1. The journey for every business is different. We listen to you and
your objectives before proposing a plan for survival and growth.
We work alongside you and your team and focus on protecting
and improving your wealth.
Published on 23 November 2010 by Tony Groom
Is Your Business Structure Holding Back Your Success?
The structure of a business is crucial to its success and often it can get in the way of
growth.
An example is the lack of built-in capacity for growth. If a business needs to build
another factory, say, then if the funding is not in place to do so that will get in the
way of growth.
Often, in order to correct this kind of issue a business needs to be restructured to give
itself the flexibility it might need to survive and grow.
Corporate restructuring involves changing the business model. This might be from a
fixed price model dependent on in-house capacity, for example having a fleet of
trucks for distribution of the product, to a flexible model, where it gets rid of the fleet
and outsources the distribution and delivery process.
Ideally a regular look at the business structure would be part of the process of
continuous improvement to ensure a business is in the best possible shape to meet
short term problems, like an economic downturn and a consequent drop in orders,
and to enable it to thrive, grow and expand long term.
Restructuring more often is carried out as a consequence of a business struggling to
survive and is one of the tools available to business rescue advisers called in to help a
company in difficulties.
An example of what a restructuring adviser can do is the case of a company with a
break-even point of £3.5 million, whose turnover had declined from £5 million to less
than £2.5 million.
K2 Business Rescue
The Emergency Service for Business
Call Tony Groom on 0844 8040 540

2. In this situation it was clear that, although viable, significant changes were needed.
They included closing a factory, getting rid of onerous financial arrangements,
terminating some employment contracts and reducing other fixed costs. The
outcome of these actions was to reduce the break-even point to £1.8 million.
A reduction of sales to just under £2.5 million then became a healthy profit rather
than a significant loss.
The result of these activities was also significant reduction in fixed overheads, for
example by terminating fixed arrangements such as finance on equipment and
buying the equipment instead.
It meant that the unit cost of production was also reduced once it was free of the
burden of the finance drain on the equipment.
It might seem that this should have been obvious to those running the company, but
it is possible to be too intimately involved in the day to day running of a business,
especially one under this kind of stress, and to be unable, therefore to stand back
and look at the elements in the structure of the business that are impeding a solution
to its changed circumstances.
The unexpected but fortunate effect of the restructuring was to lay foundations for
future growth. While improvement in margins made it easier to fund the increase in
sales activity and supplies needed, more important was the outsourcing of some
manufacturing capacity which made the company far more flexible.
Calling on the help and support of an outside business rescue adviser to look at the
business model and identify where it can be radically altered without threatening the
core viability of the company can make all the difference to a successful turnaround
in the face of a reduced order book and potential serious liquidity problems.
We are not Insolvency Practitioners. We operate within the law to protect our clients and their wealth.
Our team has worked for over 20 years to help stabilise and return hundreds of businesses to
profitable growth. Once appointed, Insolvency Practitioners do not work for you, they work for creditors
and use your company’s assets to pay themselves. We work for you, not creditors.
More Free Resources for Directors and Business Owners in Difficulty
www.rescue.co.uk
We Save Businesses
K2 Business Rescue
The Emergency Service for Business
Call Tony Groom on 0844 8040 540

3. We provide experienced advice to directors
We negotiate with HMRC and creditors
We are on your side
Need Immediate Help – Call Tony Groom on 0844 8040 540
K2 Business Rescue
The Emergency Service for Business
Call Tony Groom on 0844 8040 540