It does not really matter the size or the nature of the company: All of them can be restructured, and, generally, these processes bring quite positive changes in the commercial future of failing organizations. What must happen, in any case, is a successful process of adaptation to the new circumstances; those that make organizations take drastic decisions like this one. The need to develop a restructuring program is one of the best decisions that can be made when there is a positioning deficit in the market of goods and services to which the company belongs, and, of course, when the financial structure of the company has lost its natural balance.

Being able to adapt to changes is then a condition, insofar as it is not possible to start a restructuring process without the company being able to respond adequately to the changing situations that always take place as a consequence. The reason is simple. In general, restructuring processes involve new circumstantial conditions for any organization. These changes can be problematic or not depending on the ability to anticipate them and have enough contingency plans.

So, the first step to start a restructuring process is to analyze if there is actually a crisis situation going on that makes it necessary to start this program. This step is as delicate as the correct medical diagnosis before determining whether or not to perform a drastic operation on a patient.

What is a crisis situation? There are four basic types. The first – social – is related to the negative impact on workers, creditors, and the community in general. The second type – economic – has to do with the profitability of the investment made: It must be significant and lower than that of other investments of more or less similar risk. The third type is legal, and is related to cases in which suspension of payments is requested or when the company files for bankruptcy; and, in these cases, the legal consideration of the crisis is clearly delimited. Finally, there may be a management crisis, especially if a business is already experiencing an economic and legal crisis, as well as if there is a continued deterioration in the results of market share and competitive position.

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Now, it is important to take into account the following considerations to start an adequate restructuring process. In the first place, the company must analyze if all the productive processes really contribute value to the clients or if they are only a source of expenses and inefficiencies. The criterion for determining it is knowing how to generate more with less.

On the other hand, it is vital to group all the activities of the company to eliminate duplicities that do not contribute in any sense. Many times, companies grow and tasks are duplicated by the lack of communication or by the mere fact that the staff makes things without any order or direction. Duplicities are especially common with data and information. It is necessary to look for computer solutions based on applications that avoid these problems.

Additionally, an element of importance that could determine the good future of the organization has to do with the search for those multi-skilled workers who can lead and motivate the rest of the team. Moreover, if it is necessary to reduce personnel, the ideal is to do it based on the profiles of the workers and not based on their salary. Sometimes, the only solution is to have polyvalent and motivated people.

Creating a vision of the future that motivates the whole company is much more than just a favorable possibility. It is a necessity. This is the only way to encourage creativity within organizations, as well as to make them give everything they can offer.

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Finally, in the midst of a restructuring process, the search for new strategies to achieve visibility in the market and increase sales will always be fundamental. It does not matter how much the expenses are reduced: There will always be minimal expenses, impossible to reduce or eliminate. For this reason, one of the main goals of a restructuring process is to increase revenues (not acquire new expenses, of course, but to increase revenues.)

In the same way, it is necessary to take into account the type of restructuring process that the company needs. Small restructurings may be carried out within the business model; those that are sufficient to give the business the change it needs, as well as completely change the management of the company. For example, while large companies usually opt for merger or spin-off actions, when it comes to family businesses, it is more feasible to outsource or internalize certain tasks, such as the production of a particular service or the cleaning service. It is not enough to have a good idea for the change, but it is necessary to know how to carry it out so that it is not doomed to failure even before putting it into operation.

Read also: What you need to know about Puerto Rico’s bankruptcy and restructuring, by Suzzanne Uhland

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