Despite factors such as high inflation rates, labor shortages and economic uncertainty, companies are still finding ways to succeed and grow. How? According to Gartner, one of the main ways to build business resilience and ensure growth is by investing in digital initiatives. In fact, Gartner’s research shows that 89% of boards and CEOs agree that digital is a critical part of a business’s growth strategy.
But what does this mean for a company utilizing old software and lagging in digital transformation? Let’s take a look.
Why It’s Hard to Grow Your Business Without the Right Tools
Shawn Windle, Founder of ERP Advisors Group, explains to NexTec that “There is no way a mid-market business can be successful without an ERP.” Here’s why:
1. Lack of Staff
Most growing organizations, says Windle, do not have enough workers to take their business to the next level. That means that the jobs required to truly grow a business – like increasing sales transactions or improving a product – can’t get done without the help of tools to automate and streamline these (and other) business-critical tasks.
2. No Operational Flexibility
The most successful companies are the ones that can be operationally flexible and agile. “Everybody is changing their business model to not just do what they’ve done traditionally, but also to do brand new things,” says Windle. To capitalize on growing trends and to shift operations as required, businesses need the ultimate control and efficiency that modern software provides.
3. Data is Hard To Track Down
Higher turnover rates – particularly among long-term employees who are aging out of the workforce – means that a vast amount of institutional knowledge is being lost. “When the people you’ve been relying on, that know the business, leave, all that data walks out the door,” says Windle. The result? Huge drop-offs in productivity as new hires spend time tracking down the data they need to do their jobs. Modern tools like an ERP system makes data, processes and departmental information readily available for employees.
Enterprise Resource Planning (ERP) software, then, helps businesses do more by automating, streamlining and providing control of a company’s operations.
In this blog, we’ll look at:
- How most companies go about growing their business and some of the challenges they face, including real-world examples from a few of our customers.
- How business leaders like you can address the increasing complexities of a growing business with the help of modern technology like ERP software.
- Why a reputable ERP vendor and solution are essential to your success.
Growing Your Business
Business growth is the goal of any company seeking market longevity and solid profitability. Typically, growth strategies revolve around organic measures or through mergers and acquisitions (M&A), but some larger companies adopt both options as a way to expand.
Let’s take a brief look at how businesses grow and the challenges—and benefits—that accompany each growth strategy.
Organic Growth
Organic business growth is growth resulting from a company’s internal efforts to increase revenue, market share and customer loyalty using existing resources. Improvement measures may include optimizing business processes to reduce costs, investing in employee skill training, researching the market to find the most attractive pricing for products or services and revitalizing current products or creating new ones. Companies may also expand by establishing locations in other cities, states or countries, ensuring access to new markets and customers.
The benefits of growing organically range from complete control over decision making and risk management to maintaining the company’s values and goals—all while increasing output, efficiency and profitability. But while these organic methods accelerate growth, there can be few drawbacks, such as how long it takes to implement and to see results from organic-based initiatives. Another challenge is competing with companies that focus their resources on M&A activities.
M&A
Simply put, M&A is the consolidation of companies, either by merging them together to form a new company or by purchasing another company in its entirety. M&A as a growth strategy requires an initial—and large—capital investment. Though the upfront cost can be risky, the immediate returns include new markets and assets (e.g., instant brand recognition, a broader talent pool, additional resources, etc.) not requiring in-house effort or time. And M&A activity, whether “friendly” or “hostile,” boosts a company’s competitive edge.
On the downside, bringing together companies with varying business models and combining disparate finance and accounting processes is challenging. Also challenging? Blending diverse cultures without affecting employee morale and performance. And customers may be negatively impacted by potential price increases resulting from the merged company’s newly established control over the market.
Customer Example: High Bar Brands
High Bar Brands, LLC provides the commercial vehicle industry with innovative after-market solutions through iconic brands that include Minimizer and Premier Manufacturing. Although High Bar Brands was a growing and successful manufacturing company with multiple facilities, it had some major struggles. For example, each of its brands operated on its own legacy ERP solution, which meant they operated as completely separate entities. The aging infrastructure of each solution also prevented the brands from accessing and utilizing data, such as product margin data, in a way that would help inform better business decisions.
Says Jim Richards, VP of Operations, “In our old system, it was nearly impossible to identify our margin by product. We had to export data to Excel, and then perform additional inputs and several offline calculations.”
Implementing Acumatica Cloud ERP has allowed High Bar Brands to consolidate financial and manufacturing data from their three entities, slashing invoicing from four hours to 10 minutes and improving visibility.
