Is It Time To Restructure Your Company?

Upon launch, companies are forced to choose the type of entity in which they will operate. Unfortunately, what makes sense during the infancy phase of an organization, may not work well as the company develops and grows into maturity. Restructuring a company can take many different forms. From transitioning into a different level of operation to changing existing systems and from adjusting the company’s personnel to overhauling key processes, there is no perfect way to restructure.

While each specific organization will require a varied path to get there, the need for restructuring typically surfaces in reasonably clear ways. The best leaders are those able to recognize the signs of a necessary change and take calculated, yet swift action to move the company forward. Being proactive in the process of restructuring, whatever that may look like, will prove to be monumental in identifying challenges, seizing opportunities, and determining the best way to operate in the future.

The following are some of the most common signs that your company may be ready for a restructure:

  • Economic changes and an evolving industry highlight the need for your company to change
  • Profit margins are shrinking
  • Product development has widened the company’s primary focus
  • Existing systems and key processes don’t seem to be working anymore
  • Turnover is increasing, both in employees and clients
  • Internal operations have become inefficient
  • Communication is lacking from top management down to the staff
  • Workflow between departments has increased errors company-wide
  • New services have developed in order to create meaningful solutions
  • Taxes and regulations have opened the doors to new avenues for the company to grow

Quarterly, or even monthly, evaluation is essential in order to identify some of the above signs, meaning a company change may be imminent. However, most business owners will find that assessing these signs during yearly evaluations paints the most accurate picture. Restructuring means evolving and doing so in today’s competitive markets is a fundamental aspect in remaining profitable.

Some company leaders will evaluate these factors and come to the conclusion that selling the business makes more sense than changing the business model or transitioning to a different level of operation. Regardless of what the end decision may be, the challenge lies in being proactive while weighing the options to drive the company in the right direction. Knowing when to pull the trigger is essential to retaining your company’s value long-term.