Small Business Alert!
You Cannot Grow Without Custom Software. Period.

There was a time after high school before I decided to pursue a career in software engineering where I didn’t know what to do with my life. I was, as it were, soul searching. During that time, I decided to work for my dad in his wholesale distribution business with the intention of giving the family business thing a try. It was there that I had my first attempt at dealing with business systems and I experienced my first lesson in growing a small business.

My father was a jobber that expanded to a small wholesale distribution business and carried his lone wolf practices into the way he did things once he got a dedicated warehouse. That is, he did everything by hand and kept track of everything in his head, which included handwritten purchase orders and invoices with carbon copies that he handed to his customers. They were those old “pink slips” that detailed their orders and balances.

When I started working with my father, I looked to leverage computers and got him started with using a software product called Peachtree Accounting. I set it up, entered all his products into the system, and began to show my father how he could print invoices with his logo on them instead of those handwritten sheets he’d been scribbling all those years. He and his customers were impressed, we scored a big win, and it seemed like the dawn of a new era. But my father could not wrap his head around the virtues of the technology, and he never allowed me to go beyond using it merely for printing invoices.

Everything was still maintained in his head, and he could not bring himself to relinquish control of his financials or his operations. As a result, he was not able to grow, and I left because there was no way he could increase his revenues enough for me to see a future in it. He made great money as a sole proprietor, but he couldn’t build a future for anyone beyond himself. Eventually, by the age of his retirement, he sold his business to some family members and that was that.

Commercial Off-The-Shelf (COTS) Systems

My father was unable to scale his business up from a one-man show plus a couple of paid employees because he was unwilling to accept the enabler to grow, which was the Commercial Off-The-Shelf (COTS) system I setup for him.

Today, most small business owners know that they cannot grow an inch without COTS applications, and they come in a myriad of choices. From accounting systems like Peachtree or QuickBooks, to CRMs like Sage ACT or Salesforce, to Point of Sale (POS) systems like Clover or Square, and more. Using COTS applications enable small businesses to grow orders of magnitude greater than the sole proprietor like my dad. So, using COTS applications is the first step toward growth but it doesn’t end there.

Innovation

Being satisfied with a successful small business is not to be diminished. I wish I had accomplished what my father did as a sole proprietor at the age that he came up. So, who am I to judge? But as I observed my father squash his growth, I now see the same thing happening with small businesses today. The fact of the matter is that Commercial Off-The-Shelf systems are not enough for small businesses to realize their full potential. The basic problem is that COTS applications fall short when small business owners get really good at what they do.

Why is that? Let me explain.

When a person becomes very skilled at what they do, they enter a phase of competence that gives rise to creativity. It is a level beyond just knowing how something is done and providing that service. It is a level beyond just knowing a product and then producing it. This is where a person becomes so good at something that they are able to come up with new ideas and new methods to deliver their value to the customer. When that happens, then suddenly, the COTS application is a barrier.

COTS applications become blockers because they don’t have the features necessary for owners to conduct business in the way that they know best. These are ways or methods that the creators of the system could not have anticipated because they are not in the business of your business. They are in the business of creating software that will handle 80% of the most common and generic use cases. This can leave the small business owner with great ideas quite frustrated.

How do I operate? How do I measure performance? How do I keep track of the relevant metrics that cater to the unique way I do business?

The small business owner either doesn’t know what to do and conforms with the status quo or employs various workarounds just to get by.

The first step is to recognize that this is a fantastic problem to have!

It means that the company is ready to graduate to the next level of growth, which brings me to the next topic I’d like to touch upon.

Signs You’ve Reached a Limit and You’re Ready to Grow

Here are six signs that you’ve reached a limit and you need to upgrade your tech to support your growth.

1. COTS applications don’t have the necessary features

   This is one of the most common signs. Already mentioned above, it is when you want to do business a certain way, but the software doesn’t have the features you need to operate the way you want to. You end up calling or emailing customer support, but they can’t help you.

