Companies struggle with the volatility expected for 2021/Focus on scenarios instead of traditional budgets necessary – “Corona catalyst”

Köngen – After the first lockdown, German industry was able to compensate quite well for the downturn thanks to existing orders and stocks; however, for many this reserve for 2021 has been exhausted. As a result, numerous companies currently struggle with developing a reliable plan for the coming year. As the current market observation from management consultancy Staufen shows, those responsible find it particularly difficult to bid farewell to a traditional budget mindset. And yet there are many tried and tested alternatives.

“In some market segments, the fluctuation range of revenues expected for 2021 compared to the pre-corona year 2019 is up to 50 percent,” observed Andreas Sticher, Partner for Restructuring at management consultancy Staufen. “If you add to this on top of the more difficult conditions for acquiring new customers, preparing a valid budget for the coming year is quite difficult.”

Restructuring expert Sticher therefore recommends only preparing a rough basic plan and developing two or three scenarios based on this. “You should not only think in downward steps but also of positive scenarios,” said the Staufen Partner. The sentence “Expect everything – even the good,” which was recently used with regards to the cultural scene that was once again hit hard by the lockdown, also applies to industry.

But why do so many companies continue to fail to switch from a budget to a scenario mindset? Sticher: “Most people are able to question fixed cost structures or prepare a make-or-buy invoice but thinking in terms of +/- 25% turnover often puts companies to the test. They simply rule out that existing structures and processes could cause such scenarios.”

Based on numerous restructuring projects, Sticher knows that organizations can be set up in a much more flexible and variable manner than would initially appear acceptable from the company’s internal perspective. “Sometimes an outside perspective is necessary to uncover existing potential. In many companies, reserves for processes could easily be reduced by 20% without even remotely endangering business operations. Many have learned throughout the coronavirus crisis how to keep core business processes running with minimal resources. It is important to take these findings and anchor them in a sustainable manner.”

Currently noticeable forecast gaps also have a negative impact on the workforce. “For fear of spreading incorrect figures that have to be later revised, no real internal communication is currently taking place. This causes uncertainty, especially among employees. They wonder how things will continue, especially beyond their reduced working hours,” says Sticher, describing the situation for many companies.

In addition, even established companies that were very successful in recent years have yet to adapt their structures consistently enough to the challenges posed by megatrends such as digitization and e-mobility. Sticher: “The ‘corona catalyst’ is currently forcing companies to ask questions, such as: How can structures be flexibly adapted even with a reduced top line without having to take too large cuts and losses? Companies should not wait to come up with answers.”

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About Staufen AG – www.staufen.ag

Inside every company there is an even better one. With this conviction, Staufen AG has been advising and qualifying companies and employees for more than 25 years. Markets are on the move – the competitive pressure is enormous. Staufen helps to quickly bring about the right changes, increase productivity, improve quality and increase innovative strength. With the appropriate strategies and methods, the international transformation consulting company ensures rapid and measurable success. In order to leverage the potential available in every company, Staufen consultants establish a lively and sustainable culture of change together with executives and employees. Staufen subsidiary Staufen Digital Neonex supports medium-sized industrial companies on their path to digital transformation. The Academy of Staufen AG also offers certified, practice-oriented training courses. From the international locations, more than 340 employees serve customers all over the world. In 2020, Staufen AG was recognized by “brand eins” as “Best Consultants” for the seventh year in a row. According to the renowned industry study “Hidden Champions 2020,” the consulting firm is Germany’s best Lean Management consultancy and was honored several times with the “Best of Consulting” award by the “Wirtschaftswoche” journal.