Are You Ready for a Small Business Software Upgrade?
Is your company feeling some technology growing pains? Many small businesses struggle to know when they should adopt software to improve operations. While low-cost, entry-level solutions are great when you’re starting out, there often comes a point where it becomes beneficial to consider solutions with more functionality and features designed specifically for small businesses within your industry.
However, there are still a lot of questions you have to answer before getting software. Is it cost effective to replace your current way of accounting? Can you afford business software in the long-term? Should you combine your human resources or recruiting processes into one system? What can you do?
Start seeking small business specific software capable of scaling with your company’s growth over time. There are solutions for:
- Accounting
- Enterprise resource planning (ERP)
- Human resources (HR)
- Invoicing
- Manufacturing
- Payroll
- Recruiting
Learn more about how the right software can improve your small business operations.
Measure Your Current System’s Positives and Negatives
The first thing to do when considering a switch to new software is to review your current setup. Look at a few of the different setups you might have:
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Perform manual processes in-house: Depending on how long you’ve been in business, you might currently be doing everything manually: using a paper checkbook to pay accounts, handwriting sales orders, and tracking inventory in Excel spreadsheets on shared laptops. When sales volumes and outgoing expenses are low, this can be the easiest and most effective approach for balancing accounts payable and receivable. But as business picks up and the transactions increase, this setup can very quickly become prone to human error and inefficiencies.
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Using a software program for general services: Like most small businesses, you might already be using some sort of ERP or general accounting program purchased off-the-shelf or online. You set up the software yourself and trained yourself how to use it. What’s nice about this software is it’s very cost effective and handles the basic needs of the business. These relatively easy to use, intuitive systems are good for many companies as they start out but are not industry specific and have other performance limitations.
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Outsourcing work to a service provider: Outsourcing certain workflows can be attractive because it allows you to focus on your business and pass the duties to a professional. What better way to do accounting than to have an actual accounting or bookkeeping firm do the accounting for you?
All three of these setups can be cost-effective to start but quickly add up over time. As your business picks up, outsourcing in particular will become increasingly more expensive and prevent you from exercising control of your company’s financial performance. Opting to replace your current system with small business software and mobile apps can help you to focus on the business processes which matter most.
What Types of Software are Helpful for Small Businesses?
There are several categories of software designed specifically for small businesses and growing startups.
Accounting and Payroll
Accounting software for a small business is designed to address only the main financial needs of a limited company. Small businesses usually only require core accounting features such as accounts payable for tracking cash flow, accounts receivable for generating customer invoices, and a general ledger to record profit and loss statements.
Popular small business accounting software includes:
Along with accounting, payroll software for small businesses minimizes the time spent calculating employee payments during each pay period. Streamline the process by automatically calculating wages based on time worked, then make deductions based on tax withholdings.
ERP
Enterprise resource planning (ERP) specifically built for small businesses gives your company an affordable and easy-to-use way to manage business processes, financials, and sales in real-time. Both small and midsize companies can benefit from using one ERP software solution to cover a variety of business operations.
As your business grows, more features can be added to accommodate your business needs. Advanced features include:
- Inventory management
- Customer relationship management (CRM)
- Supply chain management
HR and Recruiting
Small business human resources covers employee record-keeping, time and attendance, and benefits management. Some small business owners may think they can get by without human resource software, especially if a company has only a few full-time employees. Yet there is no denying how valuable HR tools are in automating various HR processes, freeing up valuable time for business owners to focus on other aspects of running a company.
Startup and small business recruiting software covers the basics to help find and hire the best employees possible from among a limited talent pool. Ease of use is vital for making the software worthwhile, as it shouldn’t cost so much more to recruit, hire, and onboard one or two employees at a time.
Invoicing
Small business invoicing software is usually a more simplistic and inexpensive version of a more robust billing and invoicing software. These solutions are targeted towards freelancers or small businesses with a smaller number of clients who still need to offer some degree of customer support during the billing process. These stand-alone invoicing tools often integrate with existing accounting systems such as QuickBooks.
