How ERP Can Help Your Small Business Act like a Large One

Mark Canes

When smaller operations 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 financial commitment. 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. The right time to implement more sophisticated software is often a grey area - on the one hand, as a small business with limited resources, you don't want to risk implementing a system you can't afford. On the other hand, waiting too long to implement a solution can result in frustrated employees, missed opportunities with potential customers and stress.

Implementing an ERP solution when your business is in the early stages of growth is a 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 only then search for software. From a strategic planning perspective, it is more beneficial to be properly prepared for growth.

Frankly, 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 mindset applies to companies in any industry, let’s consider an example of a wholesale distribution company that sells baby and children's products. The company is 4 years old, has 5 employees, and current order volume is low - but growing. Current employees are all kept busy with their existing tasks, but the company is slowly starting to receive more orders, however, it isn’t anything that they cannot handle yet. Employees are happy with manually managing inventory and the company's introductory accounting system as 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 manual methods for inventory and warehouse management and the existing system for accounting
  • (B) Invest in a more sophisticated ERP and business management system that is specifically designed for growing 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 same wholesale distributor of baby and children's products has been growing (as expected) and is now handling more orders, especially after launching an eCommerce site. Managing orders from multiple sales channels, picking, packing and shipping and managing an increased number of clients is becoming more and more difficult. Their current system has reached its limits in terms of data, manually tracking inventory is both time-consuming and error-prone and customers are getting the wrong product and shipping times are increasing.  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.

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