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Complete Guide to ERP for Startups

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ERP is a vital enterprise technology solution for manufacturing and distribution businesses. It is also an important tool for those involved in finance, accounting, risk management, and many more industries. Regardless of vertical, business size, or target audience, it’s important to make ERP a core part of your business management strategy from the getgo. This couldn’t be more true for small businesses and brand new startups eager to grow.

Whereas large enterprises and established companies need to be able to micromanage every single aspect of their business, startups need an ERP solution that is affordable, scalable, and easily implemented. Startups don’t have the privilege of taking weeks to understand and learn what makes their solution tick. They need a solution that can help them hit the ground running while providing ample opportunities to improve and scale as time goes by.

Why Startups need an ERP?

ERP is a business management tool that orchestrates a holistic view of the entire business process for a particular enterprise. It employs a modular approach by addressing each aspect of business management through custom designed, pre-integrated, and pre-packaged processes. This data is managed and regulated through customizable business processes that can be controlled and managed from a central location.

Want to know how to implement an ERP solution for your startup? Just read on through this blog to get the lowdown on how to pick the right solution and how to implement it without missing a beat.

Financial Management

With ERP financial management, you can save time and reduce costs. You can keep track of everything from accounts payable and receivable, supplier invoices, income, expenses, billing and invoicing, p/l and p/p statements, cash flow, budgets, and so much more. Most ERP systems boast integrations with banks, credit card processors, and other fin-tech services to further optimize the finance process for users.

Project Management

In the startup world, managing project is a must. From managing marketing campaigns, product launches, new-product development, customer service, employee training events, software development, IT planning, risk management or anything else you can think of, ERP puts the power to manage it all right at your fingertips.

This is particularly important for startup owners who are strapped for time. With ERP, you can automate and optimize the project management process from start to finish.

Inventory Management

Inventory is another crucial aspect of every business, regardless of the size. With ERP, you’ll be able to precisely track the movement of inventory throughout the supply chain, from creation to customer delivery. You can even have the system auto-generate documentation such as the bill of lading, as well as keep tab on your inventory levels and costs.

Quality and Compliance Management

Quality is not something that can be overlooked in today’s world, especially when it comes to compliance. Specifically speaking, ERP will help users with quality management by producing supporting documentation and facilitating critical documentation. ERP can also automate all aspects of quality control, from audits to SPC management.

Customer Management

Customer management is an important aspect of any business, but it is especially important for a startup because customer retention is key for a startup’s profitability. ERP for small businesses has everything one needs to effectively manage customer service, from a user friendly customer portal for self-serve service and lead management, to automated customer service management and marketing analytics.

Human Resources Management

ERP is an efficient tool for HR management. It can help organize, store, and maintain all the information on your payroll, employees’ data, CPR, Absence Management, ERP. HRM is one of the great uses of ERP system for the small business.

Order Management

A key part of any business is its capacity to handle customer orders and fulfill them fast. ERP will help you keep track of orders, manage workflow, and deliver orders on time and within budget.

Manufacturing

ERP’s manufacturing capabilities give you the ability to coordinate and optimize your entire supply chain. With ERP, you can manage production, procurement, procurement, quality control, planning, scheduling, shipping, inventory, and customer service all in one system.

Customer Relationship Management

ERP isn’t just for the backend of business. With the right ERP solution, you can coordinate your sales, marketing, and support teams by streamlining customer data, automating sales and marketing processes, and distributing current information.

There are crucial aspects of implementing and managing an ERP solution, from payment methods to integration types, to support and maintenance considerations. In this article, we have summarized a few of the most important aspects you should consider when looking for an ERP solution.

Benefits of ERP for Startups:

1. ERP Benefits Recognition

Much like other enterprise software packages, ERP solutions can help automate much of your operational flow. This can save your startup a significant amount of time, energy, and money. ERP will optimize your business process by assigning certain jobs to specific individuals, encouraging the use of optimized processes to reach goals, tracking and assigning resources to achieve milestones, and much more.

2. ERP Provides a Clear, Single Source of Truth

ERP gives you three things – streamlined processes, information, and better operations. It’s one unique interface that manages:

  • Manufacturing accounting
  • Inventory management
  • Stores
  • Standard Work
  • Material Requirements Planning (MRP)
  • Costing
  • Purchasing
  • Selling
  • The IT group

ERP allows all these different functional areas to work together in order to achieve one single objective, to grow. Why use excel sheets to keep track of your inventory, payroll, or accounting when you can use a single platform to manage it all?

3. ERP Streamlines Communication and User Experience

Startups are constantly hustling in order to achieve their goals, but often drown in chaos due to poor communication and inefficient processes. The end result is wasted time, money, manpower, and resources. An integrated ERP system will help optimize the flow of information and the team’s time by automating the many tasks that take time away from their core business. Startups that are resource-strapped will find an ERP solution particularly helpful when it comes to tracking and distributing personnel and other resources.

