Restructuring a business can seem daunting. However, a small business that identifies the need to adapt and make changes, and acts on this need sooner rather than later, is more likely to avoid failure and stay on a trajectory of growth.
Restructuring offers up an opportunity to examine every aspect of your business and optimize all systems in order to run more profitably and efficiently in the long term.
What is restructuring?
Restructuring essentially refers to modifying the operational and financial aspects of your business in order to adapt to changes in the market, run efficiently and become more profitable.
If a business is having financial difficulties, then corporate restructuring action may be taken to modify debt by:
- Consolidating debts with the bank
- Adjusting the terms and rates of business loans
- Filing a proposal to creditors
- The sale of business assets
Typically, actions to reduce other business expenses will also be taken, such as:
- Reducing payroll/staff layoffs
- Closing less profitable storefronts/factory closures
- Discontinuation of certain products or product lines
When do you need to consider corporate restructuring?
Some businesses decide to restructure when they’re trying to overcome operational or financial challenges. Restructuring can be reactionary to financial issues, such as bankruptcy proceedings, which require a company to make changes within a specific time period.
Or, perhaps an insightful business owner recognizes the need to make changes now to preemptively adapt to future shifts in the market, and are proactive in restructuring their business.
Reasons to consider restructuring:
- Reduce business costs
- Change of ownership, such as mergers
- Bankruptcy or insolvency
- Business crisis
- Improve competitive advantage
If a business decides to restructure, it can significantly improve operations and limit potential financial harm.
What do you have to do to restructure?
Every business’ needs are different, but it’s ideal to evaluate every aspect of your business to ensure it’s running to its optimal potential. Take a look and your current business and review the following:
- Review business models– Stop or rethink any outdated business practices that make your business vulnerable to financial loss.
- Revise Operations– streamline your processes and systems. This could be as simple as updating to new software, incorporating new technology or updating staff training. Or even making changes to teams or eliminating roles that you no longer require.
- Evaluate the current market and trends– Things are always changing and new competitors will always arise. Stay informed so you can make well-informed decisions and be ready to pivot at any time.
- Finances– Optimize your finances by reviewing payroll, inventory, expenses, assets and any other capital your business might have.
How a small business lawyer can help
Tackling restructuring or insolvency issues on your own is not recommended, as these tasks can be complicated, and mistakes can be very costly to fix. You should seek professional advice and guidance from your lawyer and/or accountant on tasks such as:
- Strategizing on operations and staff management
- Streamlining business processes
- Filing taxes
- Payroll returns
- Legally closing down your corporation
- Financial analysis
To facilitate a smooth and efficient restructuring for your company, consider working with a small business lawyer at Benchmark Law. With our experience and knowledge, we can help you through the process so you avoid making any costly mistakes..