Insolvency and the pitfalls of social media…
It’s fair to say the underlying causes of most insolvencies are down to a wide range of factors which eventually affect cash-flow. However, it’s worth bearing in mind that the all-powerful effects of social media can have significant consequences for businesses which are not prepared for, or aware of the negative side of this vast communication mechanism.
Managing your social media during insolvency
Social media should be managed with an eye on how the business can gain from its reach and exposure to new markets etc. However, there should also be an eye on how to cope if it turns around to bite. There are various ways that this can happen.
Staff concerns
Company profiles on social media may be managed by numerous employees with access to the login details. It may even be a fundamental part of their role – but what measures are in place for when someone leaves the company and still has access to that platform?
It doesn’t need to be a sacking – people will often leave under ‘amicable’ circumstances rather than face a confrontation. However, they may still bear a grudge, and could cause untold damage to your company profile if they can access and manipulate your social media platforms. This damage can even happen before they leave if they are still entrusted with login details while working an unhappy notice period.
It would be challenging for a business owner to explain to its entire client base that controversial comments posted on its social media networks were a misunderstanding. Plus, the impact on trade could be devastating and might happen in an instant. Prevention is better than cure, so it is worth incorporating social media in your HR plan for managing staff turnover.
Trustworthy testimonials?
External social media sources can also pose a threat. We all tend to read reviews about holidays, restaurants, services and products and are often influenced by them into deciding to purchase.
Claims have been made that not only are some recommendations and ‘positive’ testimonials false; but that in some situations, competitors have maliciously posted false and negative reviews. If not addressed, such posts can do untold damage to a business. Sales can tumble, and in no time, it will impact on cash flow. While it may be possible to seek redress through the courts, the damage to the business can lead to very difficult circumstances.
It is essential to have a policy in place to monitor posts on the internet. The immediacy of social channels means that damage can go viral very quickly, sending the business into free-fall. Learning how to engage with criticism on social media platforms is crucial as a business survival technique.
Got the wrong person?
Mistaken identity can also cause massive problems for businesses, particularly on Twitter. A missed hyphen in an address could be the difference between your business trundling along nicely and being slated for something it has no affiliation to.
In summary
All these points could be enough to push a business into difficulties and even insolvency, but the lasting damage to reputation from some of the points raised could still come back to haunt you over time even if the initial impact is survived. To minimise said damage, make sure you revoke social media access to anyone no longer working for you. Have a social media policy in place so you can effectively tackle malicious posting and fake reviews, and make sure you address cases of mistaken identity.
Don’t shy away from social media – it’s an amazing marketing tool if used correctly, but don’t hide from the pitfalls.
Even with careful monitoring and planning, you could still find yourself in financial trouble. If you spot the signs of insolvency in your business, you should contact an insolvency and business turnaround specialist to find the right advice on what to do. Timely advice can help avoid bankruptcy, liquidation or administration.