Restructuring with confidence: How companies can navigate financial stress

For a business to enjoy true longevity, it will need to be resilient enough to weather a financial storm or two. Adverse financial conditions can be avoided with foresight – but not in every case. As such, you’ll need to work on a strategy for reacting to financial stress, and, in some cases, restructuring in response to it.

So, what might such a strategy look like?

Assess the situation objectively

To make the right decisions, you’ll need to understand the situation you’re in. Relying solely on intuition and instinct can leave you vulnerable to bias and groupthink. Look at your numbers through the lens of a predefined set of money-related diagnostics, so you can effectively prioritise.

Prioritise cash flow

In almost every case, it’s liquidity that matters. If you don’t have enough cash to hand, then you’ll find yourself unable to meet your debts. This can be corrosive to staff morale, among other things. You can think of cash as the lubricant that allows the gears of your business to rub against one another. Without it, things risk grinding to a halt.

Seek expert guidance

It can be difficult to be all-knowing and impartial when it comes to your business operations. As we’ve mentioned, we can battle bias through the right objective metrics. But we’ll also want to be able to call upon independent experts and advisory firms. The right guides will have access to specialised knowledge and equipment that you lack. What’s more, they might offer a fresh perspective on problems that you’ve become blind to.

Communicate transparently

When it’s clear the company is struggling, employees, partners, and lenders might begin to speculate about what the future holds. It’s almost always better to be upfront and transparent as early as possible. This builds the trust that you’ll need to get through tough times.

Build a sustainable recovery plan

So, what if you do need to restructure? Part of the process is working out how you’ll get the business back up and running again afterwards. Without a plan for this, your recovery may be slow and anaemic – and you’ll have no yardstick against which to measure your success (or lack of it).

Ideally, a restructure should solve not only your immediate financial problems, but the ones of the future, too. A little bit of foresight and planning will allow you to avoid having to restructure again and again over a short period of time.