Does A Startup need an ERP
ERPNext Customer Mehta Herbs looks at their experience trying to use an ERP as a startup.
We are a startup based in Coimbatore, Tamil Nadu. We are engaged in the manufacture of aloe vera cosmetics. Though we were incorporated in 2004 a large part of the time was spent in product development, setting up of the manufactuirng unit and getting the licence for the same. During this period we used to carry out the administration of the Company using Tally and primitive systems of administration if one could call it that. Initial trial marketing was started sometime in 2008 and it continued till early 2011 to help us gain an insight into the market and make necessary adjustments to the product for market acceptability. It was during this time we became aware, that if we had to go in for full fledged marketing, we cannot continue with our old ways of administration.
Most of the transaction points like selling, POS, payments, receipts and deliveries we done manually. For every transaction the respective support document was prepared manually. This was done at various locations and was sent physically to the HO. At the HO we used to manually enter each transaction into Tally and then finally prepare the accounts. This is what I meant by being primitive in today's age and time. Our production was managed in an even more inefficient manner but we got away with it as the products were only being test marketed.
The Way Forward
It was during this time we thought that there should be a better way of functioning. Something that is more faster, efficient and meaningful. Someone suggested that we should invest in an erp and that should solve all our problems. The search began to find a suitable erp system. While reviewing some of them a common thought that used to come up was do we need all the complex functionality and was is it worth investing such a lot as most of the erp systems were costing a minimum of Rs. 2 lacs (US$ 4000) upwards just for the software, hardware being extra. Besides, some of them just could not handle the basic transaction requirement which we needed like additional cost of purchase. There was a lot of internal debating and finally we concluded that if we came across an erp that is functional and affordable we should give it a shot.
That was when we came across ERPNext. It was a google search which popped up the website and the first look was impressive. The cost was really less for one year plus it covered hosting, support and updates released during the year. This was too good to be true. We did not have to invest in new hardware, servers, static ip etc. and if that was not enough we also got an option to have our website from within the erp. This was far more than what we had bargained for and to be really frank I thought there would be some hidden costs which would suddenly surface once we signed up. Nevertheless after confirming the details and some clarifications regarding taxes, additional costs of purchase etc. we signed up for the 30 day trail. Since I had tried out various erp's I was familiar with how an erp functions and hence could go about the initial setup very easily. However, I still feel ERPNext is by far one of the easiest to implement and very user friendly. This fact was vindicated when my staff, for whom it was the first erp, were comfortable using it within a week of setting it up.
Journey so far
We went live in the middle of the financial year and are now using the erp for all our administration. All transactions related to accounts, purchases, sales and stock are being done with ERPNext. We are working on the website and plan to go live with it once we begin launching our products. The ERPNext team plans to have a web shop feature which we look forward to using for marketing our products. We plan to use the blog to update our customers about us and our products. We are also looking at using the manufactuing module comprehensively to help with our producttion. I believe this is going to be an area where the full benefits of using the erp would become apparent. These are features we were not looking for initially, but since they are part of the system, we think they would be beneficial to use. I think in that sense ERPNext adds a lot of value. And there were no hidden extras once we signed up.
Should a startup invest in an erp? The short answer is yes. If the business that one plans to start has a feasible business plan and as the promoter one has the passion to see through the business plan one should go ahead with investing in ERPNext. I really believe if we had something like ERPNext at the beginning stages of our startup we could have utilised a lot of the management time productively for getting the startup off the ground. We can see the difference the erp is making within six months of use which I think is remarkable.
I would also like to appreciate the team at ERPNext for coming up with a product like this which benefits SME's in many tangiable ways. SME's which form the backbone of most economies can really benefit with ERPNext as it is simple, comprehensive, affordable and the team provides very good support. It will help small companies to think bolder, bigger and compete in the marketplace. As the days go by, we look forward to using it more comprehensively in improving business productivity and using it to better manage the resources of our Company.
Mehul Mehta is an entrepreneur and the founder of Mehta Herbs, based in Coimbatore, India. He is an active user of ERPNext.