Operational Structuring

How Operational Restructuring Can Move Your Business Forward

Is your business struggling with profits, or are you looking for a way to take your business to the next level? Regardless of whether your business is declining or flourishing, operational restructuring may be the solution you need to move your business forward and increase profitability. This article will help you understand whether operational restructuring may be the right step for your business. Keep reading to find out:

• Five warning signs you should look for that suggest your business needs restructuring.
• What a car mechanic and a business consultant have in common, and how the latter can help you analyze your business operations.
• The costs that may be involved in operational restructuring – and whether they are worth it.

What Signs Or Indicators Suggest That A Business May Need Operational Restructuring?

These are some key indicators that a business may need operational restructuring:

1. Loss of Revenue: This is one of the most prominent indicators that a business needs restructuring. If you start to see numbers go down and you do not know why, that is a big red flag.
2. Drop in Profitability: You may see your numbers slightly down, or maybe they are just hovering and plateauing. Either way, you are not as profitable as you were in previous periods, and that requires some analysis.
3. Consistent Staff Turnover: If you are losing staff or having staffing issues, or there is a process that your staff is frustrated with, that could spell trouble for you. This is particularly true in a market like California that is employee-friendly when it comes to labor disputes.
4. Poor Reviews: If you get bad feedback from a customer and it goes on a site like Yelp or Google, you want to make sure that that does not continue. You do not want to push away or turn off other future customers.
5. Wasteful Spending: Businesses tend to throw money at a problem instead of doing a deeper dive and looking at the source of the issue. It is crucial to analyze and try to rectify it before it becomes a giant revenue suck.

What Is The Process For Analyzing The Efficiency And Performance Of A Business?

Operational restructuring is like running a diagnostic test on your business, similar to what you would run on a car. Vehicles can send out electrical signals so a mechanic can plug in a device and figure out exactly what the issue is.

After assessing everything from the labor costs and new hire process, to how payables are handled, a business consultant should be able to point out which system is hurting the efficiency of your business. Based on my experience as a business advisor, I can easily identify problem areas. Just like a car mechanic, I can inform you about which parts of your business need a tune-up and which parts need to be totally replaced.

Can You Provide Examples Of Operational Challenges You Have Helped A Business Resolve?

One of my clients was the owner of a legacy restaurant that was handed down from multiple generations of family members. Traditionally, the restaurant did not operate in a way that was profitable, which created problems. For instance, there were accounting issues that needed to be addressed, and there were issues with outdated sourcing procedures.

I have worked with business owners who were keeping notes in a notebook and had no digital records or data logging, such as using QuickBooks. Helping these clients update their procedures, understand what processes are needed, and teaching them how to do projection analysis were huge steps toward streamlining their operations and setting them up for success.

Some of my business clients were trying to go from being standard operators to becoming a national presence. I directed them to think about corporate growth versus franchise growth, and reviewing their numbers helped determine what was a more realistic method for their business. One of these clients started franchising nationwide at the beginning of 2023.

Other clients are trying to figure out how to restructure their operations to be more profitable. One client had a labor-heavy business with 30% of their payroll going toward management. By diving deeper into how their operations were running, we figured out that they only needed half of that, which allowed them to significantly decrease their payroll expenses.

Another common challenge is operators who are only open for certain hours and closed the rest of the day or week. It is crucial for these businesses to figure out how to make revenue during the time they are closed. For instance, maybe they could allow other businesses to use the kitchen and charge them hourly rates. Sometimes it requires new ideas, but a different operational strategy can bring in more profits for your business.

Are There Certain Areas Of A Business Where Restructuring Should Be Prioritized?

Numbers always tell the story. When analyzing a business operation, I look at a company’s profit and overhead, as well as the systems and processes to get the big picture. Then, if certain factors stand out, I take a closer look. For instance, if there is a large discrepancy between your labor and your sales, this would need to be addressed right away.

Other areas that often need to be evaluated include the cost of goods and how products are being sourced. I like to help clients find ways to reduce their production costs on their own, whether their business involves food, a product, or a service.

What Are The Costs Associated With Operational Restructuring?

Money savings is a key aspect of operational restructuring. In altering the way you manage your business, the goal is always to decrease costs and wastefulness, and to increase profits and efficiency.

Of course, there may be some costs with restructuring. For example, you may need to train staff or hire more employees. Or, perhaps you need to change your hours of operation, which may require some marketing and promotion. Ultimately, however, the savings of operational restructuring will outweigh the cost and put your business in a better position. For more information on the Role Of Operational Structuring In A Business, an initial consultation is your next best step.