2. The dreaded spreadsheet workaround

   This is a tactic employed in even the largest of corporations. You’d be surprised how much of what happens behind the scenes to deliver products and services to you is driven in some part by some person maintaining a glorified spreadsheet. Even if you have custom software for your business, it may lack some features and the infamous spreadsheet workaround is born.

3. Multiple COTS applications need to be integrated

   Another common scenario that occurs is when you have different generic COTS applications that adequately do their respective things but data between them needs to be shared. This is what we call systems integrations, and it is inevitable for small businesses to experience this challenge at some point in their growth.

4. Bottleneck processes

   When workarounds are implemented to deal with the shortcomings of the current operational systems, they can become bottlenecks in terms of efficiency.

   In one company I designed and implemented a solution for, they had a process that was all manually done through spreadsheets and was necessary to calculate complex fees charged to clients, but they would have needed to hire a lot of people to handle the manual process if they acquired more clients. So, they couldn’t acquire the customers they wanted because they couldn’t handle the load. In other words, the business could not scale.

   Once the process was automated it allowed the same support staff to process charges for many new clients thereby capturing revenue that would otherwise be lost. How much revenue? We’re talking hundreds of thousands to millions per year. What good is your product or service if your operations can’t handle the load due to some manual bottleneck process?

5. Lacking key data points

   Sometimes you want to know certain things by keeping track of something, like averages, ratios, and trends. However, your system doesn’t capture that information so you’re unable to produce the Key Performance Indicators (KPIs) or you’re unable to conduct the data analytics necessary to support your efforts.

6. Your business is hostage to key employees

   This one is tough. When your business entails complexities or nuances that take years to learn and you have an employee that mastered it but kept it all in their head, then you have a key employee with tribal knowledge. This sometimes happens because the business rules aren’t implemented in the system that you’re using nor are they documented. As a result, if that person leaves, you’re in major trouble. If that person stays, you’ll have to pay them more and possibly deal with a person who has a bad attitude. If the person is a good overall human being but leaves for some legitimate reason, is injured, or dies, then there goes your business anyway. It is a critical vulnerability to your business.

There are probably more disadvantages not listed here but this is enough to show that you have an opportunity for growth.

The Solution – You Need Custom Software

All of this is to point out that you simply cannot grow your business beyond a certain point without the use of customized business systems. Even companies that don’t have anything to do with technology need business systems tailored to their needs.

There are now haircut franchises where appointments are set online and handled with touch screens at their locations for check-in. Sure, you could get by without the tech if you’re the local barber. But if you have a vision to turn your local barber shop into the next “Men’s Buzz Cut” franchise with hundreds, maybe thousands of locations, then you need customized technology for that kind of growth. If you wanted a handful of locations around town that you own directly, you’d still need custom business systems to manage it all. You’d find it extremely difficult if not impossible to grow beyond a single shop.

It's inevitable that at some point, if you start experiencing those signs, then you need custom software if you want to grow beyond those limitations.

Every corporation that I’ve worked with over more than two decades has had internal custom software engineers because even though they already have a lot of custom software, they realize they need more. If you’re a small business that is growing and you don’t have a plan for custom software or at least system integrations tailored to your needs, then that’s as far as you’ll grow until you start to shrink.

The Big Leagues

A good book to read is Sam Walton’s autobiography. If you don’t know who that is, he is the legendary founder of Walmart. Sam Walton’s journey detailed in his book is nothing short of a Master Class in using custom technology to put his retail genius on steroids.

Sam Walton was into data analytics before anyone called it data analytics. He was into data analytics before there were computers that did it. The first spreadsheet product, Lotus 1-2-3, did not exist at that time. Software was catching up to Sam Walton not the other way around.

