Stop using spreadsheets to manage your business!

What are spreadsheets for?

The spreadsheet is an open application designed to help easily organize, analyze and manipulate data. Organized in rows and columns, data can be manipulated with a variety of formulas and 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 might use a spreadsheet to do things like:

• record inventory items and their movement
• capture customer history and look at customer purchasing trends
• create professional reports
• track revenues and expenses that your current accounting system may not do well
• bring together data from different systems
• perform detailed financial analysis

A spreadsheet is open, flexible software that is ideal for conducting business analytics using information that is fixed in time. It’s “blank canvas” software that is great for data analysis and planning.

Why spreadsheets are not effective in managing day-to-day operations

Make no mistake: a spreadsheet is not suitable for the ongoing management of accounting, quoting, procurement, inventory or other business functions.

Information saved in a spreadsheet is:

• often immediately out of date
  The moment you input or import information into a spreadsheet, it is probably obsolete. For example, customer transactions imported into a spreadsheet are instantly out of date because a new, more recent transaction may not be reflected.
• not necessarily integrated with other business systems
  A spreadsheet might be a handy place to store invoices issued, prospects to be contacted or inventory counted, but there’s no mechanism for it to be automatically updated when a client pays, a sales rep makes a sale or the inventory count changes.
• prone to error
  It’s exceptionally easy to make a mistake in a spreadsheet because it is possible to use the wrong version of a file and records can be easily deleted, added, over-written or incorrectly entered.
• most useful for modeling data and alternative business scenarios
  As a business tool, the spreadsheet is a powerful tool for planning, forecasting, and modelling alternative scenarios. It can help you test ideas and make plans, but it should not be the primary source for running your business in the day-to-day because of possible data integrity issues.

What about cloud-based spreadsheets?

While a cloud-connected 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.

It’s not possible to feed information from other business functions into the spreadsheet because there’s no mechanism for automation. And then there’s the issue of version controls and permissions when multiple people are handling the document. With so many limitations and considerations, the cloud-based spreadsheet can be every bit the dinosaur that the desktop-based version is.

What to use instead of a spreadsheet

No matter the size of your business, there are lots of tools available to help you manage more efficiently.

Cloud-based software is a popular choice because the technology is generally easy to use and adapt for your business and it can be accessible virtually anywhere. And most integrate with other systems.

For example, your customer relationship management (CRM) software can share data with your accounting program or your inventory management system, creating a lot less manual work for you.

Here are some of the most common solutions a business should consider as an alternative to a spreadsheet.

Accounting software

If you’re just getting started or you have a smaller team, an accounting solution may be all you need. That’s because accounting is the nucleus of all business functions. A good, cloud-based software will allow you to:

• issue invoices
• track payments
• track and categorize expenses
• prepare price estimates
• track time spent on projects
• generate financial reports
• integrate to banking data
• view real-time profit and loss and other financial data

Configure, price, quote (CPQ) software

If you’re constantly sending project proposals or price quotes to potential customers, it’s helpful to have a system that empowers you to do more than just create and store them.

CPQ software allows you to create professional-looking documents and has features that help you consistently improve the quoting process by inputting information and viewing historical data. And, if quotation systems are well integrated into other software, the most up-to-date cost information can be used to inform quotations.

Customer relationship management (CRM) software

Many businesses keep a spreadsheet with a list of current and prospective customers and manually update it from time to time. A CRM solution will help you manage your sales pipeline and all interactions with customers and potential customers.

These programs usually integrate with accounting software to make it easy to prepare invoices and price quotes. Again, integration of this data to accounting software will allow you to leverage customer history and develop strategies with more current financial information.

Inventory management software

With the right inventory management solution, you can automate your inventory and warehouse functions, making it easier to create forecasts and streamline your purchasing process.

Other software solutions can manage:

• production scheduling
• purchase orders
• RFPs/RFQs
• supplier relationship management
• human resources
• payroll

Make sure the software you choose can be integrated with other solutions

To get the full value of your software solutions, it’s critical to ensure they can be integrated with one another. This will allow for information to flow often automatically so that all systems are up to date. For example, you can create settings to trigger purchasing if your inventory management solution registers stock below a certain point.

Most popular cloud-based solutions have extensions or certified 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 heavy-duty software solutions that large companies use to manage everything from accounting to inventory to payroll to purchasing and beyond.

The typical path for most growing companies is to start building a software ecosystem that addresses each of the business functions and can be integrated to share information. However, having too many solutions and integrations can create security and data integrity risks for your business. Plus, multiple solutions need to be monitored to ensure they are all updated and continue to work well with one another. If you find yourself in this situation, it may be time to think about a business management platform.

Larger businesses that have grown significantly (and expect to continue growing), have acquired other companies, have multiple business lines or sell internationally may want to invest in a more advanced ERP system to manage all of the company’s functions in one system.

Stepping away from the spreadsheet

If you’re looking for more information on the next steps as you step away from the spreadsheet, please contact us anytime. We’re here to help.