“Now, we have [product margin] data instantly available and we’re confident in the accuracy of the numbers. Accurate product margins help us make smarter pricing decisions and informed assessments surrounding our whole supply chain,” says Richards. “We get exactly what we need from Acumatica. Plus, we can significantly scale the business without ever hitting its limits.”
And though High Bar Brands is successfully utilizing the software, they still tap NexTec for support. “[I] still pick up the phone and call our NexTec consultant with questions that arise or ideas I come up with. NexTec is a strong, strategic resource for us.”
Addressing Growing Complexities with ERP Software
You saw above that before implementing ERP software, High Bar Brands lacked a sophisticated tool that could help it navigate the chaos of rapid growth. Here’s a closer look at why ERP software is a critical part of your growth strategy.
How Does ERP Software Work?
ERP software acts as the hub of a company, connecting every department and its data into its centralized and synchronized database and giving employees access to updated, accurate information. Companies that are growing—either organically, via M&A, or both—have one system that works to streamline operations and improve business-wide efficiencies.
For example, companies that grow via M&A can use an ERP system to automatically account for multi-company transactions across multiple entities. The solution can provide consolidated financial statements that contain a record of a company’s combined financials. This information is required of public companies, but it also provides valuable insight into company-wide operations and shows which business units are performing best.
Organically growing companies suddenly dealing with more complex business processes and requiring a more sophisticated solution can effectively manage the increased customer records, orders, production, project management and more with a modern ERP solution. Users are able to eliminate duplicate data entry, ensure proper financial traceability and get a consolidated view of transactions across multiple business units, making consolidation reporting easier and more efficient.
Benefits of ERP Software
Here’s a look at some of the many benefits growing companies experience after implementing an ERP solution:
1. Financial Control
- Reduce time to close for month-end books.
- Remove dependence on third-party software with native functionality for fixed assets, sales commissions, payroll and more.
- Ensure financial compliance.
- Consolidate view of all financials across multiple sites, entities, currencies and even countries.
2. Embedded CRM
- Shorten sales cycles with tools for end-to-end opportunity management.
- Simplify lead generation or fundraising with executive marketing campaigns.
- Share updated information across departments for a team approach to customer management.
- Increase customer satisfaction with exceptional service.
3. 360-Degree Business Visibility
- Gain real-time and complete view of every aspect of a business.
- Identify processes and transactions as profitable or unprofitable.
- Improve product quality with insights into business processes.
- Make faster, more informed business decisions.
4. Mobile Access
- Access data 24/7 using a mobile app.
- Streamline expense reimbursement by approving requests on the go.
- Approve purchase requests and employee timecards at any time and from anywhere.
- Connect employees in the field to those in the back office.
5. Operational Efficiency
- Consolidate and streamline operations across multiple business units.
- Automate manual workflows and repetitive tasks.
- Collaborate and communicate with every department through a single solution.
- Utilize unified purchasing and financial data to buy items at a higher volume.
6. Scalability
- Add new entities quickly and easily.
- Separate business units under one corporate umbrella but still share relevant information (e.g., customer, supplier and GL data) with each unit while benefiting from enhanced analytics capabilities.
- Integrate additional ERP modules (e.g., POS or Service Management) seamlessly.
- Configure all applications based on growing requirements.
“You can’t grow without enterprise software. If your company is growing or has a desire to grow, to expand, to create new products in new markets, having the right kind of software enables that growth. It solves the easy stuff – like customer lists, vendor lists, AP approval workflows and inventory management – so you can then focus on the hard stuff, the growing of your business.”
Customer Example: Empire Candle
Empire Candle Co., LLC, is a full-service manufacturer of candles, wax melts and home fragrance accessories that’s been in business for over 60 years. Rapid growth over the years strained its manufacturing practices and manufacturing software.
“We have grown significantly, both organically and through acquisitions, but our manufacturing practices hadn’t been keeping up with the growth and were too complex to scale efficiently,” says Austin Mathis, IT Director. “We found ourselves over-buying, over-producing and over-extending.”
With help from NexTec experts, Empire Candle was able to optimize their existing Sage X3 solution and experienced a $400,000 annual savings by eliminating an entire overflow warehouse and a 30% decrease in production costs.
“As we pursue new business opportunities, we need to demonstrate our GMP (Good Manufacturing Practices) to potential customers. We recently went through a GMP audit and scored an amazing 94 out of 100,” Mathis says.
ERP and Your Business’s Growth Strategy
Whether your company is growing organically or by M&A, it’s time to consider implementing a solution that will help take your business to the next level. Not sure what’s next? Check out our blog to learn the 6 Signs Your Company Needs a New ERP or reach out to us. Our consultants offer free consultations to see whether our ERP solutions may be a fit for your growing business.