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55% of small business dont survive – how small business erp can make a difference
Running a business effectively is about organisation, focus and process as a massive 55% of businesses don’t make it to their fifth birthday. The experts offer banal opinions as to why this occurs. I consistently see three key reasons why this tragedy occurs so often and to so many people with different experience, qualifications and knowledge.
The primary reason is insufficient market understanding.
No foresight. For example Individuals have the concept, build the product and then expect the market to flock and buy. In networked age there is no excuse for lack of research before wasting any time and cash on building a product until you have firm evidence there is a market.
The number two reason is lack of understanding of fundamental facts about business.
The majority of people starting a company know their trade, how to deliver a service or build a product, but not how to run a business. Having the ability to understand and follow the balances in the P&L or the balance sheet is an essential skill. The basic knowledge of accounting is rarely imparted coherently by the business publications, online resources and those with the knowledge such as accountants and bookkeepers. This subject is further exacerbated by technology vendors and their partners peddling small business accounting software at fledgling businesses.
Small business accounting software is only half of the solution.
Until recently ERP software solutions and packages were the privilege of larger enterprises who had deduced that the back and front office systems need to be fused together to give a comprehensive view of the business. One technology business NetSuite had the vision to see the opening in the market and began selling its small business ERP software. NetSuite competitors have seen the opening as well and as a result lower cost easier to use solutions have appeared.
The final reason companies don’t survive is because of lack of process and procedures that provide the vital disciplines and consistency a business must have to operate efficiently.
Discover the benefits of small business erp software
Companies need efficient process, the focus of leadership and structure that can stretch to enable the business to grow safely as a massive 55% of businesses fail in their first five years of existence. The observers offer shallow explanations as to why this occurs. I consistently see three key reasons why this tragedy occurs so often and to so many individuals with different experience, qualifications and knowledge.
The primary reason is lack of market understanding.
No foresight. For example People have the concept, create the product and then sit back and wait for the market to come and purchase. In information age there is no excuse for lack of investigation prior to wasting any time and cash on building a product until you have solid evidence there is a market.
The number two reason is lack of understanding of the basics of business.
A significant proportion of people starting a business know their trade, how to deliver a service or build a product, but know very little about running a company. Being able to read and follow the numbers in the P&L or the balance sheet is an essential skill. The basic knowledge of accounting is not very often imparted well by the business publications, internet resources and those with the knowledge such as CPAs and bookkeepers. The problem is maginfied by greedy and short sighted technology companies such as Sage software misleading the market by providing only a portion of the functionality actually needed by small businesses.
Small business accounting software isnt a complete answer.
Until recently ERP software solutions and packages were only affordable by corporations who had figured out that the back and front office systems need to be wired together to give a complete picture of the business. One technology business NetSuite had the foresight to see the gap in the market and began selling 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 a because of the absence of practical management processes and policies to enable a cohesive fabric of disciplines and behaviours.
Why ERP for small businesses can make a real difference to survival rates
Running a company efficiently is about organisation, focus and process as a massive 55% of businesses don’t make it to their fifth birthday. The experts offer shallow explanations as to why this occurs. I consistently see three key reasons why this tragedy happens so often and to so many people with different experience, qualifications and knowledge.
The primary reason is lack of market understanding.
No foresight. For example Individuals dream up the idea, create the product and then expect the market to appear and buy. In this connected age there is no excuse for lack of research prior to spending any time and cash on creating a product until you have robust confirmed there is a market.
The number two reason is lack of understanding of fundamental facts about business.
A significant proportion of folks starting a business know their trade, how to deliver a service or build a product, but know very little about running a company. Being able to read and track the balances in the profit and loss or the balance sheet is an essential skill. The basic knowledge of accounting is not very often imparted well by the business books, internet resources and those with the knowledge such as accountants and bookkeepers. This problem is further exacerbated by manufacturers and their affiliates thrusting small business accounting software at fledgling businesses.
Small business accounting software is only half of the solution.
Large enterprises years ago deduced that all of their systems should be fused together to give them a total view of the business and then along came ERP software solutions and packages. One technology business 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 economic reach of small businesses.
The last reason businesses don’t survive is a because of the lack of practical management processes and policies to enable a sustainable fabric of disciplines and behaviours.
Arguably the best solution for any business
I have been perplexed for a while with my bookkeeping and I wanted to share with you a shortcut that I discovered after a lot of trial and error. People in small businesses tend to prefer doing more key activities like finding, listening to and keeping customers in preference to doing their bookkeeping. All organisations have to be committed to doing their bookkeeping if they want to avoid issues.
I asked my accountant for direction and he convinced me I should use Sage Software which turned out to be a small business accounting software package. Without even seeing the software I simply went ahead and purchased the lowest cost version I could find. This was probably one of the worst mistakes I made as the software turned out to be really difficult to understand and use. To be frank whenever I see the word accounting together with the word software I am immediately reminded of the first lesson I need to share with you and that is the majority of small business accounting software assumes the user possesses good working knowledge of accounting.
Just like me small business managers are masters of their craft and the product or service they sell and not accounting but in my case I was driven to devote time to finding a system that would work for me. The great news is I found a really good answer, it’s an internet system known as salesorder.com.
This is definitively the simplest system I have ever used and what’s more it is internet based and therefore I can access it from anywhere I choose to work. And here is the best bit I want to share with you, the people at salesorder.com know their stuff, just like their application they are a pleasure to work with and better still are happy to spend substantial time with their users (even the free ones) helping folks like me to solve real issues in my business and to top it off they have tutored me in the accounting I need to know.