Walmart was the first company to work with NASA to put a corporate satellite in space. Why? Because Walmart was also the first company to have their own private fleet of trucks all connected by satellite. In those days, nobody thought K-Mart would be dethroned but Walmart thoroughly demolished them. Does anybody even remember K-Mart? Are they still around?

To give you some context, Walmart for many years was more profitable than Exxon Mobil. A brick and mortar, pre-Internet, retail company, outperformed an Oil & Gas behemoth in revenues. Let. That. Sink. In. How did they do it? Sam Walton didn’t allow his ideas to be limited by the current systems of his day. Walmart pioneered some of the practices that are now commonplace among the largest companies on the planet, which is a recurring theme you’ll see in his book. They built the finest custom-tailored software, warehouses, Just-In-Time inventory systems, GPS systems, and more to fuel the way that Sam Walton did retail. And he started with a single Benjamin Franklin franchise store in small-town Arkansas.

What company is the new Walmart of today? Amazon. And can you guess how they did it? By building custom technology that put Jeff Bezo’s genius on steroids. He is the Sam Walton of the current era.

A Road Map

You might be thinking, “But custom software is so expensive. How can I do that on a mere mortal’s budget? I’m not in the big leagues.” Well, I’m not gonna lie. Building custom software can be quite costly, but there is a way. Here is my advice for the up-and-coming small business.

1. Recognize that eventually you will run into the need for custom software in the future if your plans to grow are successful. Don’t look at it as a problem. It is a sign that you’re on the right track. If you start to have these growing pains, kudos to you … this should be celebrated.
2. Ensure that your business model supports this cost of doing business. If the only way you can grow is by a price with such a low margin that you can’t build the necessary tech when your sales are through the roof, then your business model is flawed. Make sure your revenues account for an abundance of capital to invest in custom business systems eventually. You may need to build your war chest over time, maybe years.
3. In the previous point, you make sure you have excess money to save. This point is all about actually saving it. Budget with your business systems in mind. If your business is thriving, make sure you keep a chunk of that money in a pot designated for investment into your future tech and don’t touch it. When the time comes to scale your business, you’ll have the necessary funds to support the custom software enhancements you need to grow.
4. Focus on revenue-generating initiatives instead of cost-cutting initiatives first. Cutting costs is good, but you can only go so far to minimize your expenses. Once you’ve cut the cost down to its minimum then that’s as far as you go. What you should be doing is looking for opportunities to leverage technology that will result in more sales. The Return on Investment (ROI) on your custom business system will then make sense. There is, theoretically, no limit to how much money you can make, but there is a hard limit on how much costs you can cut.
5. Get an assessment. At Knight Move Solutions, we offer free consultations. Maybe you’re not ready for a custom software project, but it would be good for you to have a road map. You can get an assessment by talking to a professional who will let you know what to expect and how to prepare. Maybe all you need right now is to investigate configuring your current system by calling the vendor’s customer support. Maybe you have an idea that you want to try, and you need to know the high/low cost of software so you can start preparing a budget for it. Maybe you need custom software now and you could afford it, but you didn’t know it was possible. Maybe you need custom software now and you thought you couldn’t afford it, but you can after calculating the expected ROI. The bottom line is that you need a road map. You need to know what you’re up against and you need to know how to get there.

Look, I’m a tech. Not a sales guy. And I’m not a sales guy partly because I didn’t want to ever be in a position to sell something I don’t believe in. This case is a little weird though. It’s not that I must believe in custom software for business to sell our service to you. Because that is not something that requires belief.

It is simply a fact.

Every business needs custom software at some point in order to grow. Period.

There’s simply no avoiding it unless you don’t want to grow. But you shouldn’t look at it as a problem. You should look at it as an exciting opportunity. Because the fact that it is custom means that nobody else has your idea or your way of doing things and nobody will have your tech to do it. If your product, service, or method of delivery is different and valuable, then the need for custom software isn’t a nuisance. It is your rocket ship, and the moon is your destination. So give us a call. Because we build rocket ships. And the moon is waiting … for you.