Many people treat the choice about the structure of their business as a one-time decision. They make a quick determination when they first decide to start the business and then let that decision stand indefinitely.
While there is certainly nothing wrong with making a choice and standing by it, the structure of your business does not have to be permanently set in stone. As the operations of the company change and it grows or evolves, you may find that the initial structure you chose is no longer the best form for your company.
Adapting is crucial to a business’s survival
Part of being a savvy business owner or executive is the willingness to revisit previous decisions and change them when circumstances shift. You don’t just need to adjust to changes in the economy but also changes within the business itself.
Understanding that you can potentially change your business’s structure when its needs, scale and purpose change can help you protect your business and yourself as well.
When might you need to look at changing your business structure?
As a general rule, business owners facing changes in daily operations, the scope of the company or the executive team may be in a position where the structure of the business should change.
If you start expanding your operations, for example, a sole proprietorship may leave you with too much liability, meaning that you need to consider the benefits of incorporating or at least forming an LLC. If you started the partnership but your partner wants to move on to a different business opportunity, it might be time to restructure the company rather than search out a new partner.
Perhaps a company once run as a corporation has become smaller and now needs to scale back the number of the executives and the size of the management team to keep them aligned with the company’s overall profitability.
There are countless circumstances and reasons to change the structure of your company, from going through a bankruptcy to a merger with another company. What’s important is that you don’t make the quickest decision but rather the best one.
Informed choices protect your business
Each time you must revisit this choice, it is important to look at all of the options and explore the company’s current needs and its likely future needs.
Making a decision about the best form for your company to take isn’t always easy, either when you first start the business or when the business starts succeeding and changing. The more support you have when making these decisions and enacting them, the more beneficial structural changes can be for your company.