Business Reorganization Can Save Your Company
How to turnaround your business. Business reorganization step-by-step.
If your business is having financial troubles, you can salvage your company using business reorganization. Although it appears more difficult than simply filing bankruptcy, many owners don't realize that in Chapter 11 bankruptcy the court forces these techniques down on the company anyway. The advantage of using these methods outside the court is that you, the business owner, have more control. During Chapter 11, the court will put a trustee in charge of all decisions.
Big corporations refer to business reorganization as "trimming the fat." As this term implies, the owner must cut costs without sacrificing the quality of products or the integrity of the company.
Smaller businesses can also use reorganization methods, but they often have more difficulty. The areas that you, as an owner, need to cut may be less obvious. And your company is less diversified. If you make a mistake and trim the wrong areas, you can destroy the entire business.
How do you, the small business owner, avoid these problems? You must have a plan of action for your business reorganization.
What To Consider During Your Business Reorganization
The planning phase of your business reorganization should be intensive. You must reevaluate your existing business plan and make significant changes. Set new goals that are realistic while being aggressive. Take the time to find out where your business is making money and then refocus your company on these profit making areas.
Next, set up a new financial plan to get you through the next 3 months. Once your business has stabilized during this period, create a more extensive plan to carry the business through 9 more months. Initially you must keep tight controls on your cash flow. You and your accountant should monitor your company financials weekly.
On the employee front, you want to go to a flat organization if you do not have one already. Then set up employee evaluations and remove nonproductive workers. Keep an eye out for misuse of employee time. Make sure everyone is working efficiently and get rid of redundant work. Hold everyone accountable to achieving certain results, including yourself.
Then go back to your business reorganization plan, set new goals and carry them out. But diligently watch your financials. Once your business makes the turn, stay on track with your new direction. Make sure you are meeting your customer needs in areas of high profitability and don't immediately start hiring new people until you are sure your company is on strong financial ground.
Most importantly, note where you business went astray. By learning from your previous mistakes, you can avoid similar problems in the not-so-distant future.
