When Does a Start-Up Need an ERP System?

startup

recent study revealed that 53% of surveyed businesses felt an ERP should be their primary business investment. With the ERP market projected to grow from $50.31B to $93.34B in 2028 at a CAGR of 9.2%, many smaller companies and start-ups have begun to ask themselves if it is the right time to switch over to an ERP. The answer is not very complex, but the circumstances can be. Most start-ups can only allocate a minimal budget for IT resources, so postponing their investment in ERP software might seem like an easy decision. But is it?

Why do start-ups fail?

Poor investment in software solutions significantly and often negatively affects start-ups and smaller businesses. They lose out on their ability to scale and gain a competitive edge over their rivals. According to this report:

  • A startling 90% of new start-ups eventually shut shop.
  • Only 33% of newer start-ups remain operational for around ten years
  • 82% of start-ups fail because they lack investment
  • Just about 40% of start-ups eke out a profit after many struggles.

One of the biggest reasons for those grim figures is that start-ups often fail to invest in technology, mainly business management software designed to help them scale. Start-ups tend to refuse to admit their fallibility and overestimate their ability to do everything independently. Most start-ups juggle multiple subscriptions to lower-grade, free software and remain trapped in a freemium cycle that limits their ability to scale.

For experienced businesses, the answer is obvious – Choose a scalable cloud-based ERP system that is customizable and tailor-made for niche requirements. But how can a new, growing company tell it’s time to hop on to the ERP bandwagon? 

1. You find it difficult to manage all your customers and clients

Some start-ups are initially very successful. They often attend trade fairs and bag a decent number of leads and customers. However, once the leads convert, start-ups find it hard to manage their projects. In the case of retail start-ups, they find it impossible to make timely deliveries and are shocked to see negative reviews on their social accounts. In other words, most start-ups cannot handle the influx of newer customers and tend to stagnate, plummeting their reputation.

An ERP makes it easy to take on newer projects, thanks to excellent project management modules. In the case of retail start-ups, checkouts and deliveries happen smoothly, and one can forget about negative reviews.

2. You do not have enough clients or customers

While the first scenario describes the problem of having too many customers and clients to handle manually, the opposite can also be the case. Your start-up may find it hard to become visible and attract newer quality leads. Advertising can be costly, and you may be wasting precious money if you do not allocate your ad budget accurately.

An ERP helps you run sales and marketing campaigns backed by numbers. These campaigns can then be tracked and measured to make your lead generation metrics impressive. The ERP sales and marketing modules are perfect for getting newer customers and clients on social media through email campaigns and nurturing them in the customer relationship management (CRM) module.

3. You are unable to manage your staff

If you have begun to recruit a workforce and do not have an HR department of your own, things can get messy. Manually delivering timely salaries, sanctioning leaves, and tracking time and attendance is prone to disasters. As your start-up blossoms into a more venerable business, you must appraise your older staff.

An ERP comes with several functional modules such as Time and Attendance, HRMS, Payroll, and Employee Self-Service, which allow you to automate most things related to staff management and focus on growing your business.

4. You do everything on your own

If you can’t relate to the abovementioned point, you probably don’t have much staff. Sometimes, it can even only be one person running a registered business. However, not having a team also means juggling multiple roles. Not only are you the CEO of your company, but you’re probably also the accountant, the marketing professional, the occasional PR consultant, and maybe even housekeeping staff. In other words, you increasingly find yourself becoming inefficient and unproductive.

One of the smartest decisions you can make is to invest in an ERP that lets you automate most manual tasks so that you can focus on the CEO duties of your one (or two) person company.

5. You feel burned out and are unable to scale or diversify

Smaller organizations tend to rapidly lose the initial energy and enthusiasm they once possessed. Giving away valuable time to inane and mundane matters related to business operations often prevents them from taking on new projects or diversifying to more profitable areas. This results in a loss of productivity and a sharp decline in profitability. Most importantly, start-ups lack access to accurate business insights and reports that lead to inaccurate forecasts and fateful business decisions.

An ERP helps you grow from a start-up to a successful and well-established organization. An ERP enables you to make accurate business forecasts and easily access business intelligence. You can quickly scale, diversify, and appear more significant than you are.

Now is the time to invest in an ERP

Regardless of the phase your start-up is at, an ERP is the most valuable investment you can make. It helps you automate manual tasks and focus on more critical decision-making. ERP enables you to grow leaner and ensures that your customers and clients are always happy.

Investing in an ERP helps your start-up grow in size and stature, and you will quickly recover your investment. Most importantly, cloud-based ERP solutions are designed with smaller businesses and start-ups in mind. You can easily scale- removing and adding modules and functionality as you go, so you always use what is necessary to manage your business efficiently.

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The Author
Todd McElroy
Head of Sales, Priority U.S.

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