We understand why entrepreneurs use flexible tools like spreadsheets to run their businesses. But if you think about it, spreadsheets may be preventing you from performing certain functions more efficiently, or even limiting your ability to achieve scalable and sustainable growth.
Spreadsheets may prevent you from performing certain functions more efficiently, or even limit your ability to achieve scalable and sustainable growth.
What are spreadsheets used for?
Spreadsheets are an open-source application designed to help organize, analyze, and manipulate data easily. Divided into rows and columns, data can be manipulated using a variety of formulas, and it can be searched and sorted in many different ways. You can even create charts and graphs from the data to observe trends or patterns and gather business insights.
As a business owner, you can use a spreadsheet to:
record inventory items and their movements.
capture customer history and examine their purchasing trends.
create professional reports.
track income and expenses that your current accounting system may not be able to do properly.
gather data from different systems.
carry out a detailed financial analysis.
A spreadsheet is an open and flexible software, ideal for performing business analysis from fixed data over time. It is a "blank canvas" type software, ideal for data analysis and planning.
Why Spreadsheets Aren't Effective for Managing Daily Operations
Make no mistake: using a spreadsheet is not suitable for ongoing management of accounting, quotes, purchasing, inventory, or other business functions.
Data recorded in a spreadsheet:
are often immediately outdated.
As soon as you enter or import data into a spreadsheet, it is likely outdated. For example, customer transactions imported into a spreadsheet are instantly outdated, as newer, more recent transactions may not be reflected.
are not necessarily integrated with other company systems.
It may be convenient to use a spreadsheet to record invoices issued, leads to be reached, or inventory, but there is no mechanism to automatically update it when a customer pays, a sales rep makes a sale, or inventory changes.
are prone to error.
It is extremely easy to make a mistake in a spreadsheet because it is possible to use the wrong version of a file and entries can easily be deleted, added, overwritten or entered incorrectly.
are more useful for data modeling and other business scenarios.
As a business tool, spreadsheets are a powerful tool for planning, forecasting, and modeling alternative scenarios. They can help you test ideas and make plans, but they should not be the primary tool for day-to-day management of your business due to potential data integrity issues.
What about cloud spreadsheets?
While a cloud spreadsheet that can be shared with others is a slight improvement over an offline spreadsheet saved on someone's hard drive, it still has many of the same drawbacks.
There is no way to bring information from other functions of the business into the spreadsheet because there is no automation mechanism. There is also the issue of version control and permissions when multiple people are working on the document. With all these limitations and considerations, the cloud spreadsheet is a dinosaur, just like the desktop version.
No matter the size of your business, there are many tools to help you run it more efficiently.
What can replace a spreadsheet?
No matter the size of your business, there are many tools to help you run it more efficiently.
Cloud-based software is a popular choice because it’s generally easy to use and adapt to your business, and can be accessed virtually anywhere. Plus, most integrate with other systems.
For example, your customer relationship management (CRM) software can share data with your accounting program or inventory management system, significantly reducing manual work for you.
Here are some of the most common solutions a business should consider instead of a spreadsheet.
Accounting software
If you’re just starting out or have a small team, an car owner database accounting solution may be all you need. That’s because accounting is the heart of every business function. A good cloud software will allow you to do all of these things:
issue invoices.
track payments.
track and categorize expenses.
prepare price estimates.
track time spent on projects.
produce financial reports.
have a system that integrates with banking data.
view real-time profits and losses, as well as other financial data.
Configuration, pricing and quotation software
If you're constantly sending project proposals or quotes to your potential clients, it helps to have a system that does more than just create and log them.
Configure, price, and quote software, sometimes referred to as CPQ (Configure, Price, Quote) software, allows you to create professional-looking documents and has features that help you continually improve the quoting process by capturing data and viewing historical data. Additionally, if quoting systems are well integrated with other software, the most up-to-date cost data can be used to create quotes.
Customer Relationship Management (CRM) Software
Many businesses have a spreadsheet with a list of current and potential customers, and they manually update it from time to time. A CRM solution will help you manage your sales pipeline as well as all interactions with current and potential customers.
These programs typically integrate with accounting software to make it easier to prepare invoices and quotes. Again, integrating this data with accounting software will allow you to leverage customer history and design strategies based on more recent financial data.
Inventory management software
With the right inventory management solution , you can automate your inventory management and warehousing functions, making it easier to create forecasts and streamline your purchasing process.
Other software solutions can handle the following:
production scheduling
purchase orders
requests for proposals and quotes
Supplier relationship management
human resources
pay
Make sure you choose software that can integrate with other solutions
To get the most out of your software solutions, it’s essential to ensure they can be integrated with each other. This will allow data to flow automatically often, so that all systems are up to date. For example, you can create parameters to trigger purchases if your inventory management solution records a stock of goods below a certain threshold.
Most popular cloud solutions have certified extensions or integrations that allow them to work in tandem with other software.
When is it time to consider an ERP system?
You may have heard of enterprise resource planning (ERP) systems , also known as business management platforms. These are powerful software solutions that large companies use to manage everything from accounting and inventory to payroll and purchasing.
The typical path for most growing businesses is to start building a software ecosystem that addresses each of the business functions and can be integrated to share data. However, having too many solutions and integrations can create risks to the security and integrity of your business data. Additionally, you need to monitor the various solutions to ensure they are all updated and continue to work well with each other. If you find yourself in this situation, it may be time to consider adopting a business management platform.
Larger companies that have experienced significant growth (and plan to continue growing), have acquired other companies, have multiple lines of business, or sell internationally may want to invest in a more advanced ERP system to manage all business functions in one system.
