In 2018, growth is back. But, taking advantage of opportunities in the economy isn’t that easy. To leverage growth potential, small to midsized enterprises (SMEs) need to look internally to software that runs their business. Whether you call it a business backend, enterprise resource planning (ERP) software, an enterprise solution – the software that runs your business – is tied to achieving your goals for growth. That said, the basic accounting system that got you where you are today will not support you in your quest for growth or in outperforming competitors.
Why is Growth Back?
In a recent Vision33 webinar, enterprise researcher, Cindy Jutras of Mint Jutras, an independent research-based consulting firm shared the early findings from its 2018 enterprise solution study. The firm collected growth figures from over 300 small business throughout the US over the last two fiscal years and identified what their projected growth would be for this year and next. The findings revealed an increase in profitability year-over-year. When you consider that the survey respondents were all categorized as SMEs, double-digit growth is very impressive. To move the needle from year to year these companies must try really hard to build upon a small base.
Much of this growth reflects industry trends in software as a service (SaaS) and cloud trends that have seen more and more companies leverage business management solutions with a lower cost to entry. The result is small businesses can be agile; taking advantage of market opportunities without spending extra time, money and resources on IT (software, server maintenance, and infrastructure). Technology has certainly leveled the playing field, however for SMEs the question remains whether they can respond to it.
How to React in the Global Digital Economy
Jutras cautions that while it is possible to realize a business’ goals, whether it’s establishing a global presence, or expanding a product line, small businesses should consider whether their current system will enable them to achieve their goals for growth. In other words, the business software or spreadsheets that got you to where you are today, may not support you in achieving your next company milestone.
While many businesses believe they are running an ERP solution, the Mint Jutras report shows that 64% of small businesses may not be running a true ERP solution. Respondents further identifed that at present, many functional areas of their businesses aren’t supported. Business are unable to support processes including order to cash, procure to pay, financial closing, marketing, financial planning, human resource planning with their current business software.
It stands to reason that these businesses are likely using a small business accounting application like QuickBooks designed for small businesses and startups. Without an integrated solution, small businesses face many challenges. Everything from a lack of control, not knowing where to expand next, difficulty meeting customer demand, tight cashflow, and limited IT staff to work with. Technology is leaving them behind but they would rather invest in revenue-generating activities, not overhead.
Moving to an ERP Solution
In startup mode, businesses invest in an operational foundation that will directly build the business. Managing by walking around is common. Reporting is ad hoc, supported by manual processes and spreadsheets. Decision-making is driven more by gut feel than data and hard facts. These methods may be effective in early phases of the business, but once an SME moves past that crucial startup phase, neglecting to invest in ERP, can significantly hinder a business’ ability to leverage the growth they are experiencing.
Many SMEs get by with a combination of spreadsheets and home grown applications thinking that a true integrated solution is beyond their reach. In reality though, rather than assuming they can’t afford it, growing businesses should instead be asking, “Can we afford not to invest in ERP?”
There’s an opportunity for SMEs, watch the Vision33 Guest Speaker Webinar Series Recording featuring Cindy Jutras to find out firsthand how your business can leverage affordable ERP.