ERP helps SME’s face biggest challenges

Common challenges SME’s face in the UK (and how to beat them with good ERP)

If you’re struggling with business growth, here are some helpful solutions to put into practice 

Firstly, we need to agree what constitutes an SME challenge?

 Let’s agree that ‘a challenge’ is any problem which arises and affects your profitability. Overcoming these kinds of problems will usually tie up management time which is a drain on the day to day operational resource pool. 

Worse than effecting the ‘day to day’ of the management structure there is a broader more detrimental affect which is having less time to view wider business challenges.

 

Managing overheads

Overheads can be like a hungry child that just wants a little bit more.  This can take the form of an increase on an existing overhead or the acceptance of a new one.  Often – small increases and additions are accepted and become part of the ball and chain that is the collective business overhead because there is simple not the time to sit back and consider what additional costs return to your business and what the alternatives might be.

Example

Whether it is a failure to regularly review your service providers and compare what you are getting against the rest of the market place or merely purchasing a PC from your usual source because it is ‘easier’ small businesses are regularly making a series of small (and sometimes larger) decisions based on a lack of information because there isn’t time to sit back, review and make a considered decision.

The solution:

Look at your spending and review what you are getting for you money.  Small decisions such as accounting software expenses, taking on yet another additional system (CRM for example) – often made in  department silos, can prove to be expensive ones.

Read this scenario – sound familiar?

A customer is a time served user of Sage 50 Accounts, the operations team needs MRP and adopt Cim50 manufacturing for Sage 50, the sales team requires CRM and adopts Hubspot but the project management aspect of their business is not met by any of these solutions hence the business also subscribes to Mondays.    Alas, the Hubspot and Monday integrations have not been paid for thus information has to be retrieved from 3 separate systems. 

Qi’s suggestion

Look at a single ERP that delivers ALL of this functionality in a single subscription cost from a single SQL database.  This capability guide for Dynamics 365 Business Central provides an insight into what a central, scalable, flexible, affordable ERP can do to digitally transform your business.

Monitoring performance

How do you measure performance? And, how do potential indicators illustrate that your team is performing to its fullest? If certain members of your team aren’t working as well as they should, your business could suffer as a result.

Example

A member of your staff’s poor performance is starting to affect the rest of the team’s morale, which has impacted their own productivity as a result.

The solution:

Detail a set of performance indicators that show how well your team and your business is performing. Rather than using simplistic finance indicators, it can be highly beneficial to identify, clarify and agree upon the expectations of respective teams. Identify how the results will be measured, monitor the progress made and evaluate performances at the end of the management cycle.

This sort of evaluation takes time and the better information you have available the more efficient analysis will be.

As an example, if you run a sales team either internally or externally how do you monitor the level of customer activity?

If you have a CRM that forms part of your core solution you will easily be able to report on individual activity and measure that against customer service delivery and new sales.

Often manufacturers need to know actual times against projected times for a job.  SME’s need to make sure they have a system that provides a good timesheet system and the ability to capture operations times automatically.

Listening to feedback

In the modern business world, your image and reputation can easily be affected by negative reviews online. Likewise, customers expect quick, effective customer service. It’s up to businesses to listen to the feedback they receive, so they can put themselves in a position to deliver satisfactory service to their core audience.

Example

There has been a complaint regarding customer service on a faulty product and this has resulted in a poor online review.  SME’s unique point of difference is often that customer service is more personal and effective than the larger more ‘faceless’ competitors.

The solution:

If you do not have one already consider investing in an ERP that provides both CRM and Service Management.  You can then easily monitor and measure the performance of a team and the performance of an individual.  You can assess the facts of the incident easily and respond to the complaint confidently and appropriately.

As a business owner you can then use this information to review why the complaint was raised in the first place reviewing the incident with staff in a constructive way to agree and implement improvements.

Responding to competition

 Once again – it is about promoting your unique points of difference. Often, your competitors will offer a very similar product or service and if you are tendering against a much larger business there will be scope for them to offer a keener price not only to retain their customers but to try to take yours.

 

The solution: 

SME owners need to make the time to constantly monitor their competitors. Understanding the competition enables you to:

• Be more innovative or creative with your product offer
• Identify their weak areas and excel where they do not
• In optimising your customer service in areas that you know your customers value the most your increase your chances of retaining them and attracting new ones.  Price is always a factor, but it is rarely the only factor.

Adopting new technologies which automate repetitive and mundane processes frees up time in your and your team’s day to focus on the important matters of product development and delivery and customer communications and service.  The right use of a good ERP will ensure that your MRP is accurate, your stock levels are right, and your approvals, proofs and controls are reliable and do not require high levels of human intervention.

