When Is It Time to Restructure Your Business and How Do You Do It?
In a perfect world, businesses would continually evolve and adapt to meet their customers’ and employee’s needs. Whether you’re a startup, a small business that has been around for a while, or a larger company seeing organizational changes, there might come a time when you need to restructure your business.
Many business owners will avoid a business restructure as long as possible despite knowing they desperately need to do so. Other business owners simply won’t know when it’s time to restructure their business and will fail to see the many signs in front of them.
If your company hasn’t been seeing the level of growth you were expecting by now, there’s a good chance it’s due to the way your operations and financials are structured. Calling in a professional can help you detect the problem areas and create a long-term solution to the problem.
Before you start considering a business restructure, make sure you understand what it is, when it’s time, and how to do it properly.
What Does a Business Restructure Mean?
When an owner decides to restructure their business, it’s typically because their company is under financial distress. It’s a moment for the entire company to take a step back and hone in on what would be best for the company moving forward.
If you’re thinking of restructuring your business, expect to make some tough decisions and have some difficult conversations. They will often involve tax restructuring, staff turnover, role changes, different strategies, changes in the way your business operates, and much more.
During a business restructure, nothing is off the table and your leadership team will need to keep an open mind. Furthermore, it will be your job to ensure that happens.
Are You Ready to Restructure?
One of the most difficult steps in the restructuring process is knowing when to restructure. Many businesses will wait until it’s too late, which will only dig their company into a larger hole. As a general rule of thumb, it’s always best to restructure your business before it becomes a necessity or requirement.
Some warning signs that it’s time to make a move are when profits become harder to maintain, employee and manager turnover is peaking, overall morale inside your company is low, your operations aren’t nearly as effective, or when your industry is entering an evolutionary phase.
Tips When You Restructure Your Business
As you continue to consider the potential restructuring of your business, we wanted to leave you with a few pieces of advice when restructuring your business. While this is a process that could very well revive your company, it could also cause a great deal of damage.
Here are our top tips during a business restructure:
- Don’t neglect constant communication with your team.
- Don’t move forward without a plan or strategy.
- Listen to what your employees and leadership team are telling you.
- Set yourself up for success and always look at the big picture.
- Never lose sight of your company’s goals and desires.
If you’ve been arguing with yourself over the thought of restructuring your business, it might be time to hear a professional’s point of view. At PBScala CPA, we understand how critical this time is for your business and we want to help!
Contact us by phone or email to speak with one of our professionals today!
References
Twin, Alexandra. “Restructuring: How to Limit Financial Loss and Improve Business.” Investopedia, Investopedia, 29 Jan. 2020, www.investopedia.com/terms/r/restructuring.asp.