Restructuring your business, particularly as a small and medium enterprise (SME), can create significant changes to your structure, process and operations. It can be overwhelming to even consider change when you’re faced with financial challenges and are perhaps concerned about reaching insolvency, however, restructuring is a positive pathway to try to improve efficiency, adapt to market changes and overcome financial problems.
Undergoing a well-executed restructuring, SMEs can position themselves for growth, enhance operational effectiveness, and remain competitive in the market. Having expert guidance is invaluable to ensuring you experience a maximised, positive outcome. However, it does take preparation, and you might find a few hurdles (albeit workable) along the way.
When a company is facing financial difficulty, it’s not just business owners who feel the effects of this. Even while retaining their employment, employees can feel stress and uncertainty when there are changes to organisational structure, roles and processes. This can impact employee morale and lead to vocalised concerns or an undercurrent of dropped enthusiasm for the job and/or company.
It’s important to address these concerns and be as transparent as possible when communicating the process, changes and benefits to restructuring to help alleviate anxieties and maintain a positive work environment. The best way to do this is to offer open communication throughout the process and ensure your employees know where they stand as much as possible.
Skill gaps and retraining
Part of giving your employees peace of mind is investing in their skill set development, offering growth opportunities as the business iterates. Restructuring often involves employees assuming new roles, which can require additional training. Identifying skill gaps and providing relevant education and resources helps employees adapt successfully and thrive in their new roles.
Providing resources to support employees during the transition is important. These resources can include job aids, reference materials, access to subject matter experts, and tools or technologies that facilitate learning and performance in their new positions.
When an organisation undergoes restructuring, upfront costs are often necessary to facilitate the changes. These costs can include severance packages for employees whose positions are eliminated or altered, expenses related to training and development programs, and investments in new systems or technologies to support the restructured operations. To ensure the smooth implementation of the restructuring process, it is crucial to assess the financial implications and develop a realistic budget that can adequately support these costs.
Developing a realistic budget is the next step in the process that takes into account estimated costs through an assessment phase. Include restructuring experts in this stage to ensure accuracy and thoroughness. The budget should consider both the immediate costs associated with the restructuring and any long-term financial implications, such as ongoing maintenance or subscription fees for new systems or technologies.
Legal and regulatory compliance
Small Business Restructuring, also known as SBR, is a type of formal external administration under the Corporations Act 2001. The Australian Securities and Investments Commission (ASIC) will note the appointment of a restructuring practitioner and that it has entered ‘external administration’ on the Company Register, which is publicly available. Once you enter your restructuring plan, your status is reverted to ‘registered’. Learn more information on the Small Business Restructuring process.
Depending on the nature of the restructuring, you have to know and adhere to legal and regulatory requirements. These requirements are within the regulations of labour laws, contracts, permits, licences, and data protection regulations. Failure to comply with these regulations can result in legal issues, penalties, reputational damage, and disruptions to business operations.
This involves understanding severance, notice periods, employee consultations, and anti-discrimination measures. Additionally, organisations should review and comply with contractual obligations, obtain or modify necessary permits and licences, and uphold data protection regulations to handle sensitive employee and customer data appropriately.
Seeking guidance from professionals or consultants experienced in business restructuring provides valuable insights and support throughout the process.
Call Shaw Gidley today on (02) 4908 4444 or (02) 6580 0400 to ensure your restructuring experience is as seamless and maximised as possible.