ERP and how it helps your small business act like a big one
When smaller companies look at robust technology with advanced functionality and a matching price tag, they often get scared away. As a small business owner, you may think a sophisticated ERP system is overkill for your needs, and you may be concerned about the finance statement for ERP. It is true that some small businesses are not ready for ERP – if they have limited, simple processes, these can often be addressed very adequately by entry-level systems. However, if your company is experiencing growth and you plan on continuing to grow, the lack of appropriate tools and systems could hamper that growth.
Implementing an ERP solution when your business is in the early stages of growth is the perfect time. It puts you in a proactive position, ready to take on future growth by streamlining processes for order entry, inventory management, quoting, invoicing, accounting etc. The alternative is to wait until you can no longer handle the expanded business, and then only search for software. From a strategic planning perspective, it is more beneficial to be properly prepared for growth.
If you want your company to grow to be a big business, you have to act and think like a big business. Even if you don’t need all the extra features of an ERP system right from the start, choosing a system that gives you the flexibility to grow will allow your company access to additional functionality that may be beneficial in the future.
Although this mind-set applies to companies in any industry, let’s consider an example of a catering business. The company is 4 years old, has 5 employees, and handles about 10 events a week. The employees are all kept busy and they are slowly starting to receive more orders, but it isn’t anything that they cannot handle yet. They are happy with their current introductory accounting and catering management software – it helps them stay organized from an administrative position. The business is doing well from a financial standpoint, and management and employees are all optimistic about future growth. That being said, the company can:
(A) Continue to use their current methods for inventory management, accounting, menu creation, and overall catering & business management
(B) Invest in a more sophisticated catering & business management ERP system that is ideal for larger operations
Option A may seem like the easier choice. Nothing changes – there is no need to go through a messy software implementation and train employees on a new system, or figure out how to store data in the new software.
Now, let’s fast forward a year into the future. The catering business in the example has been growing (as expected), and is now handling over 20 events a week. Quoting, invoicing, and creating unique menus for the increased number of clients is becoming more and more difficult. Their current system is overflowing with data, and it is hard to keep track of all the different places that orders and menus are being entered, quotes are being created, and invoices are being sent out. The company is realizing that they have outgrown their current software and really need a new, more advanced system to stay efficient. With the increase in orders, and the fact that employees are busier than before, going ahead with option B may be even more difficult now.
If you see a bright future full of growth for your business, consider taking the leap to ERP software. Having the ability to handle more customers and more inventory all in one central system will set your company up for a smooth transition to growth. Implementing robust software is a step you can take to help your small business act like (and hopefully turn in to) a large one.