ERP for Small Business – All You Need to Know

  • Post author:
  • Post category:Growth
  • Reading time:21 mins read
ERP for Small Business – All You Need to Know

Have you been wondering about getting an ERP software for a while now? This is an all-you-need-to-know article on ERP for small business, startups and SMEs in India. I will also talk about how to go about implementing it within your enterprise. ERP or Enterprise Resource Planning is a software that integrates all your processes in one place for easier management. Your small business should get an ERP soon for streamlining business processes and unlock growth.

In this blog:

  1. What is ERP for small business?
  2. What is an example of an ERP system?
  3. Is SAP suitable for small business?
  4. How is ERP used in small business?
  5. When should ERP be implemented?
  6. Free ERPs for small business
  7. 5 most important modules for an ERP for small business
    1. Finance and accounting module
    2. ERP for HR
    3. Sales and marketing module
    4. Customer relationship management
    5. Supply chain management

What is ERP for small business?

ERP stands for Enterprise Resource Planning. But what exactly does that mean? ERP refers to software that helps you run your entire business. It integrates the core processes of a company in one place. These processes include finance, accounting, HR, sales, supply chain, services and manufacturing among others. The software generally functions in real-time. It uses a common database for all its actions. Varied computer hardware and network configurations run such systems. Simply put, an ERP is a type of management software.

What are the types of ERP?

Enterprise Resource Planning Software can be categorized on the following three bases:

1. Range

The range of ERP software refers to which aspects of a business it can cover. These are classified into two types:

  • Full ERP- This ERP software caters to a wide range of industries at once
  • Industry-specific ERP- This one is useful when you want an ERP for a couple of specific industries

2. Installation and Maintenance

This takes into consideration where you want to install the software and how you plan on maintaining that further. The two types are as follows:

  • Cloud ERP- Cloud ERP allows you to access all essential business functions over the internet, via the cloud. You can opt for cloud ERP for small business.
  • On-premise ERP- In-house ERP software which you can install at your company’s location

3. Size of targeted business

According to the size of your business, you can categorize ERP systems into the following types:

  • Tier I- These systems are used for multi-millionaire companies. They address many complex processes and multiple industries
  • Upper Tier II- Small to medium companies can go for this ERP software. These companies usually operate in multiple countries but fall short in terms of global reach.
  • Lower Tier II- Systems in the Lower Tier II can also dish out to small or medium companies but with lower worth and reach.
  • Tier III- These ERP softwares are primarily for one particular industry need. For small businesses, these may be a good idea.

What is an example of an erp system?

When talking about ERP software, one cannot help but think of the big sharks. Two of the most famous and widely-used ERP systems are Oracle NetSuite, and SAP ERP. Oracle’s software is suitable equally for small, medium, and large enterprises. Adversely, the SAP ERP package supports and integrates almost all business process functions. These are some classic examples of an ERP.

Are small business and big business ERPs the same?

Essentially, no they are not the same. While comparing ERPs of small and big businesses, you need to acknowledge that ERPs for big businesses have been around for longer. ERPs were only an option for small businesses when the complex functions and costs came down a notch. There are mainly two reasons for this. To begin with, small businesses do not require extremely advanced, enterprise-level functions. Moreover, they cannot afford the high prices of big business ERPs.Again, small businesses are more adaptive to change. This is in contrast to how big businesses work. They generally follow a routine. Naturally, their ERPs are designed differently. The two businesses differ in their implementation methodology as well. Time is a vital factor in implementation as well as documentation. Big businesses way more documents for implementing an ERP software.

But nowadays with the option of cloud-based ERPs, the software is much more accessible to small business. For instance, Oracle delivers cloud-based ERP. It has also lauched JCurve ERP, a small business edition of NetSuite.

