I have led several different businesses through major setbacks and turnarounds, and I have consulted and coached business leaders through their own major setbacks. These are tough periods with what can appear almost unsurmountable challenges, a lot of uncertainty and an immense pressure on the leader to “fix it”. Below are five areas that I suggest the leader needs to focus on during these rocky times.

1) Face the hard facts

A major setback can be a sudden event (a major creditor who defaults, a market that collapses, a key component that suddenly becomes unavailable or a factory that burns down) or it can creep up on us, where the numbers start to change in an unfavourable direction and then the problems start to gather momentum. In the latter case, many leaders tend to underestimate problems in the early stages of crisis, and wind up taking a series of small steps, none of which is powerful enough to correct the downward spiral. The end-result is a major crisis. In both cases the leader needs to face the hard facts quickly, however unpleasant they are, and recognise the consequences of the setback.

2) Make the tough choices quickly

The leader now needs to show courage and strength. Boldness and decisiveness will be critical to survival. Making big decisions that affect staff, such as redundancies, stopping business activities and closing facilities are not pleasant, but needs to be done sooner rather than later. There will be a lot of uncertainties and it is likely to be unchartered territory for most leaders. Mistakes will be made, so the leader also needs to be flexible and willing to step back and change course to go forward again.

3) Rally the troops

Major setbacks are likely to affect team morale and they will be looking to the leader for assurances and guidance. You need to galvanise your troops to help you turn the business around. Create a vision for how you will come through this better and stronger, something the staff can buy into. During this period, you need to be approachable and communicate the urgency. You should describe how you picture the future and make your team feel they can contribute positively to the changes. Show you believe in them and in yourself.

4) Build a new business

As the business leader, you need to recognise that the setback is likely to be a sign that the world has changed and that it is a wake-up call to change your business. You should therefore not aim to rebuild the business to get back to the pre-crisis state-of-affairs. Instead of being defensive, be proactive and look to build a better, stronger business that is more resilient to setbacks. In this process, aim to create some early wins that gives staff confidence in the new direction and boosts morale.

5) Learn and grow stronger

As you (hopefully) start to pull the business through the worst of the crisis, reflect on what you have learned from the setback and how you responded. What did I learn about myself in this process? How am I now a better leader? Where do I need to develop further and grow as a leader? How did my senior leaders and wider team respond to the setback? What can I do to help them develop and grow?

Yes, major setbacks can be traumatic and they are not something we should wish for, but they can also provide you with a great development opportunity that leaves you, your team and your business stronger and better equipped to handle future challenges.