Small Business Operational Challenges: How the Right Software Drives Growth
Running a small business means juggling finances, customers, projects, and people—often in real time and with limited staff. As an owner, operations manager, IT decision-maker, or financial leader, you’re often the one tasked with ensuring your business’s many moving parts work together cohesively—all while addressing the operational challenges small businesses face in today’s digital economy.
Let’s explore these common operational challenges and discover how implementing comprehensive small business management software, like Acumatica, equips you with the tools, resources, and information you need to overcome them.
The Hidden Costs of Operational Inefficiency
Being inefficient is one of the “don’ts” of business. Inefficiency is caused by poor time and resource management, and, as a business leader, your job is to champion efficiency and trim operational excess—including eliminating common pain points that make your initiatives fail. An equally, and often even more, expensive “don’t” is doing nothing to mitigate these operational inefficiencies, alleviate pain points, or bring your business up to speed with the requirements of today’s very digital, very fast-paced market.
“There are plenty of examples of small or midsized businesses,” says Acumatica’s SVP of Partner Sales, Sean Chatterjee, “that have faltered or have not achieved their growth potential because they have failed to make a decision and have not acted. They’ve chosen to sit on the sidelines as their competitors boldly and decisively transform their operations.”
But, of course, it’s difficult to boldly and decisively transform your business if you aren’t sure which choices will solve your specific challenges. You can easily get stuck between knowing you need to make changes and not knowing how—reaping the costs of operational inefficiencies and of doing nothing at the same time.
This is a frustrating situation—but it’s also fixable. Here are some specific small business operational challenges and their corresponding solutions.
9 Operational Challenges Small Businesses Face
1. Data Silos and Communication Breakdowns
Problem: Data silos occur when information is stored across multiple systems that are either entirely disconnected or can’t easily communicate with one another. This means team members in one department stay in the dark about what’s happening in other departments—breaking down communication, preventing collaboration, and hobbling your business. The problem compounds as you grow. Often, small businesses that reach the point of expanding into different branches or acquiring subsidiaries end up running those entities with multiple instances of the same basic software they were using before the growth spurt. By then, it’s no longer just employees or departments that are disconnected—it’s entire business entities.
Solution: You have to make sure every team member has access to the information they need to do their jobs. They also need to be able to communicate with each other knowledgeably, with a clear picture of what’s going on in the business. The simplest way to accomplish this is by implementing business management technology that connects all operations in a single solution. This solution should also offer customizable role-based dashboards, which update in real-time and display critical information necessary to each user’s job—like cash flow information for finance, inventory statuses for warehousing and sales, contract terms for project managers, and so on.
2. Manual Processes
Problem: Manual processes are time-consuming and prone to error. People make mistakes, need breaks, and deliver inconsistent performance, which adds up to poor productivity.
Solution: To keep manual errors from negatively impacting your bottom line and limiting your growth, look for business management software that provides automatic data capture (like automated invoice processing), process automation features (like accounts payable and receivable automation), and AI-powered anomaly detection designed to catch errors before they have a chance to become problems.
3. Customer Data and Relationship Management Fragmentation
Problem: When your business runs on multiple applications, your customer information also becomes scattered and unsynchronized, trapped in those data silos. This means your team members don’t have a clear picture of each customer’s history with your company, where customers are in the sales process, what concerns or questions they may have, and what they’ve been told by other team members during previous interactions.
Solution: You must ensure that your employees have accurate, updated customer data at their fingertips, which requires business management software for small business with integrated Customer Relationship Management (CRM) capabilities and customer intelligence. CRM software allows you to capture all customer information—from initial contact to after-sale support—so you can respond quickly to customer requests, streamline their journeys, and develop long-term, mutually beneficial relationships.
4. Project Chaos and Resource Misallocation
Problem: If you’re a project-based small business (e.g., in the construction or professional services industries) but don’t use unified project management tools, then you’re likely experiencing missed deadlines, budget overruns, and resource (e.g., people, equipment, and information) misallocation. The result is poorly managed projects and unhappy customers.
Solution: The remedy for project management mayhem is finding the right resource optimization and project management tools, including Project Accounting to track costs, manage billing, control change orders, and more—in a single system. You’ll need software that supports seamless project execution, full project visibility (in the office and in the field), and connected, real-time project data for all relevant stakeholders.
5. Compliance Risks
Problem: All businesses, regardless of size, have to comply with different types of regulations. These may be governmental rules, vendor-specific requirements, or guidelines established by industry, professional, or self-regulatory organizations. Insufficient information, data errors, and oversights can make you stumble into noncompliance or create occupational hazards.
