Today I’m going to show you the different ways to restructure your business finances when in quarantine.
This actually goes a long way in helping you, or anyone you know going through a financial downfall or bankruptcy in their firms or businesses to easily get back on track, and you’re going to see exactly how to get it done.
Let’s dive right in!
What is Financial Restructuring?
Financial restructuring is the process or action taken by a person, organization or company to fundamentally change the structure of their finances, as well as operating system, so as to save them from a loss.
The primary goal here is to reduce the financial harm and achieve an increase in the value of your business or personal finances. Financial restructuring is mandatory when a business or individual is facing extreme financial downfall or hardship, bankruptcy or debts payments, poor income earnings, etc.
Now, with respect to financial restructuring for businesses during a period of quarantine:
When a particular company or firm opts in for restructuring, things really change course a bit.
Changes could go from changes in operational processes to addition or removal of departments, and even maybe change of ownership to help enable the business to be profitable and save it from financial losses.
At times, the restructuring process does lead to obtaining loans, cutting of costs of products or selling of assets to accommodate the flow of cash and lighten debts. Mind you, this process might be a little bit painful or harsh as the internal and external structural processes of the company are adjusted – but once concluded, the restructuring process should lead to smoother, cleaner and more economically sound business operations.
How to Restructure Your Business Finances When You are in Quarantine
The following are the best ways on how to financially restructure your businesses or firms when you are in quarantine:
#1: Evaluating the situation and understanding your firm strategic and organizational characteristics
If you’re facing a major financial crisis, you might be tempted to give away everything right away. This is why it’s important and advisable to proceed cautiously.
It is also important and advisable to engage a financial specialist/strategist to guide you through the process.
Financially restructuring a business aspiring to remain competitive and superior to its rivals you must try to evaluate the existing mission, vision, objectives, process, strategies, management, structure, human and financial resources so as to determine their adequacy to cope with environmental developments.
Knowing your business strategic characteristics will actually support you with the objectives and criteria you’ll probably need to meet with your business/firms restructuring plan.
#2: Identifying the strength and weakness of your business/firm
With your strategic characteristics well evaluated, you now need to consider where your business is failing to meet its goals, and what is actually triggering those changes.
Obviously, the main force behind the change in the reaction of the business lies in the environment that exists outside the business. Also, too many businesses and firms undergo the restructuring process without taking into considerations the people who will be affected by the restructuring plans.
Your employees, if there is actually any, do often have worthful foresight on what isn’t working and what you should continue doing. It’s now up to you to gather that foresight and include them throughout your business restructuring process.
Always make sure to weigh the advantages of the imaginable restructure against the risk. As you know, if the problem your business is facing won’t be solved correctly and efficiently through the restructure, please opt out and don’t attempt the process.
#3: Using your findings to try developing a new structure
Since you’ve weighed the problem of your business and also gathered information and feedback from employees and have seen the possible ways to solve the problems, it’s now time you develop a new business structure.
Don’t attempt a restructuring process without clarifying your course of action with your employees or customers… And do ensure to keep all parties on the same page.
While boosting capital can help ease the problem, operational issues are often at the centre of cash flow degeneration. Operational enhancement can include readjustments with your dealers/vendors and supplier alliance and/or enhancing key business processes.
When communicating with vendors, try as much as possible to be transparent about ongoing situations and let them know you’re about to undergo a financial restructuring process. Never over-promise or under-deliver as this is actually the key to maintaining the trust and keeping your vendors and supplier’s partnership.
A consultant can help your company identify operational problems and manipulate your limited resources to create value.
#4: Understanding the business reactions and probably analyzing them
Reaction to change differently by people is another issue depending on their insights, conclusions and understanding of the process.
There are actually three types of reaction to any restructuring program of any kind which is – alliance, compliance and defiance.
Rapid attention should be given to those who are opposing the change, even those who support the change need to be properly managed. The management should and must try to find a way for why people are in defiance with the change.
#5: Approaching to launch the restructuring program and adjust the necessary
At this moment we now move over to the implementation of the restructuring program.
Just so you’ll know, change can actually be a difficult thing to cope with. Try as much as possible not to hurry but give employees, vendors and suppliers time to shape the restructuring process to accurately judge its effects. Also, try to make adjustments if the new business structure still doesn’t meet your paramount goals.
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