Small businesses that replace inefficient manual systems with project management software reduce operating costs. Besides lowering costs, these tools help businesses improve employee productivity, resulting in better products and higher revenue.

That said, project management (PM) tools for small businesses differ in functionality, pricing and deployment. For instance, certain PM offerings are better for managing IT projects, while some solutions are more suitable for small marketing teams.

In this Buyer's Guide, we look at the core features, uses and benefits of small business PM software. Read on to learn what you should look for when deciding on the best PM tools for your business.

Here's what we'll cover:

What Is Small Business Project Management Software?

Common Features of Small Business Project Management Software

What Type of Buyer Are You?

Key Considerations

Market Trends

What Is Small Business Project Management Software?

Project management tools offer functionality that help small businesses plan and track projects on visual dashboards. These tools also serve as a repository of project related information and offer insights on employee performance and ROI of projects.

Small businesses that consult Software Advice for project management software have a low number of software users (less than 50), and are looking for an easy-to-use and cost-effective solution.

As a result, small businesses often choose cloud-based solutions that are available online, require no upkeep and offer intuitive interfaces with features such as drag-and-drop kanban dashboards. 

Drag-and-drop in a Trello board

At small businesses, choosing a PM tool is a decision made by a handful of people at most. While this can simplify the decision-making process, it can be challenging to understand what functionality a particular small business needs. Once you identify the features most important to your company, you can identify the best candidates.

Common Features of Small Business Project Management Software

What Type of Buyer Are You?

Research and advisory firm Gartner defines small businesses having under 100 employees and with less than $50 million in annual revenue. However, even within this broad category, the right PM tool for each small business differs based on factors such as actual number of software users, primary business challenges and so on.

Here are the three common types of small business PM software buyers:

• Individual buyers: Individuals can manage projects by using low-cost or even free solutions. Common capabilities include basic task management with the ability to set due dates and reminders. Some software options offer additional functionality such as file sharing for attaching documents to tasks.

• Best-of-breed buyers: These buyers are looking for software that solves specific challenges. For instance, one small business may be looking for a tool that helps improve team communication between project members working out of different locations. In this case, collaboration tools can be a good choice. On the other hand, small IT teams might be interested in bug tracking software, which is a specialized tool for tracking the time taken to resolve bugs in software.

• Full-suite buyers: Some small businesses need all of the common PM features, with support for multiple users and additional functionality such as attaching documents to tasks. Full-suite small business PM tools are different from enterprise-grade tools called project portfolio management software, which offer sophisticated functionality such as analytics and resource planning.

Key Considerations

As a small business, you want to invest in software that is low-cost, yet offers the relevant features you need. Likewise, you don't want a tool that employees need extensive training to use.

Here's are some of the top considerations small business buyers have when selecting project management software:

Deployment and availability: The first question when selecting software is whether to opt for an on-premise or cloud-based solution. For small businesses the latter option, also known as online project management software, is preferable as there are no upfront costs. If users are going to be accessing PM tools from Windows, Mac and mobile devices, you'll want an OS-agnostic solution.

Free vs. open source vs. low-cost: Many small business PM tools offer a free version with limited features. These are suitable for individuals, but not for businesses that need to track multiple simultaneous projects and users, and want full control over their project data. These businesses may be deciding between open source and low-cost tools. While open source PM tools are free to use, they can result in long-term costs since these systems have to be maintained on-site by a team member who has a lot of technical knowledge.

Integration: Last but not the least, small businesses should ensure that the PM tool offers basic integration with third-party tools that they use regularly. An increasingly important one is email integration, which allows project members to directly turn email into tasks. Similarly, integration with file sharing tools such as Box or Dropbox helps project members to easily attach notes and files to tasks.

Market Trends

From our research and conversations with small business project management buyers, we've identified these three emerging trends:

Agile project management: There has been a rise in specialized PM tools that help small businesses execute agile frameworks such as Scrum and Kanban. The reason behind this is the increasing popularity of agile PM, an approach that began with software companies but is becoming increasingly popular in businesses of all types.

Workplace collaboration: Social networking tools have changed how people communicate online. As a result, email has taken a back seat to collaborative tools that offer functionality such as comment threads for tasks, social chat groups, hashtags and ratings. Nearly all small business PM tools offer some level of collaboration, but some focus more closely on social media-like functionality.

Chatbots: An emerging trend in PM technology is the use of chatbots, which automate many different kinds of tasks. These can include project scheduling, booking online meetings, project status reporting and many more. The technology is relevant to small businesses as it's relatively cheap and easy to deploy.