small business wisdom - ERP software and the art of survival
Commercial organisations need effective process, the focus of leadership and structure that can stretch to enable the business to grow safely as a massive 55% of businesses don’t make it to their fifth birthday. The commentators offer useless ‘insight’ as to why this happens. I consistently see three key reasons why this tragedy occurs so often and to so many people with different backgrounds, education and skill.
The first reason is lack of market comprehension.
Refusal to look at the water ahead. For example Individuals have the concept, create the product and then sit back and wait for the market to come and purchase. In this connected age there is no excuse for lack of investigation before wasting any time and cash on designing a product until you have firm evidence there is a market.
The second reason is lack of comprehension of fundamental facts about business.
A significant proportion of people starting a business know their trade, how to deliver a service or build a product, but know very little about running a company. Being able to understand and track the numbers in the Income statement or the balance sheet is a vital. The basic knowledge of accounting is not very often imparted coherently by the business manuals, internet resources and experts in the know such as CPAs and bookkeepers. This subject is further complicated by manufacturers and their affiliates pushing small business accounting software at fledgling businesses.
Sage software and other vendors as usual are underserving small businesses.
Until recently ERP software solutions and packages were only affordable by larger enterprises who had deduced that the back and front office systems need to be joined together to give a complete picture of the business. One software developer NetSuite had the foresight to see the opening in the market and began selling its small business ERP software. NetSuite competitors have seen the opening as well and as a result lower cost easier to use systems have appeared.
The final reason companies fail is because of lack of process and procedures that put in place the vital disciplines and consistency a business must have to perform efficiently.
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