That is the question many business leaders ask themselves. Acquiring an ERP system is one of the biggest investments a business can make, yet many small and young businesses claim they are ‘too small’ for ERP. This stems from the mindset that the number of users drives the need for an ERP solution.
What is ERP?
Enterprise Resource Planning (ERP) has been known to be the backbone for many corporate-scale businesses. The software is a key tool for managing production, order processing and inventory. It also monitors business resources between stakeholders, such as; revenue, materials, orders, staffing and manufacturing capacity. All of this is done in a single interactive database management system with built-in analytics and a dashboard.
An ERP can be implemented across several industries including manufacturing, retail, human resources, steel, concrete, banking, pharmaceutical, chemical, oil/gas, as well as agricultural, farming and livestock management.
What Do Small Businesses Need to Understand?
Within a small company or startup, employees wear multiple hats. Everyone pitches in wherever and whenever the need arises (which is frequently). Who has the time to manually process multiple spreadsheets and separate mountains of data? ERP systems geared towards small businesses are able to blend and automate key business functions such as order processing, production and finances.
However, ERP software is integrated over all departments of a company. Implementing an ERP system entails careful planning in order to minimize the risk of failure and to ensure goals are met.
What Are Signs That Your Business Needs an ERP?
The majority of small businesses start with just the basics. This may include a combination of simple accounting software and document-based processes—i.e., spreadsheets, synced documents.
As the business expands and transactions increase, it may become more time-consuming and difficult to process a larger volume of data. Business processes become much more tedious, such as; inputting sales and purchase orders from various clients, updating inventory, manual stock checks, processing invoices, billing and keeping track of client interactions.
It may be time for ERP implementation:
- When the amount of inventory in the warehouse becomes difficult to determine;
- When the sales forecast is based mostly on guesswork;
- When the company is struggling to keep up with an upsurge of orders or relies heavily on excel spreadsheets;
- When getting solid facts becomes problematic, it may be time for ERP implementation.
Plan for Now and the Future
Many young and small companies shy away from investing in a full-fledged ERP solution, due to the risks involving finances and inefficiency. Ultimately, you need to understand how your business operates to fully understand what you want to get out of your ERP program.
This ERP solution is a good fit for companies with varied requirements and complex business processes while remaining cost-effective and fast to employ. This company knew it was headed for growth, so rather than starting with entry-level accounting software and eventually transitioning into an advanced ERP solution, they invested in a solution that would take them from startup to success.
To successfully weigh the risks versus the rewards of ERP software solutions, the key is to identify your business priorities and corresponding resources for training and project management strategy.
Even the best ERP software can fail if the implementation isn’t executed correctly. With so many options available, seeking a consultant specializing in ERP solutions and implementation may be in your best interest and ensure you select the right system and manage the change effectively.