If you’re a small business, choosing the right software can be the difference between a streamlined operation and one that struggles to stay efficient, ultimately wasting time and money.
Here, we look at some of the software options available to small businesses so you can work out what’s best for your business.
Which software should you use to run your business?
Running a business usually involves juggling multiple roles, whether you’re managing finances, dealing with customers or keeping day-to-day operations on track. The right business software can streamline these tasks, making your life a lot easier, reducing admin and allowing you to focus on other parts of the business.
However, because there are multiple types of business software out there, it’s not always easy to know where to start. Below, we’ve outlined some of the key types of business software so you can decide what works best for you. Note that in many cases, you’ll probably want to use several of these tools, rather than just one.
Accounting software
Accounting software is designed to simplify business finances and reduce the risk of errors associated with manual bookkeeping and spreadsheets. Popular examples include Xero, QuickBooks and Sage.
This type of software can help your business track the money that’s coming in and going out, as well as work out how much tax you owe, manage expenses and even send out invoices.
Accounting software is particularly important if your business is (or will be) affected by new Making Tax Digital (MTD) rules. Under the new rules, qualifying sole traders and landlords must keep digital records and submit quarterly updates and a final declaration through approved software.
When comparing accounting software, look closely at the features available. These can include:
Bank reconciliation. This means the software connects to your business bank account and imports transactions. It matches these against records to reduce errors.
Payroll. If you employ staff, payroll features make it easier to pay employee salaries and calculate taxes and benefits.
Expense tracking. This enables you and staff to scan receipts and track and categorise company expenses with ease.
Invoicing. Create and send out invoices to clients and customers. Many tools also send automated payment reminders, so you don’t have to worry about chasing late payments, and some include online payment options.
Financial reporting. Some software platforms generate instant reports to enable you to see how the business is performing financially. These can include cash flow forecasts and balance sheets.
Tax preparation. Accounting software can help you prepare your tax returns and keep digital records in line with new MTD rules.
It’s also important to consider the ease of use for each platform and look at what customer support is available. Factor in the cost too – many platforms charge a monthly fee, with the amount you pay depending on the features you require and the number of team members that can access it.
Banking and payment software
Banking and payment software refers to the tools your business uses to hold, send and receive money. Although they are often grouped together, they work differently – banking platforms manage funds while payment tools let you collect money from customers.
Banking platforms can include Starling Bank, Monzo, or HSBC, for instance. These typically offer features such as spending insights and accounting software integrations. However, costs vary, with some offering free accounts and others charging monthly fees for access to advanced features and tools.
If your business regularly deals with customers or clients overseas, you’ll also need to check if the account permits foreign transactions and what fees apply.
Meanwhile, payment software is essential if your business accepts payments from customers online, in person or through an invoice. Popular examples include Stripe, PayPal and Square. These platforms support a range of payment methods including card payments, digital wallets and options such as Buy Now, Pay Later.
When assessing payment software options, think about how easily each one will integrate with any existing business systems, and check security features such as fraud protection. You should also compare the fees involved – these can include a monthly subscription cost, per-transaction charges, and international payment fees.
E-commerce software you can use to sell online
If your business plans to sell products online, you’ll need suitable e-commerce software to enable you to do this. This type of software helps you do everything from building a website and listing products to taking payments, managing inventory and handling orders. Examples include Shopify, WooCommerce and Squarespace.
Using e-commerce software will streamline your business processes from inventory to sales, and means your store will always be open across the globe. It enables you to create a functioning online shop without needing advanced technical skills, and many platforms integrate with payment providers such as PayPal and Stripe to securely process customer transactions.
Many platforms also monitor customer behaviour patterns, and can inform you of why customers typically abandon baskets and fail to check out, as well as which products are most popular. These insights can enable you to adapt your marketing strategy and build a more successful business.
Email and productivity software
Email and productivity software refers to tools that help businesses communicate, organise work and complete office tasks more efficiently. It usually combines email services with applications for documents, spreadsheets and calendars.
Many email and productivity tools are cloud-based platforms, so you can access them from any device with an internet connection. Well-known examples include Microsoft365 and Google Workspace.
