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The Hidden Costs of Inadequate Business Management Tools

When a business is first formed, the management needs to put in place some method of managing their business operations so they can keep track of sales, orders, inventory, invoices, purchase orders, and all the other activities needed to run the business.  At first, the business will probably be quite small and there probably won’t be a lot of capital available to purchase and install a complex ERP (Enterprise Resource Planning) software. Many business startups will often use very simple software tools such as Excel or Quickbooks to keep track of these activities.

This may be adequate for the initial startup of the business, but difficulties start to occur when businesses grow. The volume and complexity increases. The management of the business may believe that the tools they initially installed are still “good enough,” but what they may not realize is that their company has outgrown these initial tools and this inadequacy is creating hidden costs which is hampering the growth of the business.

Examples of hidden costs of inadequate business management tools:

  • Not enough inventory available, causing lost sales
  • Too much or wrong types of inventory that can’t be sold, leading to waste and scrap costs
  • Poor customer service, creating dissatisfied customers
  • Pricing which is either too high, or too low, causing either lost sales, or lost profits
  • Slow collection on invoices causing potential cash flow problems

Many of these problems can sneak up on you and you may not realize the extent that they are occurring.  So it is wise to periodically step back from the day-to-day activities for a brief period and really take a look at these problem areas and see if bringing in more sophisticated software tools is appropriate.

In the past, installing a sophisticated ERP system would require you to install hardware on your site to run on-premise software. And this would entail creating a whole new infrastructure to maintain this software and perform things like data backups, software updates, bug fixes, etc.  In addition, to the costs of the software itself, there will be additional capital and operating costs for the computer hardware itself and the necessary power, cooling, and floor space.

Fortunately, with today’s modern cloud-based software tools it is no longer necessary to pay an arm and a leg in order to obtain a good performing ERP tool. My Office Apps offers Kechie ERP, which is a complete, easy-to-use ERP software that runs on the cloud and gets implemented quickly. Kechie does not require any hardware or software installations, or the attendant infrastructure to support it. Since it runs on the cloud, we take care of the servers, backups, software updates, data security, etc.  Better yet, using Kechie does not require any up-front capital costs since payment for this Software as a Service (SaaS) only entails a very reasonable, per-user monthly access fee.

So, although you may initially feel that your customer business management software is good enough, we urge you to take a closer look to truly understand the costs of some of the operational problems mentioned above.  We think that these hidden costs may actually be larger than you think, while the costs of implementing a cloud-based ERP system like Kechie may be smaller than you think.  So you may be able to improve your business’s sales and profits by upgrading your tools.

My Office Apps has business specialists available who can help you evaluate your business and uncover improvement opportunities. Many folks on our team have been using ERP systems for many years under all sorts of different situations.  We have been in your shoes and we can leverage our experience to show how much difference a reliable ERP system can make in your operations.