How to Choose an ERP for Your Small Business

There is a lot of hard work that goes into maintaining a small business. From managing inventory and budgeting to developing marketing strategies, being a small business owner means wearing many different hats and constantly balancing numerous responsibilities to ensure that operations continue to run smoothly.

A successful small business owner is always on the lookout for ways to increase returns by optimizing internal processes. Choosing the right enterprise resource planning system (ERP) can alleviate some of the pressure on small business owners by automating the payment acceptance process, tracking finances, generating detailed performance reports, and much more.

While a good ERP helps increase efficiency by streamlining daily functions, leaving employees more time and resources to invest in other areas of their business, not all ERPs are created equal. Because there are many different types of ERP systems on the market, business owners should carefully consider their particular needs when selecting an ERP system.

Assess Your Business’s Needs

Because there are so many different ERP systems on the market before you begin comparing different ERP vendors, you should first take stock of your business’s specific needs surrounding an ERP system, and outline the specific issues that you want your ERP system to address. Having a clear understanding of what your business does (and doesn’t) need from an ERP is the first step to choosing a solution that works for you, and can help prevent you from shelling out extra money for features that you won’t use or that are irrelevant to your particular business model.

If you typically process just a small number of transactions each day and don’t require some of the more advanced features (like Level 2 and 3 payment processing capabilities), you may want to consider purchasing a more basic ERP system or lower tier plan that doesn’t include some of the bells and whistles associated with more expensive plans. On the other hand, if you process thousands of transactions each day, or if you do a lot of B2B or B2G sales, a more robust plan will likely better fit your needs, and can actually help save you money in the long run.

Compare Costs

For small business owners seeking to plan effectively for their business’s future, being mindful of how you spend your money is a must. When you’re choosing an ERP system for your business, you should carefully compare the price and upkeep costs associated with different vendors, and the type of payment plan that is most compatible with your particular financial situation.

Some ERP systems, for example, may initially appear cost-effective, but come with hefty implementation or upkeep costs. Others may come with a low monthly price tag, but the system’s most effective features cannot be accessed unless you purchase pricey add-ons, or upgrade.

You will also want to consider what kind of pricing structure best fits your particular business model. For your business, paying a set amount monthly using a subscription-based pricing plan may be the most cost-effective solution For another, however making a larger overhead investment may be worth it to minimize ongoing expenses, depending on cash flow.

Consider Your Customers

As a business owner, optimizing customer experience is always at the forefront of your mind. The same principle holds true when choosing an ERP system that accommodates your customers’ needs.

In order to provide your customers with the widest variety of payment options possible, you should consider choosing an ERP that accepts many different types of payment without difficulty. Particularly if you conduct sales with other businesses, you should invest in ERP software that makes it easy to manage important documents like payment orders and invoices.

Ease of Integration

Implementing new software shouldn’t mean having to start over from scratch. However, purchasing an ERP system that isn’t compatible with your current solutions can actually create more work for you on the backend by forcing you to manually re-enter high volumes of data. Particularly for small businesses, transferring large amounts of information from one system to another can be very time-consuming, slowing down overall business operations and costing you money in the long run.

To avoid this, small business owners should seek out ERP solutions that are able to be integrated with their existing software systems. For brands with an eCommerce component or who generate sales both in-person and remotely, finding an ERP that can effectively relay information across multiple different channels is key. For business owners seeking to expand their brand, investing in an ERP that works well with other systems can make the process much easier should your business decide to scale up or implement different software in the future.

For these reasons, small business owners should prioritize ERP systems that make integration easy, and seek out merchant services providers that allow you to integrate existing solutions with your merchant account.

Good Reporting Capabilities

To make well-informed decisions for your brand, it is crucial to have a clear picture of how your business is operating on every level, from production planning to accounting to tracking returns, and more. To assess the most effective way to meet the needs of your market, you first need access to reliable, up-to-date data surrounding sales, customer demand, supply chain operations, and other important business processes.

An ERP system that has strong data analysis and real-time reporting capabilities helps guide business owners and employees by compiling this information into easy-to-read reports that can be accessed in one centralized location. From sourcing materials to helping business owners decide which products to stock and develop a successful marketing strategy, ERP systems with robust reporting capabilities make it easier for business owners to stay on top of business operations at every level of production, allowing them to make decisions that will yield the highest return possible.

Scalability

For businesses seeking to grow their business, finding a solution that is scalable is one of the most important considerations when choosing an ERP system. Because your ERP handles so many different crucial aspects of your business, it’s important that you use a system that has the capacity to grow as your business flourishes.

Before investing in an ERP system, business owners need to consider whether a cloud-based or in-house ERP system will be a better fit for their needs. Although hosting your ERP software in-house has its own advantages, including giving business owners more control over their system, once you have maxed out your server resources, your ERP is likely to suffer from drastically reduced performance, or crash completely. Upgrading your in-house ERP software can also take a lot of time and money. Cloud-based ERP systems are generally more scalable, allowing business owners to adjust their subscription type on demand through their service provider to accommodate increased traffic.

Security and Compliance

You never want to gamble when it comes to keeping your customer’s information safe and secure. At a time when a staggering 86% of people surveyed say that they are concerned about data security, business owners need to ensure that they are choosing an ERP system that is working to protect their customers’ data at the highest possible level.

Because cyberattacks have become increasingly common in recent years, and because cyber crime can have an extremely negative financial effect on businesses that suffer from data breaches, you should compare the security and compliance level of different ERP systems before selecting a different solution. Many merchant services providers post their compliance certifications on their websites, so business owners should familiarize themselves with different levels of security. Providers with PCI Level 1 compliance, for example, have obtained the highest level of security certification, having processed over 6 million Visa transactions per year.

Conclusion

Although ERP systems are invaluable tools for small businesses to increase efficiency by streamlining internal processes, it can be challenging to know which software is the right fit for your business. When choosing an ERP system, you should start by considering your specific business needs, cost, and security level, and make sure you invest in a solution that can align with your vision for your business’s future.