As small businesses grow, managing operations across multiple systems becomes increasingly complex. Many entrepreneurs reach a point where they need “something more” to tie everything together but aren’t sure what that solution looks like. For many, an Enterprise Resource Planning (ERP) system can provide the integrated platform needed to streamline operations, improve efficiency, and enable continued growth.
What is ERP?
At its core, Enterprise Resource Planning software integrates and automates core business processes across an organization. This typically includes functions like sales, purchasing, inventory management, production, financials, and customer service. By bringing these processes together in one system, ERP creates a single source of truth for business data and enables smoother workflows.
“ERP automates the integration of processes and their data. This orchestrates workflows across your business,” explains Brian McPhail, a Senior Director of Strategic Alliances. “As a result, it creates what we call a system of record—it becomes the single source of truth for your business.”
Modern ERP systems also integrate with specialized software that many small businesses use, such as e-commerce platforms, customer relationship management (CRM) tools, and financial systems. This seamless integration allows data to flow across different systems effortlessly.
When to Consider ERP
For most small businesses, ERP isn’t necessary in the early stages. Using separate apps for different functions and manually sharing data between them can work well initially. It allows founders to keep processes integrated mentally and maintain agility.
However, as businesses grow to around 5-6 employees, with each person using their own tools and apps, things often start to get complicated. Managing workflows becomes more challenging and unpredictable. Disconnected processes can become a liability, limiting leadership’s ability to see the entire business clearly.
“If you continue like this, complexity will increase, and the chaos will limit your growth and profitability,” McPhail warns. “This is especially true as you add more specialized cloud apps.”
This complexity and lack of cohesion are key indicators that it’s time to consider an ERP system to unify operations. ERP systems make it easier to orchestrate people and processes, eliminating inefficiencies and reducing conflict.
Key Benefits for Small Businesses
For small and medium-sized businesses, ERP allows the company to operate as one cohesive unit by integrating processes. This provides several key benefits:
- Holistic Business View: Centralized data provides leadership with a comprehensive view of the business, enabling better management of opportunities and risks.
- Foundation for Growth: Integrated processes create a solid operational foundation to support future expansion.
- Precision and Consistency: Streamlined workflows allow for more precise and consistent execution across departments.
- Enhanced Customer Satisfaction: Integrated systems allow for faster, more accurate customer service and improved customer experiences.
- Stronger Brand Value: As McPhail puts it, “Your brand is the sum of all the promises you keep.” ERP helps ensure processes deliver on those promises consistently.
Core ERP Processes
ERP systems can vary, but most include modules for core business functions, such as:
- Sales and Accounts Receivable: Manages the full sales cycle, from sales orders to invoicing and payment collection.
- Materials Requirements Planning (MRP): Helps optimize inventory levels and production scheduling for manufacturing businesses.
- Purchasing: Streamlines ordering, receiving, and paying for materials and supplies.
- Production: Tracks the progress and costs of manufacturing products.
- Warehouse Management: Enables efficient tracking and movement of inventory across multiple locations.
- Customer Service: Supports the full cycle of customer service, from initial contact to issue resolution.
- Pricing Management: Provides tools for setting and updating prices across different customer segments and sales channels.
Real-World Impact: Billy Footwear
The transformative power of ERP for small businesses is exemplified by Billy Footwear, an innovative shoe company founded by Billy Price and Darin Donaldson. After Price was paralyzed in an accident, they invented a unique “flip-top” shoe design to make putting on shoes easier for people with limited mobility.
As demand for their inclusive footwear grew rapidly, Billy Footwear struggled to manage disconnected processes across their financials, e-commerce, order management, and dealer portals. Implementing an ERP solution allowed them to unify their operations and support significant growth.
The company was able to open a new warehouse, streamline inventory management, and significantly increase its capacity, doubling operations within a few months. By integrating their core business functions, Billy Footwear could efficiently sell and ship globally while supporting multiple sales channels and delivering exceptional customer experiences.
Choosing the Right ERP Solution
When evaluating ERP systems, it’s essential to consider how well the solution will integrate with existing tools and processes. For businesses in sectors like e-commerce, integration with platforms used for order fulfillment, customer management, and inventory control is critical.
Seamless integration between systems allows for the efficient transfer of information across departments, enabling faster, more accurate order fulfillment and overall smoother operations. Efficient workflows lead to improved seller ratings, better customer service, and enhanced operational efficiency.
Implementing the right ERP system also allows businesses to make smarter decisions based on comprehensive, real-time data. With all core processes tied together, leadership can quickly identify best-selling products, assess supplier performance, and respond more effectively to market demands.
For growing small businesses dealing with disconnected systems and manual processes, ERP can provide the integrated foundation needed to streamline operations, improve decision-making, and enable continued expansion. By bringing core processes together into one system, ERP creates a single source of truth, allowing companies to operate as a cohesive unit and consistently deliver excellent customer experiences.