How to Restructure Your Business for Success in North America

Table of Contents

1. Why Businesses Restructure
2. Legal and Financial Considerations
3. Key Steps to Successful Restructuring
4. Common Pitfalls and How to Avoid Them
5. The Path Forward

Why Businesses Restructure

Businesses restructure for several key reasons, all aimed at boosting efficiency and setting the stage for lasting success. Growth is often a major motivator. As companies expand, they can outgrow their original structures and need a more flexible setup to manage new markets, products, or increased complexity.

Competition is another driving force. To stay relevant, businesses must adjust their structure to remain innovative and resource-efficient. Restructuring allows companies to reallocate resources, streamline operations, and keep pace with industry trends.

Financial challenges also play a big role. When profits dip or debt increases, restructuring helps businesses cut costs and eliminate inefficiencies. In both the US and Canada, regulatory changes often push companies to restructure, ensuring compliance while staying adaptable in shifting economic environments.

Take BlackBerry, for example. The company successfully pivoted from hardware to software, capitalizing on changes in the tech industry. General Motors’ large-scale restructuring during the 2009 financial crisis is another example, proving that restructuring can help companies emerge stronger, setting the foundation for future growth.

Legal and Financial Considerations

Restructuring involves navigating a complex legal and financial landscape, and it’s crucial to have the right professionals guiding you through the process. Each country has its own set of rules, so working closely with legal and financial advisors is essential to avoid costly pitfalls.

In Canada, businesses often deal with both provincial and federal laws, particularly when handling corporate changes like amalgamations or dissolutions. Meanwhile, US companies must consider state-specific regulations when restructuring LLCs, corporations, or partnerships. Each country also has its own requirements for regulatory filings and approvals, making expert advice indispensable.

Tax implications are another important factor. Whether you’re dealing with capital gains, corporate income taxes, or loss carryforwards, restructuring can have significant tax consequences. Missteps can lead to unnecessary liabilities or missed deductions.

Employment law is equally critical. If restructuring impacts staffing, businesses must comply with local laws regarding layoffs, severance, and employee rights, which differ between the US and Canada.

Finally, regulatory approvals are often required. Whether it’s obtaining clearance from the Securities and Exchange Commission in the US or the Canadian Securities Administrators, aligning with industry-specific regulations ensures a smooth process and helps you avoid legal delays.

Key Steps to Successful Restructuring

Restructuring might seem daunting, but with the right approach, it can set your business up for long-term success. Here are four steps to guide you through the process:

1. Evaluate Your Current Business Model – Start by taking a hard look at your current business model. Is your company growing, or has it plateaued? A thorough financial and operational review will highlight bottlenecks, inefficiencies, and potential growth opportunities. This assessment will help you determine whether you need to downsize, expand, or reorganize key areas of your business.
2. Craft a Clear Restructuring Plan – Once you’ve assessed your business, it’s time to create a clear restructuring plan. Set both short-term goals—like cutting costs or streamlining operations—and long-term objectives, such as expanding into new markets or launching products. A solid plan keeps everyone aligned and provides a roadmap for success. Make sure your goals are realistic, measurable, and adaptable.
3. Engage Stakeholders Early – Communication is key to a smooth restructuring. From the outset, keep employees, investors, and partners in the loop. Transparency helps manage expectations and reduces resistance to change. When delivering tough news—like layoffs or operational shifts—be clear and empathetic. Hosting meetings or smaller group discussions can help address concerns and provide updates throughout the process.
4. Implement and Adapt – Restructuring is an ongoing process, not a one-time event. Implement your plan step by step, allowing flexibility as you go. Regularly track progress using performance metrics to ensure you’re on the right path. Be ready to adapt quickly to changing internal or external factors, as market conditions can shift unexpectedly. Agility is key to a successful restructuring.

Common Pitfalls and How to Avoid Them

Restructuring offers great potential, but it’s easy to stumble without careful preparation. One of the biggest mistakes businesses make is poor communication. Failing to keep employees and stakeholders informed can lead to confusion, lowered morale, and higher turnover. In fact, businesses with strong communication strategies are 50% more likely to successfully implement changes. Avoid this pitfall by delivering key messages consistently and addressing concerns throughout the process.

Another common misstep is neglecting legal obligations. Errors in areas like employment law, tax compliance, or regulatory filings can lead to costly penalties or legal disputes. Engaging legal professionals from the start will help you avoid these issues and keep your restructuring on track.

Finally, financial oversight can cripple even the best restructuring efforts. Many businesses rush into restructuring without fully understanding the financial impact. Conducting thorough audits and consulting with financial experts can help mitigate risks, ensuring your restructuring reduces costs and protects future profitability.

By focusing on clear communication, legal compliance, and sound financial strategy, you can sidestep these common mistakes and set the stage for a successful restructuring.

The Path Forward

Restructuring is a powerful tool that helps businesses in North America stay competitive and achieve long-term success. By proactively assessing your business model and optimizing your operations, you can unlock new opportunities—whether through scaling, pivoting, or streamlining. The key is to plan carefully, engage the right stakeholders, and avoid common pitfalls. Restructuring offers the chance to position your business for future growth and resilience.

Ready to explore how restructuring can benefit your company? Reach out to our team today, and let’s build a plan that sets you up for lasting success.