A slowdown in sales or an unexpected expense can leave your cashflow in the red. A downturn in your industry, a change of legislation or even a few poor day-to-day operational decisions can send your performance sliding in the wrong direction. Out of date technology or a failure to move with the times could eat away at your competitiveness and leave your clients heading out the door.
Whatever the reason, if your SME is on the ropes, it can be a nightmarish time.
Facing up to the reality that your business is in trouble is no picnic. After surviving the pandemic and staying open when rivals around you have been forced to shut up shop, it’s a bitter pill to swallow.
Business restructuring can be a lifeline when you’re in a tight spot. It provides time, space and most importantly a strategy, to reset your business and set it up for long term success.
What does business restructuring mean?
Before you can decide if business restructuring is a smart option to help you overcome your operational challenges and cash flow crisis, you need to know what it means.
So, what do we mean by the term ‘business restructuring’? Simply put, it’s the process of bringing in some outside help to reorganise your business in a way that sets it up for a brighter future.
When should you consider business restructuring?
Business restructuring can be useful for SMEs in several different circumstances. It’s worth considering if you:
Are facing financial problems
If your SME is struggling to keep the lights on and debts are piling up, you could consider seeking investment (you can do this via a PUNK working capital business loan or other alternative finance sources) or you could consider business restructuring. This process can help you to regain control of your cashflow, reorganise your debts and potentially bring in some extra funds by selling off assets that are no longer serving your business.
Aren’t operating efficiently
Inefficiency is a silent killer in any business. If your people are processes aren’t optimised and aren’t efficient, they are undoubtedly costing you money. Sometimes inefficiency simply creeps in because you don’t update your processes as your business grows, other times it’s because you don’t have the right people or technology in place.
Restructuring can help you to tackle the areas costing you time and money and replace the old way of working with a streamlined new approach. This sets you up for success by optimising your use of resources – which in term can lower overheads and strengthen your profit margins.
Need to respond to market changes
No matter your sector, your business will be impacted by market changes sooner or later. Those changes could look like an increase in competition or a change in consumer attitudes and behaviours. It may be that technological advances have totally changed the game in your sector – whatever the reason, business restructuring allows you to consider those changes and then change your set up to better respond to those changes and leverage the opportunities on offer.
Have acquired or merged with another business
Mergers and acquisitions are a common cause of business restructuring. When two businesses come together, it’s not often that they will simply merge into one entity without some adjustment. Business restructuring looks at the different departments, assets and operations of each business and maps out how they can be integrated for maximum benefit. Think of this as a jigsaw puzzle, with the restructuring process working to get each piece perfectly aligned.
Have problems with employee motivation and retention
For many of us, the idea of spending our entire career with just one company is alien. It’s something that our parents or grandparents will likely have considered the norm, but today it’s rare for someone to stay in one place for their whole working life. While we expect some faces to change, having too many employees coming and going can cause enormous problems.
If your staff churn is high, you’re likely spending a whole lot of money on recruitment and onboarding. You’re also losing a lot of time training new recruits to do the same job time after time. You’re probably also seeing knowledge and know-how walking out the door, too. Not to mention, high turnover rates are bad for morale and could cause your remaining team members to become disengaged, demotivated or worse, toxic.
Employee retention and motivation issues directly impact your ability to operate and can negatively influence your client relationships. If it’s become a problem in your business, restructuring is a chance to understand what’s gone wrong and fix the underlying issues. At the end of the process, you should have a happier, more stable team and a much more positive company culture to propel you forward.
What are the advantages of business restructuring?
Business restructuring can be incredibly beneficial, especially if your SME is facing financial pressures or navigating a period of change or upheaval. The advantages that you’ll experience will very much be based on your reason for seeking out business restricting in the first place. Typically, benefits include:
- A stronger financial position: Restructuring debts, selling off assets and streamlining operations can all put you back on track financially.
- Lower overheads and higher profits: By eliminating inefficiency and actively looking at how the business can be made better, you could bring down your overheads while increasing your profit margins.
- Preparing your business for the future: It’s all too easy to become set in your ways and do things one way because that’s how they’ve always been done. With restructuring, you’ll look at your business and its processes with a fresh pair of eyes. By considering new technologies and new ways of doing things, you’re preparing your business for the future.
Ultimately, business restructuring is about getting your business back on track. If you’re not quite at that point, why not speak to us about a business loan? If you just need a quick injection of cash to help you navigate a tough spot, we can help with money in the bank in as little as five working days. Plus, if you do decide that you want to explore restructuring your business, we can help with that, too. Get in touch to chat with us.
