Change can be a catalyst for growth

Accept change as a mandatory part of growth. File 

By CATHY MPUTHIA

In Summary

• An optional restructuring is easier to manage as the business has enough time to mitigate risk.
• To avoid being taken by surprise during a corporate transition, do a constant risk evaluation on your business.
• A well handled transition, especially where the cause is common to your sector, may give you a competitive edge over the competition or even eliminate it.

Change and growth are signs that a business is alive. If your business has been stagnant for a long time, that is a bad sign.

 

Retrogression is usually preceded by a long period of stagnation. If your business is not proactive to change, then most likely external circumstances will force you into a transition. The business environment is always changing and if your business is too rigid to adapt to changes in the external environment, then retrogression is inevitable.

Only a few years ago, businesses were heavily reliant on capital. The environment has changed and technology and knowledge now drive industries. It is not a big surprise that the businesses that embraced technology quickly are the current market leaders. The ones that failed to do so began retrogressing.

The fittest are those that quickly adapt to changes in the external environment. Businesses that fail to adjust in the wake of ever changing externals will become weak and sometimes die.

External or internal eventualities could force your business into a transition and it is key to prepare for these. Causes of corporate and business transitions are varied. Some organisations opt for a voluntary transition through restructuring.

An optional restructuring is advisable as it entails doing an honest analysis of your business and forcing it to adapt to current or perceived future changes. An organisation that restructures itself is one that always emerges stronger and better.

An optional restructuring is easier to manage as the business has enough time to mitigate risk. Before a restructuring is done, businesses hire experts who advice on legal, financial and technical risks on the business.

However, not all transitions are optional. Many businesses are forced into transition by circumstances like change of shareholding structure, staff exits and regulatory changes. How well prepared is your business to handle a transition?

To avoid being taken by surprise during a corporate transition, do a constant risk evaluation on your business. A simple do-it-yourself SWOT test is one form of a risk analysis. This is where you and your team do an honest analysis of your strengths, weaknesses, opportunities and threats and recommend ways to deal with each banner.

Risk analysis need not be an expensive affair. A competent team that is well versed with your business can do a simple risk analysis and come up with recommendations to mitigate risk and take advantage of opportunities.

Some forms of risk analysis are more complex and it is advisable to hire experts when there is a major transition for your business. Lawyers for example, offer legal audits where they analyse all your operations, documentations, structures and the external legal environment and then advice on mitigating risk.

An improperly managed transition can be fatal for your business. For example, if a regulatory change forces your business to adapt, failure to do so can expose you to legal action.

Sometimes business transition is inevitable and can be the key catalyst for growth. A well handled transition, especially where the cause is common to your sector, may give you a competitive edge over the competition or even eliminate it. View transition as an opportunity and not a threat.

Mputhia is an advocate and business strategist. cathymputhia@gmail.com