erp for small business

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.

erp for small business

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.