Running a business in Australia can have its challenges. From fluctuating market conditions to shifting consumer trends, many businesses find themselves experiencing financial difficulties and in need of a business restructure. A business restructure, sometimes referred to as a debt restructure, corporate restructure or financial restructure, is commonly used to reorganise the internal structure of a business to better match its present or future needs. With a successful business restructure, a formal insolvency appointment can be avoided, allowing you to satisfy your creditors and continue to trade.

The Business Restructure Process

The business restructure process is different for every business as every financial situation is unique. To implement a business restructure, you need to follow these four steps:

  1. Analysing your business’ financial situation,
  2. Determining the prospects of your business’ survival,
  3. Exploring relevant strategies, and
  4. Developing a preliminary action plan.

1. Analyse Your Business’ Financial Situation

A successful business restructure is based on an accurate analysis of your business’ finances. Once you have an accurate assessment, you can refine your strategy and create an action plan moving forward.

2. Determine the Prospects of Your Business’ Survival

To determine the prospects of your business’ survival, you’ll need to find out if your business is viable. A viable business has three major requirements:

  • Having one or more sustainable businesses,
  • Owning adequate (and available) financial resources, and
  • Having sufficient organisational resources.

If you can’t tick off the above three requirements, your business may be in a declining financial position – where you’ll need expert input. If your business has all three requirements present, you can explore relevant strategies by addressing where the strengths and weaknesses are. For example, you may have strengths in operations, but weaknesses in organisational structure.

You can use the Australian Taxation Office (ATO)’s business viability assessment tool, to help determine the chance of your business’ survival.

Is-Your-Business-In-Financial-Distress

3. Explore Relevant Strategies

During the business restructure process, you need to explore relevant strategies which can give your business its best chance of success.

Some steps you may want to take include:

  • Initiating new marketing programs to broaden your business and customer base and increase market penetration,
  • Increasing revenue by carefully adding new products,
  • Securing customer loyalty through better customer service, and
  • Rebuilding momentum and company morale – transforming negative attitudes into positive ones as you map out the business’ future.

4. Develop an Action Plan Moving Forward

A business restructure is likely to impact many parts of the business. Therefore, you need to develop a business restructure plan which includes:

  • The reasons for the restructure,
  • Goals and aims,
  • Impacts on employees,
  • Changes to staffing arrangements,
  • How the restructure will be carried out,
  • Possible organisational structure scenarios,
  • New or existing legal restrictions,
  • Implementation timelines, and
  • Key hires or the creation of new roles.

The Advantages and Disadvantages of Restructuring Your Business

Advantages

  • Reviving a declining business,
  • Increasing a business’ value,
  • Helping the business position itself for growth, and
  • Reducing operational costs.

Disadvantages

  • If the business downsizes during the business restructure process, it may lose highly skilled workers which may result in a loss of productivity and cause the need to increase spending on training expenses,
  • Staff who remain onboard during a business restructure may feel insecure about their jobs, which may lead to low worker morale and poor customer service.

Business Restructuring Experts

There are many reasons why a business may need to restructure, but one of the most common reasons is when a company is facing insolvency or its assets are under threat. If you’re in this situation, Revive Financial is here to assist. We can help implement a successful business restructure to get the company’s finances back on track. Get in touch with us today on 1800 534 534 for a free 30-minute consultation.

Topics: Turnaround & Restructuring, Business Debt

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