4. ERP Can Be Used Internally for Decisions and Strategy-Building

ERP provides a solution that is capable of handling sales, production, purchasing, manufacturing, and distribution, so it’s easy to understand why startups would want to use it to steer their business strategy. While other good options exist such as accounting solutions (i.e. Quickbooks), ERP packages also give you a holistic data with which to run your business.

5. ERP Enables Cost Transparency

No matter what business you’re in, you’re going to have to look at costs at some point. You must know your costs so that you can ensure you are able to pay your employees, suppliers, and costs related to your startup.

6. ERP Can Provide You with an Overall Business Snapshot

You can get the big picture of what is going on within your company with ERP. It provides full visibility into the financials (revenue and expenses), your resource allocation, and taxes. You can also attach third party applications and third party integrations to simplify and organize your business data.

7. ERP Can Help You to Grow Your Startup

ERP can help startups grow and scale by providing your business with an integrated approach that makes it easy to delegate responsibilities and responsibilities. It will also empower your business to move past the idea stage and into the implementation stage much faster.

Should you buy or lease a software solution?

There are two primary software solutions for ERP:

  • Software as a Service (SaaS), also known as cloud solutions
  • On-premises and other/no software solutions

Both have their pros and cons. Advantages of renting SaaS solutions include:

  • Easy install and easy to use
  • Completely mobile
  • No hardware requirements
  • Lower upfront costs
  • Only pay for what you use, costs decrease over time
  • Scalable
  • Play around with the software without any long-term commitment
  • Highly accessible

Disadvantages of SaaS solutions include:

  • The service provider can shut it down anytime
  • Lack of enterprise functionality

You will also come across ERP software solutions that require a one-time or recurring payment. Regardless of the type of solution you choose, you will have to decide whether to finance it with your available cash or outsource it. Additionally, some companies will prefer leasing the hardware and software. No matter how you go about it, you need to make sure that your ERP solution is flexible and can adapt to your needs as you grow.

Types of ERP Solutions

There are two major types of ERP solutions:

  • Manufacturing supply chain
  • Operational solution

Manufacturing and supply chain solutions are more complex and are suitable for large companies. These are often orchestrated by a CIO or CTO and are usually tailored to the specific needs of the company. They are extremely efficient but also highly time consuming to implement. These solutions are the more costly option, but they prove to be a worthwhile investment.

Operational ERP solutions contain many of the same features as a manufacturing solution but are generally bound to the functions of an organization. While they are not as comprehensive as a manufacturing solution, they provide a set of tools for managing your financials, HR, and supply chain management. These solutions are suitable for small and mid-size businesses as well as startups.

How to Implement an ERP Solution in a Startup

Implementing an ERP system such as SAP or Oracle can be extremely rewarding for established and large enterprises. However, for startups, it’s a matter of survival. As such, startups need to carefully consider whether or not they need to deploy an ERP solution from day one or if they can wait a bit until they have enough capital and resources to make it work. The bottom line is that any business that relies a great deal on resources should deploy an ERP in their production cycle.

How to Implement an ERP Solution in a Startup:

  1. Budget:

Consider your startup’s finances when deciding whether or not you need an ERP system. For very small startups launching a collection-based business, it is unlikely that they’ll need an ERP system, as they can rely on spreadsheets to pull their business reports. This is why a great deal of startups start with a freemium Business Intelligence system, which allows them to look at KPIs and understand what makes their business tick without any complex or expensive software investments.

On the other hand, larger startups, especially those involved in manufacturing and distribution businesses, will need an ERP system from day one to coordinate and allocate resources. ERP systems are particularly well-suited for manufacturing and distribution businesses because they are able to track material, orders, and production. But it is important to know which ERP solution is the best one for your startup based on your business’ requirements.

  1. Business Model:

What type of company does your startup want to be? A sole trader, private limited, limited liability? It’s important to consider the legal structure of your business when choosing an ERP system. A great deal of startups seeking investment go with an LLC or holding company because these legal structures can easily be incorporated in an ERP solution. Most ERP solutions can integrate business operating and tax information, allowing you to streamline and automate your entire business process.

  1. Timing:

When is your business model going to take off? Are you launching a Kickstarter campaign to raise money or do you have a decent revenue stream already? If this revenue stream is continuous, it can be a good idea to start with a freemium Platform as a Service (PaaS) solution, which will then upgrade based on performance. On the other hand, a small startup looking to raise funds will enjoy the generous budget they have now more than ever.

Because overall getting a hold of startup funding is almost always very difficult, startups should consider deploying an ERP solution ASAP and get their foundation down now rather than wait until their funding is secure. Moreover, startups run with a lot of uncertainty and their resource allocation will change over time. As such, having an ERP system will allow you to extend your resources without spending that money yet.

  1. Financial:

How does your ideal ERP solution fit into your revenue model? As previously mentioned, a freemium model allows you to start slow and do it right while providing adequate tools to your business. Freemium solutions are great because they offer you great value and the ability to scale up when needed.

