Our friends at Revitalization Partners help companies make better business decisions. Here is a blog from their newsletter about misconceptions and the need for restructuring a company. At Juniper Capital, we are committed to sharing business advice that helps you achieve success. We specialize in real estate investments with private money loans in Washington and the greater Pacific Northwest. Share your thoughts on this blog, so we can continue to provide you with quality information for operating your business:
Every company, during its lifecycle, experiences the need to adapt and restructure existing systems, processes and even management teams. Companies that quickly identify that need, when the time is right, continue along a growth trajectory. Those that, don’t struggle and often fail.
Most company owners and financial supporters think of restructuring as a negative activity; something to only be done when there is an operational or financial crisis. Yet nothing is further from the truth. Business restructuring is the process of redesigning, realigning, and reorganizing, so as to position the business to be more competitive, survive adverse economic conditions and, sometimes, to move the business in an entirely new direction. In fact, the restructuring process, if planned and implemented in a timely manner, is designed to prevent crisis. No business can continue to function the same way forever. With changing times and changing business conditions, restructuring is the best option for many businesses.
Even in the best of times, it’s important to be proactive, to monitor not just your company’s performance, but the health of markets, competitors, customers, vendors and lenders. Most importantly, businesses should always have a recovery plan, long before the need for one becomes critical. It’s twice as hard to develop a viable plan and alternatives in the midst of crisis.
The study, “Best Practices in Corporate Restructuring”, indicates that the critical time for the successful implementation of a restructuring process is the first six weeks. A successful implementation process starts with clarity of positions, roles and responsibilities, and a clear identification of all functions within the business, including activities, tasks and levels of authority for decision-making. Everyone must understand where they fit for the efficient operation of the business; what they are accountable for and how it will be measured.
Here are a few warning signs that potentially indicate the need for some sort of restructuring:
·Profit growth has come to a screeching halt.
·Turnover at the employee and/or customer level.
·When old systems no longer work and inefficiencies are rampant.
·When the ball is constantly being dropped.
In many cases, because existing management cannot see the need for change or is wedded to a certain way of doing things, when it comes to implementing a restructuring, stakeholders in a company often appoint an interim manager or a Chief Restructuring Officer. The person in this position is a specialist in the process and normally brings together all of the tasks involved in the restructuring. The greatest impact often comes from having this person be directly responsible for the implementation of the restructuring process and acting as an honest broker on behalf of all interest groups. Their involvement is time-limited and linked to measurable objectives; once these are achieved, the exit process begins.
Skilled restructuring management insures that a successful implementation of the restructuring is carried out, involves all relevant stakeholders, creates transparency and insures the company is positioned to meet its operational and financial objectives.
Revitalization Partners is a Pacific Northwest business advisory and restructuring management firm with a track record of achieving the best possible outcomes for their clients. They specialize in improving the operational and financial results of companies and providing hands-on expertise in virtually every circumstance, with a focus on small and mid-market organizations. Contact Revitalization Partners if you want the best resolution in the fastest time with the highest possible return.
Revitalization Partners… when a company is worth saving.