Although it might be necessary to ensure the long term survival of your business, undertaking a business restructure often includes plenty of challenges.   Undertaking a business restructure often occurs as a result of a failing business that is struggling to expand its demographic and struggle to offer products and services that turn over a profit which would allow the business to continue operating smoothly.

Restructuring a business can often lead to fallout and conflict for both the organisation and its employees. By making an effort to anticipate and prepare for the challenges associated with a business restructure you are able to minimise the negative side effects of needing to undertake your businesses restructure.

Employee Uncertainty

One of the biggest challenges associated with undertaking a business restructure is the level of uncertainty felt by employees. During a restructure employees will sometimes hit a state of panic and wonder how the challenges will impact the security of their job in the foreseeable future.

In many cases once the news that the company is restructuring is announced to the businesses employees, some employees might decide to start looking for a new position employment at another organisation. In many cases the stress associated with the restructuring sometimes takes away from the staff’s focus on their actual work.

Employees can in many cases become even more worried if the company isn’t forthcoming with details about the restructure. Although the business might not have the option of sharing all of the details ahead of time long before the restructure happens, a sense of transparency that allows employees to have some idea of what’s happening will most likely put your employees at ease and make them feel less afraid of the unknown and most importantly less likely to want to start looking for a new place to work.

The Reaction of Your Investors

Mainly depending on the size of your business and the funding it has available to it, your business might find itself in a situation where a large number of investors might react negatively to the news that your business is planning to undertake a restructure.

Your business might end up with a whole lot of new problems to solve if your investors oppose the restructure or fear they’ll lose money on their investment.  Communicating with your investors about the plans to restructure the business is a very delicate process.

Furthermore, for businesses that are publicly traded, a negative reaction to the restructure can result in dropping stock prices. Educating investors on the specifics of the restructuring plans and keeping them informed may help reduce their concerns.

The Loss of Assets

In some cases, the corporate restructure involves downsizing the workforce, facilities or product lines. As a result of this your business will find itself in a positive where it will be forced to choose the employees who you’ll let go. When some of your employees leave your organisation, you also lose the experience, skills and knowledge of company projects that those staff members possess. Prioritising the staffing and facility needs going forward helps you decide how to handle the loss of various assets.

Decreased Public Image

As your company restructures, your public image may begin changing. Undertaking a business restructure might possibly leaves customers and the public in general questioning the future of the organisation.

If your business decides to decrease its number of staff, you risk even greater public scrutiny. This is especially common during tough economic times when a large number of people are already unemployed. It would be highly advised to hire a public relations advisor that can help you keep your public image under control whilst your business is going through a restructure.

The team at C&D Restructure and Taxation Advisory are here to help. As part of the Vault Group we can offer the full suite of financial products and advice to help you navigate the business landscape. Schedule a meeting here via Calendly or give us a call on 1300 1 VAULT (1300 182 858)

Post Author: Craig Dangar

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