Regulation, Compliance & Cyber Risks

Regulation and compliance within supply chains is becoming ever more demanding with security protocols and business continuity disaster recovery a key development in the last 5 years.

Accreditations within supply chain – winning business

Cyber Essentials Certification as part of your supply chain.  Many supply chains will prefer a supplier with Cyber Essentials Certification of ISO 2071.  If your business doesn’t have it and a competitor does – the scales are tipped against you immediately.  Business Central is secure and browser based.  Protected by the might of Microsoft’s data centre security it is also possible to extract a back up to an Azure blob if required.  Both Cyber Essentials and IS0 2701 is technically more straightforward and thus less expensive to achieve when using a modern, robust, Cloud based ERP such as Business Central.

Something as now commonplace as GDPR (2018 compliance) can be hard to keep on top of.

Dynamics 365 Business Central helps you comply with GDPR regulations to:

• Obtain explicit consent from customers to process their data by providing integration and customization capabilities to create notifications to inform customers about how their data will be used.
•  Respect data subject rights by supporting correction, erasure, or access of your customers’ personal data.
•  Enable portability of your customers’ personal data in a commonly used and machine-readable format.
•  Incorporate privacy-by-design and privacy-by-default methodologies into the design of your systems.
•  Increase data security by providing you with the ability to grant or restrict access to personal data at multiple levels and encrypting personal data in transit and at rest in Microsoft data centres.
• Enable audit trails to help document compliance with GDPR regulationsUncertainty

Finding the right staff

As the company grows and you see successes increase, you’ll hopefully get more of an idea of the kind of person who’s the right fit for your business. In a small business, skill and personality tend to be favoured over other qualities, but not everyone is going to be the right person for a given company. 

Example

You’ve committed to a long hiring process, only to find you’ve hired someone who isn’t the right fit for the business.

The solution:

Before, during and after the hiring process, it’s important to tailor your management style to the varying personalities in the office. Look to what works best for each individual; some enjoy working in groups, others are more content to carry out tasks on their own.

Introduce candidates to your team if possible, to determine how the dynamics may work. This may take the form of inviting the candidate’s would-be line manager into the interview process.

Create an environment where your staff can thrive. Be transparent with their expectations, concerns and successes, and create a work/life balance that ensures comfort and happiness throughout the team.

Avoid System Friction

Deploy efficient solutions for your staff to use.  Not only does this increase the productivity of the staff you have it enables you as a business owner to ensure that tasks than can be automated, are automated.  This results in not only the re-deployment of time to benefit the business but a body of staff who are greatly more fulfilled in their day to day and feel more valued as a result.

This article gives more detail regarding system friction and how this impacts businesses.

Retaining customers

 It is generally accepted that finding new customers carries an increased cost of sales over retaining existing ones.  More than ever, customer satisfaction is key and the key to customer satisfaction is best in class customer service.

Example

Most businesses accept that their product is not completely unique.  Often a product is one of a number available to customers in the marketplace.  So how can you keep your customers – yours?

The solution:

By using a great ERP that connects the dots between sales conversations and actual sales, drilling into products sold and sales patterns you can reach out to customers in a relevant way with your marketing material, ensuring that the right customer knows about the right offer for them at the right time.

A great ERP system like Dynamics 365 Business Central – will enable your staff to provide accurate answers when your customer gets in contact.  It will also provide you with an efficient process for dealing with customer complaints and returned orders. Business Central offers agentic AI to support the faster processing of sales orders for example.  As a Microsoft product it has a native relationship with Power Platform and BI which further support data reporting and sharing in the most relevant and accessible way, across your business.

Cash flow

 Whether it’s outstanding bills, unexpected outgoings, or pending payments, money problems can be a major issue. With so much to balance, maintaining a healthy cash flow is key to surviving as a business.

Example

The business completes a job and gets paid after a month. However, you’ve got infrastructure costs, employee salary and your personal expenses to consider too…

The solution:

A SaaS based ERP will provide the management team with the best information possible.  Dynamics 365 Business Central provides the following ‘out of the box’ and businesses can augment the standard set up to specify thinks like how often to update the forecast, the accounts to base it on and information about when you pay taxes.

• Cash Cycle
• Income & Expense
• Cash Flow
• Cash Flow Forecasts

Thought For the Day

Moving to an ERP is not just for big businesses.  ERP can and is scalable and affordable and will return the benefits you need to address your challenges.