Restructure your Business with AC Business Path.
Business Restructuring
The economy in Greece for example has been in a state of flux for many years, with businesses struggling to keep afloat in a difficult economy let alone the Covid-19 that has opened new challenges.
In order for businesses to survive, they need to re-organize and restructure.
Keep your business lean and efficient. Make sure you are using your resources efficiently and have a clear understanding of your costs and margins.
Adapt your product or service to the needs of the market. Make sure your offering is relevant to the needs of your customers.
Invest in new technology and innovation. This can help you stay competitive and keep costs down.
Build a strong team of professionals. This will help you navigate through the difficult times in competitive industry.
Together with AC Business Path, your business will be re-organized at its best.
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01
Corporate restructuring
Corporate restructuring is an action taken by the corporate entity to modify its capital structure or its operations significantly. Generally, corporate restructuring happens when a corporate entity is experiencing significant problems and is in financial jeopardy.
Corporate restructuring is complex and extends beyond the financial aspect of the business. Generally, corporate restructuring involves cutting costs, improving operations, and increasing productivity. However, corporate restructuring can also involve owner-manager conflicts, where the local owner prefer to operate differently from the centralized version of the business.
Common goals we need to achieve with the restructuring are:
- To improve the Balance Sheet of the company (by disposing of the unprofitable division from its core business)
- Staff reduction (by closing down or selling off the unprofitable portion)
- Changes in corporate management
- Disposing of the underutilised assets, such as brands/patent rights.
- Outsourcing its operations such as technical support and payroll management to a more efficient 3rd party.
- Shifting of operations such as moving of manufacturing operations to lower-cost locations.
- Reorganising functions such as marketing, sales, and distribution.
- Renegotiating labour contracts to reduce overhead.
- Rescheduling or refinancing of debt to minimise the interest payments.
- Conducting a public relations campaign at large to reposition the company with its consumers.
02
Debt restructuring
Restructuring a debt can make a large difference to a company’s short- and long-term health.
The term “debt restructuring” may bring to mind the image of a bankrupt company that has its debts written off by its lenders. However, debt restructuring can occur when a company is not bankrupt. In fact, when a company is not bankrupt, debt restructuring is often carried out in an attempt to avoid bankruptcy.
The goal of debt restructuring can vary, but the purpose of most debt restructuring is to give a company more time to boost its finances and viability so that it can pay its debts. A debt restructuring can also remove burdens from a company – such as burdensome interest rates or payments that are impossible to make because the company lacks the funds.
Debt restructuring can take many forms, including extending the term of a loan, converting a debt into stock, writing off part or all of a debt, and replacing creditors with new ones.
Part of any debt restructuring plan will always be an outline of how the company plans to pay its restructured debts. The plan will be assessed by the lenders when they decide whether to participate in the restructuring or not.
AC Business Path can guide and will provide an overview of debt restructuring and explain the processes involved in entering into a debt restructuring, as well as detail the benefits of a debt restructuring and risks associated with the process.
03
Formal insolvency procedures
Whatever type of business you have, if cash flow and debts are outweighing your ability to stay afloat, or if you are unable to meet your fixed payments (such as a lease), you may find it worth considering formal insolvency procedures.
These are designed to help a business regain its financial footing and continue as a going concern. There are two types of formal insolvency, namely liquidation and administration. They are not gender-specific terms, so either can be used for either a sole trader, a partnership or a company.
Liquidation
When a business is liquidated, it is obliged to cease its trading immediately. The owners, or directors, of the business are also required to cease all involvement directly or indirectly with the business that is in liquidation. A liquidator is appointed by the court to take control of all assets and property of the business that is in liquidation, except for any property that is necessary for the continued operation of the business.
The liquidator’s job is to realise (realise is actually a legal term meaning to convert something into money) the value of those assets to repay creditors as far as possible of the money that is owed to them. A liquidator will also determine if there is any value in continuing the business operation. If they deem that there is, they will try and find a new owner to continue the business. Should they unable to do so, they will also determine if there is any other means by which the business assets can be distributed to creditors. The most common methods of liquidation are:
A statutory liquidation—requested by the company
Judicial liquidation—ordered by the court
Voluntary liquidation—requested by the company
Insolvency Administration
If a business is thought to be able to continue as a going concern, but would benefit from temporarily reduced rents or debts, for example, the owners or directors can apply for administration. During this process the business hands over control of its business to an administrator, who then has the power to manage the business in the best interests of creditors and debtors. The main forms of administration are:
A statutory administration—requested by the company
Judicial administration—ordered by the court
Voluntary administration—requested by the company or any of its creditors
Get in touch with AC Business Path and let’s see your options.
04
Feasibility Studies
Why is a feasibility study so important in project management?
For one, the feasibility study or feasibility analysis, is the foundation upon which your project plan resides. That’s because the feasibility analysis determines the viability of your project.
A well-designed feasibility study should provide a historical background of the business or project, a description of the product or service, accounting statements, details of the operations and management, marketing research and policies, financial data, legal requirements and tax obligations.
Generally, feasibility studies precede technical development and project implementation. A feasibility study evaluates the project’s potential for success; therefore, perceived objectivity is an important factor in the credibility of the study for potential investors and lending institutions.
It must therefore be conducted with an objective, unbiased approach to provide information upon which decisions can be based.
The four Ps are traditionally defined as Plan, Processes, People, and Power. The risks are considered to be external to the project (e.g., weather conditions) and are divided in eight categories: (Plan) financial and organizational (e.g., government structure for a private project); (Processes) environmental and technological; (People) marketing and sociocultural; and (Power) legal and political. POVs are Points of Vulnerability: they differ from risks in the sense that they are internal to the project and can be controlled or else eliminated.
Steps in a Feasibility Study
Conducting a feasibility study involves the following steps:
Conduct preliminary analyses.
Prepare a projected income statement. What are the possible revenues that the project can generate?
Conduct a market survey. Does the project create a good or service that is in demand in the market? What price are consumers willing to pay for the good or service?
Plan the organizational structure of the new project.
What are the staffing requirements? How many workers are needed? What other resources are needed?
Prepare an opening day balance of projected expenses and revenue
Review and analyze the points of vulnerability that are internal to the project and that can be controlled or eliminated.
Decide whether to go on with the plan/project.
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