The future of your private equity firm hinges on the success of your investments. As you seek to remain competitive and grow your portfolio, the financial and operational performance of your holdings or companies can directly influence your efforts.

What happens, then, when one of those entities starts to struggle? If there is a company in your portfolio that’s falling behind, there are many process improvement strategies that can make a difference.

Today, we’re taking a closer look at some process improvement tips. We’ll also discuss how operational restructuring can help a company remain agile and efficient, even in the midst of a setback. 

What is Operational Restructuring?

Any time an organization faces a strategic challenge, it can lead to a large-scale, enterprise-wide deterioration. These stressors can be both internal or external, and they are not always immediately discernable. Such is the case with companies in your portfolio that become financially strained, turmoiled or otherwise compromised. 

This is where operational restructuring comes in. In short, operational restructuring is the process of taking measures to improve the short-term and long-term business prospects of a struggling company. Common steps include:

  • Providing interim management
  • Implementing performance metrics, benchmarks and accountability tools
  • Analyzing and refining business plans 
  • Redeploying assets
  • Enhancing and improving operational processes
  • Realigning costs

Taking swift action when a company begins to show signs of distress is key to ensure that one weak link in your portfolio doesn’t create a domino effect that usurps your entire enterprise. Due to the short window of action, many PE firms rely on third-party consultants to help them implement, navigate and optimize these widespread changes.

Restructuring Case Study

Panorama built trust and loyalty and effectively managed vendors, which generated $7.2M in sales.

The Role of Process Improvement

Process improvement is one of the key pillars of operational restructuring. Once you initially stabilize operations and restore liquidity, it’s time to take a close look at the root cause of the issue.

Often, that root cause is process related. If this is the case, it’s important to determine what core processes are causing the company to flounder and fail in the first place. Only by addressing the mission-critical problems at hand can you begin to identify areas of improvement.

We recommend using business process reengineering to locate major gaps in the company’s operational structure and to identify restructuring strategies. During this time, you should map out current business processes, looking for areas where you can consolidate systems and duties as appropriate. This helps remove waste and eliminate redundancies.

The solutions you identify can range from quick fixes to get the company back on its feet to a future-focused roadmap for continued development. With these insights and resources in hand, any struggling company within your portfolio can continue operations and stay afloat, all while satisfying both short-term and long-term debt obligations and operational expenses. 

Process Improvement Strategies for Struggling Companies in Your Portfolio

1. Be Transparent About What Isn’t Working

Denial can lead to destruction. Before the company in question can start making major improvements, it must be crystal clear on where its weaknesses lie.

Using assessment tools, you can pinpoint every inefficient process in the company’s current business model. Often, the answers aren’t what you’d expect.

For example, the weakest link in the model might lie in redundant or overly complicated processes. Alternatively, it could also be traced back to information inaccessibility, irrelevant legacy systems or out-of-date best practices.


2. Enable Clients and Democratize the Market

A democratized market is one in which customers are invited inside a business. In essence, the companies that operate within this market are willing to allow end-users access to the technology and information they need to perform a given task on their platform. 

Technology rapidly continues to become more accessible to more people. New technologies and improved user experiences have empowered those outside of the technical industry to access and use technological products and services.

When a company holds tightly to its blueprint and is unwilling to hold these kinds of client-centric conversations, it can be a recipe for disaster. 

Democratization doesn’t mean giving away trade secrets or proprietary technology. However, it does mean sharing and collaborating with your audience to help you achieve the following aims:

  • Bolster your competitive advantage
  • Discover hidden pain points
  • Form new concepts
  • Receive valuable ideas for improvement

As companies communicate openly with their customers, these companies can begin to foster community development and process improvement. In turn, this directly affects their bottom line.

In fact, one study found that customers who are loyal to businesses with communities spend nearly 20% more than other customers.

3. Explore Process Automation

Not only are manual systems time-consuming and laborious, but they are also ripe with potential for human error.

One of the major facets of process improvement is looking for areas where automation or digital integration would deliver more value. This is where a robust enterprise resource planning (ERP) system can prove invaluable.

Aligning, centralizing and streamlining procedures and processes onto a single platform, ERP software allows employees to access the information they need, at any time and from anywhere. It also helps automate back-office functions across IT, services and HR teams. 

The benefits of ERP include more than just improved efficiency. ERP also enables quicker, better-informed decision making, frees up critical employees, brings problems to light sooner and enables easier team collaboration. 

You can find more information in our blog post, How do ERP Systems Streamline Business Processes?

4. Be Open to New Opportunities

Yes, best practices get their name for a reason. Yet, there comes a time when an unwillingness to let go of a tried-and-true approach can turn into a handicap.

A major aspect of process improvement is a willingness to accept and embrace risk. Implementing new automation technology and software tools can be intimidating but having the courage to explore and adopt them is key.

As organizations do so, they can uncover practices that no longer serve modern business needs. This will pave the way toward newer, more efficient methods that can help restore profitability and competitiveness.

Strategic Process Improvement Can Turn Around a Struggling Company

It can be disheartening to discover that a company in your portfolio is experiencing a struggle of any sort. It can be even more unnerving to consider the effect that those issues can have on your private equity firm.

Thankfully, there are process improvement strategies that can help rectify the situation. Designed to provide both short-term relief and continued momentum, these solutions should be implemented as soon as possible.

Looking for support as you roll out these changes? We’re here to help. Our business restructuring consulting experts are well-versed in every aspect of operational restructuring, business process management and more. Request a free consultation below.

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