Cloud ERP vs. On-premise ERP

Speaking of cloud ERP, I would like to mention why it is easily accessible and how it differs from on-premise ERP. As I have already mentioned, the main difference lies in deployment. Cloud ERP is hosted on the server directly, and accessed through web. Whereas, on-premise ERP is locally installed on your computers and servers. The two vastly differ in costs. On-premise software is more expensive. Hence, it is equivalent to capital investments. A cloud-based software is pretty low cost, making it an operating expenditure. Although cloud ERPs can be a security hazard, the chances of that are much less nowadays. In recent times, they have rigid and secure standards. Also, they tend to be less customizable. On-premise software is easily customizable. It’s security is rock-solid too as they are upon the hands of companies themselves. Overall, cloud-based ERPs are the suitable choice for a small business.

Is SAP suitable for small business?

The moment you hear SAP, you think of large enterprises. While it is true that SAP caters to Fortune 500 companies, the fact remains that the majority (80%) of its clients are actually SME (small business and medium enterprises). SAP says it has a track record of helping more than 250,000 SMEs. Why is it suitable? Here’s how…

  • Cloud-based software- SAP aims at providing great customer experience with solutions and values to help them operate better. It provides cloud onboarding software or cloud ERP. This is where SMEs can benefit from SAP.
  • Global Bharat Program- SAP has recently launched the Global Bharat Program. It aids Indian SMEs to compete at a global level with the right digital technologies.
  • Code Unnati- Beside Global Bharat Program, SAP offers Code Unnati corporate-to-citizen digital literacy and IT skills development program. This initiative is to help boom digital inclusion in India.

As Kulmeet Bawa (President and MD, SAP Indian Subcontinent) says, “SAP will help SMEs thrive on the global stage“.

Overall, it is true that SAP is an ERP on the costlier side. Although SAP can be highly adaptive to your business, its huge costs can be a bane. But do not worry if your pockets look a little worn out right now. We have got you covered with free alternatives to SAP, further in this article. Keep reading to find out.

How is ERP used in small business?

ERPs are extremely important in today’s world. So what is ERP for small business? How can your ERP experience for small business in India be optimized? ERPs can be used as a management tool, customer relationship building tool, employee productivity tool, and more. Soon, they will be the lifeline of your small business, if you play it right. As a matter of fact, China “Made in China 2025” initiative lays great emphasis on ERPs as the ‘informational backbone of intelligent manufacturing’.

In this section, I will explain how ERP is used for a small business. You may be questioning in your mind, “Is ERP good for small business?” Listed below are the benefits of installing an ERP system, to clear your doubts.

1. Easy management

The essence of ERP lies in easing your management responsibilities. Installing an ERP lets you plan processes ahead of time and budget them accordingly. Healthy budget planning will enable you to predict and assess the financial health of your small business. Likewise, there will be faster reporting of business and financial matters. It saves you time and money.

Certainly, data forms a large part of how things work. You must be aware of how crucial data management is. Smart management of data can go a long way. It draws out better business outcomes, as a whole. With ERP small business software you can keep all your data in one place.

ERPs are also bound to help in monitoring regulatory standards. This refers to identifying all texts and regulatory needs of your business. Such regulations have a toll on your company’s safety, well-being, safety maliciousness, HR, etc.

Thirdly, with the right ERP, it will not take you long to identify opportunities. You can grab new chances as they come and plunge right into booming your small business. Do not stop there. Now take a look at the competition. With ERP, you can get an edge over your competitors. While you’re at it, take a look at the bigger picture. Where would you like to see your company in the near future? Use your ERP to reach there.

2. Risk-handling

In line with easier management advantages, you can identify and significantly reduce risks with ERP software. ERP systems are reliable and accurate. Consequently, the chances of you making errors would decrease. As you can predict events with the system, you would, therefore, have an upper hand at forecasting and avoiding possible risks.

3. Employee coordination

Since an ERP facilitates integrating all your processes under one roof, it boosts employee interaction. Your employees can seamlessly get in touch with one another on projects. Also, ERPs provide direct, online communication between two or more members of your company. This reduces the need for physical presence. Needless to say, it helps to cut corners.

