Integration Challenges for Small Businesses: Part Deux

February 25, 2010, 5:00 am

Small Business Finance & Profitability

By William Stong

Continuing from last week, integration is a good approach for small businesses, although their size makes it difficult to achieve. Here are some other challenges:

● Outsourcing to multiple vendors

For excellent economic reasons, many small businesses either don’t have some of the functions that can be integrated (e.g., formal performance evaluations) or have outsourced them to companies that specialize in particular functions (e.g., bookkeeping, payroll). If components don’t exist or they are run by another company, it’s very difficult to integrate them so that they seamlessly complement each other.

● Little leverage

Again, small businesses are small. Even if they have a clear, realistic way to integrate all of their business functions to increase efficiency, they have little or no leverage with the huge companies providing the (outsourced) services. In addition, most of the large companies providing these services must standardize their service offerings if they want to make money on massive numbers of very small accounts. Rigorous adherence to standard product/service offerings is the way they are able to turn a profit on small accounts.

Bottomline: for small businesses, keep “integration” in the back of your mind as your company grows. At the right time, and size, you will be able to benefit from increased efficiency, lower costs, and profitable strategic growth.

Bill

William A. Stong

Email: william.a.stong@gmail.com

Telephone: 925-202-6244

Integrated Profitability Consulting^TM

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