No one wants to think about what to do when business isn’t booming. But knowing how to turn a business around promptly and get back to growth is hugely important.
For small businesses in the UK, understanding the nuances of business restructuring is crucial for sustained growth and success. In this article, we’ll explore what business restructuring is, and provide useful tips if you do need to consider a restructure for your business.
What is business restructuring?
Business restructuring is a strategic overhaul of the organisational aspects and business operations of a company. It involves making substantial changes long term to improve efficiency, cut costs, and adapt to market conditions.
This process is not a sign of failure. It’s a proactive step towards enhancing the overall health and performance of a business. Restructuring plans can involve financial and operational changes. Things like corporate restructuring and attempts to reduce costs will have an impact on the bottom line.
Why would I restructure my business?
The primary goal of business restructuring is to facilitate recovery and enhance profitability. It allows businesses to adapt to changing market conditions, technological advancements, or economic shifts, ensuring they stay competitive and financially viable.
Business challenges can be caused by market conditions, or government regulations and announcements. The government budget announcement can have a huge impact on businesses, due to how it impacts confidence in the market and certain industries.
You may simply find there has been a significant increase in costs, impacting your profitability.
Company restructures are not something to fear. They’re a proactive and powerful way to align your business for success in the current market.
Top tips for business restructuring
Business restructuring involves a multi-faceted approach that addresses various aspects of the organisation. Here's a step-by-step guide:
1. Start with cost reduction
Begin by scrutinising all operational costs. Identify areas where expenses can be trimmed without compromising the quality of your products or services. This could include renegotiating contracts with suppliers, optimising workflows, or implementing energy-efficient practices.
Ensuring cash flow and accessible working capital is key. Often for businesses in financial difficulty, the biggest outgoing is staff costs. If you’ve grown more quickly than expected, it’s natural to need to reassess your team. You may want to consider whether you could still have the desired output with fewer staff members. Redundancy is not an easy option, but it can have a big impact on your business.
2. Debt restructuring
Evaluate existing debt and explore options for restructuring. This may involve negotiating with creditors for better repayment terms or consolidating debts. LawBite's legal experts can guide businesses through this complex process, ensuring compliance with UK laws and regulations. Speaking to an expert is key, as there are different types of restructuring available to your business.
3. Measure impact
Every change made during restructuring should be measurable. Implement key performance indicators (KPIs) to track the impact of these changes. This data-driven approach provides valuable insights into the effectiveness of your restructuring process.
4. Focus on high impact changes
Identify and focus on changes that will have the most significant impact on your business. This might include restructuring departments, moving resources elsewhere, or revising the product/service portfolio. Focus on initiatives that align with your overall business strategy.
5. Move quickly
Time is of the essence in business restructuring. Market conditions can change rapidly, and swift action is necessary to mitigate risks and capitalise on opportunities. Make informed decisions, with a clear plan, but make them quickly. Spending too long hoping for the market to change can leave you in a worse position.
6. Consider the marketing
Communicate your restructuring process in a transparent manner to employees, customers and stakeholders. Develop a comprehensive marketing strategy to reposition your brand positively in the market. Changes to your business don’t have to be negative. Frame changes in a positive way, with a focus on how they allow you to grow.
7. Get expert legal support
Engage legal experts early in the restructuring process. LawBite's team of legal experts can provide tailored legal solutions. We can help with all aspects of the restructuring, from employee contracts to compliance with regulatory requirements.
Restructuring with legal support means avoiding risk, and ensuring you are completely compliant. Whether that is the redundancy process or changing business operations, a legal expert can help.
Get support from LawBite
Business restructuring is a proactive approach to navigating significant business challenges. By following these seven tips, businesses can not only weather the storms of change but also emerge stronger, more efficient, and better positioned for sustained success.