Business restructuring is not essentially redoing your business from scratch. Instead, it’s a way of working with what you have and improving it to improve the business as a whole and, hopefully, set it on the right path again.
Sometimes, it may be better to wait and see what the future holds for your business. But if you are nearly at the point of no return or at the cusp of complete business failure, it is likely high time for restructuring.
However, the need for restructuring is not always obvious nor signals the end of times. Hence, here are some clear signs that restructuring may be the next best move for your business:
You are about to face bankruptcy
Filing for bankruptcy is never an easy task for everyone involved, but it does not always mean the end of a business. If you have done everything you can to rise from economic hardships and see no end in sight, it may be time to call a business lawyer to help you figure out solutions before it’s too late. A lawyer can help you file a Chapter 11 bankruptcy, which can allow you to restructure your business and fulfill debts over time without stopping operations.
Bankruptcy is the worst nightmare for many business owners, but sometimes, it is a necessary step in order to ensure business continuity. Having an experienced lawyer by your side can make this complicated and highly stressful experience easier.
You are seeing no results despite all the work you put in
After countless brainstorming sessions, long hours, and doing everything that you can to improve the business, you are bound to see results, right? Ideally, yes. But as most business owners know, the amount of work you put in does not always equate to great results.
Of course, this does not mean failure. What it could mean is that restructuring is within your horizons. Whether it’s changing the way you charge clients or finding new clients altogether, making either small or big changes can help you get to where you need to be.
Revenue is dramatically declining
The first sign of trouble that all business owners should be aware of is growth stagnation, because after that usually comes a decline in revenue. If your business is experiencing a significant decline in revenue with no signs of stopping, restructuring may be your next best move. Chances are, the business is no longer structured to bring in profits, and addressing the root causes can bring your revenue back up again.
You are ready to grow
As we’ve said before, restructuring does not only follow negative outcomes for your business. It may also be a beneficial move if you are about to take your company to the next level. Before you start your next growth stage, addressing rooms for improvement and strengthening the things that work well can help avoid growing pains in the next chapter for your business. Furthermore, making these changes can help you avoid past mistakes from happening again.
You are relying on debt
Repaying your debts can hinder you from achieving optimal cash flow, growth, and investments that can help your business improve. Once you find yourself heavily burdened by business debt, restructuring can allow you to create new strategies to pay back your debt and allow a significant amount of profits to be invested back into the business.
Turnover is high
Whether it’s an employee or client turnover—or worse, both—no business owner should take it lightly. If your employees are leaving, there is likely something wrong with the management, the compensation, the environment, and many other internal factors. On the other hand, if clients are leaving, you may no longer be at an advantage against your competitors and are not meeting, much less surpassing, their expectations.
In both cases, a business structure may be the key to resolving the underlying issues that are making people leave. You cannot simply hire more people or find more clients if something is not done at the root. Furthermore, employee frustration or dissatisfaction is contagious, and these negative emotions can affect their productivity, and thus, affect your clients as well.
This list is not an exhaustive one, but it represents some of the most obvious signs that a business needs to restructure. If you notice one or more of these signs—or any other indication that point to the need for change—contact a business consultant and a lawyer to help you find out what you need to work on to breathe new life into your business.