

Nikita Nechaev

A crisis almost always warns you in advance

A crisis almost always shows its hand early — weeks, sometimes months before the acute phase. The signals are just quiet, and easy to miss in the daily rush. Those who watch their numbers closely have time to react before things get truly hot. This checklist will help you spot the warning signs and understand what to do next.

Part 1: Signs of a crisis — what should put you on alert

1. Deteriorating financial performance

Revenue falls for two or three months in a row (especially if it isn't seasonal). Margins compress for no obvious reason. Cash flow is erratic and you're not sure you can make payroll on time. Debt to suppliers or lenders is growing. The bank starts making your credit line harder to work with. Customer receivables aren't shrinking despite your efforts.

2. Trouble with key customers or suppliers

A major customer worth 30% of revenue tells you they're moving to a competitor. A supplier you depend on says they'll only work on prepayment. You're losing customers faster than you win them. A large partner exits a project or cuts back their order.

3. Trouble with the team

Your best people are leaving. A wave of resignations begins, or talk of leaving spreads. Turnover has spiked sharply (it was 10% a year, now it's 30%). People on the team see the problems before management does, and they leave if it looks like the ship is sinking. Morale has dropped and people are unhappy.

4. Operational trouble

Product or service quality is slipping and complaints are appearing. Order lead times are growing. The unit cost of production is rising. Equipment breaks down often. Processes are falling apart: there are no clear procedures, and everyone does things their own way.

5. Market trouble

A competitor has launched a dangerous product. The market is consolidating and life is getting harder for smaller players. Legislation has changed and your business has fallen under new restrictions. The technology your model is built on is becoming obsolete. Demand for your product is falling.

6. Leadership trouble

The founder has fallen ill or has family issues and has become distracted from the company. Conflicts have emerged between the owners. A key executive is leaving. Leadership can't agree on strategy.

7. Legal and reputational trouble

The company has received a fine or a lawsuit. A negative article about the company has appeared in the press. A regulator has opened an inquiry. Partners are starting to raise complaints.

Part 2: Phases of a crisis — how to respond at each stage

Phase 1: Warning signals (weeks / months before the acute phase)

What to do:

1. Bring leadership together: the founder, the CFO, and your key operations people, for an urgent meeting. Discuss which crisis signals you're seeing. Agree that there is a problem.

2. Run a fast diagnostic. In 1–2 weeks, gather the data: financial metrics for the last 6 months, information on key customers and suppliers, information on turnover, information on the competition.

3. Pin down exactly what threatens the company. Is it a temporary problem (the loss of one customer) or a systemic one (demand falling across the whole category)? Is it a company problem or a market problem?

4. Build a stabilization plan for 1–3 months. Define the critical actions that need to happen immediately. Who owns each action? Deadlines?

5. Start talking to key stakeholders (major customers, suppliers, the bank). Be honest, but don't panic. "We see the challenges and we're working to address them."

Phase 2: Acute crisis (a week or two after a critical problem appears)

Characteristics: The company is losing money fast. Payroll may be delayed. A major customer has walked away. A creditor is demanding payment. A key employee is leaving.

What to do:

1. Switch to war-room mode. Convene leadership every day for a brief sync (15 minutes). What happened yesterday? What are the critical tasks for today?

2. Take stock of your cash. How much is in the bank? How many days will it cover operating expenses? When does the next money come in from customers? You need to know this down to the day.

3. Decide what's critical in the company and what isn't. Which costs can be cut immediately? Can purchases be postponed? Maybe marketing spend needs to come down? Decide who stays and who you can do without for now.

4. Start actively hunting for sources of cash. Is there a customer you can ask for prepayment? Is there a way to take out a loan? Maybe you need to bring in an investor? Are there assets you can sell?

5. Put all your attention on saving vital customers. If the company is losing a customer who provides 20% of revenue, that's critical. Meet that customer in person. Find what you can do to keep them.

6. Communicate with the team honestly. People already see the problems. If you hide the situation, they'll start looking for a new job. Better to be honest: "We're in a tough patch. Here's what we're doing to survive. Here's what may change. I want you to stay with us. Here's what I can guarantee you (for example, that we pay salaries on time)."

7. Bring in consultants if you need a fast diagnostic and a plan. An experienced consultant can run an analysis in 1–2 weeks and give you recommendations that help you survive the crisis. That gives you confidence you're taking the right steps.

Phase 3: Recovery (months after the acute phase)

Characteristics: The company has stabilized (there's enough cash for the month ahead, the core customers have stayed). Now the task is to recover.

What to do:

1. Build a full recovery plan for 6–12 months. It shouldn't just be "get back to normal," but "learn from this crisis and come out stronger."

2. Rebuild the team and morale. People have been under stress. Some have left. You need to rebuild trust. Launch a new project or direction that shows the company is moving forward.

