Is free ERP software the best choice for small businesses?

Think about a small business.  It could be one that the owner has run alone for years.  It could be one that started up weeks ago but the owner has not yet hired the second person.  At a minimum, both need some accounting or bookkeeping software. That small business owner might consider an ERP system as they all include accounting and the other modules will be needed more urgently another day.  Then, a quick read of some business that spent millions on ERP that failed to meet the needs moves the thought to the back burner. I do not have millions today and will not for a long time. Time to think about plan B.

What are the business requirements?

Accounting will likely be a requirement.  Break that down more and consider whether SEC reporting and detailed cost accounting are requirements.  Bank reconciliations and cash receipts and expenditures might be the only immediate requirements. Are there sales orders to manage?  Does the business issue formal purchase orders? Is there any inventory to report on or manage? Talk to other business owners and read guides on ERP selection.  There is only the owner to make the list so use available resources to make the best list possible. Which of those needs are true requirements? Those few are the needs that require some system to manage.

Free ERP

Yes, it is true.  There are some free ERP systems available.  Some have limits such as a maximum number of users or a requirement the system runs on a computer in-house and not in the cloud.  For the price, your only support might be a PDF file downloaded with the ERP software. Be warned! There is no monetary cost but there will be some labor cost that will take time away from developing the new small business.  If a small business owner has some computer system expertise, and maybe a nephew who will help out for the cost of a take-out burger, this might be what is needed today.

BlueSeer, WebERP, Apptivo, Bitax24, and 2BizBox are all examples of ERP systems you can download and use at no cost.  Any of these could be a viable solution for a business that is short on cash and can afford the time commitment to upload existing data and learn how to utilize one of these ERP systems.

Should a business take this direction?  If one of these ERP systems answers all the immediate requirements for ERP that a small business has and has a good chance of providing for future requirements, the ERP is worth a look.

While an ERP might be more difficult to use than Quicken, it also provides a much more robust vehicle for analytical reports.  The accounting in an ERP will be double entry, which is more secure and dependable than any single entry accounting system. Even if in the future, this ERP needs to be replaced, all the setup to use and benefit from a more sophisticated accounting system will already be in place.

After accounting, which every business needs, these ERP systems include some CRM functions, inventory management, supply chain management, bills of material, work in process inventory and management systems, and more modules typically found in ERP.  Many small businesses might not need these features immediately but they will have needs as the business grows and develops. Since the free ERP includes them, there is no additional cost, only the time to learn the configurations and set up each module as needed to begin using it.

Check out the top free ERP systems in our free guide

Open source

These free ERP systems are all open source.  This means the source code is freely available to be modified to suit the particular needs of a business.  When the business needs include integration of another system with ERP, a good developer can make the integration quickly.

Cheaper in the long run?

It depends.  For many businesses, yes.  For many other businesses, no.  Each business needs to balance the cost of learning the ERP, configuring the setup screens with little support, and training future users on their own against paying for the same support.  If the free ERP satisfies the business requirements, it can be an excellent choice.

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Tom Miller

About the author…

Tom completed implementations of Epicor, SAP, QAD, and Micro MRP. He works as a logistics and supply chain manager and he always looks for processes to improve. He lives near San Francisco Bay in California and can be found on the water in his kayak or on the road riding his motorcycle. Contact Tom at customerteam@erpfocus.com.

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Tom Miller

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