Successful medium-sized family businesses are characterized by one thing: they have a clear view of the relevant information needed to manage their company. Clearly, transparency creates opportunities.
Nevertheless, more and more companies are realizing that the existing information base used for decision-making is no longer sufficient. The reasons for this are obvious: the multitude and speed of changes – from geopolitics and protectionism to energy prices, inflation, and interest rates, all the way to new, partly disruptive technologies and intensified competitive situations – are pushing existing approaches to their limits.
These limits manifest in a wide variety of issues. A systematic approach can be used to analyze both the scope and quality of existing information, as well as to identify uncertain and potentially missing information.
Transparency in the development of your own company
It is confirmed time and again: up-to-date accounting and controlling aligned with the company's information requirements are key building blocks for creating transparency within a company or corporate group. The focus is on profitability and liquidity and how they are generated.
To achieve this, a multitude of methods and tools are available to compare the expectations derived from corporate planning against actual performance. The depth of content is determined by the business model, structure, size, product variety, and other parameters, allowing the generation of contribution margins and cash flows to be presented in such detail that they can be used for corporate management.
In many family businesses, we see how approaches are changing; for example, scenarios are being used much more frequently than in the past to think through specific developments and their impact on the company, and to develop potential responses.
Transparency in the development of markets and the overall economic situation
Information uncertainty and lack of transparency are primarily located in sales and supply markets. This makes it increasingly difficult for medium-sized companies to develop a stable data basis for corporate management. For cost reasons, it is not possible, or only possible to a limited extent, for the vast majority of medium-sized companies—even large family businesses—to build and implement comprehensive research.
Data- and fact-based corporate management naturally considers industries, markets, competitors, etc. Future-proof corporate management must consciously expand to include questions regarding risks and opportunities.
This requires active engagement with the relevant influences on the company's value chain – from product idea to procurement, production, and sales. This sharpens the focus on potential interactions within the markets and on the company itself. Examples could be: "What does a price change in one of the main materials used mean" for a manufacturing company in the B2B sector, or "what does an increase in VAT mean" for a consumer goods retailer? Such considerations are not trivial and require a systematic approach.
Easier said than done – what could be an approach?
The dynamics of change have more or less rendered previous methods of information gathering obsolete. Industry and expert assessments from associations, chambers, purchasing groups, or credit institutions were frequently used in the past, as they already contained potential consequences of market-related or political changes.
To get an impression of developments, interactions, and influences on one's own company, the use of artificial intelligence (AI) is an indispensable approach. Integrating AI into the work of medium-sized management is essential to develop the necessary transparency regarding the relevant factors of corporate development. An example could be: the projected development of steel prices for a defined quality class over the next 12 months and the factors determining those prices.
The creation of specific prompts or agents that regularly find, analyze, and prepare current information and data for the company leads to a significantly better foundation for data- and fact-based corporate management.
THE MAK'ED TEAM works together with medium-sized family businesses on the targeted use of technologies for the further development of corporate management.
Further valuable information on the topic of Finance Management
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