Choosing the Best Business Management Software for Your LBM Business: Industry-Specific vs. Generic

Struggling to decide between industry-specific business management software and generic accounting software for your LBM business? Choosing the right tool can significantly impact your operations and efficiency. This article breaks down the key differences to help you make an informed decision.

Running a building supply business requires managing complex tasks, from supply and inventory to accounting to customer relationships and sales. In the early stages, you might be able to manage these tasks with spreadsheets and separate software programs. But as your business grows through additional locations or SKUs, you'll likely need a more integrated solution to streamline operations and improve efficiency.

Additionally, you’ll likely run into problems that a generic system can’t perform certain tasks that the lumber and building materials industry needs, like units of measure. Instead of customizing generic software, which takes time, resources, and money, this is where industry-specific business management software comes in.

Both business management and accounting software can benefit businesses, but they serve different purposes. Here's a breakdown of the key differences between the two to help you decide which is right for your business.

What is business management software?

It's a comprehensive system integrating various organizational departments and functions. It typically handles a wide range of tasks, including:

• Accounting functions, such as AR, invoicing, purchasing and more.
• Inventory management, including purchasing, automated ordering, seasonal analytics, and warehouse management.
• Customer relationship management (CRM) includes loyalty programs, invoicing, quote management, project and job management, and more.
• Supply chain management – Specifically between LBM buying group catalogs using EDI.
• Sales, including ecommerce integrations.

Business management software incorporates these functions into a single system, providing a holistic view of your operations. This can improve efficiency and increase communication and collaboration across departments. For example, with business management software, your sales team can see real-time inventory levels, and your accounting team can automatically generate invoices based on sales orders.

Integrating business management software directly with an ecommerce platform is becoming increasingly important for dealers. A study found that 57% of dealers reported streamlined business operations after integrating their business management software with their ecommerce platform. These businesses were also 19% more likely to experience improved profitability.

What is accounting software?

Accounting software is a specific type of software designed to manage a company's financial activities. It can handle tasks such as:

• General ledger accounting
• Accounts payable and receivable
• Payroll
• Budgeting and forecasting
• Financial reporting

Accounting software can automate tasks and improve record accuracy. However, a key consideration is its integration with other business functions. Disparate systems require data entry and reconciliation across multiple platforms, leading to duplicate efforts. Managing separate software licenses and vendor payments can add complexity, even if some level of integration exists.

Beyond accounting: Essential features LBM businesses need

Industry-agnostic business management software is a step up from accounting software alone. However, for the unique building materials industry, certain functionality is key. Tallies, custom SKUs, EDI with buying group for custom catalogs, quote functionality, customer loyalty programs, etc., are unique to the industry. They can make or break the success of your business.

In summary, selecting the right software for your LBM business depends on your specific needs and growth plans. Industry-specific business management software offers comprehensive solutions tailored to your unique challenges, while generic accounting tools may suffice for smaller operations. Make an informed choice to enhance your business’s efficiency and profitability.

Which software is right for your business?

The best software for your business depends on your specific needs. Here are some general guidelines to help you decide:

• Small businesses: Accounting software may be sufficient for small businesses with relatively simple accounting needs or a limited number of SKUs. Many affordable and user-friendly options are available.
• Growing businesses: As your business grows and your operations become more complex, you will eventually outgrow your accounting software. At this point, you may want to consider implementing business management software. It can help you streamline operations, improve efficiency, and better understand your business performance.
• Large businesses: Large, complex businesses like lumberyards can reap significant benefits from implementing business management software. This is especially true when tailored to their industry, it offers the scalability and integrated functionality necessary to manage a large organization effectively.

Here are some additional factors to consider when making your decision:

• ROI: Business management software may look more expensive up front, however, the long-term efficiency gains from the software’s ability have been proven to offset initial investment cost.
• Business needs: Carefully consider the needs and goals of your business. Whichever software you choose should help you achieve your goals.

Conclusion

The LBM industry is increasingly investing in new tools. Software providers are responding by constantly developing new platforms and add-ons to meet this demand. While this offers dealers a wider range of options, it can also be overwhelming (the downside). This makes it challenging for dealers to identify the solution that best suits their needs.

Business management and accounting software are valuable tools for businesses of all sizes. However, they serve different purposes. By understanding the key differences between them, you can decide which software is right for your business.