Business restructuring is a significant process in which a company reorganises the organisational and financial priorities of their company. Business restructuring is most commonly used by companies that are facing financial difficulty and are looking to rescue the business. The aim of the process is to alter the organisational and financial structure of the business in order to make it more financially stable and ultimately return the business to a thriving, profitable enterprise once again. The individual elements involved in business restructuring will vary from company to company, however there are a few key elements that will always need to be followed when companies restructure. These include:
Identifying Issues
The first step in any business restructuring plan is to identify the main factors that are causing the financial problems. This will involve assessing which areas of the business are weaker and which are stronger, in order to create a coherent plan for moving forward. This enables companies to tackle issues at their root and to focus their efforts on the areas of the business that are the weakest.
Timing
Another key element of business restructuring that is often overlooked is timing. Specifically, recognising the need to restructure before it is too late and before the company becomes insolvent. It’s essential that the company has sufficient cash flow or financing to support the business restructuring. This is why, at the first signs of trouble, directors should consult professional help to advise on a business rescue plan before their options become limited.
Planning
It’s crucial to plan business restructuring thoroughly in order to ensure that the company has the means to support the process throughout. Once the main issues have been identified, this analysis can be used to create a new structure for the business with clear guidance on the changes that are to be made, and who will be leading those changes. When it comes to business restructuring there’s no ‘one size fits all’ and so it’s essential to plan based on the business’ individual circumstances.
Communication
When it comes to successful business restructuring, transparency is key. Once a plan has been confirmed for restructuring it’s important to communicate this with the rest of the business, particularly employees and stakeholders. For employees and stakeholders there’s likely to be concern about what these changes will mean for their own interests, and so it’s essential to keep them informed throughout the process in order to ease anxiety.
Implementation & Review
The final stage in the business restructuring process is of course to implement the plan itself. Having created a thorough plan for restructuring, it’s likely that the process should run smoothly, however be prepared to adjust to a few bumps in the road. It’s essential to assess regularly how the restructuring is going in order to adapt the plan where necessary.
If your company is facing financial difficulty, don’t hesitate to get in touch with our experienced team at Ballard Business Recovery. Assessing your business’ needs on an individual basis, we can advise on the best strategy for moving forward, whether that’s business restructuring or other rescue options.
