Restructuring can be associated with businesses that are in trouble but actually, a regular review of your structure can help to protect your business and add flexibility that allows it to adapt with a changing market.
Your business’s structure is the foundation that allows you to reduce risk, gain granular control and evolve with an ever-changing environment.
Why does structure matter?
Business structure can influence various aspects of a company, including:
• Legal liability: depending on the business structure, owners can be personally liable for business debts and legal issues.
• Taxes: your structure can impact how a company is taxed, including the amount and type of taxes it pays.
• Management and decision-making: business structure can impact how decisions are made and who has the authority to make them. For example, in a sole proprietorship, the owner makes all the decisions, while in a corporation, that responsibility is shared across a board of directors.
• Raising capital: the structure of a business can impact its ability to raise funds from investors with some structures treated far more favourably than others.
• Perception: business structure can impact how customers, suppliers, and investors perceive it. A well-established corporation, for example, can be perceived as more stable and credible than a one man band.
There is no ‘one-size-fits-all’ approach when it comes to structure. It’s important to consider what the appropriate structure is for you based on how the above affect your goals for your business alongside your personal ambitions.
What are the benefits of restructuring?
Business restructuring can involve a range of changes to a company’s structure, operations, and strategy, with the goal of improving its performance, profitability, and long-term viability. Your structure should be reviewed after any change within the business to ensure it is still fit for purpose.
Benefits of restructuring include:
• Increased efficiency: restructuring can help eliminate inefficiencies in the company’s operations, which can improve productivity and reduce costs. By streamlining operations and cutting costs, restructuring can improve a company’s financial performance and profitability.
• Refine your tax strategy: different business structures incur different taxes. Reviewing your structure alongside your tax strategy can reduce your liabilities, particularly when exiting.
• Better focus on core strengths: by refocusing the company’s strategy and resources on its core strengths, restructuring can help the company become more competitive and better positioned for growth.
• Enhanced agility: by making the company more adaptable to changing market conditions, restructuring can enhance its agility and ability to respond quickly to new opportunities and challenges.
Business restructuring can be a challenging process, but it can also offer significant benefits for companies looking to improve their performance and competitiveness in today’s ever changing business environment.
If you want to review your business structure, get in touch.
T: 020 8549 5137