Finding the Right Technology Fit - Small Business Excellence
November 7, 2012
Finding the right technology fit for the multitude of small and medium sized businesses is not as complicated as you might think - Small Business Excellence
November 7, 2012
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Small and medium sized enterprises(SMEs), or small and medium-sized businesses, (SMBs) are companies with personnel counts falling below certain limits. The abbreviation “SME” is used in the European Union and by international organizations such as the World Bank, the United Nations and the World Trade Organization (WTO). In most economies, smaller enterprises outnumber large companies by a wide margin. SMEs are said to be responsible for driving innovation and competition in most economic sectors.
Standard Industrial Classification Codes differentiate between categories of industry. The SIC Code is a four-digit code the US government uses to show company sector specialization. The range of products represented is vast, from fasteners to chemical manufacturing to computer manufacturing and cosmetics. The list goes on from electronics to playground equipment; agricultural equipment and machinery, to firearms.
Finding the most effective technology solutions to handle such a wide variety of business practices reminds one of Goldilocks and the Three Bears. Goldilocks walked into the living room where she saw three chairs. Goldilocks sat in the first chair to rest her feet. “This chair is too big!” she exclaimed. So she sat in the second chair. “This chair is too big, too!” she whined. So she tried the last and smallest chair. “Ah, this chair is just right,” she proclaimed.
It is indeed a challenge to imagine how inventory management of boat manufacturers, HVAC installation and repair, and medical devices could be simply solved by a single solution. The industry sector nuances facing pharmaceutical manufacturers could not possibly be the same as plastic manufacturers.
Technology solutions to fit sector requirements
A more accurate indication of what these unique manufacturing and distribution firms require is better found by employee size. According to the official United States Department of Labor, Occupational Safety & Health Administration (OSHA) description of SIC codes, more than 88 percent of all manufacturing and industrial organizations have fewer than 250 employees. Seventy-one percent of these companies have fewer than 100 employees.
So whether biking equipment or lighting equipment, food manufacturing or apparel, the need for technology solutions is better captured by the size, scope, growth, and complexity of the organization.
In the United States, the Small Business Administration sets small business criteria based on industry, ownership structure, revenue and number of employees (which in some circumstances may be as high as 1,500, although the cap is typically 500).
Many millions of these small and midsized manufacturers started as home-based businesses or in very small operating facilities. Many generate under $250,000 in gross annual revenues and have simply turned to QuickBooks by Intuit for most accounting functionality. These companies are able to run business more efficiently and also use proven solutions that integrate with QuickBooks. For some of these very small companies the QuickBooks solution alone has been sufficient to streamline critical workflows, solve unique business needs like inventory and order management, and permit the owner to work anytime, anywhere and still access data.
QuickBooks owns an estimated 78 percent of the accounting software market. Analysts estimate there are more than 7.1 million copies of QuickBooks in use. By conservative estimates, more than 40 percent of these organizations directly need or could strongly benefit from inventory control.
Cost-effective lean solutions
Fishbowl Inventory has been the most frequently requested inventory solution for QuickBooks users for more than a decade. As small-to- medium companies grow and face increasing competition, the flexible cost-effective combination of QuickBooks and Fishbowl grows alongside SMBs regardless of the industry sector. These smaller firms need the same kind of inventory management large organizations enjoy at a more affordable price.
Too often SMBs, fearful of big price tags for technology solutions, stick with Excel spreadsheets, and even a roll of butcher paper and Sharpies to mark the business flow. The misconception for many owners of these dynamic companies is the belief that as small organizations grow, they must spend significant sums of money or undergo the learning curve to move to a bigger accounting and inventory platform.
Many companies, ranging from wholesale distributors, light manufacturers and service companies, quickly discover the benefits from inventory software and mobile inventory management. Inventory management can have a profound effect on the bottom line of many companies, including service organizations and other traditional companies that have yet to consider the possibilities of inventory software.
As companies are under competitive pressure to produce more with fewer resources, the search intensifies to locate a practical choice and an ideal solution for achieving maximum efficiency and profit for minimum costs.
Additional technology solutions often include a bar- coding solution to generate a mobile warehouse, allowing authorized personnel to view and adjust inventory levels from any location. The cost of shipping the wrong product or the wrong amount of a product is simply too great. Whether shipping or receiving inventory from one location to another, increasing inventory accuracy and worker productivity are vital to the growth and survival of SMBs.
Advanced inventory management and manufacturing software is designed specifically for small and midsize companies with 10 to 200 employees; these are often the ideal candidates seeking an integrated solution stepping to the next level beyond QuickBooks. Annual sales frequently average $2 million to $100+ million and it is common to find multiple warehouses or production facilities, regardless of the industry sector or SIC code. While some of these SMBs start with just a handful of users, typical users range from five to thirty employees using the inventory management solutions. Scalability is vital for rapidly growing organizations.
The next level
Often SMBs are not sure when to take the next step in technology. Waiting for production problems, delivery mistakes and out- of-stock supplies means things are out of control. Waiting for disasters is not the ideal timing to select additional technology (yet is often what prompts a small business to take action). An evaluation of the conditions causing an SMB to jump from a QuickBooks solution to add-on solutions such as Fishbowl, are detailed in the table opposite.
Thomas R. Cutler is the president & CEO of Fort Lauderdale, Florida-based, TR Cutler, Inc. Cutler is the founder of the Manufacturing Media Consortium including more than 4000 journalists, editors, and economists writing about trends in manufacturing, industry, material handling,
and process improvement. Cutler is a member of the Society of Professional Journalists, Online News Association, American Society of Business Publication Editors, and Committee of Concerned Journalists. firstname.lastname@example.org www.trcutlerinc.com