Big companies run their entire businesses with enterprise resource planning (ERP) software that integrates all the key functions manufacturing, logistics, distribution, inventory, shipping, invoicing, accounting. The most important aspect of the process is the integration.
Too many small businesses, especially very small businesses, end up using individual programs for each function. The software isn't integrated and that causes all kinds of headaches. This was the challenge Jonathan Stark, president of Compulsive Paintball Inc., faced two years ago before he bit the, er, paintball and invested in small business management software from Everest Software Inc.
He began the company as a college sophomore, funding it out of summer earnings from McDonalds, and running it from his dorm room until he graduated in 2004 with a degree in computer science. By that time, Stark says, it was clear that Compulsive Paintball could be a serious business. He found a local bank to provide funding, opened the retail outlet and cranked up his online operations, filling orders from an 1,800-square-foot warehouse also in North Huntingdon.
The Integration Blues
At that point, he was using Intuit'sQuickBooks for accounting, online shopping cart software from MonsterCommerce and Stamps.com, an online shipping service. The lack of integration was a major problem. "I had to have somebody whose sole job was to take the orders from Monster and re-enter them into QuickBooks," Stark explains. "A double entry system greatly increases the possibility for human error. Then we he had to type the address in again to get it into Stamps.com."
It wasn't that the company was constantly screwing up orders, but Stark was frustrated with the software he was using. After he received the bank financing, acquiring serious business software that would provide "as much integration as possible" became a priority.
Stark looked at a bunch of possible solutions, including having custom software written to integrate Monster and QuickBooks. That was the low-cost option only $1,000 to $2,000. But then store and online inventory wouldn't be updated in real time.
It would mean that if he sold the last of an item in the store, it wouldn't show up online as being out of stock until the next time he synched QuickBooks from Monster. In the meantime, somebody might place an order for it online, thinking they'd get the product right away, only to be disappointed. No online seller wants to frustrate or disappoint a customer.
Stark also considered an integrated solution from Microsoft built around its Great Plains small business accounting software. It was too expensive over $50,000.
Cheaper than Competitors
E-commerce systems from COREsense Inc. and Infopia Inc. were briefly in the running. They have some features he would still like to see added to Everest, such as the ability to sell on eBay and through Amazon. And the initial investment wasn't much more than Everest from $25,000 to $30,000. But both products were pure e-commerce tools with no accounting, which was something Stark definitely wanted. The pricing also included steep monthly fees on top of the capital expense.
Stark admits now that the $22,000 Everest system, which included two servers and all the core software modules, was probably more than his very small company needed. "But I knew if I wanted to go to the next level, we would have to make this kind of investment." Plus, he had already been through four different solutions in three years while ramping up the business. The new system would have to be able to grow with the company.
And Compulsive Paintball did grow. Today it posts well over $1 million in sales a year and ships as many as 1,000 orders a month. The company still has exactly the same work force Stark and one full-time employee but now does five times the business it did in 2004. That's the ultimate testament to the effectiveness of the Everest software, he says.
The Everest system provides all of the e-commerce functionality Monster Commerce once provided and much more. Customers open an account and place an order. The order flows directly into the Everest accounting system so no more rekeying. "That's a huge, huge time saver right there," Stark says.
The system also automatically pre-authorizes customers' credit cards. In the past, the company would try to get credit card authorization after the transaction was completed. If the card was turned down, Stark or his employee would have to track the customer down to resolve the situation, sometimes adding days to the sales cycle and wasting scarce company resources. "We've never had a card declined since we started using Everest," he says.
Either Stark or his employee looks at every order soon after it comes in. Everest automatically checks the inventory on ordered products. If the company has plenty of stock on an item, it's color coded green on the order. If stock is getting low, it's marked yellow. And if the item is out of stock, it's coded red. As long as everything is green or yellow, they send it to the warehouse to be picked.
They print the order at the warehouse and use it as a reference for picking product. Compulsive does a second check after picking the order. Stark is a bit, well, compulsive about ensuring orders are correct. "Mistakes are expensive," he says. "If you have to have an order shipped back, it's at your expense, and then you have to ship out the correct items, again at your expense."
Once the order is assembled and verified, they scan a bar code on the printed order, which triggers the Everest system to print a mailing label with data pulled from the e-commerce system.
The Everest software has well-developed CRM (customer relationship management) modules, also fully integrated with the e-commerce system. Stark uses them in a number of ways. If an order requires special tasks moving an item from the store to the warehouse so it can be shipped to fill an online order, for example he may send his employee the task using the CRM system, and then monitor it to ensure it's completed.
The system automatically sends out e-mails at each stage in the transaction order received, order shipped, etc. And two weeks after shipping, the system automatically generates an e-mail asking the customer if there were any problems, directing them to the company's support line and asking them if they would fill out an online questionnaire.
Compulsive doesn't yet use the CRM system to automate marketing sending e-mails to customers to tell them that an item they purchased once before is now on sale, for example. But Stark does use the system to notify customers when a back-ordered item they requested is in stock. "What you do with CRM is limited only by your creativity," he says.
The company even uses Everest's payroll module even though there are only two of them on the roll. "The maintenance costs are maybe $150 a year," Stark points out. "So why not?" Besides, some day the company will be bigger.
That's one of the beauties of the Everest package. It's scalable. If Stark needs to add another employee, he simply adds another computer. "It will do everything we ever need it to do," Stark says. In fact, Compulsive is set to take another major step forward later this year when it adds about 8,000 square feet of warehouse space.
While he gives the Everest software high marks in many respects, Stark is not uncritical. Premium support is too expensive. The system took longer to learn and implement than most small businesses would find tolerable, he says. He has also had to do custom modifications to support PayPal payment and good search engine placement, features that should be built-in, he believes.
Still, it's hard to argue with what Everest has done for Compulsive Paintball. Sales of over $1 million with only two employees speaks of a very efficient, well-managed operation.
Based in London, Canada, Gerry Blackwell has been writing about information technology and telecommunications for a variety of print and online publications since the 1980s. Just for fun, he also authors features and columns on digital photography for Here's How, a spiffy Canadian consumer technology magazine.
|Do you have a comment or question about this article or other small business topics in general? Speak out in the SmallBusinessComputing.com Forums. Join the discussion today!|