5 Warning Signs that you need to Restructure your Business.

There comes a time in every business when its growth starts to stagnate or decline. Restructuring your business is a good way of avoiding going out of business. At some point, a company will feel the need to restructure its business and its current processes and teams. Such a rejig helps get back on track. You may be wondering what exactly is company restructure is. It can be defined as a condition where your business has to make big changes in the way it operates to make it more suitable for the needs of the business.

Why do you need to restructure your business?

Businesses go through many changes throughout their life. Even the most stable companies need to restructure their business from time to time. This is done to adapt to the changes in the business environment. It helps the business to sustain itself amidst changes and sudden halts, like the COVID-19 pandemic. Restructuring helps a business to adapt to its needs by changing course to a suitable direction. But it is not always done as a consequence of a negative impact on the business. Businesses may also undergo restructuring to accelerate growth, merge with another company, introduce a new vertical or fix a financial situation

 

A business has to evolve with the times to stay relevant and to survive in the market. Sometimes the restructure is very simple, like reducing costs or bringing in a new process. But it can also be complicated, such as rearranging the capital structure or changing existing systems. If you restructure your business at the right time, you can continue to grow and progress. If not, then your business will have to struggle. If you want your business to thrive, irrespective of the changing times, you need to restructure it now and then.

 

If you want your business to sustain, you need to look out for these 5 warning signs of restructuring:

 

  • Cash Flow problems:

Money is what keeps a business running. They are many ways a business earns and spends. If your cash flow goes in a negative direction, there is a need to fix that at the earliest. A business needs to maintain a positive inflow of cash to sustain itself. If that is not the case for your business, then it is a warning sign that you need to restructure your business. Cash is needed for dad to day operations in a business, without which it can impede functioning and make it difficult for the business to avail credit from the market. You could lose your edge over competitors and lose market share if you don’t have enough cash to run the business. To avoid the risk of insolvency, the business has to restructure to bring down costs and increase income sources.

 

  • You are behind in the competition:

Surviving in the market takes being ahead of the pack. Your business should have a competitive advantage over others to keep growing. If your competitors are ahead of you in the product range, pricing, and product quality offered, you will be left behind. This will lead to a significant drop in your sales numbers and a reduced customer base. If you are unable to meet industry standards, you will fall behind and see your sales go down. Eventually, your business will stagnate and stop growing.

 

To avoid such a situation, you need to restructure your business to stay ahead afloat. A thorough evaluation of every aspect of your business will help you determine the weak areas and determine how you can improve your business structure.

 

  • Your business is not efficient:

Efficiency is key in maintaining a business’ reputation. Having processes that get things done swiftly will help the business service a lot more customers and accelerate growth. But if your business lacks efficiency in communication systems, processing and streamlining tasks, and carrying out day-to-day activities, it will be very difficult for it to stay afloat.

 

To avoid being inefficient, the business needs to be restructured from time to time. The need for restructuring will surface from timely audits of processes. These audits highlight the weak areas and give the chance to correct the situation and keep your business stable. You can remove these hurdles from the way and achieve your potential if you can restructure the business at the right time.

 

  • Your business is heavily indebted:

A business regularly deals with debts from creditors. Most businesses operate on funds collected through debt. Operating on debt is not a problem till you can repay them on time. But being dependent solely on debt is not helpful. You need to earn profits to sustain your business. If you have too many debts piled up, you will not be able to devote funds towards the development of your business. As a result, growth will stagnate and eventually decline. You will lose your edge over competitors and slowly be out of the race if you can’t manage your debts.

 

To avoid this situation, a business restructure is a must. You need to evaluate your borrowings and find sources of earning to help the business grow. A business restructure will help you draw up a plan for timely debt payments. This way, you don’t spend vital funds on repayments and devote them towards the development of the business.

 

  • Your staff turnover rate is high:

Your employees are the people who help run your business. They are a valuable asset for the company. Having employees who stick with you and provide their invaluable services heavily contributes to the growth of your business. Employees who for many years are very valuable, it is crucial to retain them. But if your business sees more employees leaving the organization, it’s a sign that your need to restructure. The cost of hiring new employees is very high and will take a toll on the company’s health. It is necessary to retain the talent and avoid high costs.

 

To avoid this, you need to restructure your business. It has to be in a way that benefits the business and the employees. As long as your employees are happy, they will give their efforts and help the company reach its potential.