You’ve been pitched an ERP. Maybe by a consultant. Maybe by a software salesman who assured you it’s “the only solution that scales.” Maybe by a board member who remembers the SAP rollout at their previous company and thinks you need the same.
Here’s the uncomfortable truth: for most small businesses—those with under 100 employees, straightforward supply chains, and limited IT budgets—enterprise resource planning systems are expensive, slow to implement, inflexible, and often make day-to-day operations harder, not easier.
This isn’t an anti-ERP manifesto. ERPs exist because they solve real problems at scale. But scale is the operative word. When you’re running a business doing $5 million, $10 million, or even $20 million in annual revenue, an ERP is like buying a freight truck to deliver groceries: technically capable, wildly overbuilt, and a financial burden that won’t pay for itself.
This article breaks down what ERPs are actually designed for, the five major problems they create for smaller operators, when they genuinely make sense, and what to use instead if you’re not there yet.
What ERPs Are Actually Designed For
Enterprise resource planning systems emerged in the 1990s to solve a specific problem: how do you run a large, multi-divisional organisation with standardised processes across finance, procurement, manufacturing, HR, and logistics?
The canonical ERP—SAP, Oracle, Microsoft Dynamics, NetSuite—is built for:
- Complex, multi-entity accounting: Consolidations, inter-company transactions, multi-currency, transfer pricing.
- Manufacturing at scale: MRP (material requirements planning), capacity planning, BOMs (bills of materials), routings, shop floor control.
- Procurement workflows: Multi-tier approval hierarchies, RFQ processes, supplier scorecards.
- Compliance & audit trails: SOX controls, role-based permissions, detailed change logs.
- Customisation and extensibility: Business rules engines, workflow automation, integration middleware.
If you’re a manufacturer with 500 employees, three plants, and revenue over $100 million, an ERP is the right tool. It gives you visibility, enforces governance, and scales with your footprint.
But if you’re a distributor with 12 staff, a single warehouse, and revenue under $15 million? You don’t have those problems yet—and an ERP won’t accelerate your growth. It will slow you down.
Problem 1: Implementation Takes Months (or Years)
The promise: “We’ll have you live in six months.”
The reality: Most small business ERP implementations take 12–18 months, blow past budget, and require multiple rounds of scope renegotiation.
Why It Takes So Long
Data migration is a nightmare. Your existing data—SKUs, customer records, transactions, pricing—is messy. The ERP demands clean, structured, normalised data. Expect 2–3 months just cleaning spreadsheets and migrating historical records.
Customisation spirals out of control. ERPs are rigid by design. Your “simple” requirement—like generating invoices with a custom layout or handling consignment stock—becomes a customisation project. Customisations cost money and delay go-live.
User training is underestimated. ERP systems have steep learning curves. Your warehouse staff who could use the old system in 10 minutes now need formal training sessions, manuals, and ongoing support. Productivity drops during the transition period.
Integration with other tools is painful. If you use Shopify for e-commerce, Xero for accounting, or a third-party freight platform, you’ll need middleware or custom APIs to connect them to the ERP. Each integration is another project, another cost, another delay.
The Consequence
According to research from Panorama Consulting, the average ERP implementation for small to mid-sized businesses takes 16.3 months and costs 8.1% more than the original budget. For a $500K project, that’s a $40K overrun—and that doesn’t include lost productivity or opportunity cost.
When you’re a small business with limited cash and tight windows for growth, losing 12–18 months to an implementation is a strategic liability.
Problem 2: Costs Spiral Out of Control
The sticker shock isn’t just the licence. It’s everything around it.
Breakdown of Total Cost of Ownership (TCO)
| Cost Component | Small Business Range (3–5 year TCO) |
|---|---|
| Licence fees | $30K–$150K |
| Implementation services | $50K–$300K |
| Customisation & integration | $20K–$100K |
| Ongoing support & maintenance | $10K–$40K per year |
| Infrastructure (cloud or on-prem) | $5K–$20K per year |
| Training & change management | $10K–$30K |
| Lost productivity during rollout | 10–20% revenue impact for 6–12 months |
Total: For a small business with 20–50 staff, you’re looking at $200K–$600K over three to five years. And that assumes no major scope changes, failed integrations, or failed implementations.
The Hidden Costs
You’ll need consultants. ERPs don’t come with a setup wizard. You’ll pay hourly rates for implementation partners who configure the system, manage data migration, and troubleshoot.
