Successful mid sized family businesses share one trait: they have a clear view of the information that matters for steering their company. Transparency creates options.
Even so, more and more companies are realising that the information base they have for taking decisions is no longer sufficient. The reasons are obvious. The sheer number and speed of changes, from geopolitics and protectionism through energy prices, inflation and interest rates to new and in part disruptive technologies and sharper competition, are pushing the existing approach to its limits.
Those limits show up in very different questions. A systematic approach makes it possible both to analyse the scope and quality of the information available and to work out which information is uncertain or missing.
Transparency about the company's own development
It is confirmed again and again: accounting that is up to date and aligned with the company's information needs, together with controlling, are central building blocks for creating transparency in a company or a group. Profitability and liquidity, and how they arise, are the focus.
A wide range of methods and tools is available for setting the expectations from corporate planning against actual performance. The level of detail follows from the business model, the structure and size, the range of variants and other parameters, so that the way contribution margins and cash flows arise can be shown in enough detail to steer the company.
In many family businesses we see approaches changing, for instance scenarios being used far more often than in the past to think through particular developments, their effects on the company and possible responses.
Transparency about markets and the wider economy
Uncertainty and a lack of transparency in information lie overwhelmingly in the sales and supply markets. That makes it increasingly hard for mid sized companies to build a stable data basis for steering the business. For cost reasons, most mid sized companies, including large family businesses, cannot build and run comprehensive research, or can do so only to a limited extent.
Steering a company on figures and facts naturally looks at sectors, markets and competitors. Steering that secures the future has to be deliberately extended with questions about risk and opportunity.
That requires actively engaging with the relevant influences on the company's value chain, from the product idea through procurement and production to sales. It sharpens the view of possible interactions in the markets and their effect on the company. Examples might be: what does a price change in one of the main materials mean for a B2B manufacturer, or what does an increase in VAT mean for a consumer goods retailer? Such considerations are not trivial and call for a systematic approach.
Easier said than done, so what can an approach look like?
The pace of change has more or less disabled the way information used to be gathered. Sector and specialist assessments from associations, chambers, purchasing groups or banks were often drawn on in the past because they already contained the likely consequences of market or political change.
To get a picture of developments, interactions and effects on your own company, using artificial intelligence (AI) has become indispensable. Integrating AI into the work of mid market management is essential for building the transparency needed about the factors that drive company development. An example might be the likely development of steel prices for a defined quality grade over the next 12 months and the factors that set those prices.
Building particular prompts or agents that regularly find, analyse and prepare current information and data for the company leads to a markedly better basis for steering the company on figures and facts.
THE MAK'ED TEAM works with mid sized family businesses on the purposeful use of technology to develop the way they steer their company.
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