Chapter 2: Why use an ERP and what is it?
Why use an ERP?
Spindl is doing what every other large business does—managing accounts, payroll, customer relations, taxes, inventory, quality assurance, invoices, payments, and much more. But there is one critical difference: unlike large businesses, they also struggle to manage and organize their processes. They are using a hotchpotch of apps and spreadsheets to keep everything going.
On one hand, they were happy to see increasing operational problems this since it's a sign of growth. On the other hand, they seriously needed something to help manage this never ending series of operations. Simple accounting tools and spreadsheets were no longer cutting it.
Saf and Mel realize if they keep it up, they’ll be stuck trying to ensure their business is functional. Looking for solutions, they reach out far and wide. What’s something they can use to manage their business? What’s something that will give them the time to focus on profitability and growth? Of course, while there isn’t a miraculous solution, their research leads them to a place they can start with: an ERP system.
Small businesses and large businesses share a lot of complexities—even if it doesn’t appear that way. As we discussed earlier, the fundamental problem is that the processes small businesses utilize early on aren’t built to scale. As the business grows, it becomes harder to maintain consistency and efficiency. ERP software eliminates that problem. It is designed to improve with the company.
It seems like setting up an ERP system is the answer, but it requires time—a resource they are short of already.
Is it worth investing time in then? And why?
The role of an ERP system for a small business
Running a business like a well-oiled machine requires organizational processes. If there’s no scalable system followed from the get-go, these processes can become a resource-hog. (A scalable system is something that can be used despite the size of the operation. It doesn’t matter if the business has 1,000 or 10,000 customers; the system remains just as viable.)
Small businesses often lack these scalable systems. Almost everything happens on an ad-hoc basis. It may work initially, but a business’ growth and the volume of tasks are directly proportional. What remains constant, however, is the lack of appropriate resources. A company cannot sustain itself on a single innovative discovery. The profit and sustenance come from the repeatability of their innovation. And innovation requires time and resources—things that get lost in maintaining suboptimal processes.
This is why it is vital to have a tool that allows your business to grow sustainably, not merely function.
That’s where Enterprise Resource Planning comes in.
What is an ERP
Small businesses are using QuickBooks for accounting. Slack for internal discussions. Post-Its for reminders. Pigeons for mailing. Each of these is a business-critical process, yet completely disjointed. It’s like using tape to hold shards of glass together. Functional, but not efficient.
Cue: an ERP!
It consolidates all your business operations in a single, central monolithic application.
This allows you to view, analyze, and manage all your business operations from one place. No jumping from app to spreadsheet to another app to make sure one job gets done. All data that you enter into an ERP speaks to the other—if you’ve just made a sale, you can use that information directly within the system to update your inventory as well. With an ERP, you can:
- Manage sales, purchases, inventory, billing, quotes, leads, customers, payroll,* *and much more.
- Have your data safely stored in one place. No running around like a headless chicken looking for stuff from spreadsheets or emails or different apps.
- Eliminate redundancy and repetitiveness. Because everything is integrated, you’re not entering the same data in multiple places.
- Have everyone on the same page. The data updates for every single user in the system, so there are no discrepancies.
- *Maintain track of things and remain transparent. *A full history of all processes, available at all times.
You can now set the pigeons free! That said, an ERP is a tool for_ _a business to utilize. It’s only as efficient as its users make it.
|An ERP can||An ERP cannot|
|Manage all your business processes in one system
Visualize your business’ data and records
Help you manage customers, suppliers, and employees
|Automagically enter accurate information for you
Give you insights in plain language (that’s for you to figure out)
Send them chocolates on their birthday (but it can remind you to)
What an ERP will help you accomplish
ERP is the backbone of your business
When all your processes are in one place, the ERP becomes the backbone of your business. Everything is accounted for, all data is in the same place, and everyone is on the same page. No matter how much your business grows, the workflow remains consistent. Because of how much control an ERP system offers, you can:
- Focus on innovation and profitability.
- Drastically improve employee productivity.
- Avoid the slog of redundant work.
ERP is an investment in growth
“The key is in not spending time, but in investing it.” --Stephen R. Covey (Educator, Author, and Businessman).--
With an ERP assisting your business management, you start spending a significantly less amount of time slogging away. You’re eliminating factors like manual maintenance, data duplication, communication difficulties, and a lot more when using it. When you’re not spending time updating every single spreadsheet, you can invest it in growing your company.