Manufacturing
Finally, small business manufacturing software provides inventory control, generates purchase orders, and gives companies greater visibility across the supply chain. Software designed for small manufacturers often features a multi-module system to pick and choose the exact functionality you want. This allows you to cut costs and have a system that isn’t too complex for your needs.
Common Issues Small Businesses Face without Software
While every company is different, there are a number of common issues which often lead companies to consider a switch to a more capable business software program. These are the most frequent issues encountered by small business owners and startup entrepreneurs which don’t adopt business technology:
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Slow processing: Most off-the-shelf programs have closed database systems with a set number of records. As you start to reach the limits of the database file, performance degrades and can increase the amount of time it takes for you to access the information. This can impede on your ability to access data you need to make effective business decisions.
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Reporting limitations: Reports on sales, job costing/tracking, customer data, and more metrics are not always found in basic solutions. Additionally, many smaller companies will find they need the ability to customize reports unique to their operations. Most generic systems lack industry-specific reporting mechanisms. Exporting data to spreadsheets for further reporting is an option, but it is a fairly inefficient one that creates issues with data integrity and allows for easy access to key business info.
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Integration issues: A piecemeal software system has a low initial investment as functionality is added on an as-needed basis. However, in the long run, integrating multiple programs and mobile apps can be more expensive and impractical to maintain than a single software.
Integrating one or two programs to start often works great, however, when it’s time for updates, the integration might cease to work correctly. This requires tech upgrades to all programs to maintain and create new integration points. Repeatedly upgrading multiple programs can be an unexpected expense for small businesses.
For instance, coordinating eCommerce sales with a social media marketing campaign can be too much for some generic point-of-sale (POS) software. Or reviewing real-time financial data on a mobile device while away from the office can be tricky without a corresponding accounting software app. A single, comprehensive system can bring together everything your small business needs at one low cost.
Benefits of Software Upgrades
There are many benefits to upgrading your current software with a small business specific solution. These include:
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Audit Trail. Most entry-level bookkeeping programs make it very easy to change data. This can be convenient, but there is a security cost if no record of this change is maintained. More robust software solutions automatically create an audit trail for all changes. Maintaining a trail of who made what changes holds users accountable to their bookkeeping activity. A reliable audit trail, compiled automatically through software, provides compliance, security, and reduces human errors.
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Multiple Users. One of the biggest reasons for implementing software is the ability to add users. Upgrading to a multi-user operating system can make a world of difference in how your small company operates, allowing multiple people to share responsibilities once limited to a single admin.
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Industry Specific Options. Off-the-shelf software solutions include basic functionality, but do not “talk the talk”, lacking industry-specific features. A manufacturing or ERP designed for small businesses can offer far more than a generic system.
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Automation. Automation is another big reason for switching to a new software solution, as they increase overall efficiency. Many smaller firms supplement their bookkeeping software with Excel spreadsheets. While this setup may help, it still requires double entry of data, and is prone to errors. A fully integrated program with added functionality can help you save time in processing transactions in the software. Depending on the size of your company, those weekly time savings can translate into annual savings in the tens of thousands of dollars.
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Support. Think about the times you have needed support on the software. Were your calls directed through a call center even for the simplest questions? A large, enterprise corporation can afford to have a single employee out of hundreds wait on the phone for IT answers; small companies can’t. Most of these off-the-shelf solutions lack the specific kind of support a small business needs.
Further, hackers and malware can leave small businesses vulnerable. Fortunately, advanced software support offers additional security measures, either through IT tech upgrades or data recovery efforts. Calling support for a generic, enterprise-level software can take hours or days. Buying small business software usually includes a dedicated or even local representative your company can reach out to as needed.
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Scalability. To address growing pains of a startup or small business, you need a system to accommodate future growth. Regular software updates enable you to keep up with workflows even as your business grows. It’s important to address scalability early so you’re not in the market for new software after only one or two years.
