Why ERP for small businesses can make a real difference to survival rates

Companies 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 make it to their fifth birthday. The observers offer banal opinions as to why this happens. I continuosly observe three key reasons why this tragedy occurs so often and to so many individuals with different experience, education and skill.

The primary reason is lack of market understanding.

Refusal to look at the water ahead. For example Individuals have the idea, create the product and then expect the market to come and purchase. In information age there is no excuse for lack of research prior to wasting any time and money on designing a product until you have firm evidence there is a market.

The second reason is lack of understanding of the basics of business.

The majority of folks starting a business know their trade, how to offer a service or manufacture a product, but know very little about running a company.  Being able to read and follow the numbers in the P&L or the balance sheet is a vital. The basic knowledge of accounting is not very often imparted coherently by the business publications, online resources and those with the knowledge such as accountants and bookkeepers. This problem is further exacerbated by software companies and their partners peddling small business accounting software at fledgling businesses.

Small business accounting software is only half of the solution.

Until recently ERP software solutions and packages were the privilege of corporations who had deduced that the back and front office systems need to be wired together to give a comprehensive view of the business. One software developer NetSuite had the vision to see the gap in the market and began selling its small business ERP software. NetSuite competitors have since emerged.

The last reason businesses don’t survive is a because of the lack of well thought through management processes and policies to enable a sustainable fabric of disciplines and behaviours.