1. Change in management or ownership of the business

If you are a sole trader and you decide to take on a business partner, you will need to restructure as a partnership. On the other hand, if you buy an existing business and you become the new owner, you may have to restructure the business to meet your business goals and regulatory requirements.

2. Profit growth is stagnating

If this is the case, you will need to audit your salary-to-revenue ratio, cost of goods sold, and overall expenses. If any of these are causing your net operating income to dwindle, a restructure may be necessary to improve the profitability of your business.

3. Poor efficiency

If you do not change as your business grows, this could lead to inefficiencies in the workplace. Hiring more people may increase efficiency and allow you to service more customers, but you will also have a higher payroll cost and reduced profit. Instead, restructuring could be the answer. It could help you streamline your operations and continue to grow without having to hire new staff.

4. Poor employee management

Are your employees overworked, underutilised, ignored, or unsatisfied? If so, they could make costly mistakes or leave the company, and this will affect morale and profit. If your business is experiencing these problems, you may need to audit your existing teams and structure. You may find that restructuring is the key to reducing turnover, minimising mistakes, increasing morale, and leading your business back to profitability.

5. Poor competitiveness

As time passes, industries change and technology improves. If you’re doing business the same way you were a decade ago, you could fall behind your competitors. They could crush your prices and surpass you in everything from product quality to customer service. You’ll need to rethink your business model and structure so that you can start beating your competitors again.

6. Shifting customer base

If your customer base is diminishing or buying less, it may be time for a restructure. It could help you roll out a new product, generate revenue for the same product through licensing or subscriptions, or deliver the same for less through reduced costs that allow you to lower prices. This can keep your customers happy and coming back for more.

7. Business growth or economic downturn

Your business, goals and the economy can change over time, which could lead to an expansion or downsizing in regard to your office space requirements. For example, if you are expanding your business overseas or introducing new product or service lines, you’ll need to change the structure of your business to accommodate this growth. On the other hand, if there’s an economic downturn, you might want to downsize your business structure from a company to a sole trader to better manage your business and keep it alive.

More information? To find out more, give us a call on 1300 023 782 or email team@cdrta.com.au.

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Craig is the principal consultant of C&D Restructure and Taxation Advisory and has been working in the industry since 1999. Having established C&D Commercial Partners in 2015 the precursor to the current business.

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Post Author: Craig Dangar

Craig is the principal consultant of C&D Restructure and Taxation Advisory and has been working in the industry since 1999. Having established C&D Commercial Partners in 2015 the precursor to the current business.

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