4. Better customer relations

Indian employee shaking hand with happy customerWith an ERP you will be able to deliver products and/or services to your customers faster. This is backed by increased productivity among your employees, courtesy of a smooth ERP system. A modern system leaves an impression on your buyers. Customers should feel good about themselves when they are purchasing. This sense is induced when they have a high notion about the company. A good ERP Software will help you attain just that. Even better if you are a small business and are planning to lay hands on your first ERP. First impressions always last. Additionally, customers get the ease of access if the system comes with a digital assistant or a chatbot. This uncomplicates their communication with your company. Thus, building better B2C relations.

5. Forecasting demand and supply

Lastly, one of the focuses of ERP systems is to accurately predict demand and supply of the enterprise. It refers to some standard functionality, analysis, and professional demand planning. Furthermore, has to do with setting prices and studying demand and supply for making orders. The future demand is forecasted by a blend of statistical analysis, business sense, knowledge of events, and evaluating the salesforce. Similarly, sales for future endeavors can be predicted with factoring in buying patterns, latest trends, inventory, and consumer behavior.

When should ERP be implemented?

“An ERP sounds good, but when do I know that I need one?” I bet you’re wondering how to understand that you require an ERP. Worry not, because I have listed out 3 top reasons to get an ERP. Read on.

Rising number of employees

A larger workforce needs greater collaboration and management. This is especially important now given how difficult it can be to motivate your remote employees. You’re not expected to take all the weight on your shoulders. ERPs are here to the rescue. If you are a small business, exceeding the 50 people mark can be a tell-tale sign that it is time to install an ERP. If you find yourself struggling to delegate, not being able to keep up with employee updates, now is the time for an ERP software. Likewise, you will also begin to notice more unresolved employee issues. Your employees do not look motivated. They are unsatisfied. You have tried every trick in the book yet something is missing. If you check all these boxes, do yourself a favour and get an ERP system installed. Not only will it be easier for you to manage your staff, but inter-personal flow among employees will also enhance as well.

Raised funding recently

So you have raised funds for your business. What next? Well, go forward with sustainable and reliable ERP software for your small business. By now you know why it is crucial to install an ERP for small business. It will be an investment in more ways than you can fathom. Who will benefit from it? Employees – check, customers – check, vendors – check, you – double-check. And finally investors will also be happy – so triple check.

Exploding Customer Demand

You can see that demand for your products and/or services are growing by leaps and bounds. But now you’re struggling to meet said demands. If you are facing issues with inventory management, reporting to clients, and customer behavior, look no further. ERPs are the sure-shot way to put an end to these problems. After all, you have worked hard for your company to come this far. Do not let the celebratory event of amplified demands turn into a nightmare of not being able to deliver.

Note – If you are in the business for quite a while, you should consider opting for an ERP when your existing software is outgrown. Your previously installed system is as old as Queen Elizabeth but unlike her, it can hardly function any longer. With your business growing, your prevalent software is just not enough anymore. Besides, it is always better to have all your processes under one head. Do not hesitate to shift to ERP software. It will be worth it and how.

Free ERPs for small business

What is the best ERP for small business, you ask? We have got it covered for you. In this section, I will list some of the most cost-effective and best ERP for small business out there. Not only are these ERPs very efficient, but they are free too. Most of these ERPs for small business are open-source. Hope you soon find a dream ERP system for small business.

  1. ERPNext: ERPNext is open-source ERP for small business. It has a free-version and completely integrated. JavaScript and Python are used for its server-side framework.
  2.  Odoo: Ideal to grow your business, Odoo is an open-source, cloud ERP. You can just download it, as it is a free ERP for small business.
  3. Dolibarr: Dolibarr is another cloud-based ERP for small business in India. It caters to companies irrespective of their size, and more importantly, free-lancers as well. One of its main features is customer relationship management.
  4. ADempiere: This is released under a free license software. Adempiere in Italian means to accomplish and this ERP does justice to its name.
  5. Tryton: Tryton comes with a wide range of modules. Interestingly you can choose which modules to install. Installing all of them is not mandatory. It is a popular one. It also adheres to desktop clients like besides the web.

