Posted on: July 2nd, 2013
Corporate restructuring advice usually involves painful decisions as to layoffs or discontinuing certain lines of business. It usually involves shutting down one part of a company so that capital and resources can be redeployed.
Often a corporate restructuring involves negotiating with lenders or trade creditors so that company can improve its liquidity.
The best way to formulate corporate restructuring advice is to develop a holistic picture of a company’s problems be it product, customer, production, overhead, or balance sheet.
Upon seeing a 360° view, a realistic plan of corporate restructuring advice can be drafted. Most companies have interrelated issues stemming from weak controls or management systems.
Often, through improving a company’s information quotient, greater focus is brought to key issues that are easily solved. For example, if a company has weak cost accounting systems, it probably is not realizing consistent gross margins.
This information lapse is compounded by a sales decision to sell product at a lower than standard gross margin. This lower price could mean the company is not making profit on the sale.
Once price is broken with one customer, other salesmen are likely to quote lower pricing as a way to build sales as well.
This leads to a downward spiral of gross margin compression. While revenue may grow, the company may not be generating enough gross margin to cover the operating expense.
Corporate restructuring advice needs to be fully informed by the prior worst practices of the organization. A flexible plan of corporate restructuring advice containing low cost, technology based solutions and more management communication over key issues is critical.
Changing the underlying processes and rebuilding management focus and information metrics will lead to long lasting change.