Is it time to restructure your small business?

in Growing by Nigel Bowen
(11 Ratings)

A restructure is an activity most commonly associated with major corporations, however, small businesses face exactly the same economic imperatives and have just as much need to periodically shake things up to stay competitive.

Restructuring for positive change

All business owners are constantly restructuring their businesses, whether they recognise it as such or not. They win a major new client, they put on a new staff member; they hit a rough patch, they let someone go. Their industry experiences some form of technological disruption, so they change the nature of the service they are providing and their pricing structure. The question for businesses, whether they are small, medium or large, isn't so much if they need to restructure, as whether they are going to do it in a thoughtful and strategic fashion in order to grow and prosper.

How to structure a restructure

For the best results, it's important to approach a restructure with what Zen masters refer to as "beginner's mind". Set aside some time to review your business in the way an independent consultant with no previous involvement in your organisation might. Ask yourself what it is your business actually does right now. Is it the same as when it launched? Is it something it can keep profitably doing for the medium to long term? Identify which departments make money, which of your goods and/or services there is strong demand for and which of your employees are true assets. It's only after you have a clear understanding of the current state of your organisation that you will be able to work out what you are really good at and where you should be devoting your focus.

Focus on staff

Given that labour is likely one of your major costs and your employees have a big impact on your business's ongoing viability, it's wise to start any organisational restructure with a review of staffing. Have you promoted someone beyond their abilities during a period of rapid growth? Do you risk losing a stellar performer if you don't increase their responsibilities and pay soon? Are unprofitable departments or product offerings lingering? If so, are you going to retrench the affected staff or try to find a place for them elsewhere in the business? Taking steps to maximise the efficiency of your workforce always involves some difficult decisions, but it's essential if the business is to thrive.

Fortunately, dealing with other aspects of the restructure should be considerably less emotionally draining. If you haven't reviewed it in a while, there is a good chance your branding could do with a refresh. If you're still using the same technology you did when you launched (even if that was only six months ago), it's likely that new software and hardware has hit the market that can potentially save you a great deal of time and money, so take the time to investigate it. Likewise, the way you operated when you were a startup won't work as well when the staff, clients and orders increase, so do a forensic analysis of the way things are currently being done and introduce new procedures to avoid double handling or unclear divisions of responsibility.

A well-executed restructure can have an extraordinarily positive effect on a business, raising staff morale, customer satisfaction and profitability. Even better, instead of constantly having to put out fires, once you have your business running like a well-oiled machine, you can devote far more time to high-value activities such as chasing new clients.

This article represents the views of the author only and not those of American Express.

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Nigel Bowen

Nigel is a freelance journalist and web content provider. Over the past 15 years he has worked for many of Australia's major print media companies and written for a wide range of newspapers, magazines, trade publications and websites. Nigel most enjoys writing about entrepreneurship, popular culture, politics, social trends and small business.

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Poll Results

How many hours do you work on your business each week?

20-30: 18%
30-40: 16%
40-50: 23%
50-60: 43%