If you’re an established manufacturing or distribution business, you know exactly how much it costs to produce products, and you can even have a rigorous and documented process in place. This type of system will work better with full-scale ERP systems that can keep that type of production in check. When the time is right, you can start looking for new funding and make your ERP system your own.

How to pick the best ERP solution for your startup

It’s important to note that picking the right ERP system requires a lot more than just picking one with great features. While there are hundreds of ERP solutions out there, very few of them offer the right combination of features and price for startups. So, before you begin picking systems, you should ask yourself:

  1. How much vertical is your business?

For example, if you’re starting a business that involves manufacturing and distribution, you’ll want an ERP like Oracle or SAP. These two and many other ERP solutions offer plugins that cater to your specific requirements and allow you to get your manufacturing business up and running in no time. While these vertical ERPs are great for businesses with a strong focus on manufacturing or significant fulfillment and the likes, they can’t be considered the best solution for non-oriented startups, which are in different verticals.

  1. What is the stage of your business and what type of funding do you have?

For instance, if you’re just starting out and don’t have any funding to speak of, you should probably look for freemium Java, Ruby, and PHP Platform as a Service (PaaS) solutions that can be scaled up as your business grows and your financing improves. As your funding progresses, you can transition from a PaaS to a more enterprise solution that has the agility and flexibility to accommodate any changes in your business.

  1. What are your budget restrictions?

Much like the legal structure of your business, the answer to this question will heavily depend on the funding you have available and the type of startup you’re running. As with previous decisions, the best solution for your startup will be found somewhere in the middle of how much you have to spend and the amount of features you need. You’ll also want to focus on time and flexibility here, as ERPs are much like wedding dresses—you usually pick one and get stuck with it for a while.

  1. How many resources do you have?

When you’re just starting out, there is a chance that your ERP solution will have to scale up as you do. This means that your business is going to have to scale up a lot faster than your solution, and this can be a tricky balance to strike. A great ERP solution for startups is one that offers ample features right out of the box.

Key Features of a Top ERP Solution for a Startup:

1) Scalability: Be able to scale up or down, quickly and simply

At the heart of every successful startup and business are clear plans for expansion, both in terms of geography and revenue streams. An ERP solution that is unable to adapt can easily cause major issues for these businesses. For example, a startup should be able to quickly and easily go from selling in one location to many of them simultaneously without having to pay tens of thousands of dollars to support the implementation of vendor’s new modules.

A cloud solution that is capable of integrating seamlessly with popular software like MS Office and Google is also highly desirable. Transparency and fast data entry are absolutely essential.

2) Security: Safe from viruses and hackers, both external and internal

Cyber security is an ever-present threat to businesses of every size, but it’s especially scary for start-ups. Startups are often at the mercy of IT professionals with limited resources. While knowing what to protect is key to avoiding malware and other forms of virtual attacks, even bigger businesses can be easily exposed to cyber threats.

Choosing an ERP solution based on Microsoft Azure can make a great deal of difference. With this kind of solution, there is absolutely zero worry or concern regarding security matters. You can sleep easy knowing that your data is safe in the cloud.

3) Budget-Friendly: Inexpensive up-front, saving you thousands over time

In any quest for data and financial intelligence, it’s critical to have clarity about all costs. Ideally, you want to invest in your ERP solution upfront so it’s free to scale, grow, and adapt alongside your business. ERP solutions vary in pricing from as low as $12 per user per month to as high as $150. How much you pay will depend on how much complexity you expect out of your product, and how many users you need to support.

4) Trustworthiness: Your data needs to be reliable and secure

Every single day, a company’s reputation is at the mercy of public opinion and client satisfaction. Are clients happy? Are employees content? How can you come up with answers to those questions, and more?

While transparency is important everywhere, it’s especially essential in the ERP solution you choose. If you can’t be sure your data is being preserved and secured, how can you have faith in your own security and stability? How can you trust the information on your CRM dashboard?

5) Simplicity: Simple-to-Use, simple-to-change

There are plenty of ERP solutions out there with dizzying amounts of features, including built-in collaboration tools, task management, automated data upload, and more. If you don’t have a specific need for these functions, why waste time and money on something you aren’t using?

6) Modern Design: A good-looking and intuitive user interface

A user-friendly UI can make all the difference in terms of efficiency. One of the fastest ways to lose customers is by having a clunky, confusing interface that end-user can’t relate to. The more reasons they have not to enjoy interacting with your new ERP solution, the greater are the chances that they end up giving up on your company.

It’s absolutely critical to choose a cloud ERP solution with a modern, clean design, a simple menu hierarchy, and a systematically organized interface. Everything needs to be within reach, and you mustn’t be required to memorize a bunch of shortcuts just to get your work done.

7) Support: 24/7 Live Chat Support, always reliable

No matter what your plans for your ERP solution are, you’re probably going to have questions and need some help getting started. Even the most intelligent choice can leave you with questions.

Give yourself the edge you need by choosing a top-notch support department. Whatever service you choose, make sure you have professional, prompt, and accurate answers whenever you need them.

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