If your business is like many, it is struggling to get through these difficult economic times. Perhaps you are having to cut hours because of staff shortages, or you simply don’t have the customer base you used to before the recent health crisis and business shutdowns. You are facing some tough choices, knowing that the closing of your business is also on the table.
One option you may consider is restructuring your business. This can be done privately or through Chapter 11 bankruptcy, but either way, many business owners who launch a successful restructuring plan manage to save their businesses and emerge with a stronger, savvier operation. It is not an easy process, so before you undertake this method of finding relief from your financial stress, you will want to enlist knowledgeable professionals to assist you.
What does restructuring look like?
When your business is no longer profitable, you will find yourself unable to pay your creditors. This can result in a devastating domino effect that ultimately means the end of your venture. However, through restructuring, you may be able to trim waste in your company and capitalize on the strongest, most productive areas of the business. Your restructuring plan might be drastic or just a few consistent changes. If you can do an honest assessment of where you can cut costs, you may see immediate results. Some examples include:
- Reducing staff, especially jobs with overlapping tasks, to cut payroll
- Selling off unnecessary company assets
- Adjusting business procedures to streamline them
- Upgrading or consolidating computer systems, networks and programs for more efficiency
- Closing branches or eliminating services or products that are not profitable
These steps will not all be easy, and you will probably experience some tumult among your staff, especially if your process includes cutting jobs and departments. However, the goal of these and other steps is to pay down your debt and avoid having to liquidate your business, so it is important to keep this goal in front of you.
It is very likely you will need to do some negotiating with your creditors, and you may have to keep the option of filing for bankruptcy on the table. It will be important to keep open communications with your legal advisor so you can take the most appropriate steps to keep moving forward. With successful restructuring, you might be able to reach your goal of attaining a more stable and profitable business.