Why ERP for small businesses can make a real difference to survival rates
Companies need efficient process, the focus of leadership and structure that can stretch to enable the company to grow safely as a massive 55% of businesses don’t make it to their fifth birthday. The commentators offer shallow explanations as to why this happens. I consistently see three key reasons why this tragedy occurs so often and to so many individuals with different backgrounds, education and knowledge.
The primary reason is lack of market understanding.
Refusal to look at the water ahead. For example Individuals have the idea, create the product and then expect the market to come and purchase. In this connected age there is no excuse for lack of investigation prior to spending any time and cash on creating a product until you have robust evidence there is a market.
The number two reason is lack of comprehension of fundamental facts about business.
A significant proportion of people starting a business know their trade, how to deliver a service or make a product, but not how to run a business. Being able to understand and follow the numbers in the profit and loss or the balance sheet is an essential skill. The basic knowledge of accounting is rarely imparted coherently by the business publications, online resources and experts with the knowledge such as accountants and bookkeepers. Vendors such as Sage software and Intuit aggressively fool business managers with their messaging that their systems are the cure for all ills.
Small business accounting software isnt a complete answer.
Until recently ERP software solutions and packages were the privilege of corporations who had deduced that the back and front office systems need to be fused together to give a complete picture of the business. One software developer NetSuite had the foresight to see the opening in the market and started offering its small business ERP software. NetSuite pricing has since increased and put their solution out of the financial reach of small businesses.
The third reason companies don’t survive is because of a dirth of process and procedures that put in place the vital disciplines and continuity a business must have to work efficiently.