Enterprise resource planning (ERP software) specifically built for small businesses gives your company an affordable, easy-to-use, and secure way to manage business processes, financials, and sales in real-time. Software streamlines your work across multiple areas, from back office accounting to front-end customer support. Both small and midsize companies can benefit from using one ERP software solution to cover a variety of business operations.
ERP systems typically include customizable modules you can choose from based on your company’s specific needs. For smaller businesses and startups, it’s important to only choose the modules you really need to cut down on costs - you can always add more later on as your business grows.
|Human Resources Management||Automate payroll processing, track time and attendance, and manage employee records like performance reviews, payroll benefits, and scheduling. Self-service HR functionalities allow employees to request time off or view their attendance record.|
|Financial Management||Track income and expenses through recorded transactions and account structures in order to forecast profit and loss.|
|Inventory Management||Record information on items you build, store, buy, or sell. Keep up-to-date stock records to avoid running out of items or buying items unnecessarily.|
|Customer Relationship Management (CRM)||Manage customer contact info, order histories, invoices, and quotes.|
|Supply Chain Management||Manage the flow of goods and services from raw material acquisition to delivery of the finished product to the customer.|
|Analytics and Reporting||Measure key performance indicators (KPIs) like income (Accounts Receivable) and expenses (Accounts Payable), top performing products, or open orders over a set period of time.|
The primary benefit of implementing an ERP at your company is the ability to streamline many separate business functions into one solution. Additional benefits vary depending on the exact nature of your work, your industry, and projected growth.
The most common types of ERP systems for small businesses include:
Some ERP solutions are marketed as being only for small businesses. These solutions can be on-premise or web-based; though, web-based is more common for small businesses due to the generally lower upfront cost. ERP software exclusively for small businesses is less complex than more expansive systems, with limited functionality to cut costs and tailor to the needs of smaller companies. Further, these solutions are not scalable to the extent of other ERP options.
Going with a small business-specific ERP means you’re not paying for features you don’t want or need. For instance, a full-scale ERP accounting software may include a way to calculate multiple currencies and exchange rates. If you operate a local store with no eCommerce capabilities, you won’t need such functionality.
Cloud-based ERP software is a popular choice among most small businesses due to the low upfront costs and lower SaaS monthly payments. This entirely online software is easy to set up and can scale with your business. As your business grows from small to midsize businesses (SMBs), you can add or remove modules as needed to customize the solution to your business’s needs.
Many companies prefer to use industry-specific ERP solutions to cater to their business’s unique needs. For example, small business manufacturers need ERP with quality control functionality while construction contractors want project management capabilities.
The most frequently represented industries include:
ERP pricing varies greatly due to a variety of factors including the number of concurrent users, additional modules, implementation costs, ongoing maintenance, scalability, and training. Some plans are available for $20 per month per user while others are $5,000 per month. Over the course of ownership, expect to invest between $25,000 to $150,000 on an ERP system for your small business.
Be aware of hidden fees which can make ERP software much more expensive. The ERP vendor you choose should be able to help you choose only the functionalities you need to ensure your solution is cost-effective.
Most ERP solutions offered for free are meant to be more of a demo of services rather than a permanent solution. There are usually some costs associated with these systems, such as installation fees, training, maintenance, and any add-on functionality.
Some examples of free and open source small business ERP software include:
While there are a lot of factors to consider when selecting an ERP software, these are the top ERP solutions frequently used by small businesses:
Microsoft Dynamics 365 Business Central helps small to medium-sized businesses (SMBS) with business and financial management. Some features include financial reporting, supply chain management, customer relationship management, and project tracking. Microsoft Dynamics 365 starts at $70 per user per month.
SAP Business One is a popular ERP solution for small to medium-sized businesses that can be deployed on the cloud or on-premise. Some functionalities include financial management, CRM, supply chain management, purchasing and procurement, and reporting and analytics. Pricing for SAP Business One is customized based on the number of users and the functionalities you need.
Sage Intacct is an online ERP system for small to medium-sized businesses. This solution assists with accounting and financial management, as well as order and inventory management. Sage Intacct is priced per month per user and is customized to your business needs.
As a growing small business, you need to find an ERP system that will scale with your company. You might bring on more employees, open another location, or expand your professional services. When evaluating ERP solutions, don’t just rush into implementing a system because it fits at the moment - think about what you’ll need in the coming years. As your business brings in more sales, you’ll need a more comprehensive system for managing orders, inventory, and invoices. And if you bring on more employees, you’ll need to keep track of payroll, employee schedules, benefits, and tax information.
Many small business ERP systems allow you to add and remove modules as needed, as well as provide integration with other management systems. Some standalone software like business intelligence (BI) tools, CRM, and manufacturing execution systems (MES) might not be required for you business now, but could play an important role as you grow in the next few years. You can purchase a standalone system when you’re ready and integrate it with your ERP system without much trouble.
Is a full ERP still too much for your growing business or startup? As mentioned before, there are specific small business software products for: