2. Whitepaper
Why do some companies grow faster than
others?
Have you ever looked at a competitor and thought, “How did they pull that off? They’ve been around as long as
us, they sell the same sort of products to the same customers and yet, somehow, they’re doing better.”
Businesses are fond of drawing comparisons with other companies. And why not? Competition can be healthy.
But it can also be a source of huge frustration for any company that feels they’re not really doing anything wrong,
yet can’t quite command as much market share.
It’s tempting to put it down to luck or good timing or some other external force. But in reality there’s nearly
always a straightforward answer: efficiency. The more efficient you are as an organisation, the easier it is to convert
opportunities into sales. And that’s the golden ticket. The trouble with efficiency – or, more precisely, the lack of
it – is that the less efficient you are, the harder it is to notice that you’re doing anything wrong.
Same business, different models
So which business are you? Are you the one maximising every ounce of resource, or are you losing precious
traction through archaic systems, bumpy workflows and steam-driven processes? Or more commonly, you’re not
sure.
Let’s compare two wholesale businesses to see where differences can be found.
Company A and Company B start the same way – their managing directors were laid off from permanent
employment. After the initial shock of redundancy and one too many hours of daytime TV, they take the plunge
and set up their own businesses. Company A’s MD, Adam, opts for the kitchen table, using the garage as a make-
shift store room; Rachel takes company B’s helm from the spare bedroom, carving out a small space to work
amidst all the boxes. Aside from those two small differences however, it’s an identical start.
As both companies start making sales, business grows. Adam (Company A), who’s a bit of a whizz in Excel, creates
spreadsheets to manage just about every aspect of the business, from customers’ details to order histories, stock
lists and sales projections. And this helps him keep track of things. For a while in fact, his sales start to overtake
Company B, whose MD (Rachel) is managing the business through a manually-intensive mix of traditional paper
bookkeeping and lists in Word.
A year on however, Rachel realises she’s spending more time with her head in the books than focusing on how
to build the business. She takes the decision to invest a little bit of capital and purchases a simple accounting
system. Adam is spending just as much time on admin, but his familiarity with Excel, his confidence in his
own abilities to create pivot tables and basic reports, and his reluctance to incur costs mean he accepts these
processes as ‘part of the job’ and pushes on in the same way.
Why do some companies grow
faster than others?
A brief look at how poor processes and poor systems deny some
businesses the opportunity to grow into market leaders
3. Whitepaper
Why do some companies grow faster than
others?
Playing catch up
This is where the two companies start to part company. The decisions they’ve taken at this point will dictate the
pace of growth for the next few years – one embracing technology; the other playing catch up.
Within a year or two, Rachel and her company (Company B) move into a dedicated warehouse and take on a few
extra staff. Despite a few seasonal dips, sales are now pretty steady. The visibility afforded her by her accounting
system means she’s been able to weed out bad debtors and that’s improved cash flow. Raising invoices now
takes seconds, as does reconciling the company bank account, and with the time she saves, she’s able to focus on
refining her product lines.
Company A’s doing okay. Despite a tough economic climate, he’s made reasonable profit. He’s still working from
home, which means overheads are less, but he’s starting to feel swamped by admin. He’s got a spreadsheet for
everything and each one gives him impressive information on little aspects of the business. But end-of-month
takes an age, and there are always errors to iron out.
You can see where this is going. Company A catches up eventually. Adam bites the bullet and invests in an
accounting system. He hires an admin person too, though ironically with the system up and running there’s less
for her to do than he expected. He’s still running reports in Excel, but at least now he’s got a better view of the
health of the business. And can see there are some holes that need addressing.
The need for centralised information
At her new premises, Rachel has taken on dedicated staff for each of the key areas in her business: stock keeping,
accounts and sales. With strong sales across Australia, she’s decided to open a new depot in South Australia to
cut down on freight costs. But there’s an issue. With distinct departments, she’s noticed a silo-mentality creeping
into the business. Each area has their own way of doing things and information isn’t moving around as freely as it
once was. The worse problem is that when customers call asking about an item of stock, Company B can’t provide
an instant answer – especially if they have to check with the second depot. And Rachel suspects customers are
going elsewhere rather than wait for an answer.
She realises they need a single, central database that all departments can access simultaneously, regardless of
whether they’re in the same building or in a different state. Sales leads, she argues, should be traceable from the
first telephone call to the last delivery. Order histories should be instantly accessible, and stock lists updated the
moment an item leaves on the back of a truck. There’s only one way to capture all this information. Rachel invests
in a business management system.
The truth, however, is that a good business management system will save a
business the cost of the installation or license fee many times over in terms of
reducing the number of hours wastedand increasing profitability.
4. Whitepaper
Why do some companies grow faster than
others?
When bad habits set in
That is a simplified journey of course. There are plenty of pitfalls along the way, even for a successful business, and
many exceptional companies fall victim to external pressures and market forces beyond their control. But what
the example highlights is that some businesses are able to recognise that inefficiency is a real and present danger
that, if left unchecked, can set in like a rot.
Whatever business you work in, it’s all too easy to get caught up in the day-to-dayintricacies – whether that’s
calling customers, reordering stock or chasing down debtors. And when that happens, you stop looking at the big
picture.
