Restructuring a company in the face of declining profits is a tough, nononsense operation that requires a willingness to face financial realities and triage difficult decisions. There are ways to not only stop the bleeding, but also heal and strengthen the patient for the future.
1.Consider hiring a turnaround specialist--as either an interim manager or a consultant--to help with restructuring. An outsider often brings objectivity and a fresh point of view.
2.Analyze the extent of the problems. Is the profit picture merely ailing or is it terminally ill? Is the company's core business still financially viable?
3.Develop a restructuring plan and present it to the board of directors, management and employees. It may also be advisable to show the plan to certain outsiders, such as bankers and other creditors, and to major vendors.
4.Start at the top. Replace weak members of top management and the board of directors. Then reduce management layers. Unprofitable companies are often bloated with middle managers.
5.Investigate the possibility of restructuring debts or acquiring bridge loans to finance the restructuring costs.