Managing director of Europa Worldwide Group – one of the largest independent logistics operators – Andrew Baxter, who has more than 20 years’ experience in the freight industry, says restructuring should take place when a business is flying high.
Andrew lives with his family in Notts, from where at the age of 18 he joined his father’s family business RH Freight. He and his brother Ian performed a management buyout of the business in 2005, acquiring the company from other family members. Under their ownership the business was expanded and ultimately sold to Kuehne + Nagel in 2011 for £60m. Andrew then acquired Europa in 2013 and set about a bold restructuring of the business.
Failing businesses don’t have a monopoly on restructuring. For some business owners, it’s a necessity to achieve future growth which brings commercial benefits. For sensible and forward-thinking MDs, to restructure is not a sign of failure at all, but an indication that they are constantly thinking about how best to prepare their business for the future.
Depending on whether you are a cup half full or a cup half empty kind of person, restructuring is either seen as an evil necessity or an opportunity to create a business infrastructure which creates success. I speak from experience, and I am certainly of the cup half full camp.
Having acquired a logistics business in 2013, one of the first challenges was to implement a complex, front end restructuring necessary to position it for growth and secure its future in a highly competitive global marketplace. The business was bringing in a turnover of £73 million and had a strong balance sheet – but restructuring was essential. It took two years, and at such a rapid pace, I believe, would take many other businesses over a decade to execute.
But it didn’t stop there. Several more restructuring projects took place and the last major one – the implementation of a brand new, bespoke IT system costing £1.7 million – has just been completed. The sheer complexity of the project meant it was painful and extremely challenging but it is bringing huge benefits now and for years to come; benefits for the business, customers and the rest of our supply chain in terms of efficiencies, scalability and cost savings.
These restructuring projects are game changers for the business, and ones which have geared the business up to see its turnover go through the £100million mark for the first time in the company’s history. In my opinion, the most successful businesses adapt their structure constantly in order to ensure optimum efficiency – it isn’t a ‘done and dusted’ job and business leaders should view restructuring as an ongoing process. It is much better to restructure in the midst of success than reactively when turnover and profits start to dip.
No one said restructuring is going to be easy. The first step is to be honest with yourself that the business needs to restructure in order not to stand still, or worse, go under.
But what’s important is the focus, leadership, motivation and mindset to do it. Having created a detailed plan of what we wanted the company to look like, the changes were implemented with ruthless determination and efficiency. It can be lonely at times like this but having a good management team around you who share your vision and pain helps, especially during very difficult times such as having to make people redundant.
Restructuring isn’t a dirty word in my book and it is a vital part of running your own business if long term success is to be achieved. Never shy away from the difficult realities but turn them into positive opportunities where the gain is worth the pain. See it as part of the bigger picture.
Difficult decisions were made, including redundancies, but the business had to modernise. The restructuring has created more jobs and gives Europa a unique operating model which will reshape the logistics sector. The business is in a very healthy position now and in the second half of 2016 the company turnover smashed through the £100 million turnover barrier. So, after a difficult first three years the ambitious plans for growth can now be realised.
There is a host of reasons why a business may look at restructuring – good and bad. If your company is heading towards financial difficulties look at how restructuring can help to cut costs and improve profitability. Like Europa, if your company is operating on a solid platform but offers no real potential for long term growth, I’d strongly consider grasping the nettle and implementing change for the better. Don’t wait until it’s far too late when the company is completely wound up with creditors’ circling for any last financial morsels left in the business. Don’t ignore or it dismiss it. Restructuring can be, and is, good for business and it should be done when business is going well.
Andrew Baxter is managing director of Europa Worldwide Group. The £100m turnover business employs 600 people across its 11 sites in the UK and Hong Kong office.