10 Key Features of the Best ERP For Small Business
Selecting the best ERP system for small business can be a daunting proposition. There are quite a few ERP software solutions to choose from, ranging from small business accounting software that simply covers the basics, to sophisticated enterprise resource planning that includes manufacturing and distribution capabilities, supply chain management, human resources, and much more.
How can you narrow the list and pinpoint the best ERP solution for small business? In this article, we’ll walk you through the criteria you should consider, the features you should look for, and how to get started with the process of implementing an ERP system for your small business.
How do you pick the best small business ERP?
It’s important to start with a clear list of selection criteria for your small business ERP. There are significant differences among the various solutions. The best ERP for small distribution businesses, for example, might not necessarily be the best ERP solution for a small manufacturing business. Here are some of the criteria that you should consider:
Features: Simply put, does a particular small business ERP solution do what you need it to do? If you ship and receive products, for example, then you’ll need ERP software that handles inventory and warehouse management. If you assemble or manufacture products, look for production capabilities that fit your specific needs. If you operate a professional services company, you’ll want time & expense, project tracking, and progress billing. Even within those categories, there are key features that might only be available in some ERP solutions for small businesses. If your company sells products that are serialized or tracked by lot or batch, you will need an ERP solution that can handle those kinds of requirements.
Cost: ERP software for small businesses can vary widely in price. Some companies sell their ERP software as a traditional “perpetual” license. Those typically entail annual support and maintenance fees as well, which cover technical support and upgrades. Subscription pricing is becoming far more common these days, especially as more and more companies are offering cloud-based ERP under a SaaS (“software as a service”) business model. As you compare perpetual versus SaaS pricing, keep in mind that the latter typically includes maintenance and support, but may also cover infrastructure, security monitoring, backups, and periodic hardware upgrades.
Implementation: The best ERP solution for small business should be simple enough to learn quickly, but flexible enough that it will inevitably require some configuration and training to get started. The best small business ERP software implementation partners will take the time to get to know your business and can work with you to configure your small business ERP software so that it aligns well with your internal processes. For this reason, it’s important to seek out a trusted partner with a good reputation among small business ERP customers. Look for companies that know the software, understand how to make it work for your business, and can work with you to ensure your success. Ask for references and talk to the people who will be working on your project.
Vendor Reputation: The best small business ERP solutions should have a successful track record that will be evident when you talk to small business owners and managers. Look to other businesses in your industry and ask what they recommend. Talk to financial management professionals. Be sure to ask about the must-have small business ERP features that your organization requires. If you run a manufacturing, for example, ask your peers what they believe is the best ERP for small manufacturing businesses.
What are the key features of ERP software for small businesses?
To narrow the list of best ERP solutions for small business, identify the features that are most important for your organization today, and the things you think you’ll eventually need as your business grows. Here are some of the business functions to look for:
Accounting: Virtually all ERP software for small businesses will include core accounting, financial management, and common business functions like general ledger, accounts payable, accounts receivable, and bank reconciliation.
Inventory Management: Cost-effective business operations require good inventory management, especially for manufacturing and distribution companies.
Bill of Materials (BOM) and Kitting: Bill of materials is an essential business function for many manufacturers. Kitting is important in many cases as well. This refers to situations in which multiple inventory items are packaged together into a “kit” that is sold to the customer.
Manufacturing: For anything beyond light assembly, you will want to look at features that support small business manufacturing, including things like MRP, job costing, and other key manufacturing functions.
Project Accounting: Almost any business can benefit from project management features. This is especially important, though, for firms that offer professional services, or which do project-based work like construction, architecture, or custom products.
Field Service: If your company services machinery and equipment or performs similar business functions that require a visit to the customer’s location, field service capabilities may be important for you. Field service functionality includes ticketing, dispatch, spare parts inventory management, and more.
eCommerce: Almost every small to mid-sized business these days is using eCommerce to reach customers online. The best ERP software for small business will offer integration to the most popular eCommerce platforms or will provide built-in eCommerce capabilities.
Vendor Portal: An online presence is not merely useful for reaching more customers. It can also be a very cost-effective way of working with your suppliers. A vendor portal can help you streamline your purchasing and vendor management processes. This can be especially beneficial for many small manufacturing and distribution businesses.
Human Resources & Payroll: Many small business ERP products include some kind of human resources or payroll functionality, whereas others do not. For any business that requires time & billing or tracking labor costs in manufacturing, this capability can be especially important. Some companies prefer to outsource their payroll and integrate the associated payroll expenses to their small business ERP software.
Analytics: Reporting and analytics are important for any business because it helps management to understand what’s going well, what’s not, and how they can be more profitable. Look for analytics that include dashboards, customizable reports, and core financial statements.
How do you determine which features are a priority for your small business?
With so many different ERP features to consider, you’ll need to prioritize carefully. Think about your existing business processes, and how those might work within the context of a new small business ERP solution.
Start with core business processes: Begin by looking at your most important business operations. A wholesale distribution company, for example, will need to issue purchase orders, receive merchandise, then pick and pack orders for shipment. That calls for inventory & warehouse management functionality. Manufacturing businesses tend to have specific requirements. That tends to narrow down the choice of viable ERP products at the outset.
Trace your “order to cash” process from end to end: Determine all the steps that need to happen along the journey from taking an initial order to collecting payment from the customer. For example, do you take orders over the phone? On the web? Do you have a walk-in location where customers can pay cash and take the merchandise with them? What kind of products or services are you providing as part of that transaction? What’s the most cost-effective way to procure those products, manage inventory, and deliver them to the customer?
Consider the need for multiple currencies: If you need to issue invoices or take payments in a currency other than that of your home country, make sure you have a system that can accommodate that.
Ask whether the ERP software can handle multiple companies: Are you operating 2 or more legal entities? For example, do you have a separate company set up to operate in Canada or Mexico? If so, look for software that allows multiple companies to be set up in parallel, with the ability to generate consolidated financial statements.
Consider the benefits of cloud-based ERP: Do you have a clear preference for on-premise software or cloud ERP? Are you open to either one? Cloud ERP is a solid option because it offers excellent performance and anywhere/anytime access. That’s great if you have remote workers. Cloud-based ERP is also highly secure and eliminates the need to maintain a computing infrastructure on-site for your small business ERP solution.
What do you need to implement the best ERP system for small business?
An ERP implementation is not nearly as daunting as many people make it out to be. For the best small business ERP results, consider the following advice:
Find the right implementation partner: A trusted implementation partner will take the time to get to know your business well. Look for companies that have a stellar reputation and industry-specific knowledge that can help you succeed.
Lay the groundwork in advance: Review your business processes and determine how your new small business ERP system will address each key requirement. Your implementation partner is an essential part of this process because they understand the software thoroughly and they can work with you to complete that roadmap.
Allocate adequate staff time: Your implementation partner is there to work with you, but your staff should be prepared to take ownership of the results by allocating adequate time to see the project through to a successful conclusion.
How to get started with ERP for Small Business.
In your quest to find the best ERP for small business, it’s well worth spending some time with ERP experts to talk about your company’s goals and objectives. They can help you explore key questions, define your vision for success, and create a plan to make that vision a reality.
You may also find some of these resources useful as you continue your journey to find the best ERP for small business:
- The Top 10 Benefits of ERP Systems Explained
- 8 Key ERP Implementation Steps
- ERP System Evaluation Checklist
If you would like to discuss your small business ERP needs, please reach out to the experts at Synergy Resources. Our goal is to first understand your business, then identify the right ERP solution to fit your needs.