The market leaders out there are the ones who don’t have their head in reports, or under a pile of paper. They’re
the ones looking six months down the road, reacting to market changes and preparing new products that keep
their company ahead of the game. Unfortunately, the businesses that don’t have that long-term visibility – or
aren’t willing to invest in it – frequently miss out on opportunities to innovate and lead. And that limits growth.
Why are some businesses slow to adopt?
So if business management software can give you that long term visibility, why do some businesses take so long
to recognise its benefits?
For some, it’s a reluctance to embrace change. How many times have you heard the words, “That’s just the way
we do things round here”? Companies get stuck in a rut, employees – especially long term employees – become
entrenched with a certain way of doing things, and managers are sometimes too cautious to rock the boat. To
those businesses, there’s only one thing to say: any change is going to be difficult to implement. There’s never
going to be an ideal time to bring in a new system or process. But talk to the market leaders out there and they’ve
all taken the plunge at some point.
For others, cost is perceived as an issue. Adam at Company A is a case in point. He felt he could do all he needed
with Excel – so why add to the overheads with an unfamiliar system?
The truth, however, is that a good business management system will save a business the cost of the installation
or license fee many times over in terms of reducing the number of hours wastedand increasing profitability. Tasks
that typically take a business several days to complete (such as end of month reports or payroll) can be done in a
matter of hours.
Whether that cost saving translates into needing fewer admin staff, or freeing up sales staff to focus on generating
new revenues, it is undoubtedly there.
Quantifying savings
So where do the savings actually come from?
One of the biggest problems faced by businesses using systems like Excel, or running a number of different
systems concurrently, is the reliance on manual entry to ensure the integrity of the data.
In our earlier example, Rachel from Company B found that with an accounting system on board, she could
reconcile bank statement entries at the click of a button. The same process in Excel is both laborious and error-
prone. Scale the business up to 20 people and you don’t get an automatic reduction in the time it takes to
do things. In fact, as staff increase, inefficiency also increases. More often than not, employees simply end up
duplicating work that’s already been done. Where’s the sense in that?
5. Whitepaper
Why do some companies grow faster than
others?
i) Instant access
A business management system uses a centralised database. What this means is that when one member of staff
updates a record (for example, the address of a supplier), that change is there for all to see, instantly. There’s no
need for anybody to re-enter the information. As a result, accuracy goes up, and the time required to correct
mistakes goes down. How a business chooses to reapportion that saved time is entirely up to them.
ii) Better customer retention
The other key benefit from a centralised business management system is better customer retention.
A common complaint amongst wholesale businesses, especially those who hold large volumes of stock, is that it’s
very hard to know whether an item is in stock at the point a customer makes his or her enquiry. With a business
management system, stock levels can be updated in the warehouse the moment an item is shipped. This means
sales staff have up-to-date information to feed back to the customer there and then through the use of the CRM
(Customer Relationship Management) component, eliminating the very real possibility that responding with, “Err
… I’m not quite sure, let me check and get back to you” will result in the customer going elsewhere.
Even if the item isn’t in stock, real time information on when it will be means businesses can keep customers
in the loop at every stage of the order process. In a climate where loyalty is a long-lost commodity, that’s very
valuable indeed.
iii) Ability to make informed decisions
Perhaps the biggest advantage of any business management system, however, is the intelligence it provides
higher up the chain.
With up-to-date reports and snapshots of the business, intelligent decisions can be made. They can be made
quicker too, although the real bonus of real time data is the positive reinforcement it provides to key decision
makers. In short, managers can make informed decisions for the good of the business, rather than being forced to
take reactionary steps long after the opportunity has presented itself.
It’s this ability to be able to pre-empt market fluctuations, or changes in product popularity, that separates the
innovators from the followers. And it’s the innovators who grab market share.
6. Whitepaper
Why do some companies grow faster than
others?
Australia
1300 555 110
exo@myob.com.au
myob.com.au/enterprise
New Zealand
0800 696 239
exo@myob.co.nz
myob.co.nz/enterprise
GED91501/0813
You and your competitors
So in summary, do you feel your business has stagnated over the past couple of years while the competition has
got stronger? If it has, then perhaps your internal systems and processes are not working as hard for you as they
could.
Your inefficiency checklist
We believe there are a number of classic early warning signs that inefficiency is afoot. If you see any of these,
it may be time to talk to somebody about the benefits a business management system could bring to your
company.
Departments (sales, accounts, etc) are using different software systems or using lots of spreadsheets.
Year or Month end Reports or payroll creates a backlog that puts staff out of action for days on end.
You can’t get a snapshot view of today’s sales figures without asking someone else to compile a report.
You can’t see bad debtors – cashflow is critical, knowing who owes what and since when should be at
your fingertips.
Your sales people can’t access a history of customers’ previous orders, current credit status and
targeted specials.
Sales have been dropping off in recent months and you’re not sure why.
Stock is piling up in your warehouse and its affecting your cashflow.
You or your managers are spending more time than you’d like correcting errors.
Want to find out more?
This paper was produced by MYOB. To find out how MYOB EXO Business has helped companies like yours, why
not read one of the success stories. Or If you’d like an implementation specialist to visit you to discuss how EXO
Business can help your business grow, please get in touch using the contact details below.
