The decision to restructure your business is never easy. However, if you’re facing financial pressure you may need to organize the system in a new way to increase the effectiveness of your operation. You must make significant changes to your business structure if you don’t want to face liquidation.
Some business owners tend to ignore the signs of an organization starting to fail. By the time they realize their mistake the company has endured too much financial loss. So how do you recognize when it’s time for a business to be restructured? Here are 11 warning signs and how to implement change.
1. Your Company Growth is Stagnant
Your business will need to be restructured if you’re finding it impossible to reach company growth. If you can’t scale up or expand your business, you won’t be able to meet the demands of your business effectively.
By restructuring your business, you can uncover efficiencies and leverage resources to become a dominant player in your industry.
2. Competitors are Surpassing You
One of the more obvious signs that you need a corporate restructure is when your competitors start growing and surpassing you. This means you’re no longer the number one business consumers turn to for products and services.
Your competitors may become more successful because they’re offering competitive prices or better customer services. If your competition is beating you in the industry it’s time to restructure aspects such as:
- – Marketing strategies
- – Business model
- – Customer services
- – Prices
- – Organizational structure
You also need to re-evaluate the quality of your products. Find out what your customers don’t like about your products by allowing them to review them so you can make effective changes.
3. Cash-Flow Shortages
If your cash inflow is drastically declining, you will soon experience a shortage when paying overhead and utility costs. Although sales are excellent you could have issues with clients or customers not paying on time. In some instances, a higher paying client may go bankrupt, and you’ve now lost money coming in.
Poor cash flow can compromise competitive advantages and can affect credit rating with suppliers. At this point, it’s time to restructure your organization to bring in the money you need to keep your business afloat.
4. Massive Revenue Drop
Many factors affect revenue such as delivery or manufacturing problems or reduced product availability. Sometimes a customer’s decisions will change, and you can’t meet their demands. If your revenue declines, you won’t be able to break even.
The only way to start increasing your revenue is by changing all aspects of your business that are affecting growth.
5. Dept Dependence
Companies that are heavily dependent on debt are servicing their borrowers instead of becoming financially independent. Paying off debt will affect your business growth and it can decrease cash flow. Furthermore, you won’t have the capital to invest in your business.
Although business loans can help start-ups you shouldn’t be fully dependent on lending cash to grow your business. If this is the case, then you need to re-evaluate your system to see how you can generate your own money to be self-sufficient.
6. A Significant Decline in Sales
You could benefit from a business restructure if your sales are declining. If your sales aren’t coming in, you could experience liquidation. By reviewing your market and re-evaluating your operations you can identify the problem and restructure your processes to increase sales.
7. Runaway Costs
Runaway costs are expenses that aren’t controlled by your business. These costs are the top indicator that your business is in trouble. If your business is spending more money than you’re making you will experience cash flow shortages and profit loss.
Soon you won’t be able to pay suppliers or even your employees.
With restructuring, you can identify what is causing you to spend money unnecessarily so you can cut out excessive costs.
8. You’ve Learnt from Others Mistakes
Some companies go through restructuring but are still experiencing problems. This could be because the restructuring wasn’t done correctly. To avoid restructuring mishaps you must first identify common pitfalls and risks.
The ideal way to avoid mistakes is to consult a business that has experience with restructuring companies. Professionals will help you identify the problems in your organization and how they’re affecting your growth.
9. Constantly Working Without Results
Are you and your team working long hours but you’re not seeing the fruits of your labor? This means that there is a problem in your processes that is causing serious cash-flow shortages and loss of profits. Sometimes you don’t have to restructure your entire system. You may only need to change how you deal with clients and your communication processes.
10. Your Metrics Aren’t Showing Results
Online businesses rely on metrics to show them how their companies are performing. These metrics include website traffic or engagements. If your metrics are low, it means that your consumers aren’t interested in your content, products or services.
You’ll need assistance to find out why your metrics are low. Sometimes it could be a website issue, or you’re producing low-quality content. With professional assistance, you can identify what these problems are and how to fix them.
11. Changing Customer Loyalty
Customers can change their loyalty at any time especially if they find a business that’s better than yours. If you’re experiencing a decline in your customer base it could mean that your products, services and communication is subpar. Now is the time to develop a plan so that your customers stay loyal to your brand.
Final Thoughts
If you’re experiencing any of the signs mentioned in this article, then it’s time to call in the cavalry! Daveron Networking has over 10 years of experience with restructuring organizations that are facing major problems.
Whether you’re experiencing a decline in revenue or you’re not seeing results with your business growth strategy, we’d like to assist you. We aim to find weaknesses in your processes and develop a plan to restructure them so you can start seeing the fruits of your labor.
Ready to grow your business? Speak to our growth experts and learn how to expand your customer base, drive revenue growth, and optimize your business operations.
