Everyone who starts a business does so with different aims in mind – some go in thinking global, some go in thinking small and some go in with no real thought for the future at all! Whichever way you start a successful business has one distinct hallmark as it travels through its’ journey: Growth.
Growth is a simple fact of business – even if you start a hobby business with no marketing budget behind it you expect word to spread, positive reviews to sprout up and ultimately for sales to grow. Any one with a solid product or service, good customer service and an available audience will see this happen – the sticking point comes when the growth surpasses the current capacity or capability and how you deal with that.
As a sole trader the simple first step is to employ people (or rope in helpful friends) – but having extra people adds burden to your payroll and administrative processes (think holidays, HR issues and so on) and so you need to be sure that your growth is sustained and not seasonal or an anomaly.
For a smaller business employing a few people the growth stage can be particularly painful – they might already have a hefty wage bill; they might be cognizent of HR issues that they don’t want to replicate with a larger team; they don’t want to invest in the space that team growth would need; or they don’t want to unbalance the vibe of the team already in place.
Consider a greetings card company who have grown steadily over the last 2 years – taking on a few employees as needs (and demand) arose who have a solid customer base – both B2B and B2C – within the UK. Imagine they want to now expand their operations to internationally – they’ve researched the market, they know the customer exists and they go for it – successfully. Demand soars and suddenly the output is 5 or 6 times what they were doing previously. Instead of Debbie in accounts raising 14 invoices manually each month, she’s now raising 84. Instead of John picking and packing 250 cards a month and making 6 trips to the post office he’s now faced with orders for 1500 cards and a daily trip to the post office.
At this point you are faced with several options:
Make your existing team work harder, longer, more
Grow tour team and take on more people (2 of Debbie and 2 of John)
Bring in new systems and processes to automate parts of the system and reduce manual input
For many small businesses, moving into this next stage as a more medium sized entity is all about the mitigation of risk. With all of the above options comes costs and risks but you need to pick the one that minimises these for your business and this is often when ERP (Enterprise Resource Planning) comes in. By its very nature ERP is about bringing systems together in a more seamless process and reducing human input (and cost).
There are so many areas in which technology can be used that often the small wins are made as a business goes along e.g. introducing accounting software rather than using spreadsheets. However, if you later introduce a lead management tool you need to make sure the two systems talk to each other and don’t require intervention to move data from one to the other or you’re actually not making things easier!
It’s important to note, therefore, that ERP is not the introduction of technology and systems but rather the integration of all systems to create one seamless process. Integration, Efficiency and Accuracy are the watchwords here.
The areas that you can consider as part of this ERP process are vast and include (but are not limited to):
Warehousing
Stock Management
Ordering
Materials Purchasing
Lead Management
Marketing
Despatch and Order Tracking
Communication
By its very design it is supposed to make the customer journey easier – take the greetings card example again. If john is despatching all these new cards a week, he’s not getting time to do the stock count so he can’t update the available stock numbers of the website. If a customer then goes on and orders something which you subsequently find is out of stock you’ll have one very disgruntled customer… however, if you have a stock management system integrated with your website this information is live and up to date – removing that room for error.
Although there is a cost involved to implementing ERP and any form of system into your business (not to mention the investment in time and training and change management) it can often be the most effective and efficient way for a business to take the step from small to medium.