With all that’s going on in the world at the minute, it can be tough for business owners to prosper and scale their business.  Price rises across the board mean that owners are being more cautious when it comes to unnecessary spending.

It isn’t all doom and gloom however.  With measurable KPIs in place and a solid business plan, business owners can weather the storm and come out the other side.

Also, it is important to know what common business failures look like in order to prevent this from happening.

 

Main Causes of Business Failure

• Loss of Market – this could be due to a failure of knowing customer’s needs, the cost of running the business or even competition.
• Poor management of failure – that cliché – “fail to plan, plan to fail” is actually a very common cause of businesses closing.  This is a result of not keeping tabs on business performance.
• Too much debt – As a result of poor credit control processes, this further increases the debt as opposed to decreasing it.
• Cash flow issues – This could also be a result of poor credit control.

ERP Investment is Crucial to Business Success

Businesses can often spend too much time pondering over decisions that only affect the business owner directly.  As opposed to taking a step back and looking at the wider picture.  Additionally, these decisions are normally pondered with little to no actual data to make an informed decision.  Without this data, business owners are essentially guessing on important business decisions that could make all the difference between being a success and being a failure.

Thankfully, ERP is a solution that will provide you with this data.

 

How ERP Can Prevent Business Failure

ERP software can be used as a way of making informed decisions based on data.  The previously mentioned common reasons for businesses failing can be controlled using an ERP system.

Having an excellent awareness of the business’s financial circumstances as well as a foresight into potential issues will prepare any business and significantly reduce the likelihood of failure.  Chances of success are greatly increased if the business has some basic things such as having a plan in place and the business owner always looking for ways to improve.

 

What ERP Can Do

A great ERP system is able to assist when difficult decisions have to be made.  Here are some of the ways it can help:

 

1. Understand customers – A reliable CRM will allow business owners to understand their customers better.  This will then give them the ability to make better decisions about which customers to talk to, and which products to talk to them about.  This will lower sales times and increase the efficiency of sale processes.
2. Tight Finance Control – Automated dunning routines within an ERP system will help you keep a tight control of finances.  This then allows for the efficient management of bad debt.
3. Improve Cash Process – A cloud based ERP system will improve the time to bill within the business.  This improvement therefore allows businesses the opportunity to quickly collect money and boost cash reserves.  Also, cash flow can be measured more accurately and in real time.
4. Identify Profitable Customers – The identification of the most profitable customers for the business is a crucial area where ERP systems can aid success.  This allows sales teams to expand their efforts to the areas where the rewards will be the greatest.
5. Accurate Forecasting – Forecasting becomes an automated process that then becomes more accurate.  This is due to the reduction in misinterpretations of data or human error.
6. Real Time Reporting – An integrated view of your business generates solid and reliable business intelligence and meaningful reports.  These are produced in real time, at the click of a button.
7. Crucial Live KPIs – perhaps most importantly, ERP systems allow businesses to show live KPIs.  These KPIs that will be readily available allow for the management of exception thus decisions can be made faster.  It also means business owners can look for ways to improve the business and manage the performance of the business.

 

What Next?

If you are a CEO, FD or business owner who is worried about the potential struggles that may be upcoming, or you already recognise the need to put tighter controls in place, get in touch with Cofficient.

At Cofficient we can provide you with advice and support around your issues.  Our NetSuite solution can be tailored to your needs by our team of experts.