Creating the perfect business restructuring plan is the most important thing you can do when looking to restructure your company.
A shoddy plan will inevitably lead to a shoddy restructure, and ultimately can lead to making what was an efficient and well run business before, a hodge-podge of different ideas and plans.
Business restructuring can be one of the most effective ways to transform a business and get it back on the right track, or to prepare it for an exciting new future.
This blog details what to consider when developing a business restructuring plan, the importance of restructuring, and more.
What is a Business Restructure?
Restructuring is a term to describe when a company changes its core structure in a meaningful way. This could be a change to the organisational structure of the business (changing management roles, shifting resources, and putting focus on new areas etc.), or it could be an adjustment to the businesses finances (selling off assets, refinancing debt etc.).
A business opting to restructure usually comes about after a period of financial difficulty. It is commonly used as a method to improve the business in order to better its prospects going forward.
If a business is in particular financial peril, a successful restructuring can be one of the most effective methods to find the required funds needed to pay off a debtor.
For more information about what business restructuring entails, please check out our blog on the subject.
Reasons for Business Restructuring
There are a variety of reasons a business may wish to restructure. The most common causes are that a business is struggling to operate under its current structure, or is looking to prepare for a new opportunity
— such as a takeover or expanding into new markets.
However, a business wishing to restructure is not limited just to these two core causes, there are a whole host of possible reasonings:
- Reduce costs to decrease/consolidate debt
- Put increased focus on underutilised teams/staff/departments
- Refocus on key products/accounts/services
- Customer/client needs and wants have shifted
- Incorporate all new technology and services
- Merge with another company
- A key member of staff has left, leaving a hole to fill
- Unforeseen organisational growth or recession
How to Restructure a Business
Regardless of if you are opting to restructure your business to consolidate debt or facilitate growth, there are a variety of steps you need to ensure you follow if you want to maximise your chances of a successful business restructuring plan; such as gaining an overview of the business, preparing to change your plan, and more.
If you feel that you aren’t totally familiar with the process of creating your own business restructuring plan, it may be worthwhile to consider seeking out a specialist who can act to guide you throughout the process.
Understanding the key aspects of a business restructure is important to research before you begin the process – get it wrong and you could find yourself with an inefficient business.
Take a Step Back
One of the most important steps in creating a successful business restructuring plan is to formulate a cohesive strategy; why do you wish to restructure in the first place, what is the short-term and long-direction of the business after the restructure etc.
If you are in the process of developing a plan and you haven’t yet considered your business strategy, it may be prudent to take a step back and analyse your current situation:
- Is your current business plan still relevant? If not then you will likely need to evolve its strategy
- Are you targeting your business at the right audience, will the restructure affect this?
- Are current customers/clients happy with your service, how could a restructuring change this?
- What do the businesses finances look like currently?
Without a clear, uncompromising idea of why you are seeking a business restructure, or where it may lead, there will be nothing to shepherd the direction, or base the success of the restructuring on.
A clear understanding of the businesses finances, including a clear picture of assets and debts will go a long way towards ensuring a successful business restructuring.
It is vital to get an understanding of where a business stands today, how it got to that point, and how it plans to improve from then on. A clear analysis of a company’s finances makes it significantly easier to formulate a clear timeline..
Formulate a New Structure
After taking as step back to assess the situation and comprehensively analyse company finances, the next step is to formulate your firm’s new operational model
Some things to bare in mind when creating your new model are:
- Who has authority within any departments affected by the restructure
- How streamlined will the operation be post-restructure
- How will departmental budgets be split for those affected by the restructure
Communication is Key
Once you have considered the finer points of your business restructuring plan, it is important if you want everything to go off without a hitch, to at this stage share your plan with employees.
Get them excited for the restructure, share your ideas for the changed roles and departments. Make transparency and honesty the focus and, if you are lucky, members of the team may be able to help.
Nobody will know more about the pros and cons of the business restructure than those currently doing the job. They may be able to offer their insight, which in turn you can use to improve your plan.
It is also key that you communicate your plans with management and senior members of the team ahead of time so they are able to answer any possible questions other employees may have at a later date.
Be Prepared to Adjust
From the very moment you first consider a change, right through the creation of your plan, and all the way through until after you are restructured, you must always be prepared to listen to people’s opinions and be ready to tweak your strategy.
A successful business restructure is one that has listened to common sense and been able to adjust to new realities.
3 Components of the Business Restructuring Process
When it comes to the business restructuring process, there are a few key components to ensure everything goes smoothly. Strong leadership, perfect timing, and ample planning are likely the three most important factors when preparing for a business restructure, if you get any one of these three components wrong, you could be setting yourself up for a disaster.
While there may be three core components, each business restructure is different, and what is key to the success of one may be of little importance to another so do your research and make sure you’re prepared for any eventuality.
If you aren’t 100% up to the job of steering the ship through the occasionally choppy waters of a business restructuring, then ultimately it will likely be doomed to fail.
An effective leader will need to be decisive in navigating towards the company goals. Focus, drive, and attention to detail are just a few of the key characteristics you will need throughout the process.
A strong leader during a restructuring will also be important to convince all employees that the plan is the correct way forward for the business, get everybody on board and things will go much more smoothly.
All details of the restructuring will need to be considered if you have any chance of it being a success.
Consider all angles, analyse the business from top to bottom, formulate a clear plan of exactly where the restructuring is most necessary.
You can’t afford to go into things with anything less than 100% effort throughout.
Being able to adapt on the fly, or see trends before they come to a head and realise that your business needs to restructure at the right time could be the key to success.
Noticing the need to restructure too late could lead to the more pressing needs getting out of hand and not being able to be fixed with a simple restructure.
Immediately after you decide that a restructuring is the optimal course of action, you should begin the process of ensuring everything you will need to complete the plan is in place.
How Inquesta’s Business Restructuring Services Can Help
At Inquesta we have years of experience assisting businesses with preparing the perfect business restructuring plan for them.
With ample expertise, and the ideal team, we are perfectly equipped to help make your business flourish from top to bottom.
We have a guide available on our website, providing you with tips and information to guide you through the restructuring process.
For more information about how Inquesta can help you, book a free consultation or contact our team today.