7 Signs your Business needs Restructuring in 2021

by | Mar 15, 2021

Covid-19 was unexpected. By the time the business sector felt the impact, things had gone out of hand for many. Most business leaders today are caught in an overwhelming situation and wade through unchartered waters. The journey or the navigation continues witnessing efforts to reinvent by many organizations. Some are restructuring, others are still caught between the dilemma of what to do and what not ,while some have become case studies for the corporate world.

Their agility and inventiveness have created a difference, not only for their business but for others too. From re-evaluating existing scenarios to reassessing strengths, there are a lot of activities that are happening in the corporate sector.

Restructuring the business is one of the key strategies for small and medium scale businesses. What is Restructuring? It is about reorganizing or making relevant changes to the organization’s financial, operational, or legal structures and is usually done under financial duress. In 2021, the likelihood of firms getting liquidated is far more than opening new firms or restarting operations again. If the pandemic was not enough, cut-throat market conditions coupled with technology are consistently acting as major disruptive forces.

It is good to identify the signs that show your business needs restructuring

Here are the top seven signs that act as the indicator for owners, CEOs, and CIOs to start restructuring your business as fast as possible

  • Declining sales
    It is the biggest indicator that things are not fine with the business. It is time to think of restructuring the business seriously. If the sales volumes are going incredibly low, it could mean that your business is sitting on the tip of an iceberg called insolvency.
    A top business restructuring consulting firm will closely assess and review your business from close quarters and pinpoint the cause and reason for Restructuring. It is important to move swiftly to gain the lost grounds and stay ahead of the competition. Through rRestructuring, businesses need to re-strategize so that they can be profitable again. Identifying the right consultant is important; so that you get a fresh and new perspective to strategize.
  • Increasing dependency on debt
    If your debts are rising without any increase in Revenue, it surely indicates that your business needs to go in for Restructuring. Remember that when borrowings increase, the cost of servicing of the debts would increases too, impacting the cash flow and profitability. In such a situation, consult with a credible business restructuring service provider to get back to your feet again. The restructuring would majorly focus on formulating a plan to reduce debt to and invest a good part of the debt into building the business.
  • Runaway costs
    Runaway costs are expenses that are not under the control of the business. Such impromptu costs are indicators of your business requiring proper planning ahead. It could soon drive your business to bankruptcy as all the money would be used up in covering such costs. In this scenario, you would typically need a financial restructuring and planning to come out of the situation. Review your historic costs, analyze the variation in cost during the past and plan ahead to accommodate such surprises.
  • Cash-flow crisis
    One reason firms choose to hire professional business restructuring consulting services is when the cash inflow goes down drastically. It could be even with a business that is registering tremendous sales and doing commendably good on the papers. In reality, there could be issues with clients not paying on time or a big client going bankrupt, or the working capital required is incredibly high. It is smart to consider Restructuring at this stage as a viable option.
  • Market conditions are becoming unfavorable
    Volatile market conditions are always a beckoning sign that it is time to re-strategize. Restructuring is one strategy that has worked well with many firms, and there is no reason why it will not work for your business. One of the market signs not being favorable anymore is losing out on your industry’s top positions. For example, if your firm has typically been ranked number one or two and has slipped down in recent years, there could be something wrong. It is time to think on the lines of Restructuring.
    Another sign of changing market condition is when no growth opportunity exists in your industry; you would want to go in for a major rehaul or rRestructuring. In this condition, even if your market share is good and there are no apparent threats to your business, the scope of growing or scaling up does not exist.
  • When change is imperative, yet there is a major resistance to change.
    Change management is key to success in many organizations. It is an inevitable truth. Yet, when the time to embrace change arrives, the employees and staff shirk away or lack the dynamism to adopt change. It could be a vicious circle because the resistance to change can creep up and become a demon with your valuable and performance-oriented employees leaving the organization. Things can go out of hand pretty quickly; it is good to have an expert offering business restructuring services to come in and show the way.
  • Changing customer loyalty
    Customers can shift their loyalties anytime. That is why businesses work hard to retain customers. If your business is facing a similar situation where the customer base seems to be diminishing fast, you need to develop a plan. There could be innumerable solutions to the problem, and an expert would be able to offer you the best help.

CONCLUSION

Knowing when to restructure can help save your business, especially in 2021, when the pandemic’s aftermath is still being felt in many parts of the world and across multiple industries. Consulting with an expert is ideally the best way to go about it.