Does Your Small Business Need an Enterprise Resource Planning System?
It’s a given that any business that starts to scale up will want to have some kind of enterprise resource planning system in place. Having an enterprise resource planning (ERP) system is vital for larger organizations so that they are able to have a clearer picture of their overall financial status.
However, many Philippine microbusinesses are still lagging behind when it comes to adopting ERP software. There is a tendency to think that surely a microbusiness that employs less than five people will not need a computerized ERP or accounting system, when a manual system may be perfectly adequate.
To a point, this can be true. If a microbusiness only has infrequent transactions, or a very low volume of them each month, it can be hard for it to justify the cost of adopting a modern ERP system, in terms of time and money.
However, there are several reasons for microbusinesses to adopt an updated enterprise resource planning system that make it worth the expense. There are also many use cases where a microbusiness may find the adoption necessary for continued growth.
The first reason is accuracy. Humans make mistakes, and overloaded entrepreneurs who run all aspects of their business are even more prone to them. Even very small businesses need accuracy when it comes to their financials, not just because businesses should be able to immediately assess their overall status, but also to ensure compliance with taxes and other laws.
Many microbusinesses also have a considerable volume of transactions as well as an inventory containing different items.They may run into considerable challenges just keeping track of items that are sold and items that are currently in stock. In these cases, an ERP system with the features of enterprise resource planning (ERP) software can be vital in allowing these businesses to keep their inventories at just the right size for the available demand.
In an online retail use case, a small business can use ERP or accounting software to automatically update their inventory items and trigger orders when stocks of certain items run low. This can help keep storage costs down and also allow the microbusiness to offer better service levels.
Microbusinesses that engage in small-time manufacturing or food processing can also use ERP systems to automatically order components or ingredients as they start to run low in your inventory. This allows a more efficient operation and can help bring production costs down.
In any type of business, using an ERP system can help save time save time that would otherwise be spent on compliance and sorting out different minutiae. This time savings allows the business to then focus on growth and meeting customer demands, rather on these small operational matters.
The use of an ERP system can also save on a microbusiness’s labor costs by reducing both the downtime needed to work on the books and allowing a smaller staff to do more. In the case of a single-person operation with a high-volume of transactions, this can prove absolutely vital as well, allowing them to keep the business smaller for longer, thus reducing the need for additional labor.
Lastly, having a computerized system early on prevents the
often painful transition periods that plague larger businesses who are only
just deciding to make the move themselves. These changes can often take several
months for SME’s while a microbusiness may only take a few days to a couple of
weeks to do the same, once the process has begun.
There’s really no reason for most serious businesses to avoid using ERP software, even if they may only have a small number of employees. Given the availability of affordable and free software, any business that’s starting to see the volume of their transactions increase should give them a try.