Business Reputation Crisis: How to Overcome and Be Prepared

A business reputation crisis happens whenever something unexpected happens. It could be a bad review, or even just a product problem that suddenly damages the way customers and the public see your brand.

However, for a small or medium-sized business (SMB), it only takes one viral negative post or media article to cause serious damage to the company's reputation. Fortunately, with brand reputation crisis management and the right preparation, you can weather the storm and come out on top. in

In this guide, we’ll break down:

• What a reputation crisis is
• Why they happen
• How to prepare in advance
• The exact steps to take in the worst case scenario.

What Is a Reputation Crisis in Simple Words?

A reputation crisis can be any event or issue that suddenly makes people lose trust or confidence in your business. It might be a social media post or a customer complaint. It’s anything that “goes viral” or grabs public attention for the wrong reasons.

If the buzz about your brand online or in the news starts to turn negative fast, that’s a reputation crisis. But it isn’t just about “bad press” in the traditional sense; it’s about speed and impact, a single event that sparks thousands of comments or headlines in hours.

If unchecked, it causes customers to leave in droves, business partners to distance themselves, and team morale to plummet.

Fortunately, timely reputation repair strategies and promptly addressing the issue can show responsibility, win back trust, and prove that your brand is human (a competitive advantage against faceless corporations).

This means prepared planning and learning from your mistakes. If you know how to respond (apologize, fix, explain), you can rebuild stronger from the damage. 

Common Causes of a Business Reputation Crisis

A reputation crisis can come from many different directions. Knowing the usual culprits can help you understand what to expect.

Each of these can cause a reputation crisis, so let’s look at them one by one:

Product Recalls or Defects

When a product or service fails (a software bug or even a tainted food batch) your customers will naturally feel hurt or cheated. Any news of this defect (or some kind of government recall) will spread quickly online. Then you’ve got the likelihood of each harmed customer posting on social media or filing a complaint.

For example, when Johnson & Johnson’s Tylenol capsules were poisoned in 1982, they responded quickly with a recall and honest communication, which eventually saved their reputation.

The key issue here is that product problems are visible and they cause frustration. People expect companies to own up and fix them.

Negative Media Coverage

Sometimes, the media highlights something negative about a company. A newspaper investigative story, a leaked internal email, or an online rumor, can go viral. When journalists or influencers report on problems (like a safety violation or a dishonest practice) it can trigger a PR nightmare.

And negative PR often snowballs: once one outlet publishes, others often follow, and it can dominate headlines for days or weeks.

Even a short negative mention in a local news report can become a huge problem if it gets picked up widely.

Ethical Lapses or Scandals

This is when the bad news comes from your own actions or culture. Say a company’s leaders do something unethical. For example:

• Discrimination
• Bribery
• Fraud
• Mistreating workers

It feels like a betrayal of customer trust. People share outrage on social media and in comments where they demand some level of accountability.

A famous example of this is the Volkswagen emissions scandal, where the carmaker was caught cheating on pollution tests. VW’s brand took a massive hit worldwide. Their first response (an apology video) did almost nothing to calm critics. Only after big changes and investments in electric cars did trust begin to rebuild.

Scandals like this show that ethical lapses can be a shadow on your reputation for years if not addressed head-on.

More recently, we see companies like Nestlé being criticized due to their ties with Israel through their investment in Osem, a major Israeli food producer. 

Poor Customer Service

Bad customer service can ruin your image even if you make great products. Customers see it, repost it, and now your brand’s being called out.

A classic case here was the 2017 United Airlines incident: a viral video showed a passenger being dragged off a plane.

One single video led to worldwide condemnation of United’s customer service. While you aren’t likely to suffer from the same virality if you’re just a small business, even a 1-star Yelp review or an angry Facebook post can make an impact. If one bad experience gets amplified, it can cause a crisis of confidence in your brand’s commitment to people.

Legal Issues or Lawsuits

Legal troubles instantly catch attention. If your company is sued for discrimination or fined for violating some kind of regulation, the media often reports on it.

Then, your customers worry. “If they broke the law or hurt customers, can I trust them?” A data breach lawsuit or an FDA fine ends up causing a reputation nightmare. For example, when a major data breach hit Equifax in 2017, it wasn’t just tech news — it became a public relations crisis for the company.

How to Prepare for a Reputation Crisis

So, what do you do if you find yourself in a mess like this?

Establish a Crisis Management Team

Don’t wait for disaster to strike before figuring out who will handle it. You need to get yourself a small core team (or at least assign roles) now. That could include:

• Senior leaders
• PR/communications staff
• Customer service
• Legal advisors

Give everyone a title, like “Crisis Lead” or “Media Spokesperson.” In an emergency, this team will gather information and make decisions. This lets you control the narrative. 

Monitor Social Media and News Platforms

Set up real-time alerts for any mentions of your brand. Some platforms specialize in online reputation monitoring and media monitoring. You can act faster if you know when people are talking.

Develop a Communication Plan

Once you have your team ready, have some templates and protocols in place. That means writing basic content like press-release or email templates now that can be customized quickly later.

You’ll need to decide on the kind of tone you’ll use (whether sympathetic, apologetic, or factual) and some key messages for possible issues. Think “We care about customers’ safety,” or “We are investigating,” as two examples.

Your plan should include:

• Key messages: What you want the public to understand.
• Approval process: Who signs off on statements and how fast.
• Channels: Which platforms to use (website statement, social media, email customers, etc.) and backup plans if one channel fails.

