small business wisdom – ERP software and the art of survival
Businesses need effective process, the focus of leadership and structure that can stretch to enable the company to grow safely as a massive 55% of businesses fail in their first five years of existence. The commentators offer banal opinions as to why this happens. I continuosly observe three key reasons why this tragedy happens so often and to so many individuals with different backgrounds, qualifications and skill.
The first reason is insufficient market understanding.
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 appear and buy. In information age there is no excuse for lack of research prior to wasting any time and cash on designing a product until you have robust confirmed there is a market.
The number two reason is lack of understanding of the basics of business.
The majority of folks starting a company know their trade, how to deliver a service or make 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 an essential skill. The basic knowledge of accounting is rarely imparted well by the business publications, online resources and experts with the knowledge such as accountants and bookkeepers. This domain is further exacerbated by manufacturers and their partners 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 larger enterprises who had figured out that the back and front office systems need to be wired together to give a comprehensive picture of the business. One software developer NetSuite had the vision to see the opening in the market and started offering its small business ERP software. NetSuite pricing has since increased and put their technology out of the financial reach of small businesses.
The final reason businesses don’t survive is a because of the lack of good management processes and policies to enable a cohesive fabric of disciplines and behaviours.
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