Solution: Simplifying compliance begins with knowing what regulations apply to your business and controlling business processes in a way that fits those regulations. Modern business management software removes the complexities from compliance, giving you the tools you need to document safety protocols and requirements, track employee skills and certifications, protect your data from cyberattacks, establish product/service standards, ensure quality, and abide by financial requirements (e.g., keeping audit trails, complying with GAPP and IFRS standards, etc.)
6. Financial Blind Spots and Cash Flow Issues
Problem: Small business financial management is complex. You must account for all monies coming in and going out of your business and effectively manage your cash flow while potentially working with a limited budget. Without the proper financial management tools, you risk experiencing delayed reporting, limited visibility, inaccurate forecasting, cash flow concerns, and more compliance worries.
Solution: To avoid financial blind spots and cash flow issues, consider embracing automated accounting and implementing a business management solution that includes financial management software. Managing your assets, income, and expenses with automated workflows and accounting-specific features, including General Ledger, Accounts Payable, Accounts Receivable, Tax Management, Cash Management, and more, means you have the exact features and functionalities you need to fulfill your financial responsibilities.
7. Inventory Nightmares and Supply Chain Disruptions
Problem: Not every business manages inventory or deals with supply chain requirements, but, for those that do, inventory nightmares (e.g., stockouts, overstocks, and costs associated with both) and supply chain disruptions (e.g., supplier coordination failures) can—and do—occur.
Solution: The solution is business management software with modern inventory management capabilities. Inventory management software can help you increase inventory accuracy, simplify tracking and traceability, reduce costs, decrease stock overages and shortages, and enhance customer service.
8. Blind and Delayed Decision-Making
Problem: For small businesses operating only on basic accounting software (which is often the case for those just starting out), a major problem is limited out-of-the box reports that can’t be customized—leading to a lack of actionable insights. Not having sophisticated, personalized reporting leads to a dearth of knowledge, which lends itself to reactive management, and, eventually, missed opportunities.
Solution: Implementing comprehensive small business management software that covers all your operations—including and far beyond basic accounting—will give you a single version of truth, multi-dimensional analytics, and dynamic data extraction. Robust reporting and AI-powered capabilities also put the information you need to make strategic decisions at your fingertips.
9. Service Business Scheduling and Billing Chaos
Problem: If your business is a service business, then you understand the struggle that comes with efficiently scheduling appointments, tracking hours, and handling complex billing. Customers expect a smooth, seamless experience, which takes the shape of easy appointment-making, timely communication, and no billing issues. Should this not be the case, they’ll take their business elsewhere.
Solution: To ensure customer satisfaction and loyalty, you need to find small business management software that offers streamlined scheduling capabilities, automated notification creation, and advanced billing features, allowing you to provide hassle-free customer service.
Evaluating Software Solutions for Your Operational Challenges
So, we’ve established that investing in the right comprehensive small business management software is necessary for overcoming inefficiencies and boosting productivity and profitability. But how do you go about choosing what’s “right”?
As you evaluate your software solution options, you’ll need to ask yourself the following critical questions:
- Does the system offer seamless integrations with critical third-party applications?
- Does it offer industry-leading usability?
- Does it provide features tailored to my specific industry?
- Will it fit my budget and provide the return on investment I want?
- Can it scale with my growing business?
Why Acumatica is a “Yes” to Every Assessment Question
Built specifically for small and midsized businesses, Acumatica’s comprehensive, customer-centric, AI-first enterprise resource planning (ERP) solution can help you overcome the operational challenges you combat daily.
Our award-winning usability, growth-friendly unlimited-user licensing, and flexible, open architecture set us apart in the business management solutions market. Acting as your centralized repository and unifying your business processes in a single, cohesive system, Acumatica replaces data silos, blind spots, and chaos with streamlined communication, accurate automation, unparalleled visibility, and operational efficiency. You’ll also have up-to-the-minute data and AI-powered analytics with the click of a button, helping you make intelligent, real-time decisions so that you can scale without limits.
“With Acumatica,” says Schneur Perl, Senior Technical Project Manager and Business Development Manager at Sunshine Lighting, “we have the ability to take a problem and solve it, and take another problem and solve it, and then just keep solving problems as we grow and grow.”
“Acumatica gave us a heart in our business,” he continues. “We’ve found ourselves in a place where we can be proactive versus reactive. Acumatica is an easy-to-use tool that gives us the flexibility to do business our way.”
To learn how Acumatica can help your small business flourish and put an end to your growing pains, contact our experts today.