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Sanitary Maintenance

The leaders of small businesses tend to have strong drives for independence and success, with high levels of vigor, persistence, and self-esteem. These individual have, if nothing else, an exceptional belief in themselves and their abilities to succeed. By their very nature, they are born enthusiasts, generating great ideas that burgeon into products or services. They are eager to accept risks and make mistakes; living by the adage that "he who never makes mistakes, never makes anything."

This willingness to take risks and assume the consequences is evidenced in a survey done by the U.S. Commerce Dept.: Of the one-million companies that are started every year, 700,00 survive their first year, 300,000 still exist after three years, and only 200,000 remain after five years. Ultimately only 90 percent of the companies started every year will survive long-term.

There are many reasons for failure, including inadequate management, insufficient R&D, and not enough marketing, but the most important are poor financial planning and under-capitalization. Often, it's not a problem of having enough capital, but rather using capital wisely on areas to grow the business. Many small businesses exceed their initial projections and then the principals scramble to pull resources together to get the business to the next level. Resources don't just include cash, but also people, equipment, and space.

ERP For Wholesale Distribution

Entrepreneurs who run small-scale wholesale distribution businesses are faced with even more challenges than conventional businesses. As margins gradually erode in many verticals, consolidation increases, and international competition continues to intensify, distributors must keep up.

In an effort to compete, the majority of wholesale distributors look to improve efficiency and streamline manual processes by implementing Enterprise Resource Planning (ERP) software to streamline every aspect of their businesses including inventory, purchasing, and account receivables.

Mid-sized and larger wholesale distributors are more capable of investing in robust ERP software and hardware, and have both the technical and functional resources to manage this investment. These distributors are also more inclined to manage and maintain the software and hardware in-house due to adequate resources, free cash flow, and the desire to keep all investments close to the vest.

However, for the majority of small distributors, limitations include scant technical and financial resources. Historically, most small-scale wholesale distributors have leveraged in-house, conventional accounting software packages, or simple spreadsheets to run their business. This allowed them to maintain their operations in a limited capacity, but did not promote growth.

Until recently, small-scale wholesale distributors had very few options in terms of investing in a viable ERP system, but with the advent of advanced technology, comes greater choice.

The SaaS Trend

Over the past few years, there has been a shift in the method of software delivery, referred to as Software as a Service (SaaS). SaaS is becoming much more prevalent due to the improved bandwidth for data delivery and the pervasiveness of high-speed Internet connections among small businesses. It allows companies to use software over the Internet in the form of a complete service. In most instances, there is no need to download software, and access can be gained by simply logging on to a central Web site or another Internet-enabled application. Applications that can be leveraged as an on demand service include word processing, CRM tools, and ERP applications.

Leveraging an ERP system is a necessary progression for wholesale distributors to continue to promote expansion, and maintain their position in actively served markets. This is especially applicable to smaller distributors who must take advantage of every opportunity that presents itself to maintain healthy growth.

SaaS Geared Towards Small-Scale Wholesale Distributors

The advantages of leveraging a SaaS to run a business include the relative ease of technical setup and implementation. The dramatically lower upfront capital costs required, which allows small distributors to keep more free cash flow and avoid the dreaded "under capitalization" dilemma.

Another major advantage is the hands-off approach in terms of managing and maintaining hardware severs, databases, and software. All of this allows small-scale wholesale distributors to run their core business as opposed to devoting time to administer the system.

The only certainty that can be applied to business is the concept of change. With the odds stacked up against small businesses and especially small-scale wholesale distributors, change in the form of technological improvements can be the key differentiator between the 10 percent that succeed, and the 90 percent that have to start all over again.

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