At the core of the evolution of life on planet Earth, species have had to adapt to changing circumstances or face extinction. Similarly, every company and organization experiences changes throughout its lifecycle that inspire the need to adapt. Companies that fail to recognize the appropriate time to adapt or restructure risk a great deal of risk and even failure.
Companies can work to identify when it’s the right time to restructure with under the guidance of professional restructuring consulting firms. During such times of uncertainty, it’s understandable that a business would want to cut costs, but a professional restructuring consultant or firm can help a business adapt in a way that supports their growth rather than prolonging their failure.
The events that lead up to the need to restructure don’t happen overnight, and usually take place over a fairly long period of time. Here are a few signs that may indicate it’s time for a business to restructure:
Profit growth falls short
If a business had a consistent history of steady growth and increasing profit margins that seem to be shriveling up over time, it may be time to perform an audit in order to identify for the problem. The audit will closely examine several things that could be causing the decrease in net operating income, which will help to determine if a restructure is necessary.
Employee musical chairs
A high turnover rate of both employees and clients needs to be carefully monitored and examined. There are several internal and external factors that can contribute to a high turnover rate and it’s important explore all of them. For example, ff you find that your customers are leaving almost as fast as they come, it’s important to accurately identify the cause of their dissatisfaction. Building solid customer relationships will ensure to health and success of a business.
Similarly, a business that has a revolving door of new employees coming and going needs to examine why this is and how to change it. Again, there are several reasons why this could be, including poor company morale, lack of competitive compensation, or poor leadership. Identifying these patterns through surveys and exit interviews can help determine if a restructure would be beneficial.
Inefficient workflow
As a company grows or decreases in size, its workflow needs to adjusted accordingly in order to ensure it remains efficient. If a company is experiencing growth, the natural assumption would be to hire more employees in order to accommodate new business. However higher payroll means a decrease in overall profits, so it may be time to restructure in order to keep the workflow process as streamlined and efficient as possible. This is often possible without having to hire new staff simply by improving systems such as software or internal operations.
