Article

ERP for small businesses

Erp For Small Businesses

What is ERP software for small businesses?

ERP software is a business management tool that helps companies automate, manage, and monitor various business processes. Every business, regardless of size, can benefit from Enterprise Resource Planning (ERP).
ERP integrates multiple business processes into a single, centralized system, helping small and large firms to streamline their business activities by providing a single source of truth for business-related data, eliminating manual tasks, reducing errors associated with manual operations, saving on expenses, and enhancing efficiency across the board.
ERP software for small businesses usually offers basic features and functionality, like financial management, CRM, and HR management, that help automate accounting, sales and marketing, order processing, and customer service.

Can ERP be used for small business?

Contrary to popular belief, small businesses benefit significantly from ERP tools, as they provide them with the tools, insights, and resources to compete with larger organizations and improve their market reach.

With all that said, A significant feature that small businesses must seek in ERP software is the capability to scale and offer the option to easily add modules or remove features as the company goes through changes and growth spurts.
Regardless of the number of employees in your company, an ERP helps automate various business processes and enables businesses to divert their time and resources toward more pressing tasks. This is especially impactful when there is a staff shortage, and tasks are delegated to third-party vendors, freelancers, and temporary workers.
Implementing an ERP system can significantly reduce the reliance on third-party services, if not eliminate it entirely. E.g., instead of hiring an accounting agency for taxes and finances, your ERP will automatically enter all debits and credits into the ledger in compliance with authorities.

Automating customer support and inventory management, implementing sales and marketing campaigns, and keeping up with digital transformation puts small businesses on par with medium and large-sized ones.

Importance of ERP for small businesses

Small businesses typically have a smaller number of employees compared to larger ones. In fact, most small businesses have a staff of five or fewer employees, and many of them are managed by proprietors. While outsourcing and hiring external vendors to perform various functions can help to some extent, an ERP system can perform the same tasks at a much lower cost.

Benefits of ERP for small businesses

Improved efficiency
Better decision making
Mobility and flexibility
Cost savings
Enhanced collaboration
Data security

Improved efficiency

Small businesses, in particular, must identify their strengths and weaknesses and proactively improve efficiency to grow. An ERP system centralizes data from various sources, such as inventory, finance, sales, marketing, and CRM. This eliminates duplicate data, human errors, and redundancy. As a result, you can access the most current and up-to-date information about your customers, business processes, and operations.

ERP software also improves communication and collaboration with employees, vendors, and distributors. It streamlines business operations across devices for greater efficiency. ERP software provides real-time insights for effective decision-making, identifies risks, and improves performance.

Improved Efficiency

Better decision making

Small businesses often struggle with decision-making as they lack the resources to operate different departments and rely on limited staff to manage multiple processes. This can lead to biased decision-making and subjective opinions. However, an ERP system can help overcome this challenge by providing objective insights based on real-time data stored on a centralized server. It automatically stores and identifies critical data, generating valuable insights to help make informed decisions. With an ERP system, you don’t need a large team of leaders and decision-makers to analyze and interpret data; you can rely on the system to provide the necessary information to make informed decisions.

Better Decision Making

Mobility and flexibility

An ERP system that prioritizes mobile functionality allows for uninterrupted business activity and enhances the productivity of managers and staff alike, regardless of location, and allows remote workers and mobile employees across offices, construction sites, factories, or warehouses to perform various tasks on mobile devices when they cannot access a desktop or carry a laptop.

Cost savings

An ERP system brings together different IT functionalities onto a single centralized platform. This platform is updated in real-time, meaning small businesses do not need to subscribe to or purchase multiple IT products for different business operations. Small businesses can reduce their IT-related expenses by consolidating IT operations while gaining access to enterprise-grade software at a lower price.

In addition, an ERP significantly improves organizational efficiency by streamlining operations, which, in turn, indirectly reduces expenses.

It also helps comply with rules and regulations and avoids the risk of paying penalties and fines. A flexible, customizable ERP system allows small businesses to choose only the modules relevant to their operations and add more features as they grow, which helps reduce costs dramatically.

Enhanced collaboration

ERP solutions for small businesses provide pre-built collaborative features, including task and document management functionalities, which help employees share files and ideas.

