There comes a time in the life of every business when change becomes necessary for survival. This change might be as straightforward as reducing manpower or adapting new technology. It can also be as complex as restructuring your existing processes and systems.
Companies that can quickly identify what needs to be changed and do it at the right time are able to successfully overcome challenges and continue growing. However, organizations that resist change often struggle, stagnate, and eventually fail.
To prevent your business from falling into the latter category, you must watch out for the following warning signs:
1. Cash Flow Issues
Money is the life blood of any business. If you’re unable to maintain the influx of cash into your organisation, then that’s a sure sign of trouble. Regular cash flow shortages can disrupt daily operations, affect your credit ratings with your suppliers, compromise your competitive advantage, and ultimately leave you vulnerable to insolvency.
2. Poor industry competitiveness
Your competitors are leaving you behind when it comes to product innovation, pricing, and quality. You are finding it difficult to catch up to the changing standards of your industry. Both these signs indicate your company is no longer competitive in your chosen field.
To turn things around, you must take the time to reevaluate every aspect of your company, from your business model to your current organisational structure. This will allow you to rediscover what made your business great and help you bring back your edge so you can once again compete well in the industry.
3. Too many debts
If your business has a lot of debts, then you’re most likely devoting a significant portion of your time and money into servicing your borrowings. This takes away a lot of the resources that you could have spent on other crucial areas that will improve your competitive advantage, such as branding and product development.
Business restructuring can help you solve this problem. With this strategy, you can come up with a new plan on how to pay your debts on time without draining all the funds necessary for your company’s growth.
4. Rampant inefficiencies
Another sure sign that your company needs to be restructured is poor efficiency. This is often manifested in miscommunication between teams, slow processing times, mistakes in product or service delivery, and failure to comply with government and industry regulations. All of these roadblocks affect your bottom line and keep your business from reaching its true potential.
5. Skyrocketing runaway expenses
If your business is spending more than it’s actually earning, then you’re definitely headed for trouble. A dramatic increase in your runaway expenses threatens your company’s solvency as it puts you in a position where you’re unable to pay your suppliers and creditors.
6. Significant decline in revenue
A sudden and sizeable drop in sales and revenue is another obvious sign that your business needs to be restructured. This situation can set off a chain of events that will threaten the long-term survival of your company. It can halt your operations, damage your competitive standing in the industry, and keep you from meeting important financial obligations like paying debts and employee wages.
7. Diminishing customer base
Have you noticed a significant decline in your customer base lately? Are your clients buying less products from you or are showing less interest in your services? If you answered “yes” to these questions, that means your business could certainly benefit from restructuring.
To bring back your clients, you will need to figure out a way to reduce production costs without sacrificing quality, introduce new product lines, or explore innovative ways to market your offering. Business restructuring can help you will all of these tasks.
Remember that time is of the essence when it comes to business restructuring. The sooner you do it, the more effective your changes and improvements will be. Also, restructuring gives you a chance to start anew, so it’s important you have the right professional to help you through the process.
This is where Slater Byrne Recoveries comes in. We offer a variety of services that can help you identify the financial weaknesses in your operations to ensure your business thrives again. Click here to find out more about our services.
Liam White joined the Slater Byrne Recoveries team in early 2013. He has worked across the credit & dispute resolution industry for a number of years. He is currently working in a Marketing/Head of Sales capacity at Slater Byrne Recoveries.