You’ve decided to open a new wholesale and distribution business. Maybe you’re going to start selling home goods, industrial machinery, furniture, food items, clothing, or pharmaceutical products…whatever the situation, one of the most important business decisions to make is what accounting and inventory software you need to run your business. This is an important consideration when first starting out and will depend on several different factors. Aside from required functionality and working within a budget, you will also want to take into consideration your growth projections and future needs. How quickly do you plan on growing your business and what do realistic growth projections look like? You don’t want to implement a new system only to have to replace it a year later, but you also don’t want to burden yourself with an expensive software solution if you do not grow as quickly as planned. We’ve put together some more information on how to help you find the right system for your start-up business.
Typically, as a start-up wholesale distribution company, there are a couple of different areas to focus on when looking for a solution – accounting, inventory management and possibly eCommerce.
First, you will need something to manage the accounting side of the business. This includes invoicing, accounts payable, accounts receivable, bank management and more. Ideally, you will want a system that can also handle creating sales orders and purchase orders, and something that allows you to generate different business reports – such as Profit and Loss Statements, Balance Sheets and then additional reports to track sales, customer data and inventory information. A great solution for small businesses is QuickBooks. With a sole focus on accounting, QuickBooks is an inexpensive solution that can be implemented in a short time frame to help you manage your basic accounting requirements.
Your next order of business will be finding a solution to help manage inventory. You need to track how much product you have available for sale, inventory levels for purchasing, and the management of inventory in your warehouse for picking, packing and shipping. As a start-up company, you may be able to get away with using spreadsheets to manually track data. Although using spreadsheets is time-consuming and error-prone, with a small number of SKUs, transactions and orders, using spreadsheets is a great option to get your business up and running. Alternatively, as your business starts to grow, or if you would prefer something more advanced, there are many inventory solutions that will integrate with QuickBooks.
If you want to sell product online, you will need to get an eCommerce site. This involves finding and creating a website based on existing platforms in the marketplace such as Shopify, WordPress, BigCommerce, Magento, etc. Once again, when just starting out, you may be able to survive by manually updating information between your accounting/inventory system and on your website such as inventory, descriptions, pricing and more. Implementing a proper eCommerce store requires a significant investment, but manually updating information between your different systems can save you some money while order volumes are still low.
What About ERP Software?
You may have heard the term “ERP Software” and are wondering about using that as a potential system. ERP software is designed to automate processes and streamline operations by providing functionality across all business operations – including accounting, inventory management, warehouse management, order entry and processing, reporting, contact management and more. However, because ERP is essentially multiple systems in one, it comes at a higher price tag and with a longer and more complex implementation process than an accounting solution like QuickBooks. Therefore, it can be hard to justify purchasing ERP at the beginning, and realistically, most start-up companies are better off using QuickBooks and spreadsheets (or some integrated inventory solution) to start off with. It is only after your business starts to grow and transaction volumes start to increase that it’s time to look at ERP as an option. There are some situations where start-up companies can benefit from ERP software as the first system implemented – for example when companies want to automate as many processes as possible and expect significant growth within the first couple of years. Frequently, start-up companies who do choose to implement ERP software will do so instead of hiring more people to perform tasks.
Search Process Tips
Now that you have a better understanding of the different systems available to your start-up business, here are some tips to help you with the search process.
- One of the biggest challenges as a start-up entrepreneur is time. Since you have limited staff, you have to wear a lot of hats and inevitably get stuck performing tasks across the different areas of the business. This makes it hard to find the time to dedicate towards finding a proper solution, however, this is a double-edged sword as once you do find a solution, it will help you free up time.
- While systems like QuickBooks can be implemented very quickly, this is not the case with ERP software. If you decide you want to implement an all-in-one solution, start searching well in advance of needing a new system. Implementing ERP can take several months based on a vendor’s availability and resources so you will want to start your search ahead of time – when it’s still manageable to run your business using your existing systems.