How ERP Can Help A Small Business

How ERP Can Help A Small Business

A person might believe that since the word Enterprise is involved in ERP, or Enterprise Resource Planning, that only medium or large size businesses need ERP. What if a business is only a one-person shop? Can ERP principles still help a small business of that size? Yes!

What if a business person could run QuickBooks without any problem? Is QuickBooks the best choice for their business? Should the accounting system not be QuickBooks, which one is the best to choose for the business owners company? Why should this question be asked at all? The reason is an ERP principle. The principle is that you start with the business and tailor the computer system to fit the business, not the other way around. This way the computer system compliments the daily business processes that the business owner goes through, and it avoids purchasing a bunch of unnecessary technology a small business cannot afford.

System Selection, System Implementation, and System Maintenance are still necessary even for a simple accounting system to function properly. For example: Naturally the system they select is going to be something they are familiar with. It is always better to use a system people are familiar with when possible, and QuickBooks can generally do anything a small business needs, so the system selected may very well be the correct one. However, which version of QuickBooks is required for a particular businesses needs. How would we answer that question and do it according to ERP principles?

We start by analyzing the current business process model the business owner is using. BPM (Business Process Modeling) is a vital part of any business structure. Without the correct Business Process Model; no accounting system will work properly. Once we have the model drawn out, then we determine which version of QuickBooks to use. Generally it seems like a simple process. However, there are plenty of poor souls who have ended up spending more than was necessary for a Professional version and really only needed a Basic one.

Another problem for this example is going to be System Implementation. Proper setup of QuickBooks requires using ERP principles to arrange general ledger accounts in the proper order and to add the correct modules to QuickBooks to avoid confusion by fitting it to the correct BPM. Setting up a retail business and maintaining inventory might seem easy to do. However, every single business is very unique in the way it handles accounting and inventory.

What fields do you use and what fields do you leave blank? What optional fields should you add? What are the business processes the business owner needs to incorporate in their day-to-day activities to insure that accounting and inventory are accurate? How do we integrate our BPM with our computer system we have purchased? These are just a few of the many questions that have to be answered by a business owner who intends to try and keep their records accurate and the books zeroed out.

Does this mean that the business owner will not have to make adjustments to the way he does business? That depends on whether or not the business processes are arranged correctly to start with. How accurate is a small businesses BPM? This is a question that needs to be answered before purchasing any accounting or ERP package. The size of the business is completely irrelevant. A larger business will have a larger model to work from. A smaller business does not require a model that is so complex; however, the small business still needs a model that is accurate and correct to begin with or the computer system will be unable to keep accurate records regardless of how well the business owner understands the accounting or ERP package.

ERP packages generally are used when a company has more than one employee; because, the intention of ERP is to bring one company with all its various departments such as sales, accounts payable and receivable, inventory, purchasing, and others under one computer system that can provide the same information to everyone in the company that requires it. ERP is an acronym for Enterprise Resource Planning, but in reality, ERP is nothing more than a computer software system used to operate your business.

So why try to fit a small business into a model using the same principles you use for a larger company? The reason is that whether the business is small or large if the records are not accurate than Uncle Sam will get you. The government requires all businesses to keep accurate records of their business activities rather it is a sole proprietorship or a huge corporation running an ERP package. And very importantly, if the BPM does not fit well with the accounting or ERP package then the attempts to keep those records accurate will most definitely fail. The small business may not need an ERP package, but the small business still needs the principles that ERP is based on.

Michael W Harleman
ERP Business Center
313 Cliff Drive
Logansport, IN 46947
(574) 721-9503
m_harleman@hotmail.com
http://www.erpbusinesscenter.net

Article By Michael Harleman

Keywords: business

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