Key features typically include:
Sorting and filtering. Automatically categorises emails, separating out important emails from spam and promotional content.
Task integration. Converts emails into actionable tasks or calendar events.
Templates. Provides quick responses or templates and automated follow-up reminders.
Cloud storage and file sharing. Offers centralised document storage for easy access.
Document creation and editing. Most platforms include tools for producing office documents, such as word processing, spreadsheets and presentations.
CRM software
CRM (customer relationship management) software is designed to help businesses organise and manage their interactions with existing and potential customers. It brings all customer information into one system, including contact details, communication history, and records of where each person is in the sales process.
CRM software can help businesses improve sales and customer relationships, understanding how each customer interacts with the business over time and including reporting tools to highlight sales performance and help you identify where improvements can be made. Common examples include Salesforce and Hubspot.
As with other software platforms you’ll need to compare the features available and the cost before deciding which option is best for your business.
Common mistakes and how to avoid them
When comparing business software platforms, it can be easy to fall into certain traps, so it pays to be aware of some of the most common mistakes to avoid:
Buying too many tools that overlap
With so many different types of software platforms to choose from, there’s bound to be an element of overlap in some of the features. But it’s important not to end up investing in multiple tools that perform similar functions.
For example, you could have separate tools for invoicing, expense tracking and reporting, even though one platform like Xero or QuickBooks could handle them all and save you money.
To avoid this, focus on the core functions your business needs now, while also considering how those needs might develop. Where possible, choose software that combines related features to avoid duplication. However, also keep in mind that using a small number of tools is often better than using one platform to do everything.
Not considering integration
When comparing software platforms, it’s important to think about how they will integrate with any systems your business already uses. If they don’t integrate, you’ll create a bigger headache for your business as you’ll need to manually transfer data between systems, wasting time.
Always check how each platform integrates with others before investing and make the most of free trials (which many platforms offer) before making a final decision.
Choosing more advanced software just in case
When choosing a software platform, you might be tempted to plump for the one that offers the most advanced features just to ensure you’re covered. But doing so could mean you’re paying for tools you simply won’t use and if the system is too complicated to navigate, your team might avoid it altogether.
To make sure this doesn’t happen, make a list of the essential features your business needs and prioritise software that offers these.
Failing to train your team
When new systems are introduced, it’s easy to focus on aspects such as setting up and migration, and assume your employees will work out how to use everything. In practice, this rarely happens.
If you are introducing new software, it’s important to ensure your staff are fully trained on the relevant platforms. This includes understanding advanced features as well as basic settings. For example, with accounting software, you might focus on basic invoicing but forget to tell staff how to use forecasting and analytics features. Doing so, however, means you’re paying for features that aren’t being used.
For this reason, it pays to set up regular training sessions to ensure all staff are fully up to speed.
Bottom line
There’s a vast array of software platforms for businesses to choose from, all of which can streamline processes, and save you time and money – if you use them wisely. To do this, you’ll need to take the time to consider which type of software platforms will be of most use to your business and which features are essential and which are “nice to have”.
Once you’ve made your list, you can then compare costs to see which platforms best align with your budget.
Frequently asked questions
Business software can help companies manage important tasks such as accounting, sales, customer relationships, communication and operations. It reduces manual work, improves accuracy and saves time.
Yes, business software can be hugely beneficial to small businesses. However, small businesses don’t necessarily need complex systems – in fact, they can usually get by with fairly basic tools at first, such as accounting software, email and productivity tools and an e-commerce platform.
The most important type of business software depends on the type of business you run and its size. For most, however, accounting software is the most important as it tracks income, expenses and tax obligations.
When comparing business software, consider which features are essential for your business to operate efficiently, and which are less important or won’t be needed. You should then consider the cost of each package to ensure it aligns with your budget.
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Rachel Wait is a freelance journalist and has been writing about personal finance for more than a decade, covering everything from insurance to mortgages. She has written for a range of personal finance websites and national newspapers, including The Observer, The Mail on Sunday, The Sun and the Evening Standard. Rachel is a keen baker in her spare time.
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