Small business owners face numerous obstacles, especially when just starting out. As soon as you conquer the initial task of organizing your new business, it seems as if you move straight into having to handle restructuring it. The thought of facing this endeavor head-on is not only daunting, but damn near impossible. Or so it feels. Just as you finally start to feel that you have control of the reins… BAM! Time to restructure.
Maybe I’m jumping in too quickly here. Let’s take a step back. First let’s look at the common definition of restructure.
“Restructuring is the corporate management term for the act of reorganizing the legal, ownership, operational, or other structures of a company for the purpose of making it more profitable, or better organized for its present needs.” -Wikipedia
For the purposes of this article, I am primarily referring to operational changes that will make the company more profitable, and/or better suit the needs of the business at the time. This seems to present itself almost as a nuisance, or something that ought to be done, but is not a necessity.
Recognizing when restructuring is needed, not only when it’s convenient, is critical to business growth and success. Ignoring this need can lead to business decline, or even failure.
So, how do you know if it is time to restructure? There are many signs, but here are a few to get your wheels turning:
1. Profit growth has come to a stand-still.
This is a dead giveaway. If your company is growing, or at least staying steady, and then it seems as though overnight your growth hits a red light that never turns green again, you may have a structuring issue. This is a telltale sign that something isn’t working and it’s possible that some of the following issues are also present.
2. The high turnover epidemic.
This is a painful one. High turnover from clients or employees are both brutal on a small business owner!
Experiencing a high employee turnover can mean that a few things are wrong with your current structure. It could mean that your pay structure isn’t competitive. It could mean that there is low morale amongst employees; which in a small business is like going to work with a communicable illness...everybody is going to get it! High employee turnover could also mean that there are undetected issues that management is completely unaware of, but that need to be figured out.
The turnover epidemic is obviously a problem. You want your clients to be happy and referring; not shopping other companies that provide the same product or service as you, and saying ciao to your company.
If this is a regular occurrence within your business, you guessed it, time to restructure.
3. Industry is evolving.
Let’s face it, evolution is just a fact of industry. This is why constantly educating ourselves on new trends within our industry is paramount to success. If you don’t know what your competitors know, you’re at a disadvantage.
Sometimes there is not only new information that we need to know, but new processes as well. For example, I am an accountant. What that means today isn’t necessarily what it meant 10 years ago. Sure, the basics of accounting stay the same: there will always be debits, credits, and payroll to be run. What hasn’t stayed the same? Well, technology for starters. Online software has all but eliminated the need for an in-house accountant or CFO. With programs like QuickBooks Online, your accountant can access and handle your accounting virtually. This has also lead to the concept of the Virtual CFO. Accountants have had to adapt to this evolution by training in new software and by learning how to work in an almost entirely virtual environment, outside of a “traditional office”.
4. Antiquated systems and inefficiencies gone rampant.
This one is a doozy. For many reasons, your current company or operational structure can quickly become antiquated. Now, despite how it sounds, this can actually be a good thing; meaning that there’s a good chance your company has experienced some rapid growth, which has caused your current system to become antiquated. For example, the systems you utilized to run a 5-person company will not work for a 50-person company.
As you develop the need to hire new staff, especially if you are hiring multiple staff members at the same time, it is not uncommon to have some staff that is overworked, while you have others being underworked.
This improper balance of workload requires restructuring of your operational system. This form of restructuring can be as “simple” as creating new job descriptions to make sure you are properly disseminating workload. Many times when a company is expanding, they don’t want to take the time to do this; it doesn’t seem like a good use of time, because it doesn’t appear to be a revenue or growth generating activity. However, this is absolutely the wrong thought process on the matter!
Having overworked and underworked staff can lead to other issues, such as low morale and high turnover (for both clients and employees). The process of creating new job descriptions would unveil that, with the increase in staff, what may be needed is to hire people with more specific, rather than generalized, skill sets.
It is tremendously important to recognize the need for restructuring. While it may seem against your instincts to spend valuable time on this, it can mean the difference between business growth and business failure.
Restructuring when it is necessary, rather than when it is convenient, will save you time and frustration and help increase growth!
If you’d like help discerning if it’s time to restructure some aspect of your business, feel free to reach out to our Superheroes! We would be happy to help analyze your present situation and get you on the path to maximum growth!