If there was ever a time on top of the usual economic ups and downs, the last two years might have put more strain on your organisation than you ever wished for. As the pandemic related support measures are phased out, global corporate insolvencies are forecast to increase by 24% in 2022.
If you are at a stage that all your business KPIs are throwing up red flags and you fear you have to close down your business, you may want to consider restructuring your business, a turnaround restructure.
Restructuring your business involves reviewing every aspect of your organisation with the sole purpose of making it a more efficient as well as a more profitable organisation. And you need to do it quick.
Start with identifying the most inefficient processes, underutilised assets and the most significant cost drivers. Pay particular attention to any product or service that does not contribute to your bottom line. Include a review of all of your customers. Are they profitable, or do they keep you busy but never buy. Review all supplier contracts, re-negotiate where you can. Liquidate all business assets that are not contributing to your profitability.
The main focus of any turnaround restructuring initiative is to eliminate all cost drivers urgently and at the same time increase your ability to boost sales of your most profitable products (or services). You might have to outsource some of your operations or cut back on staff. Focus on your high(est)-margin products/services and be prepared to change your product or service offerings. While it is stressful, restructuring will improve your cash flow, revenues and, depending on your type of business, you should see signs of recovery after 3-6 months. Of course, this does not consider any economic changes or a total collapse of your market.
Restructuring efforts are quite business-specific, but the above high-level summary gives you a good idea of the necessary steps.
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