Business Rescue and Restructure
When a company is facing financial difficulties, it may be able to restructure its business in order to stay afloat. This process is known as business rescue. Business rescue can involve a variety of different measures, such as streamlining operations, reducing costs, or selling off assets. In some cases, it may also involve bringing in new investment. The goal of business rescue is to help the company become viable again and avoid bankruptcy. Often, businesses will seek out the aid of a professional restructuring firm in order to ensure that the process is done properly. If successful, business rescue can help a company get back on track and avoid closure.
Business restructuring is a process by which a company may remodel some aspect of its operations.
Not necessarily. A business could merge with or be taken over by another. This would require large scale restructuring of staff, assets and resources.
Debt restructuring is a form of business restructuring, where a business owner or Company Director negotiates new payment terms with their Creditors or enter into a Company Voluntary Agreement (CVA), or another form of debt solution.
A successful business restructure means the Company can once again operate smoothly and have a better hold over their finances and debt.
When there are long-term cash flow problems. If you don’t see a way out of paying off your debt, business restructuring could work out to be a viable option.
Business restructuring will be carried out by a business rescue expert. This is usually a licensed Insolvency Practitioner (IP). Professionals in the legal and financial field will also be involved.
How does business restructuring work?
- Step one: Why do you want to restructure?
- Step two: Mapping out your objectives
- Step three: Budgetary considerations
- Step four: Communicating
- Step five: Testing phase
- Step six: Full roll out
- Step seven: Review and evaluation
The first step towards restructuring is to identify, why there is a need for this. As mentioned, it could be due to financial pressures, or you’re about to merge or take or be taken over another business.
Once you are aware of the reasons you need to restructure, you need to work out the objectives. The objectives should be SMART (specific, measurable, attainable, realistic, time-specific).
Business restructuring costs money. You have to pay the Insolvency Practitioner hired to restructure the business, including any project team you bring on board and any legal costs. Furthermore, if your restructuring process includes hiring new staff or making staff redundant, you’ll have to factor these into account as well.
If you’re a large organisation who operates from different cities, HQs or country’s, you will need to appoint a ‘go to’ person at each site.
You will need a robust communications platform in place to communicate out milestones, progress and anything that goes wrong. This should be part of your budgetary considerations.
Depending on the size of your organisation, it is always wise to test, measure and analyse the restructuring of one element of the business. This could be one branch, one country or even one department. The measuring should take place against pre-identified SMART objectives.
Once all kinks and corrections are ironed out in the testing phase. It is time to roll it out organisation-wide.
Even if testing goes well, there is still a chance for errors. Therefore it is important to regularly review and make any necessary changes.
Barriers to business restructuring
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Resistance from employees.
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Goals are not SMART.
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A lack of openness to change.
The key element is to be as meticulous as possible. Business restructuring is a long, and often painful, process. However, Managers need to be open to change, recognise the issues and afford proper documentation and thought at each stage of the process.
Cooperation, effective planning and goal setting does not guarantee success. Some businesses cannot be saved via restructuring. At this point, they will need to look at other solutions.