The truth is though, that restructuring represents a major transformation that will undoubtedly impact upon you, your staff and the business in itself.
You might need or want to restructure for a number of reasons; whether a change in the marketplace, cashflow concerns, or simply as a result of how your organisation has evolved over time. Whatever your reasoning, restructuring is not a decision that should be taken lightly and there are things that you must consider before you act to make it happen…
Know your reasons for restructuring
Put simply, your reason for restructuring will largely determine the key things you should be considering before making your final decision and, once you’re confident it’s the right thing to do, how the restructure will proceed.
Do you need to downsize?
Many business owners will likely, at some time or other, have considered downsizing their operation; whether because of a lull in work, or as a result of struggling to manage the business as it currently is.
This means of restructuring will typically involve you cutting back on the services you offer, perhaps having to sell some of your assets, assigning staff with new roles or even making redundancies.
These sorts of things can be a blessing in the short-term, but you must be sure that they will also be right for your business in the long-term and that you aren’t unwittingly doing more harm than good.
With the countless pressures that come with today’s economic climate, you may find yourself considering a restructure as a means of remedying financial strain within the business. In this instance we would always suggest that you seek specialist advice from an insolvency practitioner, who can talk you through your options and help you to protect your best interests in the face of a challenging time.
Or perhaps you’re upscaling…
As your business grows, you may be thinking about scaling up and with scaling, often comes a new strategy.
Your business structure and your strategy should go hand-in-hand and should aid you in achieving your business objectives. So, when your strategy changes, you should consider how your structure may need to change alongside it.
Are you thinking of relocating?
You might be thinking of relocating your entire operation, just a single element of it, or of expanding by opening new premises in addition to those existing. Again, it’s worth bearing in mind that this is something that will impact upon all those involved in your businesses, not just you.
Here a few points to mull over when it comes to a possible move:
- Consider researching how others in your field are faring in the new location.
- Consider staffing; you might think it easy to move staff from one location to another, but some may not be willing to relocate.
- Think about your finances and the tax implications of relocating (this is particularly pertinent if you are relocating overseas).
- Think about why you want to relocate and whether a change of location is going to help you get your business to where you want it to be. If it is, great – but if it’s not, what are your alternatives?
- Do the positives outweigh the negatives?
A change amongst management
Shifts within the management team can often come naturally as a business evolves and develops; particularly when as the result of a retirement.
This is certainly a valid reason for restructuring your business, by way of a management buy-out (MBO) for example, but the key thing to bear in mind here is that, to avoid upheaval, it should be carried out as efficiently and effectively as is possible.
Know where you are headed beyond the restructure and, most importantly, communicate this to all those involved in your business. Transparency is essential if you are to keep your staff motivated and hence working productively.
You should also consider your financial position and any issues surrounding funding, as well as the administrative responsibilities that come with this type of restructure.
A particular structure might be appropriate for growing your business, but the same structure is unlikely to be appropriate when it comes to selling up. If the purpose of your restructure is to aid the sale of your business, bear in mind that restructuring is not a quick process and so proactive planning is essential. You can read more about selling your business in our article ‘What happens if… I want to sell my business?’ here.
Purpose – be sure of the purpose of your restructure; whether to adapt to a changing market, or to make your business more productive and profitable, for example. We would always encourage you to seek professional advice before jumping in feet first.
Inform – make sure all those the restructure affects, if you go ahead, are informed throughout the process. Share your vision with staff and keep them engaged – after all they have a role to play in ensuring the restructure is a success.
Plan – as with anything in business, never underestimate the importance of a plan. Mapping out the process may not seem like the best use of your time when you’re keen to get things underway, but it could save you a lot of confusion in the long run.
How can we help?
When you’re busy running a business, it can be hard to take a step back and assess where you are now, where you want to be in the future and how you can get there. Here at George Hay we can help you by providing strategic advice that will help to bring the bigger picture into focus.
Maximising the performance of your business, at every stage in its life, should always be a priority. Our integrated approach – combining our business advisory experience with expertise in accountancy, tax and other specialisms, such as corporate finance and risk evaluation – will help you to identify your strengths and weaknesses, plan your strategies for the shorter and longer terms and implement these to ensure your business has the best chance of fulfilling its potential.