Time for a change
It can be hard to admit that your business is heading in the wrong direction, but there are a number of tell-tale signs that indicate all is not well – falling profit margins, cash flow difficulties, spiralling costs, loss of market share.
The best time to embark on a restructuring programme is before you reach the point of insolvency so the business can continue to trade. There are two types of restructuring:
- Financial (where you look to restructure the debts you owe to creditors)
- Operational (where you change the way the company is structured or how it works)
How can I turn it around?
A good business consultant will be able to advise on the actions you need to take to get yourself back on an even keel and help you formulate a plan.
The first step is usually to examine the business to see where immediate cash savings could be made. Once this is done the focus will shift to options for increasing turnover, which could involve a review of pricing or options for repositioning your products or service.
Unfortunately, the process usually involves reducing staff numbers so be prepared to make some difficult decisions around who stays and who goes. Refinancing debt is another common element of a restructuring, which is where the accurate assessment of your current financial situation available from a cloud-based accounts package such as Big Red Cloud can be helpful.
It is also prudent to consider what you will do in the event that the reorganisation or restructuring does not go to plan.
Don’t forget the people
As an entrepreneur you might feel a sense of relief that you are doing something to help your business. But your staff will be understandably worried about what might happen to their jobs and if this concern is allowed to fester it will affect their productivity.
So take the opportunity to not only explain to your employees what changes might be made, but also why they are being made. Encourage them to ask questions and answer them as truthfully as possible.
People fear change when they don’t know how it is going to affect their livelihood. By keeping your employees informed and being honest with them, you have the opportunity to improve workplace relations in the long term.
Give yourself a break
There are many reasons why companies reach the point at which reorganisation or restructuring is required. The best-run businesses can experience tough trading conditions and it is better to act decisively rather than stick your head in the sand.
Think of it as an opportunity to not only take stock of where you are now, but to make changes that will allow you to trade successfully in the future.
Even the largest corporates have found themselves needing to make huge changes to survive. If the process is handled correctly it can give everyone fresh impetus and allow you to put mistakes behind you while learning from them.