ERP for small business: Do you need it?

Software choices can be a puzzle for small business owners. For some, an ERP system is the right answer, especially if you’re hoping to grow.

By Heather Redding

While you may be aware of the need for the right software solutions in your small business, you may feel like none of the solutions you have found are the right fit. After all, each business is unique, and it can be challenging to find a good software program that perfectly fits all of your needs.

Rather than trying to adjust your business needs to a specific software solution, another idea is to turn to an ERP, or enterprise resource planning, system. While ERP is best suited for larger corporations, the reality is that the number of smaller businesses using these systems is on the rise. To determine if an ERP is right for your small business, explore these points carefully.

What is ERP?

Depending on the type of business you run, you may have human resources, accounting, and sales departments. It may also include inventory and order management, customer relationship management and more. Finding a way to integrate these and other essential processes together is important, and this is what an ERP system can do for you.

ERP enables you to integrate your data and processes into one streamlined yet comprehensive system. It allows all employees to work off of a central database. All have access to actual data in real-time, and it is shared in an automated and synchronized way to eliminate redundancies and errors. There is no need to ask each employee or department to create separate reports and spreadsheets and no need to try to reconcile all of this data.

It may seem like an ERP system is not necessary for a very small business. However, if your business is poised to grow substantially soon or if it has already reached a modest size, implementing the use of an ERP may be a great idea.

Processing a larger volume of data

An ERP system can be scaled down or up as needed. A smaller business may have limited yet expanding needs for the benefits of an ERP. Because of this, some small businesses initially use an ERP system for database management and accounting purposes. This can save time and effort with these critical processes and ultimately lead to better business management.

When a small business grows, other aspects of business operations can become demanding. For example, monitoring inventory, keeping track of orders, and billing becomes more time-consuming because a larger volume of data keeps piling up.

An ERP can help you keep up with the needs of a fast-growing business. Rather than compartmentalizing data in each department, data can easily be imported, exported, and compiled as needed. This can also help the management team to monitor operations for maximum efficiency.

Cutting costs

While using an ERP can help you save time and improve efficiency across various departments, it can also reduce operating costs. Rather than investing in department-specific software programs for each aspect of your operation and trying to integrate various programs, your entire business can be streamlined using one comprehensive system.

Through the use of ERP, all the data you review is current and accurate. There is never a concern about redundancies or using outdated data. When you are concerned about your company’s financial health, you can easily obtain and review all data responsible for financial management tasks.

Better collaboration and increased productivity

Many small businesses struggle to collaborate effectively. It can seem like each department is working independently rather than the entire operation coming together to achieve a common goal. An ERP can bolster communication and collaboration. Everyone can easily see the big picture and the individual efforts that each person or department is making to achieve common goals. This can motivate your team to work harder and to be more productive.

An ERP facilitates open communication. It can also prevent delays and even improve job satisfaction. One type of delay some businesses experience is caused by trial and error during new product development. If different teams are working on the same project, it can be hard to complete specific tasks when real-time, accurate data is not available. As a result, delays and extra expenses can occur. This is eliminated through the use of ERP systems because teams can more efficiently identify potential problems early in the product development process and make necessary design improvements.

It’s a challenge

As amazing as the use of an ERP can be for small businesses, keep in mind that you may face some challenges when introducing ERP to your team. The cost of the system can be rather high for some tight business budgets. In addition, your team will need to be trained on the proper use of the system, which can be time-consuming. While everyone gets up to speed, efficiency may actually decline for a short period of time.

Keep in mind that an ERP system is not a great-fit option at all times. It offers exceptional customization capabilities, but it can take time and effort to customize it perfectly for your needs. When selecting the right ERP system to use, look for a system that is scalable to meet your needs. In addition, search for a system that is beneficial for all departments to use equally. Avoid making a lopsided decision that favors one or two departments heavily.

Final thoughts

Running a small, growing business has inherent challenges. While there are numerous steps you could take to prepare for and manage this growth, one of your options is to consider investing in an ERP system. However, before deciding on a specific ERP solution, spend time learning more about ERP systems and weigh the pros and cons carefully.

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Heather Redding is a tech enthusiast and freelance writer based in Aurora, Illinois. She is a coffee addict who enjoys swimming and reading. Street photography is her newly discovered artistic outlet, and she likes to capture everyday little moments with her camera. You can reach Heather via Twitter.

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