ERP For Small Businesses

January 21, 202216 min read

What is an ERP system for small businesses?

An ERP system facilitates the management of business processes through a single platform. It is made up of core functionalities that include accounting, logistics, and human resource management.

Small businesses usually operate with only a handful of resources. Therefore, it is not practical to have specific software for each function as it will require too much time and effort to run the business.

An ERP system organizes the different processes and consolidates all information from these functionalities into a single program. This makes it easy for small businesses to manage their operations as they only need to access one platform for data sharing, processing, analysis, and reporting.

ERP software is specifically intended for smaller businesses that do not have substantial financial and technical resources. It gives them a more efficient way of running their business while focusing on their core activities.

What are the benefits of an ERP system to small businesses?

Supply chain management. ERP systems use several technologies to monitor all processes throughout the supply chain. It is, therefore, more accessible for small businesses to manage the procurement of raw materials, order processing, inventory management, and delivery tracking. Having an ERP system will help small enterprises save on time and money as they are now able to run their supply chain more efficiently.

Better customer service.

An ERP system allows for real-time sharing of information throughout the business, which means that all staff members can access the same data, enabling them to serve customers better.

Accounting and financial management.

With an ERP system, small businesses will have a better picture of their financial history, which will make decision-making easier as they can now see how profitable certain activities are. They will also be able to prepare for future growth as accounting processes are now automated using an ERP system.

Order management.

With an ERP system, small businesses can manage orders through a centralized platform, making it easier to track incoming and outgoing orders. They will process orders faster as all information is accessible from a single platform. This will minimize the possibility of mistakes that may lead to order cancellation, which saves time and money on the part of the business.

Project management.

ERP systems are great for project management as they make it easier to monitor the timeline, schedule, and budget of different projects. This will help small businesses keep track of costs on various projects, which is always an essential component of project planning. Project management helps keep track of the entire growing business.

Managing human resources.

With employee information stored in a single platform, it becomes easier for managers to monitor their performance. Managers can now see who needs to be coached, who needs training, and which employees are doing well in their roles. This will help small and midsized businesses allow each employee to fulfill their potential while ensuring that they produce high-quality work for the business needs.

Business operations.

ERP systems go a long way in helping businesses automate different processes critical to their operations which frees up time and resources. Now, small business owners can focus on core components as all other tasks are automated using an ERP system.

Employee training.

As mentioned earlier, an ERP system makes employee management easier for small business managers. This will help them save time and resources that would have been spent on training employees about the various processes in a company.

Financial management.

ERP systems help small businesses run their financial processes more efficiently. This, in turn, helps them make better decisions as they can now access all of their data from a single system. They will also be able to prepare for future growth as accounting processes are automated using an ERP system.

Warehouse management.

Inventory management is now automated with ERP systems. Small businesses can now keep track of all their products, and they will also know which ones are in stock. This will help them improve customer service by ensuring that they always deliver on time despite any unforeseen circumstances. Inventory control can also help them keep costs under control as they will not overstock their inventory.

CRM or CRM software integration.

Customer relationship management systems are also integrated into some ERP systems, making it easier for small businesses to manage customer relationships. They will now have a single platform where they can store valuable customer information and track all interactions with the client, which will help them provide a better service, build a positive brand image, and improve sales in the long run.

Business intelligence.

Small businesses can now access real-time information as systems integrate with BI tools. Business intelligence allows them to see which areas need improvement and should be given more attention. They will also monitor market trends, identify competitive threats, and take the necessary action to benefit their business.

ERP System for Small Business Comparison Criteria

Which ERP systems should I buy?

Small businesses often make business decisions under tight budgets. Hence, they are always looking for the best value for their money. Since various ERP systems are available today, it can be hard to choose which one will suit your needs. Here are some factors you should consider before selecting an ERP system for your small business:

  1. Budget - How much are you willing to spend on ERP software? The price will often determine what kind of system you can buy. If you are looking for a full-featured system, then expect to pay more than if you want a basic one. You may also need additional modules for your chosen ERP system. Make sure you have budgeted for these modules so that you can get the most out of your investment.

  2. Support - Who will provide support if something goes wrong? Make sure to choose an ERP system with a responsive customer support team. They should help you resolve problems quickly and effectively, which is important since time is valuable for small business owners.

