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5 Easy Answers To Your Urgent Business Restructuring Questions

What does a business restructure mean?

A corporate or business restructuring is the process of reorganising one or more aspects of a business to increase its efficiency and profitability. Restructuring is an umbrella term that encompasses four distinct groups of activities:

● Expansion
● Contraction
● Financial Restructuring
● Organisational Restructuring

What are the objectives of business restructuring?

The aim of a corporate or business restructure is to improve the current situation and respond to the ambitions of the business owners. For some businesses, this could mean an operational restructure to bring efficiencies to the business. For others, a restructure may mean pulling the company out of imminent insolvency and liquidation.

What are restructuring strategies?

Each restructure is unique and there is no one-size-fits-all strategy, but in simplistic terms, this is what a restructure would look like:

The first and most essential step is acknowledging and taking ownership of the problem. You must have the desire and energy to make changes. The sooner you can do this, the better. Delaying restructuring only limits your options and increases the risk of business failure.

The next step is a diagnostic review to identify the key problems within your business. This review will usually uncover several issues which the restructure will need to address; cash flow, staffing, financial management, operations, processes or debt. This is best done by a person from outside the business who is independent, objective, and experienced.

After the review is complete, develop a restructuring plan and engage experienced advisors to direct the restructure. Restructuring a business always has its challenges.

There will be different plates spinning all at once, so it can look very chaotic and lacking direction. For business owners, this is often a challenging period in a business restructure. We suggest considering each spinning plate and its effect individually rather than the whole restructure. Look for ways to achieve some quick results. This will keep motivation up while continuing to work on medium and longer-term plans.

The last step is the future strategy step. Do this after the more immediate issues are mostly resolved, and the business has a more stable platform to make medium and longer term decisions.

Restructures typically take between six months and three years depending on the size of the business, the complexity of issues, and the ongoing support and motivation of the management team.

How do you write a business restructuring proposal?

A business restructuring plan has 6 components:

Executive summary

A summarised overview of the important aspects of the restructuring plan covering:

● The purpose of the plan
● A brief description of the company
● The history and marketplace
● Highlights of the financial projections
● Proposed restructuring, funding requirements, and strategies

Operational analysis and action plans

A SWOT analysis of each core business process and each major support function, then a detailed series of initiatives that address weaknesses and opportunities – operationalising the restructuring strategies into a series of actionable, measurable and quantifiable steps.

Financial projections

These include the basis of any refinancing, financial restructuring, or negotiations for ongoing support from stakeholders. Financial projections set out the financial implications of the restructuring strategies and detailed operational actions, which in narrative form provide the core of the plan.

Implementation process

There should be a description of the whole implementation process including milestones, key performance indicators, reporting timetable and an internal communication program to roll the plan throughout the business.

Risk assessment

An assessment of risk is critical for all stakeholders when deciding whether to support the restructuring plan.

Review process

A restructuring plan should outline when and how the restructuring plan will be reviewed, and by whom. The reviews should involve a restructuring advisor especially if you are relying on safe harbour provisions.

What are the benefits of restructuring a buisness?

When done properly, a business restructure makes your business more dynamic and innovative. It becomes more efficient, robust and profitable.

Do you need one of our restructuring advisors to help you restructure your company? Call 1300 004 404 or email info@byronvaleadvisors.com.

10 REASONS TO CALL YOUR BUSINESS ADVISOR:

  • Advice on business restructuring
  • Choose between pre-insolvency or insolvency
  • Lack of understanding of financial information
  • Analysis of profit margins and costs
  • Poor debtor collection management practices
  • A better understanding of pre-insolvency and Safe Harbour
  • Business running out of cash but has fast growth
  • Poor inventory or creditor management
  • Build a healthy and more profitable business
  • You’re a worried director dealing with financial distress