Does your favourite START-UP need an ERP to become SMART-UP?

Most start-ups start lean with big ideas but small teams. Also, since most of the successful start-ups are based on innovation and industry disruption, the focus is always on planning, execution and launching the idea instead of starting to think about keeping track of capital raised from multiple investors and reporting operating results to those investors.  Technology is THE most important enabler for a start-up today and cash management is one of the less liked functions in most techies. They normally hate to be involved in financial management and would rather spend their whole time on fine tuning the ideas, finding buyers and doing software development to launch their ideas. An ERP is not only about accounting or managing finances but for a start-up the challenges start from here. Some of the challenges related to handling of finances and accounting can be:

• Compliance with complex accounting rules
• Handling deferred sales & revenue generation
• Chronological recording of financial transactions including investments
• Potentially rogue team members stealing data from their machines
• Long-time taken by team to determine revenue for a month
• Inability to accept money from customer in case of payment through credit card

Well, this article is not only talking about F&A challenges that Start-ups face. If we start talking about the challenges, they will be much more in the areas other than F&A and will present a much stronger case of having an ERP for a Start-up organization so that they start in an organized manner and are equipped to handle larger size of operations as and when they grow. It is more about the impact an ERP can make to a start-up to make it a Smart-up as fast as possible.

I know a founder (Ashish – name changed on request) of a start-up who started their business around 18 months back and are doing pretty well till now. Having acquired initial funding for their venture, they started growing and within a year, they reached a top-line of $6.5 Million. Ashish shares with me that they took an early decision to go for a cloud based ERP (believe me there are large number of ERP products available today which are being marketed as only for start-up and GOD some of them are too good) and feel pretty good about that. Ashish told me that small businesses like them are benefitting from ERP because of its ability to manage flow of information. The decisions that they were able to take quite early in their cycle were all because of ERP they selected and implemented (unlike traditional ERPs, these new crop of ERPs for start-ups take 4-6 weeks to implement bringing lot of value).  Streamlining back-office (procurement, supply chain, inventory, finance, human resources etc.) helped them focus on sales, improving market reach and measure customer satisfaction. You will be surprised to know that they doubled their revenue this year and in last six months, they have already crossed $7 Million revenue already and Ashish gives lot of credit to the ERP they implemented.

 When I asked him what he looked in the ERP product before deciding, he gracefully shared good insights such as:

 

• Availability on public cloud – mostly software as a service rather than infrastructure as a service
• Ability of the product vendor to guarantee security of data
• Cost Effective, easy to use and good support model (24X7)
• Ability to meet industry specific needs
• Own analytics dashboards
• Extent of availability on mobile devices
• Easy licensing norms & availability of exit clauses (with data return)
• Fast implementation period
• Ability to integrate with host of other systems

This is not an exhaustive list but since it has come from a real user (Ashish also acts as the CIO for their start-up), it has lot of value.

 

It would be nice to hear more comments and voices from other start-ups and ERP evangelists on whether ERP plays a definitive role in growth of a START-UP into a SMART-UP or it is just another software which brings some value to any company, be it start-up or not. Shoot!!