Additionally, the following software, though not completely free, offer you a free trial, and are two of the best for small businesses in India.

  1. Horizon ERP: This one is a dream come true for a business with a large number of invoices. It is a billing software with inventory and account modules. It has low maintenance, is speedy and trustworthy.
  2. Deskera: It perfectly suits the needs of an ERP for small business. It is a user friendly, one-stop ERP solution with affordable prices.

5 most important modules for an ERP for small business

Your ERP module should contain an application programming interface (API). API refers to an interface that defines connections between multiple software intermediaries. In other words, it sends a message from one software and receives a signal from another. APIs help in end-to-end automation. Such ERP modules also allow you to plug and play. It’s as thrilling as if sounds. Simply, it means no reconfiguration by the creator is required. You just need to connect the module to start working on it. Piece of cake, isn’t it? Your ERP software of choice must include the following five modules. Above all, they form the five pillars of a good ERP for small business. Lacking in any of these might lead you to purchase separate software for the left out genre.

1. Finance and accounting module

This component of the software manages the main accounting and financial aspects of your company. It gathers data to generate financial reports, audit statements, record transactions, and communicate financial matters to external partners. The module deals with all the money related aspects of your business.

2. ERP for HR

Any ERP system must have an HR Module. Without it will be impossible for you to effectively manage your fast growing human capital. The ERP for HR typically needs to manage the Hire to Retire process for employees

Good ERP for HR or HRMS such as Asanify provide end to end management of people processes. A good HRMS should based on a plug and play API architecture. So leading players such as Asanify play nice with all existing ERPs and finance tools (Zoho Books, Xero, Quickbooks, etc). You can get started for free here.

Typically the HR Module contains following submodules:

Recruitment Management or Hiring:

Attracting the right people to your company has never been more critical. So much so that building employer reputation is one of the core HR responsibilities. A good HRMS helps streamline the process of recruitment through like a CRM. This allows you to maintain a strong pipeline of good candidates.

Onboarding:

Asanify also provides a custom hiring site that allows candidates to fill in their own information. In effect, this saves a lot of HR operations time. Candidates can fill in mandatory information such as dependents data, upload past educational and professional documents, etc. directly on the custom site.

Attendance and Leave Management:

Given prevalence of remote working, having a modern system that allows integrated time management is critical. Asanify allows marking attendance as well as applying for leaves directly via HR chatbot.

Human Resource Planning:

Given the difficulties of an uncertain business environment, Human Resources Planning is a critical for success. A good ERP for HR should help in following ways

  • Track the headcount and HR related costs
  • Forecast future costs in coming quarters

Payroll:

An integrated Payroll platform helps businesses delight their employees and reduce administrative costs. The payroll platform needs to integrate with both the Finance module as well as the HR module.

Exit Management:

Managing employee exit is a very difficult process and smaller companies struggle with it. A good ERP for HR shall help in automating the exit management workflow. Asanify provides a highly customisable Exit Management workflow that includes the following:

  • Unpaid salary processing

  • Gratuity calculation

  • PF transfer

  • Leave Encashment, etc.

You can get started for free with Asanify here.

3. Sales and marketing module

This is very vital in tracking all records related to the actual sales that your small business is making regularly. You get to know which marketing strategies are boosting sales, and which are not hyped. You can tackle MRP, salesforce, and marketing tools all in one place. These will decide where your business finally stands.

4. Customer relationship management

This one lets you strategize better relationships with customers. As a result, you can build a good rapport with the market and potential buyers as well. Maintaining healthy customer relations gives a push to your products and/or services in the long run. After all, the customer is indeed the king. Read about best CRM for startups here.