3. Develop a new strategy. If a crisis happened, it means the old model was vulnerable. What needs to change so it doesn't happen again? Maybe you need to diversify your customers (so you don't depend on one)? Maybe you need to cut fixed costs? Maybe you need a new sales model?

4. Strengthen financial and operational resilience. Build up a cash reserve. Set up backup suppliers and partners (don't depend on one). Improve processes so they're more stable.

5. Think through how you'll respond to future crises faster. Which metrics will you track? What plan will you have ready if demand drops by 20%, 30%, 50%?

Part 3: A detailed action checklist for the acute phase of a crisis

Days 1–3 (as soon as you realize how critical it is):

[] Bring leadership together and agree that this is a crisis

[] Take stock of cash and cash flows for the next 3–6 months

[] Establish how much cash is on hand and how many days it will last

[] Decide which costs can be cut immediately

[] Start daily leadership syncs (15 minutes at 9 a.m.)

[] Prepare a message for the team (for tomorrow / the day after)

[] Think about which consultant could help quickly (if you don't know one — ask friends in business)

Days 4–7:

[] Communicate with the team (meeting at 10 a.m.; speak honestly, but don't panic)

[] Start meetings with key customers and suppliers

[] Identify sources of cash: loan, investor, prepayment, asset sale

[] Start negotiations with the bank (if you need to extend the credit line)

[] Find and bring in a consultant (if the previous days showed it's needed)

[] Build a 30-day stabilization plan

Days 8–30:

[] Execute the stabilization plan every day

[] Track cash every day

[] Meet leadership weekly (instead of daily syncs)

[] Protect key customers (meet in person, show that you're in control of the situation)

[] Start looking for new revenue opportunities

[] Work with the consultant on the long-term plan

Part 4: When to bring in consultants

Bring in consultants during an acute crisis if:

1. You and your leadership have lost your bearings. The crisis is so new that you don't know what to do. A consultant gives you a plan and confidence.

2. You have no time for a diagnostic. A consultant can run an analysis quickly (in a week or two) and give you recommendations.

3. You need a neutral perspective. When you're in a panic, there can be blind spots. A consultant sees what you don't.

4. The crisis demands specialized experience. For example, it involves M&A, bankruptcy, or negotiations with a regulator. A consultant who has done this is invaluable.

Don't bring in consultants:

1. If you simply need money. A consultant won't solve the problem if the company is just short on cash. That money has to be found from investors or lenders.

2. If the problem is one person. For example, the founder has lost control and the team is falling apart. A consultant won't help here (you need a change of leadership).

3. If you have no resources to implement. A consultant will give you a plan, but if you then can't put anything into action, it's a waste of money.

Examples of crises and responses

Example 1: Loss of a major customer

An IT services company. One customer provided 40% of revenue. The customer suddenly announced they were moving to a competitor (looking to save money). Within a month income fell 40%, and the risk of cutting the team emerged.

Response: (1) An attempt to keep the customer: the founder met with them and offered a 10% price cut. It didn't work. (2) An urgent search for new customers: sales were ramped up, and within two months three new mid-sized customers were found to replace the loss. (3) A search for additional cash: a one-month short-term loan was taken until the new customers started paying. (4) Cost rationalization: non-critical hires and development were postponed for a quarter.

Example 2: A sharp drop in demand (for example, due to the economy)

A furniture company. Over two months demand fell 50% (buyers were cutting back). There were 50 employees; suddenly only 25 were needed.

Response: (1) An honest conversation with the team: everyone was gathered together, the situation was explained, and two options were offered: either a 20% pay cut for everyone, or 25 people leaving. People chose the pay cut. (2) A rethink of processes: production switched to made-to-order (rather than to stock). (3) Expansion into new channels was put on hold (there were plans; they were postponed). (4) An active push to find B2B customers (public-sector and government organizations), because they cut back less. (5) A consultant was brought in for a fast diagnostic and a recovery plan. Within 3 months demand began to recover.

Example 3: A leadership crisis (a conflict between owners)

A company founded by two partners. They had once agreed on a vision, but over 5 years the company grew and their views diverged. One wants to sell the company, the other wants to grow it. Because of the conflict, people don't know whom to listen to. Decisions aren't being made. The best people are leaving.

Response: (1) An honest conversation between the partners (this usually needs a mediator — a consultant or a lawyer). (2) Mapping the options: buying out a stake, selling for both, the exit of one. (3) Transparent communication with the team: "We had differences in vision, and we've resolved them. Here's what comes next. We're heading toward..." (4) Once the conflict is resolved, the team and morale need to be rebuilt.

Conclusion

The main thing in a crisis is not to lose time: admit there's a problem as early as possible, and start acting right away. After that, much comes down to discipline — and this is exactly where a checklist earns its keep, keeping you from missing what matters while your head is busy fighting fires. And if you feel you can't pull through alone, call in someone who has been through something similar. Sometimes an outside view saves you not weeks, but months.