  3. Business Requirements - What do you need your ERP software to do? A basic accounting and inventory management system are good for some businesses, but others may need additional features like sales and customer relationship management (CRM) software. Hence, determine what features you want in your ERP system before choosing one. Don't forget mobile apps so you can access information on the go.

  4. Improvements - How often are you willing to upgrade your system? Many vendors regularly release new versions, which can be good since it helps improve the product. However, some upgrades may require changes in business processes, which is time-consuming and disruptive for users. It will help if you ask your vendor how much they invest in improving the product before signing a contract.

  5. Ease of use - How effortless is your system to use? You will have to train your employees on using it, so go for a familiar interface. Also, try out some products before purchasing to determine whether it meets your needs.

  6. Integration - Are your systems integrated? Check if the solution you are considering has apps for different devices, which allows you to access it anytime, anywhere. Ensure that your vendor can integrate it with existing IT infrastructure, so you do not have to make costly changes to achieve compatibility.

  7. Flexibility - How flexible is your ERP system? Does it allow you to add and remove modules as your business needs change? If yes, then choose a vendor that can provide additional products, so you do not have to switch to another provider in the future.

  8. Scalability - How scalable is your ERP? Can you increase its capacity if your business grows bigger? It would be best if you also looked for a solution that can integrate with third-party products and apps so that you can expand your business further.

  9. Standards - Do you need compliance standards? If your business is registered in a country that requires compliance standards, then make sure you buy an ERP from a company that is ISO 9001-certified. You may also want to check for compliance with industry or national standards so you can pursue government contracts with ease.

There are many ERP software out there. You need to make sure you get one that will suit your needs before buying it.

Should I build my ERP?

If you are building your ERP system, consider these thoughts. It is generally easier to acquire an off-the-shelf product, so you do not have to deal with customizing and deploying a bespoke solution on your own. However, some businesses have specific requirements that existing ERP solutions cannot meet. If this is the case for your business, it may be good to talk to an IT consultancy company about building your system.

Here are some points you should take into consideration before making a decision.

  1. You need the technical know-how and resources to build your systems, such as programmers and IT specialists who can help you with development. This is not possible for all small businesses, so consider hiring an IT consultancy company with experience in building custom ERP software if you do not have the expertise.

  2. Building ERP software usually takes up a lot of time and resources, so make sure you budget enough for the project. It would also help to involve your employees in developing the system since they will be using it on a day-to-day basis. This will enhance user acceptance and encourage them to use it.

  3. Customizing an existing ERP system can be expensive because you will have to pay for additional modules and licenses, which may not be the case if you build your software from scratch. It would be best to weigh the costs involved in both options before making a choice.

  4. While customizing an existing product may take less time, building your ERP solution will help you avoid vendor lock-in since it was designed specifically for your business needs. This can be beneficial in the long run because you are not restricted to using only one vendor's products. You can be locked in with an ERP vendor and your technology choices when building the ERP software solution.

  5. If you have a limited budget, it is better to go for an off-the-shelf product since it is cheaper and readily available. You can also avail of free trials or demo versions before you buy, so you can test the system first to determine if it meets your requirements.

  6. If you already have an existing IT infrastructure, it will be easier for your employees to become familiar with commercial ERP software since they will not be required to learn new software and processes.

  7. If your business grows and you want to expand its capacity, it may be better to buy an off-the-shelf product because you can easily upgrade or add new modules as needed. It will also cost less than doing the same with a custom system.

  8. Companies that invest in building their ERP solution gain a competitive advantage. Still, the software cannot be successfully transferred or resold to other businesses if they stop using it. If your business tends to outsource some of its operations due to seasonal fluctuations, then you may want to consider getting an off-the-shelf product instead.

  9. If you have a unique business process that an existing product cannot easily replicate, it is advisable to build your ERP system. This will give you the flexibility to customize it so it can conform to your needs.

Is a cloud ERP solution a good idea?

A cloud ERP solution may be a good idea if you need an IT infrastructure to store and process data remotely. This is beneficial for businesses that want to centralize their information, such as manufacturing companies. Cloud ERP software uses remote servers to store and manage data, which makes it accessible from anywhere in the world in real-time. Cloud computing provides a reliable and scalable system because a business can avoid investing a lot of money in hardware and technical support. A cloud ERP requires lower maintenance costs since it is an on-demand service that does not require investing in expensive equipment upfront. This will give you more time to focus on your core competencies and other business operations.