5. Supply chain management

The supply chain management module of ERP aims at creating automatic demand on the reception of orders. It is a complete destination for tracking consumption, usage, deficits, delivery dates, for instance. Furthermore, a case study on a Jordanian pharmaceutical company reveals the importance of ERP for the supply chain management.

What is the current trend in ERP systems for small business?

Small business entrepreneur accessing ERP on mobile phoneIn order to get the best ERP for your small business, you need to be upto date with the latest trends. Only then will you be able to implement and integrate your ERP efficiently. Following are the top 3 trends:

  1. Mobile app for ERP: This had to be the top trend, right? Everything is now at the tip of your finger with mobile phones. Get instant real-time business updates wherever you are,w mobile ERPs.
  2. ERP integration in social media: Another no-brainer here. I, for one, am addicted to social media. There is so much new buzz everyday. Also, it is an ever-flourishing entity. Put yourself in the know with ERPs that provide social media integration.
  3. Software as a service: Abbreviated as SaaS, this refers to those ERPs which are web based. They do not need local installation. Say goodbye to days of IT employees coming over to install softwares. Needless to say, they are on the rise and here to stay. Furthermore, they can make on-premise ERPs obsolete in a few years.

How to choose the right ERP for small business?

Firstly, you need to comprehend the type of ERP that suits your business model. Among all the types you have come across at the beginning of this article, following are the most suited for your small business.

1. Cloud-based ERP

These are low cost and easily modifiable. Cloud ERPs rely on the web for functioning. As small businesses need to budget smart, and generally do not have a large operation or infrastructure, this type of ERP is a good fit.

2. Open-source ERP

The source code of such ERPs is publicly available. They can be freely accessed and customized. Open-source ERPs do not require a vendor. Hence, making it a great choice for your small business.

3. Free proprietary ERP

These are a limited version of a full-fledged ERP software. You can access free trials for a short span of time, before going ahead with the paid version. Small businesses can opt for these to see their options for the suitable ERP.

3. Proprietary ERP

Although these are fully paid ERPs, some of their suites are aptly suited for the different functions of a small business. If you have the resources, this can be a viable option.

You are done taking your pick from the above types. Next you need to measure how good a software is. What qualities does it have? The must-have qualities are:-

1.  Cost

Since, you are a small business keep in mind the costs for subscription or installation, licensing, maintenance, and customisation.

2. Scalability

Small business hold the potential to grow. Your ERP software should grow along with the business. It should provide room for development.

3. Integration

You should keep an eye out for the smooth operation of the ERP along with other softwares in your enterprise. They should not stand in the way of each other. The ERP should ideally bring together all operations under one head.

4. Customisation

Adaptability is vital for small businesses, and I cannot stress this enough. The ERP of your choice should be modifiable according to your company’s needs.

5. User friendliness

As more and more applications are taking to smartphones, look for an ERP which can be accessed on mobile. This will make it more flexible. Operations can be conducted quickly on the go. This way it becomes user-friendly as well. You can adapt user friendly modules and software on computers as well for ease of use.

TL;DR:

To sum it up, installing an enterprise resource planning software is the way to go. Especially ERP for small business. Why so, you say? Firstly, it takes a lot of load off your shoulders. Secondly, you will get a heads up for upcoming dangers. Thirdly, employees will have easier collaborations. Fourthly, you will establish a great customer relation. Lastly, it will help you estimate the future of your company. Who does not want to be a forecaster, right? Next comes sensing when you need an ERP. To do so, consider your company’s strength, funds, and demand. Find some of the best cost-effective ERP for small business, in this article. While you are at it, you should also go through the quintessential modules for your ERP to include. One such is ERP for HR. Get seamless personnel management with Asanify – the best HR and Payroll software out there for Indian small business, SMEs and startups.