The 5 myths of selling ERP to mid-market, family run companies

Over the years, I’ve heard many professionals in the software industry say that they dislike selling ERP software solutions to family-run businesses. I have a difficult time relating to them because I feel quite the opposite. I love working with and supporting these close-knit private businesses, since I feel they are truly the lifeblood of the American economy.

While many do have their idiosyncrasies, typically, this does not adversely impact the post-sale success of the ERP project. Family-owned environments tend to be very intimate, concerned about their information and processes being publicized and, of course, have a deep sense of commitment to both family members and staff. As with anything, there will always be exceptions, but generally these businesses are desirable and receptive audiences.

Recommended Reading: ERP Vendor Guide - Find ERP vendors working with mid-market, family run companies

Below are five myths that, from my experience, do not accurately portray the workings of a family-run business:

Myth 1: Family Members are Hard to Please

The passion of family members who work together is hard to beat. There is so much vested interest, closeness and camaraderie. Typically, interested family members are the ones who get involved along with their staffs, who are closely managed in these projects. When the job is done right, the outcome is highly appreciated. However, there has to be value to any ERP project, and it needs to be “served” with fairness, honesty and integrity. Positive outcomes increase the pride of ownership, and that is something which is continually important in dealing with this type of customer.

Myth 2: Family Run Businesses have a “Mom & Pop” Mentality

In many mid-market, family run establishments, there is a common trend of pushing education, and this creates a broader mentality and a drive toward more strategic and growth-minded thought. The “Mom and Pop” mentality is usually shed in the early transition of growth, as these businesses educate themselves, find stability and grow from small to stronger and healthier mid-sized enterprises.

Myth 3: Family-run Businesses have Difficulty Making Decisions

Family members may debate a lot more because of their vested interest, involvement and close relationship, but once the path of success is shown, they are very apt to determine direction. These decisions help to stimulate growth, improve bottom line results and enhance quality overall. At the same time, I have found that there is often a restrictive attitude of extending into unknown markets or expanding product lines very quickly. This approach may sometimes limit the speed of growth, but it also permeates a natural control mechanism that reflects good financial conservatism.

Myth 4: Family Owned Businesses do Not Pay

I’ve come across ERP professionals in the past who have claimed that have run into difficulty selling ERP to family-owned businesses, because they believe these organizations place themselves on stern financial restrictions and therefore, don’t want to pay. In my experience, it is quite the opposite, since both company name and family reputation are at stake and highly protected. While financial controls are often more emotive than structured in order to avoid waste, supportive documentation for services rendered tend to accelerate their desire to pay on time. There is often less reluctance with family-owned establishments to “put off tomorrow what can be done today,” since there is no obligation to shareholders.

Myth 5: Family Businesses do not Appreciate ERP

This view is typical of outsiders who have little understanding of ERP Software and the benefits of having a system in place. ERP is a necessity in mid-market businesses where control over areas, such as cost, quality and delivery are central to running the company. ERP is critical to good decision making and effective management over inventory, complex data, multiple locations, etc. Even though ERP can be complex, so are family run businesses, and they must adjust to their growing needs in order to remain competitive. The benefits of user friendly ERP software can easily be demonstrated with case studies that reveal the successes that similar size, family owned businesses have achieved.

Family run organizations will continue to grow in this post-recession economy, and I believe they are the cornerstone of job growth within the United States. Even though their characteristics may be peculiar to some, they are eager for growth and are the backbone of America and our rising economy.

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Joey Benadretti

About the author…

Joey Benadretti has over 30 years’ experience in working with manufacturers and distributors and has spent the past 25 years with SYSPRO, a worldwide producer of ERP software. Benadretti has extensive experience in working with senior industry consultants, analyst firms and editors and is extremely active in the software community.

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Joey Benadretti

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