ERP, small businesses and why they fail
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 commentators offer shallow explanations as to why this happens. I continuosly observe three key reasons why this tragedy happens so often and to so many individuals with different experience, qualifications and skill.
The primary reason is insufficient market understanding.
No foresight. For example People dream up the idea, build the product and then sit back and wait for the market to flock and buy. In this connected age there is no excuse for lack of investigation prior to spending any time and cash on designing a product until you have solid confirmed there is a market.
The number two reason is lack of comprehension of fundamental facts about business.
The majority of people starting a business know their trade, how to offer a service or make a product, but know very little about running a company. Being able to read and track the numbers in the P&L or the balance sheet is a vital. The basic knowledge of accounting is not very often imparted well by the business books, online resources and experts in the know such as accountants and bookkeepers. Companies such as Sage software and Intuit aggressively fool business managers with their messaging that their systems are the cure for all ills.
Sage software and other vendors as usual are underserving small businesses.
Until recently ERP software solutions and packages were only affordable by larger enterprises who had deduced that the back and front office systems need to be wired together to give a comprehensive picture of the business. One technology business NetSuite had the vision to see the gap in the market and began selling its small business ERP software. NetSuite competitors have since emerged.
The final reason businesses fail is because of lack of process and procedures that provide the essential behaviours and consistency a business must have to work efficiently.
