Why You May Need to Consider Restructuring Your Business

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Victoria Smith

Just because a business worked at one point in history does not mean that will be the case today. Many once very profitable companies, both large and small, have eventually fallen by the wayside. The forces of change affect us all, and this certainly holds true for business owners. If you feel like there is now something fundamentally broken about your business, it’s not too late to take action. You can restructure your company. Here are a few reasons why it might be a good idea to do so.

Technology Has Made Your Company Obsolete

One of the biggest drivers of change in the business world, as well as the entire world in general, is the advancement of technology. At one point, the manufacturing of typewriters was a huge industry. Today, if you asked school children what a typewriter was, they more than likely wouldn’t even know the answer. When technology is poised to make your company obsolete, you have to evolve or go extinct. If you don’t want to become a dinosaur, start laying the groundwork for plans to restructure your company’s business model. Start doing so many years before the change will be permanent. This is part of the reason why all the major auto companies are developing electric vehicles. They know change is coming.

Your Plans for Growth Aren’t Working

Another issue happens when a business owner is trying to grow the company past its more humble beginnings. Despite the owner’s best efforts, growth ends up stagnating. The hopes of reaching certain benchmarks for growth may be dashed. In this scenario, most likely, your business needs an organizational development adjustment. The organization of your company may have been sufficient when it was smaller. However, that structure may not be one that can facilitate the rapid kind of growth you want to obtain for your company. This process may involve overhauling the technical systems of your company in regards to technology and how the workflow is completed. It may also include the overhaul of social systems as well such as your business culture and leadership hierarchy.

Your Revenue Has Dried Up

A third scenario that may require a business restructure is when your revenue simply dries up. This may happen slowly over a period of months and years. In some cases, the revenue drop may be more dramatic and seemingly happen overnight. Whatever the case, it may still be possible to save your company if you act quickly. Think, for example, of how many restaurants adapted to lock-down orders during the pandemic by switching to a business model of delivery and curbside service. A drastic re-think of how you can continue delivering a product to customers and make a profit doing so may be required to stay afloat. Moving through a formal restructuring process can help you find a way to do so in an orderly fashion.

You’re Losing to Your Competition

Sometimes a business does well enough for an extended period of time. Then, at some point, a new competitor enters the market and takes all of that company’s former business. This isn’t a new phenomenon. Think of how most department stores disappeared after the advent of huge retailers like Walmart. If this is the case for your business, a restructuring can help you develop new strategies for competing in your market on a more equal footing. Changing your business model can help put you on top again. Think, for example, of how Little Caesars started growing again after changing their business model and centering it on a more fast-food approach with the Hot-N-Ready pizza that is always available for walk-in customers.

Your Business Is Dependent on Debt

If your business has become too dependent on debt to make it by, it may be time for a formal restructuring of your company. When you amass too much debt, you are more or less running your company for your creditors instead of yourself. The ability to grow your company or even simply re-invest into the business may be lost due to having to pay down your debt load. Your ability to maintain a competitive advantage may vanish as a result. Many companies are in this situation, and the global corporate debt is about 72 trillion dollars. Restructuring your company may allow you to find a way to make paying off your debt quicker and more orderly while also having some funds left over to invest in your business.

Overall, no business can stay the same forever. Whether it’s technological changes, the economy, consumer trends, or some other force of change, businesses will have to readjust from time to time to remain competitive and solvent. Don’t be afraid to go back to the drawing board and re-think your company’s business plan in a formal restructuring.


About the Author: Victoria Smith is a freelance writer who specialized in business and finance, with a passion for cooking and wellness. She lives in Austin, TX where she is currently working towards her MBA.