ERP for Start-Up Organizations
Every successful business starts with an idea, but implementing that idea is key to creating a thriving start-up organization. ERP (Enterprise Resource Planning) software is one tool many start-ups use to optimize and organize their operations to increase productivity and growth. It is important for entrepreneurs to understand the importance of ERP and how it can help their organization reach its goals.
Why do Start-Ups Need an ERP Software?
ERP software provides start-up organizations with an all-encompassing view of the business by consolidating data from all departments into a single system. This means that instead of relying on multiple programs to run the organization, entrepreneurs can utilize one program that effectively stores and organizes data. Additionally, with this consolidated information, entrepreneurs can gain valuable insights into their company's performance, helping them identify any issues or trends in their operations, which they can then address accordingly.
The Benefits of ERP for Start-Ups
ERP systems also provide start-up organizations with streamlined processes, which lead to increased efficiency. By implementing automation within the system, employees can easily access relevant information, meaning less time is spent searching for data and more time is devoted to optimizing operations. Additionally, with automated tasks comes reduced costs as manual processes are no longer necessary due to ERP streamlining functions such as billing, inventory tracking, and order management.
Additionally, an ERP system can provide cost savings by allowing the business to reduce overhead costs associated with manual record-keeping and paperwork. As more processes become automated, companies no longer have to employ people solely to manage data entry or tracking procedures, leading to substantial cost savings over time. Furthermore, having all information stored electronically also reduces the risk of human error while speeding up transactions overall.
Lastly, ERP allows companies to stay competitive in their markets by providing valuable insights into customer trends and activities. Through analytical reports and data visualizations provided by the ERP system, businesses can easily identify areas for improvement and respond when changes are necessary to remain competitive in their market space.
The Question of Timing
ERP systems cost money both from an implementation and licensing perspective. This translates to a significant upfront cost and then a recurring annual or monthly charge. There is also an internal work effort for the company to actually implement the software, as software is not implemented successfully without contributions from the stakeholders within the business. A start-up business can be ready for the benefits of ERP but reasonably consider that, at the current moment, their money and time are best invested in other endeavors. This is a fair conclusion to come to and one that should be consistently reevaluated as a business matures.
It's no secret that the vast majority of businesses start by running QuickBooks. This is a very useful system (I know from experience) that can help an organization track financials, customers, vendors, product sales, and much more. The shortcomings of QuickBooks not being GAAP compliant, offering perpetual inventory, handling orders in a manageable way, or enabling a mobile workforce can be accepted while the business grows, but at some point, there is a breaking point.
The trick here is to remember that implementations take time and effort. Waiting to engage in a system selection when an organization is past the point of needing a fully-integrated ERP is harmful to the process as the staff will be then consumed with a growing business and, most likely, inefficient processes that have developed without a holistic view over time. Adding participation in an ERP project to this workload is often viewed by the staff as an unwelcome, even if necessary, burden.
Keep in mind that from the point that an ERP system selection process is started to the point of go-live can take 8 months to over a year for a start-up company. This includes a 3-month fast-tracked selection process and 5 to 12-month implementation for Phase 1. Starting the process at the right time by looking at the forecast for a business should be front of mind for leaders of a start-up company.
Other Considerations for Start-Ups
There are other considerations that limit an organization's options. For example, in FDA-regulated environments, a company cannot have controlled substances on-site until a validated system is in place to track them. This has prompted Life Sciences organizations, such as start-up pharmaceuticals, to implement an upper-tier system such as Microsoft Dynamics 365, SyteLine, or Oracle NetSuite before they even have revenue.
Another consideration is how well-funded the company is. Companies with the solid financial backing and a confident long-term outlook may implement a top-tier ERP system from the onset. Making that investment before they can even take advantage of all the features, knowing that implementing a system in the early stages and growing with it will put the least strain on the business. Alternatively, a company may decide to implement a smaller ERP system initially, knowing they plan to outgrow it in 5-10 years, at which point they know they would need to implement another. Both of these plans are reasonable solutions. The important part is having a plan.
How to Implement ERP in a Start-Up Organization
When implementing ERP software into your organization, entrepreneurs need to understand their specific needs first. After deciding what features your business needs most to meet its goals, businesses need to research what platform would be best suited for them while considering pricing options and security protocols. Once this has been determined, businesses should focus on setting up user permissions according to different departments and migrating over any existing data into the new system. Finally, businesses need to provide comprehensive training and support throughout the implementation process so that employees can transition successfully without feeling overwhelmed by the changes happening within the organization.
Be in the Know with John Hannan LLC
Businesses should recognize that investments in ERP software can make or break a company's success. However, if used correctly, it could lead an organization down a path of optimization, allowing them to reach its highest potential and achieve its goals much faster than anticipated. To learn more about how businesses can leverage enterprise resource planning technology, follow John Hannan LLC on LinkedIn!