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Offset the High Cost of AI

Posted on: January 31st, 2023

The acquisition market remains hot for small and medium-sized businesses (SMBs).  Operations data can give you a clear advantage, and AI promises to give you an edge.  But how can SMBs offset the high cost of AI?

Large software as a service (SaaS) providers will tout their ability to leverage AI and Machine Learning.  But for that to work, your business must fit into their existing data model.  For SMBs, this requires an expensive data-creation, or data-conversion process.  But the costs of this are often prohibitive and difficult to predict or control.  As a result, many small business owners decide it’s not worth it.

MLA provides finance, strategy, and solutions to small and medium-sized businesses (SMBs).  We have expertise in data creation, management, and analytics.  Contact us to learn more.

SMBs Priced Out of AI

Businesses that take the plunge into one of these large software systems often discover that it is easier and less expensive to change your business to fit the software than to modify the software to your business.  As a result, SMB owners face a choice between giving up what makes them distinctive and being able to scale.

The solution is to define who you are and what makes you distinct and then collect the data to support that.  In an M&A process, a clear structure with minimal data is preferable to a convoluted structure with data that does not demonstrate your distinctive value.

“Investing in your operational visibility necessitates a thoughtful strategy around data,” says Kyle Roth, MLA Strategic Principal.  “The journey begins with leadership defining the concepts which matter and to which they will hold each other accountable.   It’s as much cultural work as it is technological.”

AI begins by replicating what humans are doing. So, the first step is to document your processes and define the roles of who does them.  Companies with clearly documented processes and roles often sell more quickly and for higher prices than those without.

Offset the High Cost of AI

Working to define and document processes and roles will help you identify the key places to capture data in the future. Depending on where you are in the M&A cycle, you can decide whether to invest in that data capture yourself or recognize that it will be the responsibility of the buyer.

While your company may be more valuable with that data in place, having well-defined processes and roles is essential to a smooth and profitable M&A transaction.  Demonstrating a high level of human intelligence helps SMBs offset the high cost of AI.

MLA can help you get clear financial and operations data and make that a compelling story for your own future growth or as part of someone else’s growth through your acquisition.  Contact us to learn more.