Why Reconsider Something That Already Works?

“If it ain’t broke, don’t fix it” is usually good advice. Businesses have enough problems without creating new ones by changing things that work.

But working and working as well as it could are not the same thing. A strategy or structure can continue producing acceptable results while limiting growth, reducing profitability, consuming more of the owner’s time, creating unnecessary conflicts, or preventing the business from reaching its full potential.

Sometimes an opportunity makes the difference visible. An acquisition offer, for example, may cause you to ask whether the business would command a substantially higher value with a stronger strategy, structure, and demonstrated path forward.

Something does not have to be broken before it is worth another look.

You Can Become House-Blind to a Business

You have probably experienced being house-blind. You live with something long enough and eventually stop noticing it. Someone walking into your house for the first time may immediately see something you have walked past every day for years.

The same thing happens in business. Procedures become habits. Workarounds become normal. Responsibilities shift without being deliberately reassigned. Relationships and compensation arrangements outlive the circumstances that created them. What was once a sensible solution can remain in place long after the problem it solved has changed.

House-blindness can also hide opportunities. Familiarity makes it harder to imagine arrangements that do not yet exist, or to recognize how much better something you already have could work.

Nobody knows your business as well as you do. But knowing it intimately and seeing it with fresh eyes are not the same thing.

What Should Make You Look Again?

Sometimes the signals appear gradually. Growth becomes harder to manage, decisions take longer, or sales increase without producing the improvement in profitability you expected. Responsibilities that once seemed clear begin to overlap. Managers are held responsible for results without having sufficient authority to produce them. Owners remain involved in decisions they expected to have delegated years ago. Compensation arrangements, procedures, and relationships continue largely because that is how they have always worked.

Other signals become visible in the relationships and structure surrounding the business. Owners begin wanting different things. A relationship with an important supplier, customer, distributor, franchisee, licensee, lender, or other organization no longer produces the benefits it once did. Different channels begin competing with one another. Too much knowledge, revenue, authority, or control becomes concentrated in too few hands. Opportunities appear that the existing organization cannot pursue without disrupting what it already does.

And sometimes it is an event rather than a problem that makes you look again. You receive an acquisition offer, consider bringing in outside capital, contemplate buying another company, begin preparing for succession or sale, or encounter a new market or channel that could materially change the business.

Nothing necessarily has to be wrong. The event simply gives you a reason to ask whether the business as presently structured is capable of producing everything you now want from it.

There may be other signals unique to your business. The important point is not to diagnose restructuring from any one of them. It is to recognize when something deserves a closer look rather than another workaround.

Sometimes It Is Too Late

Problems with an existing strategy or structure rarely remain unchanged while you decide what to do about them. An arrangement that is merely inconvenient today can become difficult or expensive to change later. Dependence increases. Commitments are made. Relationships deteriorate. Good people leave. Financial resources are consumed. Opportunities disappear.

The same is true when the issue is unrealized potential. A company negotiating a sale cannot go back five years and create the management, earnings, growth record, or market position that might have supported a substantially higher value. Some opportunities have a window, and once it closes, improving the business later does not bring that particular opportunity back.

We are often told it is never too late to turn things around. Unfortunately, that isn’t always true.

Businesses run out of cash. Markets disappear. Important relationships become irreparable. Buyers lose interest. Owners run out of energy. Choices that once existed cease to exist.

Sometimes it is too late. The reason to look again now is that you still have choices.

Start With the Business You Have and the One You Want

Restructuring begins much like our other work. Before deciding what should change, we establish a sufficiently clear picture of the business you have and the business you now want.

We examine the circumstances that make up both realities and, where necessary, break them down further by asking what is happening, when and where it happens, who is involved, why it happens, in what way it happens, and by what means. You do much of this work yourself, with our guidance, because nobody else can supply the knowledge, observations, objectives, and judgments that only you and the people in your business possess.

But establishing the New Reality requires more than deciding what results you want. It will most likely require a new or revised strategy and structure for achieving them. With our guidance, you develop a preliminary strategy and structure until you have a sufficiently clear picture of what you want the business to become.

Only then can we compare the two realities and determine what must change to get from one to the other.

Getting From One Reality to the Other

Once the New Reality and preliminary strategy and structure are sufficiently clear, we can begin determining the optimal structure required to make them work. This involves modeling and testing.

We look at what can remain as it is, what can be adapted, what needs to be added, and what may need to be removed. We also examine how changes in one part of the structure affect the others. A change in ownership, authority, management responsibilities, compensation, financing, channels, contractual relationships, or organizational arrangements may solve one problem while creating another.

The testing may also take us back to the preliminary strategy. A structural requirement may reveal that part of the strategy is impractical, unnecessarily costly, or simply not the best way to achieve the New Reality. We adjust the strategy, reconsider the structure, and test again.

This is an iterative process. We continue moving between strategy and structure until they work together and provide a sufficiently sound way to get from the Current Reality to the New Reality.

Turning the Strategy and Structure Into an Actionable Plan

The resulting strategy and structure can then be developed into whatever form is needed to accomplish the purpose that brought you to Restructuring in the first place.

If refinancing is required, it can become the basis for a refinancing proposal supported by appropriate financial projections. If you are considering a merger, it can be developed into a merger plan. If you have received an acquisition offer, it may support a counter-proposal based on what the business could become rather than only what it is today. It might instead become a succession plan, a proposal for raising capital, a reorganization plan, or the basis for renegotiating an important business relationship.

Where other professionals are needed, we can help direct and coordinate their work so it remains consistent with the strategy and structure. That may include attorneys preparing agreements and other legal documents, accountants and financial professionals developing supporting information, financing sources and fundraising professionals, or others involved in negotiations and implementation.

The document is not the objective. It is the expression of the strategy and structure developed to achieve the objective. Our role can continue through the work required to put it into effect.