Future-Proof Your Business: Strategic Restructuring Options for Business Owners

Future-Proof Your Business: Strategic Restructuring Options for Business Owners

The window of opportunity is slowly closing for directors to explore strategic restructuring options for their businesses
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Wednesday, 19 August 2020
By James Cook

With 25 September 2020 just around the corner, it is now more important than ever that business owners pause and take stock to carefully consider what the next 12 months of trading might look like for their business.

In March 2020, the Federal Government introduced the Coronavirus Economic Response Package Omnibus Act 2020 (Cth) which was designed to provide temporary relief to businesses and stimulate economic activity. Among the incentives and temporary measures initiated by the Federal Government, many business owners have subsequently been able to:

    • Defer repayments owing on business loans, mortgages and other finance facilities;
    • Access rent waivers and rent deferrals from landlords;
    • Access significant cash flow stimulus and wage subsidies;
    • Access six (6) months of stimulus under the Jobkeeper program;
    • Obtain temporary relief and an extension to comply with statutory demands from 21 days to six (6) months; and
    • Take advantage of the temporary easing of insolvent trading laws.

Whilst these temporary measures have had their desired effect, this has however, created an artificial economic environment for many businesses, which has left many business owners awash with cash and a false sense of business performance.

As the temporary relief begins to wind back from 25 September 2020, the months of August and September should serve as an opportune time for business owners to take stock and ensure they are preparing their business for the next phase of the recovery cycle.

EARLY INTERVENTION IS KEY

As businesses slowly begin to be weaned off the Federal Government’s various stimulus packages, it is critical that business owners now use the comings months to:

    • Revisit historical performance of the business and consider the financial impacts from the withdrawal of any previously relied upon stimulus;
    • Carefully assess the business’ financial position and identify the levers and key drivers of financial performance (i.e. billable hours, inventory levels, occupancy rates);
    • Revisit the business’ forecasts and cash flow assumptions and ensure the revised projections are reflective of the current operating structure of the business;
    • Explore profit optimisation strategies and consider resizing the cost base of the business (where practicable);
    • Develop liquidity forecasts and investigate cash flow improvement strategies available to the business (i.e. changes in trading terms);
    • Conduct customer segmentation and profitability analysis and ensure the business remains focussed on its core target market; and
    • Develop strategies to maximise revenue, streamline processes and optimise the cost structure of the business.

Businesses facing challenging operating conditions should seek prompt, specialist advice to reduce the risks and consequences of financial failure and increase the options available to the business.

WHERE GT ADVISORY & CONSULTING CAN ASSIST

During times of business distress, we work alongside directors and management teams to manage the financial pressures on the organisation and develop strategies that maximise value for stakeholders.

Read more here to learn about how GT Advisory & Consulting can assist.

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