Why ERP for small businesses can make a real difference to survival rates
Businesses need effective process, the focus of leadership and structure that can adapt to enable the company to grow safely as a massive 55% of businesses don’t survive the first five years. The observers offer useless ‘insight’ as to why this happens. I continuosly observe three key reasons why this tragedy occurs so often and to so many people with different experience, education and knowledge.
The first reason is insufficient market comprehension.
Refusal to look at the water ahead. For example Individuals have the concept, create the product and then sit back and wait for the market to appear and purchase. In networked age there is no excuse for lack of research before wasting any time and money 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 folks starting a business know their trade, how to offer a service or build a product, but know very little about running a company. Having the ability to read and track the numbers in the Income statement or the balance sheet is an essential skill. The basic knowledge of accounting is rarely imparted coherently by the business publications, internet resources and those in the know such as CPAs and bookkeepers. The problem is maginfied by greedy and short sighted technology companies such as Sage software misleading the market by selling only a portion of the functionality actually needed by small companies.
Small business accounting software isnt a complete answer.
Large enterprises way back worked out that all of their systems should be wired together to give them a total picture of the business and then along came ERP software solutions and packages. One vendor NetSuite had the foresight to see the gap in the market and started offering its small business ERP software. NetSuite competitors have seen the gap as well and as a result lower cost easier to use solutions have emerged.
The third reason companies fail is because of lack of process and procedures that put in place the essential behaviours and consistency a business must have to operate effectively.
