Comprehension

Tag: Comprehension

Why ERP for small businesses can make a real difference to survival rates

by admin on Nov.14, 2009, under General

Running a company efficiently is about organisation, focus and process as a massive 55% of businesses fail in their first five years of existence. The experts offer banal opinions as to why this occurs. I consistently see three key reasons why this tragedy occurs so often and to so many people with different experience, education and knowledge.

The primary reason is insufficient market comprehension.

Refusal to look at the water ahead. For example Individuals have the concept, build the product and then sit back and wait for the market to flock and buy. In information age there is no excuse for lack of research before wasting any time and money on creating a product until you have robust confirmed there is a market.

The number two reason is lack of understanding of the basics of business.

A significant proportion of people starting a company know their trade, how to deliver a service or build a product, but know very little about running a company. Having the ability to read and follow the balances in the profit and loss or the balance sheet is a vital. The basic knowledge of accounting is not very often imparted well by the business manuals, online resources and experts in the know such as accountants and bookkeepers. This subject is further exacerbated by manufacturers and their partners thrusting small business accounting software at fledgling businesses.

Small business accounting software isnt a complete answer.

Large enterprises years ago worked out that all of their Information systems should be fused together to give them a complete picture of the business and then along came ERP software solutions and packages. One vendor NetSuite had the foresight to see the opening in the market and started offering its small business ERP software. NetSuite competitors have since emerged.

The third reason businesses don’t survive is because of lack of process and procedures that provide the essential behaviours and consistency a business must have to perform efficiently.

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