Business restructuring is a useful way to address a range of challenges impeding business performance. Typical problems it can solve include:
1. High levels of debt
If your business has built up extensive debts, it can be hard to know where to even begin to reduce the amount owed. A high level of debt is usually accompanied by high interest rates, late payment fees and potentially unaffordable repayment requirements.
When a large pool of debt is accompanied by other losses such as a sales slowdown, the problem becomes even more pronounced.
Business restructuring can put your business on a firmer financial footing by consolidating debt and renegotiating repayment terms. This could see some debt wiped off or a new more sustainable repayment plan agreed with creditors. Additional funds may also be raised by selling off assets that aren’t vital to company operations in order to bring more liquidity into the business.
2. A lack of efficiency
Inefficient processes and teams cost money. But beyond being a poor use of resources, a lack of efficiency can also hinder sales and see competitors getting ahead. If your workflows are outdated or regular delays and bottle necks are constantly holding up production, you’ll need to take action.
Business restructuring can be used to streamline your operations – either by introducing new technology – such as automation or AI -, by investing in more up-to-date equipment or by developing more modern workflows.
At the other end of this process your business should be firing on all cylinders and working at optimal pace and capacity.
3. Underperformance
No part of your business works in isolation. How one team, unit or department operates will have consequences across the board. If one area isn’t performing well, your entire business could be dragged down.
Bringing in a restructuring team gives an objective perspective on why a particular area or department is underperforming. Consideration is then given to how improvements can be made. That could mean reorganizing that team or completely overhauling the department so that it’s better structured and more able to achieve its targets.
4. A lack of cohesion following a merger or acquisition
Mergers and acquisitions are a time of opportunity, but they can also cause considerable headaches with integration of the two disparate businesses, its processes, teams and management very rarely straightforward.
A lack of cohesion is a common issue, but other problems like duplication, incompatible systems and conflict can all hamper progress.
Committing to business restructuring takes the two disparate businesses and aims to bring them together as one cohesive operation. This could involve reorganizing teams and departments to remove redundancy, bringing in new systems and technologies to ensure cohesion, rebranding, the liquidation of unnecessary assets and a review of the management structure, polices and operations.
5. To set your business up for growth
Business restructuring isn’t always called for because a company has lost its way and is facing significant financial challenges or a threat of insolvency. It can also be an incredibly beneficial process when you’re gearing up to expand into new markets or scale your current growth targets.
For scaling and expansion to be achievable and successful you need the right structures, systems and efficiencies in place. Restructuring is a way to ensure that the setup and operation of your business is optimal with a solid foundation on which to grow. During this period, you may need to consider new processes and new systems or technologies. These changes are intended to fuel your growth ambitions and put you on track to execute your expansion objectives.
6. A lack of competitiveness
If your business is no longer competitive – perhaps due to new competitors, new compliance requirements or a shift in consumer habits – it will quickly begin to falter.
Even businesses that are used to being at the forefront of their industry can find themselves struggling to compete. Often that’s because new competitors have launched with a new way of doing things, pushing the industry forward at a pace faster that you can match. If they are taking advantage of new technologies to launch better products and services or offer higher quality items at a lower cost for example, your own sales may well begin to falter.
Addressing the underlying issues is the only way to ensure your business survives. Depending on the root cause of your lack of competitiveness, your business restructure could see a new business model created, a pivot into new markets planned or an overhaul of your systems and technologies.
7. Overexpansion
It’s easy to be overly optimistic and over ambitious when things are going well. But when an unexpected slow down hits or a big customer account is lost, you suddenly find that you’ve overexpanded. If you’ve moved too quickly and can no longer sustain the bigger operation and greater overheads, you’ll need to restructure and reorganise your business to become leaner and move back into the black.
Restructuring doesn’t always mean scaling back on locations and head count. It could be that you need to bring your focus back to your core products and service areas and strip out the unprofitable additions that are pulling your attention away from your business strengths.
Sound familiar?
If any of these scenarios sound familiar to you, Boardroom Punks can help. We bring together decades of expertise in business operations, compliance, insolvency and legal services to give you the support you need to solve your business challenges.
We make it our mission to save your business and put it back on the path to success with straight-talking advice and actionable strategies. Give us a call or send us an email to speak to us in confidence.
