In any economic climate, you need to understand what's going on inside your business in order to make sound management decisions. How much do you really know about your business?
According to experienced business coaches and management consultants, there are four common processes and information issues faced by most businesses:
- Complex spreadsheets
- Lack of visibility of real costs
- Unforeseen production bottlenecks
- Failure to meet delivery deadlines
Each on their own is problematic enough; when taken together and allowed to get out of hand, they're a disaster waiting to happen, particularly in a tightening business environment when there's little or no margin for error.
All four issues are inexorably linked by one critical issue - the quality of information you're getting from your finance system.
Most businesses start out with a basic accounting system like MYOB or Reckon Accounts. But as you grow, you start to exceed the capabilities of the system and begin to rely on increasingly more complex Excel spreadsheets to keep track of the numbers. Pretty soon, your internal finance team will be drowning in spreadsheets, and that's a big warning sign.
One of the most cumbersome processes within any finance team is the transfer of data and manipulation within Excel. Numerous studies across the world quote extremely high error rates – a fact that any longtime reviewer and user of Excel can readily attest to.
The solution is an Enterprise Resource Planning (ERP) system. However, the critical point here is that before you take this step, you must be able to adequately scope and plan a system that's right for you with the help of a business software consultant. If not, you could expose yourself to a whole new world of pain.
Replacing complex spreadsheets with a tailored ERP system will directly address the four issues highlighted above as well as deliver improved efficiency and productivity benefits:
- Data integrity will be improved dramatically, allowing you to make decisions with confidence.
- You'll know your real costs, enabling you to monitor cost creep within your direct costs and make adjustments to margins where market forces allow it.
- Production managers can make informed decisions about resourcing and employee overtime requirements, eliminating production bottlenecks.
- Constraints on production become instantly visible and the reality of achieving an order's required delivery date is visible for all to see.
While the current economic climate presents a number of challenges to businesses, it also presents an excellent opportunity to think ahead and map out a strategy for growth. That strategy should include an ERP system that gives you the insights you need to make informed decisions.
The business cycle will turn and when it does, you'll be ready for it. It all comes down to what you know.