Small businesses and ERP software
November 19, 2009 by Trent Wilson
Filed under win32 virus
Running a business effectively is about organisation, focus and process as a massive 55% of businesses fail in their first five years of existence. The commentators offer shallow explanations as to why this happens. I continuosly observe three key reasons why this tragedy occurs so often and to so many individuals with different backgrounds, qualifications and knowledge.
The first reason is insufficient market understanding.
No foresight. For example People dream up the concept, build the product and then sit back and wait for the market to come and buy. In networked age there is no excuse for lack of investigation before spending any time and cash on creating a product until you have firm confirmed there is a market.
The number two reason is lack of understanding of fundamental facts about business.
A significant proportion of people starting a company know their trade, how to deliver a service or manufacture a product, but not how to run a business. Being able to understand and follow the balances in the P&L or the balance sheet is an essential skill. The basic knowledge of accounting is not very often imparted well by the business publications, internet resources and those with the knowledge such as CPAs and bookkeepers. This subject is further exacerbated by technology vendors and their alliances peddling small business accounting software at fledgling businesses.
Small business accounting software isnt a complete answer.
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 joined together to give a comprehensive view of the business. One technology business NetSuite had the vision to see the opening in the market and began selling its small business ERP software. NetSuite pricing has since increased and put their technology out of the financial reach of small businesses.
The third reason companies don’t make it is a because of the absence of practical management processes and policies to enable a cohesive fabric of disciplines and behaviours.