How to restructure a business successfully. There could be one or several reasons for a business restructure, from volatile market conditions to new consumer expectations or increased competition. Managing such significant change also naturally creates new challenges. But when done well, restructuring could be the evolution an organisation needs to survive and thrive.
The events of the past year or so have proved incredibly difficult for many businesses, with over 800,000 people losing their jobs in the UK alone. At the same time, technology and changing habits have transformed the way several industries operate. These are two conditions which could drive more restructures in the near future.
So how can leaders go about them successfully? Below we highlight some different approaches and advise on how to make any transition as effective as possible.
Approaches to business restructuring
Restructures are usually operational, focusing on employees and processes, and/or financial, looking at the balance sheet. Both types can be driven by internal factors, such as poor communication or high operating costs, or external factors like an innovation that’s redefined the market.
Restructures can also be proactive or reactive, which effectively means setting trends or adapting to them. The former usually puts businesses in a stronger position – though reacting late is better than not responding at all.
Tips for restructuring successfully
Act quickly and decisively
As touched on above, waiting too long can have disastrous consequences for a business that’s already in trouble. At the same time, if you’ve spotted an opportunity to gain a competitive advantage, acting quickly can help you maximise it before others get there first.
Collect accurate data
Restructuring isn’t a decision any business should take lightly, nor is it one that should be based on hunches or feelings. Instead, take the time to carry out accurate assessments of your financial situation and what’s causing any problems. You’ll also need to create realistic forecasts of how a restructure could improve things.
Most business owners will have relatively little experience with restructuring, so it’s a smart idea to seek external advice and make sure your ideas are watertight. This outside perspective could come from trusted personal contacts or a consultancy firm with experience in restoring business fortunes.
Lead with strategy, not tactics
Whatever it is that’s driving your restructure and however you plan to execute it, it’s essential that you put long-term strategy over short-term gain. This could mean reviewing your overall purpose and business model and making sure your restructuring plans align with them.
Communicate change effectively
Restructures are bound to cause friction and uncertainty internally, especially if not communicated effectively. Being open and honest as early as possible will help to get people on your side, as will clarifying their new roles, responsibilities and prospects.
Business restructuring is often an essential but painful process. Follow the advice above to help your company come out the other side stronger.