Business Restructure

Business Restructure is a kind of corporate advisory process which aims to improve the financial and operational efficiency of a company. Many business owners will need to consider how to restructure their company for business growth and survival during he Covid-19 pandemic.

As businesses continue to be affected by Covid-19, business owners nationwide are relying on restrictions being lifted and trade resuming ie: things returning to ‘normal’. But what exactly is the new ‘normal’ going to be? Nothing like it was, that’s for sure. Spending habits have changed, as has social interaction; both these issues will have an affect on your business’ outlook.

What Is Business Restructure?

Business Restructure often takes place when a company is experiencing financial difficulty, or as part of an insolvency process. If a company enters administration, it will be granted a ‘moratorium’ which gives the organisation time and space, plus the legal protection needed while the company is being restructured. If the business is not under threat of litigation or insolvency, restructuring can take place while the business continues to operate.

Business rescue is not only carried out on distressed companies. Businesses often decide to restructure when in need of change. Of course, this might very well involve financial incentives, however, it could also be down to other factors which could have the potential to improve the way a company runs, such as politics (ie: Brexit) or global pandemics (ie: Covid-19).

Why Would A Business Restructure?

Companies restructure for a variety of reasons, including:

  • To reduce costs
  • To concentrate on key products or accounts
  • To incorporate new technology
  • To make better use of talent
  • To improve competitive advantage
  • To merge with another company
  • To decrease or consolidate company debts

Just as there are many reasons a business might restructure, there are many benefits of restructuring a business. Companies might restructure the financial, operational, legal, or other structures to make it more efficient and profitable. Essentially, the idea is to make things as effective as possible.

The Benefits Of Restructuring

Two words can sum up the overall advantages of business restructuring: survival and success. There are huge benefits to restructuring and business owners should not be afraid of the process.

In fact, restructuring a company is the perfect opportunity to reflect on the current position of the business and on what steps to take to ensure its ongoing success in the future.

Business Restructure Ater Covid-19

COVID-related uncertainty is triggering many business rescue activities ranging from formal insolvency procedures to restructuring company debts. Many are redesigning operating models and supply chains, managing new areas of risk and negotiating long-term stakeholder support. Now covid-exists it is to be a part of everyday life for the foreseeable future. Things are not the same and your company must be structured in a way which takes this into account.

  • The “New Normal”: Businesses must adapt to the ‘new normal’. Strict social distancing measures and increased hygiene protocols have resulted in changing consumer behaviours and ideals. Some companies will find upcoming trade particularly difficult; while trade may not bounce back full force, costs certainly will. Companies that have been using the government’s staff furlough scheme to cover wages will be hit hard with full wage bills for their employees. With cash flow having taken a nosedive after months of no trade, this could result in company debts.
  • Workforce: There are many uncertainties for businesses around their workforce, particularly the practicalities of acquiring or keeping the confidence and support of employees in their personal safety, whilst simultaneously resuming operations. Other concerns relate to health and safety, trade and credit insurance and sector specific issues.
  • Company Debts: If there are any company debts such as emergency loans, as well as any back payments owed (for rent or tax for example), this will increase outgoings, thereby reducing available cash flow. Companies face many difficulties dealing with the frequent changes in today’s economy, and company restructuring can be a short and long-term answer to maintaining company viability.

Business Restructure: Cutting Costs

Cost Cutting is a familiar activity for many business owners but it is becoming more urgent since the beginning of the coronavirus pandemic, with many under intense pressure to cut costs quickly. However, rushing in cold could damage the company’s long-term prospects.

Business Restructure should aim far beyond simple capacity and headcount reduction. Unless it is a desperate bid for immediate, short-term survival, the main goal should be to improve long-term health and capacity. Our experts can advise you on this. It is important not to make the mistake of scrambling for short-term cuts and take the time to set strategic goals which can help avoid long-term losses.

We can help you with all types of restructuring, including streamlining and business simplification. We can help you identify non-performing areas or departments which can be closed or scaled down, allowing for funds as well as resources to be channelled towards more profitable areas. A streamlined, more refined organisational structure allows for increased efficiency and significant cost reductions.

Business Restructure should increase resilience, preparing it well for the future, improving stability and preserving stakeholder value.

How Debt-Helpline Can Help

Delivering strategic change and instigating the operational capabilities needed to deliver it have always been difficult. Yet, we now have both the industry professionals and the practical means to make strategic cost reduction realisable and transformational for your business.

Successful business restructures feature wider strategic goals that position them for future growth. This can be achieved with the help of one of our business rescue experts working closely with your company’s management team to plan a way forward.

Embarking on a process of business restructure can ensure your company is in an optimal position to reach peak efficiency when we emerge from the pandemic.

Debt-Helpline has a team of professional insolvency practitioners and business turnaround experts who can talk you through the entire business rescue process and support your business every step of the way. To arrange an initial consultation with one of our restructuring specialists, call the team on 0333 300 3490 today or fill out our contact form.

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