Why ERP for small businesses can make a real difference to survival rates

erp for small business

Businesses 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 don’t survive the first five years. The commentators offer shallow explanations as to why this happens. I consistently see three key reasons why this tragedy happens so often and to so many people with different experience, qualifications and knowledge.

The first reason is lack of market understanding.

No foresight. For example People dream up the idea, create the product and then sit back and wait for the market to flock and buy. In networked age there is no excuse for lack of research prior to spending any time and cash on designing a product until you have firm confirmed there is a market.

The number two reason is lack of understanding of fundamental facts about business.

The majority of folks starting a business know their trade, how to deliver a service or manufacture a product, but not how to run a business.  Having the ability to read and follow the balances in the P&L or the balance sheet is a vital. The basic knowledge of accounting is rarely imparted coherently by the business books, internet resources and experts with the knowledge such as CPAs and bookkeepers. IT Giants such as Sage software and Intuit aggressively hoodwink business owners with their marketing that their applications are the holy grail.

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 figured out 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 gap in the market and started selling its small business ERP software. NetSuite pricing has since increased and put their technology out of the financial 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 cohesive fabric of disciplines and behaviours.