Restructure & Turnaround FAQ's

Business restructuring typically involves reorganising the legal, ownership, operational, and/or other structures of the company. The purpose of such could be to increase profitability, but more often than not it is to avoid insolvency and debt issues.

To increase the prospects of a successful turnaround, companies often employ an external third party such as Australian Debt Solvers to provide expert advice and recommendations.

As part of our restructure and turnaround process, we will:

• Conduct a thorough evaluation
• Identify strength, weaknesses, opportunities, and threats
• Provide recommendations
• Help implement recommendations
• Work alongside you, reviewing results and monitoring strategies

Read more about you business restructure and turnaround options.

There are several different reasons why a restructure should be considered. This may be the case early in the business cycle during a period of rapid growth or at a more mature stage where there is a potential change in ownership. Here are some of the most common reasons for business restructuring:

• Change in management or ownership
• Stagnating profit growth
• Poor efficiency
• Incompetent management
• Shifting customer base
• Business growth or economic downturn

For more information, read our in-depth article on ‘when should a business restructure be considered?’​

The key to a successful restructure is developing an effective strategy. The easiest way to do this is by seeking professional restructure & turnaround advice from experts such as Australian Debt Solvers. Our team will follow a proven process that will provide the best prospects of returning to financial prosperity. The process includes evaluation, analysis, recommendations, implementation, and review.

Read more on how to manage your business operations restructure.

When a company is failing to meet expectations, there are several ways to address the issue. Increasing profits is not as simple as generating more revenue through sales. It is necessary to take a holistic approach and analyse every aspect of the business, both internal and external. Depending on the type of business, the following areas may be considered:

• Company budget: Analysis of everything from salary and expenses to revenue and forecasts. All financial records should be scrutinised.
• Efficiency: The organisational structure and every department in it are to be evaluated to identify issues and areas of improvement.
• Products and Services: An objective evaluation of such shall be conducted including production costs and processes. A rising cost of acquisition may be affecting profitability, as may competition or unpursued opportunities.

At Australian Debt Solvers, our team consists of specialists across a range of fields including accounting, leadership, consolidation, operations, and technology. If you are looking to increase your profits, contact us for expert advice that will make a difference.

During a restructure, communication and transparency are essential. This is particularly the case during the implementation stage of a strategy as it will likely have a direct impact on stakeholders such as employees.

The roles and responsibilities of retained staff may be changed and any potential impact or adverse reaction would need to be considered. In addition, it may mean that certain employees are no longer required. Staff are an important asset of any business and ensuring their well-being is critical during a restructure. Communication leads to a better understanding of the restructure process for employees and minimises any uncertainty among the ranks.

The government has introduces a simplified debt restructuring process specifically for small businesses. It has been designed to provide a cost effective way in which businesses with less than $1 million in liabilities can continue trading under their current owners.

It is a simplified process that is more cost-effective, allows company directors to remain in control, and provides them with the time required through extended relief from liability for trading while insolvent.

Find out if your company fits the criteria for a small business restructure.

Insolvency and taxation are two areas where there is constant legal reform. Being up to date with all your taxes is probably the most critical legal requirement, but companies should also ensure that they are diligent with respect to reporting and adequate record keeping.

Directors should also be aware of laws that have been designed to help them. This includes safe harbour provisions which provide directors with the time required to develop a plan or set of strategies.

Many organisations consider their employees as their biggest asset. Organisational change is a common strategy used during a restructure. This often involves changing the roles and job descriptions of employees.

Any business plan should consider the implications and likely impacts. Addressing early rumours and maintaining clear communication with employees is critical throughout the process.

Here are some tips on how to communicate with employees during a restructure.

For a restructure to be successful there are several key components that must be present throughout the process. These include:

• Gaining support and sustaining momentum
• Internal alignment
• Managing mindsets and behaviour
• Transparency in decision making process
• Ability to adjust

For more information, read our Guide to Business Restructure.

There is a long an increasing list of ways to improve business profitability which generally fall under one of the following:

• Increase Turnover: expansion, up-selling, cross-selling etc.
• Increase Productivity: additional staff, incentivise, improve employee engagement.
• Increase Efficiency: improve communication, delegate, provide additional training.
• Reduce Costs: suppliers, finance, production, and premises.

Reasons for fair dismissal fall under one of the following categories:

• Conduct: unacceptable behaviour should be outlined in employment contract
• Capacity: unable to complete requirements of the role
• Performance: failure to perform role to satisfactory standard or meet KPI’s
• Redundancy: role no longer required
• Process: the way dismissal takes place must be fair

It is also important for companies to be aware of what happens to employees when a company goes into liquidation including their entitlements under the FEG Act.

As insolvency experts we have found that one of the biggest issues facing business owners is recognising the difference between voluntary administration and liquidation. Administration is a stage where your company might be close to being insolvent or is already trading insolvent. That said, it is not necessarily the end of the line and is a point where your company may still be saved.

Liquidation differs from administration as it signals the end of a company's existence. Once a company goes into liquidation, it will begin to wind up its affairs and cease to exist following de-registration. In the past liquidation was seen as an expensive exercise, particularly for small businesses. This has recently been addressed with the introduction of simplified liquidation that is a cost-effective alternative for qualifying businesses.

There are varying theories as to the difficulties associated with cultural change, many of which include the following:

• Belief filters from the top: The businesses owners or people in upper management must first believe in the need for change for it to effectively filter down from the top. If employees are told one thing but see another, it is hard for them to be motivated about embracing a cultural change.
• Employee engagement: Employees throughout an entire organisation need to believe that they will achieve their goals and have the desired impact if they shift their mindset and behaviour to be aligned with the intended cultural change.
• Ease of transition: This is critical from an employee standpoint and change is not necessarily welcomed due to the uncertainty associated with it. The absence of effective communication and transparency make cultural change difficult to achieve.

• Insolvency: Some companies are forced to explore the concept of a restructure as they are either trading insolvent or on the verge of becoming insolvent. As a result, a restructure and turnaround are undertaken in an attempt to save the business and become financially viable
• Increase Profitability: Many companies explore restructuring as they see it as an avenue to increased profitability. This may include altering processes, reducing costs, incorporating new technology, or improving a competitive advantage.
• Merger & Acquisition: In this event change is almost inevitable. In many instances two does not fit into one which results in redundancies and changes in organisational structure.

For a comprehensive list of reason, refer to our complete guide to business restructure.