Growth is growth, right? Not necessarily. SMBs grow in many ways and face vastly different challenges from one another.
Some companies burst on the scene with an innovative new business model, and may even create entirely new markets in their wake. Others grow below the radar, hewing closely to their core capabilities as they expand into new territories. A third type of SMB focuses on its broader mission rather than a core product, expanding into new categories to better serve its customers.
In all three cases, a tailored finance solution can help your SMB meet its growth needs. Let’s explore how:
Innovators create technological and cultural change. They may start in someone’s basement with a hot idea, and suddenly garner $200 million in venture capital funding. Before they know it, they’re on their way to a billion-dollar capitalization.
That’s an extreme case, of course, but fundamentally innovators begin with a completely novel idea made possible by recent technological advances and grow rapidly from there.
Innovation-focused SMBs face stiff competition from the get-go because their business models may be replicated easily. They battle for customers, partners, and brand recognition. They must scale very quickly, but they must be nimble and pivot at a moment’s notice to stay ahead of the competition. They must be laser-focused on their value proposition and avoid any distraction from their core objectives.
They need a small business ERP cloud up and running from launch. They can’t divert focus and resources to build one from scratch. With a cloud-based solution, innovation-focused SMBs don’t have to worry about hiring a lot of IT talent that may or may not be available in their location. They’re not tied down by inflexible on-premises systems that never quite fit. Instead, they can purchase the computing power and business processes they need, when they need them, without tying up capital at the outset.
This type of SMB builds on its core competency by expanding geographically—for example, a regional construction company that grows organically or through acquisition. Companies with a chain-store or franchise business model also fall into this category. Empire builders rarely garner the attention of their disruptive peers. They may not have a sexy backstory or product. Instead, they rely on a proven business model that’s easily replicated at the pace they choose.
Companies that grow through geographic expansion face several challenges. The first, of course, is the increasing distance between satellites and the home office. These scattered entities must share data quickly and efficiently. If the growth is by acquisition, companies often face the problem of integrating diverse IT systems and mismatched business processes.
A small business ERP cloud addresses these issues at once. With a cloud-based system, users from Portland, Ore., to Portland, Maine, (or London or Singapore, for that matter) share data, business processes, and even user interfaces seamlessly and automatically. When the company adds a new location or division, that unit simply taps into the cloud solution. Think of it as a service like an electrical utility. It is size-agnostic and simply works without users and managers having to think much about it.
While empire builders grow geographically, brand builders grow by diversifying their product and service offerings to best serve their customers. These companies’ core competency is not a single product or service, but the ability to unite a broad range of offerings within a single brand. Brand builders can grow through licensing agreements, partnerships, acquisition, or in-house business development.
Brand builders often face many of the same challenges as empire-builders, including uniting disparate technologies and processes, and sharing data over long distances. But they often deal with greater complexity. Rather than owning their production and distribution, they typically must coordinate a broad range of multilayered supply chains, many of which falls outside their direct control. What’s more, they may operate across several entirely distinct industries, each with its own production cycle, infrastructure, and business processes.
As these organizations build parallel internal structures, they need to track cost- and profit-center activities. Cloud software allows a brand-builder to transition from a relatively simple organization to a more complex one as it branches out horizontally. Because data is centralized and shared, the cloud allows companies to interconnect as many processes as necessary, feeding data from one part of the organization to another seamlessly and automatically.
These days, growth doesn’t merely require quick scaling; companies must be able to scale instantaneously, with minimal business disruption. One week your procurement system supports 10 buyers, and then next week it supports 15. With the cloud, you get that change with a couple of clicks. The cloud is growth-agnostic, so no matter how you grow, the right ERP cloud solution can help you adapt.