The United States is home to more than 30 million small businesses. Launching one takes guts, commitment, and planning.
Growing a small business also takes the right tools. For fast-growing businesses and those with annual revenue of at least $1 million, that means investing in an enterprise resource planning system (ERP).
ERP is one of the secret ingredients for small businesses that are serious about efficiency and growth. ERP collects all business data and serves as a single source of truth for a company, enabling unified operations and key business drivers such as big data analytics, real-time reporting and advanced automation. Integrating an ERP system into a company’s operations can give a competitive edge and make business processes much more efficient.
Yet, many SMBs don’t really understand ERP, partially because they largely were the domain of large enterprises before the advent of cloud computing.
So let’s take a look at ERP and what it could mean for your small business.
Understanding ERP’s Purpose and Function
ERP is a comprehensive business software solution that handles all aspects of a company’s operations. These systems can be used to manage product manufacturing, order processing, goods delivery, accounting, human resources and all other areas typical to most businesses. ERP centralizes data from across the business into a single system that accessed via a customizable dashboard.
ERP is made for small businesses in diverse industry sectors from retail and manufacturing to finance. A variety of tools companies depend on every day can be replaced with a single ERP solution.
The Benefits of ERP
There are a number of tangible benefits from using an ERP system at your SMB. While setting up a new ERP system takes time, typically about a year for planning and implementation, it radically transforms the capabilities and processes of a small business.
Some of the benefits of ERP include:1. Informed Decisions with Accurate Data
Information is key for business today, whether a small business or a large enterprise.
Research shows that operating without ERP software leaves businesses struggling with redundant data, misaligned systems, and no method of real-time process tracking.
ERP systems deliver real-time data pulled from across your company. This keeps your team up-to-date on which areas demand attention, and where processes are working smoothly.
For example, you may see that productivity is suffering in your warehouse, with deliveries sent out slower than is required. Armed with real-time visibility from your ERP solution, you can spot the slowdowns and implement processes or automation that improves delivery time.
Real-time data eliminates the need to make guesses, and allows you to handle problems more effectively. That’s why more than 35 percent of businesses find their decision-making becomes faster and easier because of ERP solutions.
2. Company-wide Visibility
Your small business may consist of a few departments, each with its own tasks, goals, and structures. But keeping them in silos opens the door for miscommunication, confusion, and potentially-costly mistakes.
SMBs can cut operation costs by as much as 11 percent by utilizing ERP software instead of patching together several standalone options.
An ERP system unites your departments at all times. Each team has access to the same data and tools. They can see which tasks their colleagues in other departments are focused on, and gain a greater appreciation for how their performance impacts others.
Unifying your workforce through a shared system reinforces their awareness of being part of a larger team. It reminds them they have a common goal, despite how different their day-to-day duties may be.
3. Efficient Resource Utilization
With ERP, you can manage inventory, process orders, deal with HR issues, monitor employee activities, and more. This helps your small business minimize waste, whether that means materials, time, or money. This is just one reason why roughly 53 percent of companies describe ERP as a priority investment.
You have the tools to keep stock levels topped up with no risk of running out of high-demand products when you use an ERP system for tracking and management. Similarly, you can see when new stock has been ordered unnecessarily and stop it from happening again.
Also, you can automate small tasks and create extra time for employees to focus on more important priorities with ERP. As a result, employees are able to achieve more in less time.
Further, ERP software increases flexibility in business processes. Changes to material orders, delivery processes, behavior policies, and virtually anything else can be updated in the system for the entire workforce (or those with authorized access) to see.
4. Increase Productivity
Automation and overall streamlining means ERP software has the power to boost productivity in all departments. Tasks which may have taken up chunks of time before can be restructured or automated entirely.
A connected workforce means questions can be answered within seconds, rather than waiting for a colleague in a different department to share data.
For example, all customer data is synchronized and kept in a single location for quick access. Complaints, questions, and order disputes can be dealt with quickly for heightened customer satisfaction.
Everything from payroll, invoicing, shipping, fulfilment, valuation reports, supply-chain management, and dashboard customization is simplified through ERP software. Teams have access to all the information and tools they need to perform at their best, creating an opportunity to maximize productivity in all areas.
Investing in an ERP system might seem daunting on first look, largely because older on-premise ERP solutions were complex to set up and maintain. With the rise of cloud computing, ERP has become a lot less challenging and costly. This makes it something that most small businesses can afford—and something small businesses should invest in, for the reasons mentioned above.