This means everyone is on the same page. You don’t want that nightmare of one executive tweeting something and another doing the opposite. You need to be consistent to build trust.

Check out our PR strategy guide if you want more tips on consistent messaging.

Train Spokespersons for Media Interactions

Who’s going to speak for your company? This could be the CEO or a PR professional. Whoever it is, role-play interviews and practice how to be calm and factual under pressure.

A single poor interview can make headlines (think awkward CEO soundbites gone viral). The spokesperson should know the company’s key facts (timelines, policies) and the messaging points you’ve agreed on. In short, don’t wing it: practice saying the right words now so it comes naturally in a crisis.

Have a Clear Protocol for Response

Decide in advance how you will respond to different crisis triggers. For instance:

• If it’s a customer complaint going viral on social media, who replies publicly and what do they say first?
• If it’s a faulty product, when do you issue a recall notice and who crafts it?
• If it’s a data breach, have you pre-drafted the “we are investigating” statement?

The aim is to stop your team scrambling to figure out what to do first. They’ll already have a plan of attack.

Maintain Transparency and Honesty

Always plan to tell the truth, even when it’s difficult. Stakeholders (customers, employees, partners) appreciate transparency. If a mistake happens, acknowledge it openly.

Even in preparation, be open with your policies (e.g., clear privacy practices, open reporting channels). This way, when a crisis hits, your audience will already know you as a credible and trustworthy brand.

Remember when Taco Bell did that “Thank You for Suing Us” apology campaign because they were sued over the quality of their beef? They denied any allegations that their meat was bad, but flipped this potential PR nightmare by saying, “Thanks for the opportunity for us to prove ourselves to you.” They started from a place of honesty and engagement.

Learn From Past Crises for Improvement

After any crisis, gather your team and ask: What caused the problem? How did we respond? What worked and what didn’t? Then use these lessons to update your crisis plan.

For example, if something unprofessional happened on your social media page, change your social media policy and response time to show you’re taking action.

Many businesses keep a “crisis log” or notes on past incidents to help train staff. The key is continuous learning. 

Steps to Take During a Reputation Crisis

Now it’s time to put all this information into practice when a crisis finally hits:

Assess the Situation Thoroughly

Understand what’s happening before you ever speak about it. Gather facts:

• What exactly occurred
• Who’s affected
• Where the information is coming from
• How widely it’s spread

Start by checking social media analytics (how many engagements on Twitter, etc) and read news stories. Talk to your team.

The first response is to “take stock of the current environment”. Check if your company is fully at fault, a little bit culpable, or a victim of misinformation. Decide whether you have enough info to make a statement.

Wait a few hours to be accurate rather than rush out an incorrect statement. Ask: Is this a local issue or viral? Who is talking (customers, media, competitors)?

Communicate Openly With Stakeholders

Once you know the basic facts, speak out to key audiences immediately. Use all available channels:

• A press release and distribute it
• Social media posts
• Email alerts
• You could even do a video message

Ensure everyone can hear you. The message should explain what you know so far, what you’re doing, and when you’ll update people again.

For example, many companies issued public statements on Twitter or their website addressing COVID-19 disruptions and saying “we’re monitoring closely.” This open communication keeps people from starting rumors.

Always reach employees and partners internally too, as uninformed staff can spread confusion. In short, just make sure no stakeholder says “we heard nothing from them.”

In severe cases, you could even consider outdoor advertising to clearly state your stance and publicly reassure your customers.

Take Responsibility for Any Mistakes

Own up to it quickly if your business made an obvious error. Don’t double down.

For instance, in 2024 Burger King faced a backlash when a tweet jokingly said “Women belong in the kitchen”. The company apologized the next day and explained its scholarship program motives.

But Burger King prevented the crisis from dragging on by admitting the mistake (“We realize that the message came across as offensive and that we misspoke”). Again, they didn’t double down on the idea that it was “an edgy joke”.

@BurgerKing

BurgerKing

We hear you. We got our initial tweet wrong and we’re sorry. Our aim was to draw attention to the fact that only 20% of professional chefs in UK kitchens are women and to help change that by awarding culinary scholarships. We will do better next time.

9:23 PM Mar 8, 2021

5.1K Views

View post

Customers tend to accept an apology if it feels genuine. If a mistake isn’t entirely your fault, still show empathy (“We are sorry this happened, and we’re investigating”). You will only look cold or evasive if you claim total innocence without an apology. The goal is always to show you take the issue seriously and will fix it.

Implement the Crisis Management Plan

Put your prepared plan into action:

• Get your crisis team ready
• Follow the protocols you made
• Keep everyone on message (this includes assigning someone to answer media calls and someone to liaise with legal counsel, etc).

And use your scripted templates from before to speed up writing statements. If any legal or compliance steps (e.g. notifying regulators in case of breach) come up, do those immediately.

Address Concerns Promptly and Transparently

Listen and respond. If customers are complaining publicly, reply politely and informatively. Don’t hide behind boilerplate statements. Give them updates as soon as you have them.

For example, if you say there’s going to be a recall on a defective part, announce it with instructions and how you’re going to fix it. Similarly, if a mistake by an employee went viral, explain what policy changes you’re making. 

Monitor Media and Social Channels Closely

And lastly, keep watching. A crisis is often still unfolding as you speak, so you should use your social listening tools to track new mentions of your brand, hashtags, and related keywords.

Are people still complaining, or has sentiment improved? Respond quickly to any new developments. Clarify to people if a false rumor starts gaining traction. Treat this whole approach to crisis management like a live war room and update information constantly.