Customisations lock you in. Custom code makes upgrades expensive. When the vendor releases a new version, your customisations may break, forcing you to pay for re-work or stay on an outdated version.
Licence creep. As you add users, modules, or integrations, licence costs increase. That $30K upfront quote becomes $60K within two years.
Opportunity cost. The money and leadership attention spent on the ERP could have gone toward hiring, marketing, product development, or inventory investment—activities that directly drive revenue.
Problem 3: You Need Consultants to Make Changes
Once your ERP is live, you don’t control it the way you controlled your old system (spreadsheets, lightweight SaaS tools, or simple databases).
The Consultant Dependency Trap
Want to add a new field to an invoice? Call the consultant.
Want to change a workflow? Call the consultant.
Want to integrate with a new carrier? Call the consultant.
ERPs are designed for stability and governance, which means they resist ad-hoc changes. This is great for a multinational managing thousands of transactions daily. It’s suffocating for a small business that needs to pivot quickly.
Real-World Example
A Queensland distributor implemented NetSuite in 2023. Six months after go-live, they wanted to add a simple reporting dashboard to track inventory turns by product category. Their implementation partner quoted $8,500 and a four-week timeline.
Compare that to a lightweight WMS or inventory platform where you can build a custom dashboard in an afternoon with drag-and-drop tools or a simple API call.
Problem 4: Features You’ll Never Use
ERPs are designed for comprehensive functionality. The problem? Most small businesses use 20–30% of what’s available.
Modules You’re Paying For But Not Using
- Advanced manufacturing: Shop floor control, routings, capacity planning.
- Multi-entity consolidations: You don’t have multiple legal entities yet.
- Complex approval hierarchies: Your business doesn’t need six-tier PO approvals.
- Project accounting: Useful for consultancies or construction firms, not for most distributors or e-commerce brands.
- HR & payroll modules: You already have dedicated payroll software.
The Complexity Tax
Every unused module adds:
- Licence cost (even if dormant, you’re paying for it in bundled pricing).
- System complexity (more menus, more configuration, more potential for user error).
- Maintenance burden (upgrades and patches affect all modules, even ones you don’t touch).
It’s like buying a Swiss Army knife with 47 tools when you only need a blade and a bottle opener. You’re carrying the weight of features you’ll never use.
Problem 5: Your Team Won’t Adopt It
Small businesses run on speed and flexibility. ERPs run on process and governance. The culture clash is real.
Why Adoption Fails
The interface is intimidating. ERP screens are dense with fields, tabs, and dropdown menus. Staff who were comfortable in simpler tools feel overwhelmed. Productivity drops, errors increase, and morale suffers.
Processes become rigid. Your warehouse supervisor used to adjust pick sequences on the fly based on what made sense that day. Now, the ERP enforces a predefined workflow. Workarounds emerge—staff start using spreadsheets again, defeating the purpose of the ERP.
Training doesn’t stick. Staff attend training, then don’t use the system daily for weeks. By the time they need to perform a task, they’ve forgotten the steps. Retraining is expensive and frustrating.
Change fatigue. If you’re a 20-person business, rolling out an ERP is all-consuming. Leadership attention gets sucked into the project. Other initiatives stall. Staff feel the strain.
The Consequence
Research from Gartner indicates that 55–75% of ERP projects fail to meet their original objectives, often due to poor user adoption. For small businesses with lean teams and tight budgets, a failed ERP project can set you back years.
When an ERP Actually Makes Sense
This article isn’t arguing that ERPs are always wrong. There are scenarios where they’re the right choice.
You Should Consider an ERP If:
1. You’re manufacturing at scale. If you’re running MRP, managing BOMs, coordinating production schedules, and tracking shop floor efficiency, an ERP is purpose-built for this.
2. You have multiple legal entities. Inter-company transactions, consolidations, transfer pricing, and multi-currency accounting are where ERPs excel. If you’re managing three subsidiaries across two countries, the complexity justifies the cost.
3. You’re highly regulated. Pharmaceuticals, medical devices, aerospace, and food safety require stringent audit trails, batch traceability, and compliance reporting. ERPs provide the governance and documentation you need.
4. You’re preparing for exit or IPO. Buyers and auditors expect robust systems. An ERP signals operational maturity and gives confidence that your financials are clean.
5. You’ve outgrown all alternatives. If you’ve tried best-of-breed SaaS tools—accounting, inventory, WMS, CRM—and you’re spending more time managing integrations than running the business, an ERP’s unified platform can simplify your stack.