It is also easier to scale your company's business capacity when you use cloud ERP software because you will need to add more servers, storage space, and bandwidth. Cloud ERP solutions can be set up in just a few days, so there is no need to wait too long before it is put into use. You can also take advantage of business continuity solutions to make sure your data is always available, even in natural disasters or other types of catastrophic events.

Disadvantages of Using a Cloud ERP Solution

  1. The success of cloud computing relies heavily on your Internet connection speed and bandwidth capacity. It would be best if you had enough bandwidth for all the users you want to accommodate at the same time. Otherwise, your employees will not access your data and IT infrastructure efficiently.

  2. Security is a huge factor since storing sensitive business information in remote servers or cloud providers. You need to have an effective security management system in place because hackers can steal personal and financial details from your company databases. This can lead to a considerable loss in monetary and reputational damage for your business.

  3. It is not common for cloud computing providers to guarantee 100% availability or reliability, so there is always a chance that you cannot access your data when you need it the most. You may have to purchase an additional service from your cloud computing provider to ensure your information is always accessible.

  4. Emergency service support may not be available promptly in case of a catastrophic event that disrupts your IT infrastructure from working correctly.

There are many advantages and disadvantages of using cloud ERP, so you need to weigh them carefully when determining whether or not it is a good fit for your company.

Maybe my business management solution should be on-premise with the business?

An on-premise solution may be a good idea if your company needs more security and control over its IT infrastructure. You can also do any upgrades or changes to the system according to your specifications without involving any third parties. However, it is more difficult to maintain an on-premise system because you will need to hire additional technical staff to keep your servers running. You will also need to regularly update and upgrade your data center equipment so your solution will be compatible with the latest changes in hardware, software, and security solutions. This can be an expensive undertaking for many businesses.

ERP Pricing how much should I pay for a small business ERP software?

ERP pricing can vary depending on your company's specific requirements. You may also need to spend extra money to purchase additional features, so it is vital to thoroughly assess your needs before choosing a business management solution provider.

Starting an ERP implementation project with no prior knowledge of the software or comparisons between ERP providers is not a good idea. Even if you have a small business, it is still essential to do your homework and choose the enterprise resource planning solution to provide the best solutions to your company's problems.

An ERP consulting service can help companies determine their specific requirements and develop customized solutions to address their challenges in meeting financial targets or achieving sustainable growth. Your provider should assess your company's processes and determine if there are opportunities for improvement that can generate more income or cost savings.

As you look for an ERP consulting service, make sure they have expertise in different areas, such as finance, accounting, sales, marketing, operations, human resources (HR), manufacturing or supply chain, and customer relationship management (CRM).

You can also compare your options by looking at the business model of different provider companies that provide business management solutions. You should consider a software-as-a-service or cloud ERP solution if your company does not have a large IT staff to maintain a complex IT infrastructure.

As with any investment, there is a certain level of risk and uncertainty when using cloud ERP. It would be best to weigh the advantages and disadvantages of the different options available before deciding which one best suits your business needs. It's also vital that you know your options before committing to any services so you can make the right choice for your company.

ERP implementation process. What should I expect?

When you hire an ERP consulting service to implement your company's business management solution, they will usually start by conducting industry research. This helps them understand your industry and the challenges you are facing in running your organization effectively.

They then analyze how well your processes compare with other players in the same space, both local and international competitors. They also review your company's technology infrastructure to determine if there are any problems that will hamper the implementation of ERP software.

They then help you create a roadmap for your ERP implementation project. This includes allocating resources needed for hiring additional staff, arranging training sessions so employees can learn how to use their new tools, and providing temporary solutions to address problems with productivity.

The length of your business transformation process can depend on the size of your company, its industry, and the available manpower needed to make things work smoothly. Once your new ERP solution is rolled out, you should be able to monitor it more effectively so you can measure performance against objectives.

Should I hire a consulting service to help me?

To minimize disruptions during the implementation period, it would be a good idea to hire a partner with experience in the ERP software you want to use. The company should also have an established team of experts who can handle all your specific requirements and make sure you meet your goals as soon as possible. Why should I consider this service?

An ERP consulting service can help you make the right choices for your company by providing advice on how to meet all your business challenges. Their expertise in different areas will help you choose the best solutions and address problems as soon as they arise.

They also understand how important it is to start this process as early as possible because the earlier you implement the changes your company needs, the more you will benefit from them.

ERP solutions vary depending on your industry and specific requirements so hiring experts can help you choose which one best fits your business needs.

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