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6 Tips For A Successful Business Restructure

Updated on October 27, 2019
Luke Fitzpatrick profile image

In my spare time, I enjoy writing about parenting, productivity, and home improvement.


To remain competitive in any industry, organizations must adapt to the changing environment. And as business goals transform alongside the changing environment, certain business structures may become counterproductive.

Take Microsoft, for example. Rather than relying on constant refreshes of the Windows and Office software suites for their success, Microsoft underwent a restructure in an attempt to better compete with the likes of Google and Apple. The new CEO, Satya Nadella, was appointed in 2014 and turned the company on its head, with all employees now focused on a common product and platform.

So how can you successfully restructure a business, and what are the key points to take into consideration?

1. Make sure you understand the why

There’s no point in undergoing a restructure if you don’t know why it’s happening. Any new structure needs to meet business needs, especially as they change. So, if you don’t have a good understanding of why you need to restructure, chances are, it’s not going to be successful.

Some common reasons many businesses restructure include:

  • A change in management or ownership: A new CEO or owner will view the business differently, and as an ‘outsider’ can often see where and how the business needs to adapt to remain sustainable.

  • Finances: If you’re not meeting financial objectives, how can you change this? Restructuring, even a small one, may help improve cash flow or profitability. On the flip side, economic downsizing may also lead to simplifying the business structure.

  • Business growth: With growth often comes greater responsibility and a much higher workload. If your current staff can’t manage the expansion, it may be time to reorganize.

Each business will have different reasons for wanting to undertake a restructure, and there are also different legal and compliance obligations according to what’s required, so make sure you do your research.

2. Communicate, and then communicate some more

Communication is absolutely essential when restructuring. When a company undergoes a restructure, it can be difficult for staff to face the unknown. The uncertainty for many, especially if they’re kept in the dark, can affect business flow.

So, when it’s time to announce the changes, make sure you articulate everything as clearly and honestly as possible. Answer all questions, and if you don’t have the answers right away, reassure staff that you’ll get them as soon as you can.

Make yourself and any others in a management position available for staff, and update employees about what’s going on throughout the process. Even if there’s very little to report, share it with your staff to show you’re being honest with them and that you trust them.

Remember to also communicate why the to restructure is happening so there are clear reasons for the changes. Openly talking about the restructure will help achieve buy-in from staff and ensure they remain committed to their jobs throughout.

3. Plan absolutely everything, but be open to spontaneity

Having a plan in place is crucial. From setting up your transition team to ensuring professional development courses are ready with the new business structure. Here are some questions you should ask yourself that will help with the planning process:

  • How will the changes impact the organization and what needs to be set up to accommodate this?

  • Does the financial reporting structure need to change?

  • How will customers or clients be affected and what do we need to communicate to ensure they’re being looked after?

Timelines should be mapped out. Establishing contingency plans and doing your homework is key to figuring out the best course of action. Remember, failing to plan means planning to fail.

4. Be honest

Honesty is key, especially when it comes to your business. This may be achieved by performing a skills assessment of workforce strengths and weaknesses. It also means being honest when it comes to what’s actually happening in your business to cause a change in structure.

Work through business processes, financial statements and speak to managers about how they feel the business is performing. If you’re not honest with yourself, the restructure won’t be effective. Also remember to be realistic when it comes to workloads, especially during the restructure. Sometimes a restructure can lead to overloading positions and in turn, burnout.

5. Get it done

In terms of the actual steps to getting a business to restructure done, it’s all about planning and managing the process. Here are some things that are worth considering:

  1. Analyze your business and figure out what new structure will work best.

  2. Create a business plan for the new structure.

  3. Figure out what agreements need to be put into place. For example, does a partnership agreement need to be drawn up or a corporate governance structure?

  4. Research any tax obligations.

  5. Notify the relevant agencies to ensure your business registration details are kept up-to-date.

  6. Make sure all staff are looked after. Even if the restructure means terminating some staff, it’s important to ensure staff isn’t leaving with a sour taste in their mouths.

  7. Speak to the relevant experts. It’s impossible to know absolutely everything, so when in doubt, bring in the experts. Whether it’s financial, legal or even further business advice, there are professionals who can support you throughout the restructuring process.

6. Budget accordingly

The restructuring process can cause a hit to your budget, especially if you’re restructuring due to financial reasons. So, it’s important to keep the budget in mind every step of the way. Ensuring you have the right team around you, including any relevant experts, will help you stay on top of the budget. Having a good understanding of what finances are linked to the restructuring is also crucial.

Creating a formal budget to cope with the restructure will help not only ensure the changes happen smoothly, but it will also help you with communication to staff when it comes to financial targets. Most importantly though, it assists with minimizing cost blowouts throughout the transition.

Time for a restructure?

There’s a reason for every business restructure, and for many organizations, it’s an essential process to help a business stay sustainable in a constantly evolving market. Planning is key and communication is crucial, and with a solid strategy in place, you can ensure your business has a chance to survive whatever storms it may weather.


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