The Test
Ask yourself: Am I solving problems I have today, or problems I think I’ll have in three years?
If the answer is the latter, you’re buying too early. Build for where you are, not where you hope to be.
What to Use Instead: The Middle Ground
For most small businesses, the right approach is best-of-breed SaaS tools that are purpose-built, easy to implement, and integrate cleanly.
The Modern Stack for Small Distributors and E-Commerce Brands
| Function | Tool Category | Example Platforms |
|---|---|---|
| Accounting | Cloud accounting | Xero, QuickBooks Online, MYOB |
| Inventory | Inventory management | Unleashed, Cin7, TradeGecko (now QuickBooks Commerce) |
| E-commerce | Online storefront | Shopify, WooCommerce, BigCommerce |
| Warehouse | Lightweight WMS | EQUOS, Sortly, inFlow |
| Freight | Shipping platform | Starshipit, Shippit, Easyship |
| CRM | Customer management | HubSpot, Pipedrive, Salesforce Essentials |
Why This Approach Works
Faster to implement. Most SaaS tools go live in days or weeks, not months. You start seeing value immediately.
Lower upfront cost. Subscription pricing spreads cost over time. A typical stack runs $500–$2,000 per month—manageable for small businesses.
Easier to change. Don’t like your inventory platform? Swap it out. With an ERP, you’re locked in for years.
Built for your use case. Purpose-built tools are designed for specific workflows. A freight platform understands carrier APIs and label generation in a way a generic ERP never will.
Integrations are mature. Modern SaaS tools integrate via APIs or native connectors (Zapier, Workato, or built-in links). You get 80% of the benefit of an integrated system at 20% of the cost.
Case Study: Northwind Network
Northwind Network, a Queensland-based distributor, grew from $8 million to $22 million in revenue over three years without implementing an ERP.
Their stack:
- Xero for accounting.
- EQUOS for inventory, warehouse, and freight management.
- Shopify for B2B e-commerce.
By choosing lightweight, integrated tools, they avoided $300K+ in ERP costs, went live in six weeks instead of 12 months, and maintained the flexibility to pivot quickly as their business evolved.
The Decision Framework: ERP or Not?
Use this simple rubric to determine if you’re ready for an ERP—or if you should wait.
| Factor | ERP Makes Sense | Simpler Tools Are Better |
|---|---|---|
| Revenue | $50M+ annually | Under $20M annually |
| Staff | 100+ employees | Under 50 employees |
| Entities | Multiple legal entities | Single entity |
| Manufacturing | Complex MRP, BOMs, routings | Simple assembly or distribution |
| Customisation needs | Highly standardised processes | Frequent process changes |
| IT capability | Dedicated IT team | No IT staff |
| Compliance | Regulated industry (pharma, aerospace) | Standard retail/distribution |
| Implementation budget | $200K+ available | Under $100K available |
If most of your answers fall in the left column, explore ERPs. If most fall in the right, stick with best-of-breed tools.
The Simplicity Advantage
There’s a reason startups and fast-growing small businesses often outpace larger competitors: they’re not slowed down by legacy systems.
Simple tools let you:
- Move fast. Implement in weeks, not months. Change tools when your needs change.
- Stay lean. Avoid massive upfront costs and consultant dependency.
- Focus on customers. Spend leadership time on growth, not system rollouts.
- Remain flexible. Adapt to market shifts without being locked into rigid processes.
Research from McKinsey shows that small businesses with simpler tech stacks report 30% faster decision-making cycles than those locked into complex, integrated systems.
In a competitive market, speed is a strategic advantage. ERPs trade speed for control—a trade-off that makes sense at scale but penalises smaller operators.
Try a Simpler Approach
If you’re a small distributor, e-commerce brand, or manufacturer with straightforward operations, you don’t need an ERP. You need tools that match your complexity, integrate cleanly, and let you move fast.
EQUOS is built for this exact scenario: inventory, warehouse, freight, and billing in a single platform—without the cost, complexity, or consultant dependency of an ERP.
No six-month implementation. You’re live in weeks.
No consultant lock-in. Configure workflows yourself with drag-and-drop tools.
No paying for features you’ll never use. Purpose-built for distributors, e-commerce brands, and light manufacturers.
See how EQUOS compares to an ERP. Explore pricing or read real-world case studies from businesses that chose simplicity over overkill.