Benefits of Restructuring your Business

For businesses that are struggling to keep their doors open, they usually have two choices - call in the administrators or restructure their business. If the owners are keen to continue the business then a restructure is their only option. An expert consultant in restructures is usually brought in to examine all aspects of the business including staff, management, assets, stock, debtors, creditors, policies, procedures and reporting. The consultant can then make recommendations and begin implementing the restructure.

Management and Staff

Business can fail if it doesn’t have the right management in place. To adequately lead the business, the management team needs to have the right mix of skills and experience. They must be respected by staff be able to gain the best results from everyone working in the organisation. Some or all of the management team may need to go to make way for new managers that have the skills required to lead the organisation to better success.

Some organisations can be overstaffed or staffed with the wrong type of people. A business that is struggling may bring in more staff to try to turn it around but this can compound existing problems. In the past management may have not been able to make staff redundant when roles weren’t required or business has retracted. Staff may also be working inefficiently either because they aren’t willing to change, adopt technology or simply don’t realise they’re inefficient. It is easier for an outsider than a business owner to make the hard decisions to sack people who aren’t required.

Assets

Some businesses have a huge amount of capital tied up in assets that are no longer required or could be shifted to other areas. Again it is often easier for a consultant to identify surplus assets than an owner or manager. A consultant new to the business is also not influenced by staff claiming to need the assets. By offloading assets, the business can free up capital or earn more income by shifting the assets to another area of the business that can generate income.

Business Operations

Some businesses do things the same as they have done for 10 years or more not realising that they are falling behind. A competitor who is keeping up with technology and has all of their lean team working efficiently will be able to undercut on price or deliver a better service. Changing the way a company and its employees work can have a massive impact on the bottom line.

Creditors

Poor cash-flow hurts more businesses than any other problems a business faces. By reducing the value of creditors, more equity is available in the business. Expensive funding options may no longer be required. Overly generous payment terms may need to be reviewed or a collection agency used to follow up bad and doubtful debts.

Non-Performing Sectors and Products

A consultant can look at the parts of a business and determine which parts are successful and which parts need to be closed. Sometimes business owners or managers aren’t aware that a division or product is underperforming and dragging down the results of the rest of the business. By removing or closing down a division, they reduce costs and allow staff to focus on providing better quality, more profitable products.

Financial Control

A lack of reporting or poor reporting can have dangerous repercussions. A business may be using an outdated reporting system or staff aren’t entering the right data. Business decisions made based on poor data can have a devastating impact on businesses. Better procedures may be needed around debt collection and tightening up credit policies to better protect the business in the future.

Merger and Acquisition Options

Some businesses have the option of merging with another business or being bought out. A competitor or complimentary business may be looking to grow their customer base or product offering and could be interested in purchasing the flailing business.

Finance

A lack of cashflow sees many good businesses go to the wall every year in Australia. A business owner may have tried to gain finance in the past but was knocked back. Their application may be successful if they a different financier or can show that their business has been restructured and is in a better position to pay back the funds they are attempting to borrow.

If you are looking for an expert to provide advice or guide you through restructuring your business, Perth has numerous agencies that can assist you.