Even if you have only a few employees and no multiple departments, an ERP system can improve the quality of their work and help them collaborate and manage their tasks more efficiently. Most importantly, it helps your employees understand what they need to do, when they need to do it, and how, by easily setting reminders, updating task statuses, and ensuring everyone is on the same page when making workflow decisions.

Enhanced Collaboration

Data security

The increasing concern about security-related risks such as malware installation, phishing, and data theft compels businesses of all sizes to comply with different data security regulations and privacy standards, such as GDPR and HIPAA, depending on their location.

Enterprise Resource Planning (ERP) systems provide peace of mind through ongoing 24/7 monitoring across all system elements, such as the operating system, database, and network, preemptively identifying and addressing potential vulnerabilities and ensuring adherence to upstream compliance with security standards like SOC 1/SSAE 16/ISAE 3402, SOC 2, and PCI DSS, ensuring that sensitive information is secure.

How do I choose the best ERP For my small business?

Assess your business needs
Consider ERP cost - affordability and ROI
Evaluate key ERP features
Plan for growth
Consider implementation and support

Assess your business needs

Every business is unique, and it is crucial to understand the specific needs and requirements. It’s helpful to ask your team for feedback about the various bottlenecks they face. You can also reach out to vendors offering ERP consultation to help you choose a product that best fits your needs.

As a small business, you may only require a limited suite of modules such as inventory management, sales and marketing, CRM, HR, and accounts and finance. However, if your business operates in a niche sector like electronics manufacturing or pharma, you may require industry-specific modules and customization to adhere to your specific market.

Consider ERP cost - affordability and ROI

Although implementing an ERP system can help reduce your IT-related expenses in the long term, and has an indirect cost-saving impact, it’s important to remember that there will be an initial or recurring investment. It’s crucial to evaluate your business profitability and decide how much you will allocate for your ERP implementation.

Speak with a vendor who can provide a detailed explanation of the various functionalities of the ERP system and how they can help improve your ROI. After a thorough discussion and careful consideration, you will be able to make an informed decision and select the right ERP product that meets your specific needs.

Evaluate key ERP features

When searching for an ERP vendor, it is important to find one that, in addition to basic ERP features, also specializes in specific and niche areas. This will allow your company to expand its operations whenever necessary. Some key features to look for in an ERP system are financial services, CRM and sales, supply chain management, warehouse management, retail features, business analytics, and task management.

Consider your niche, if you have any, and discuss it with the vendor to see if they can customize it for your specific use case. Furthermore, to prepare for the future, consider mobile ERP capabilities and AI-enhanced features like Integration with IoT, Predictive Analytics, Process Automation, and Augmented Strategic Planning.

Plan for growth

Studies have shown that small businesses that use ERP systems tend to grow in the subsequent years. While small businesses are usually unprepared for growth and find it challenging to scale up, they must set the foundation for expansion. This includes selecting the right IT solution to support you while you scale up your operations. You might begin with the basic functionalities of an ERP and then add more features as you grow. It is crucial to choose an ERP product specifically designed to meet the needs of small businesses (e.g., businesses subjected to many changes in workflows due to operational shifts or disrupted market dynamics). Speaking with your vendor should help you obtain the information required for your use case.

Plan For Growth

Consider implementation and support

Implementing an ERP system is typically a lengthy process that requires some preparation. You must ensure that your data is cleansed and compatible before being migrated to the new platform, and after implementation, you must ensure everything functions as expected while orchestrating a smooth onboarding.

However, all stages require technical assistance and professional experience. If you do not have an in-house IT team, it is recommended that you inquire if the vendor provides implementation services and after-sale support.

Priority ERP can be customized to suit your unique needs and requirements

Small businesses need an ERP system to remain competitive and productive. However, with many ERP systems on the market, it is important to speak to a trustworthy vendor before choosing a tool for your business.

In addition to doing your research and making a list of features you need, speaking to an experienced ERP consultant can help you identify gaps in your business processes. As an ERP automates and manages various business operations, identifying these gaps will help you choose the right platform to enhance productivity and reduce costs in the long term.

Priority ERP can be tailored to meet the specific needs and requirements of small businesses. With its advanced features and tools, Priority helps small enterprises keep pace with the evolving industry landscape and embrace digital transformation. Speak to our consultants today for an evaluation.

See how Priority works for you