As seen in:
Svoboda's Home and Small Business Review
November, 1998
revised: July, 1999>

2000 Myths and Facts - A Small Business Guide

by William R. Stocking

On October 19, I had the opportunity to give a presentation for the Illinois Small Business Development Center Network Conference, and event also attended by managers of the regional Small Business Administration offices in Chicago. What follows is a small part of that presentation with minor revisions to bring it up to date in mid-1999.

At the core of my doubts about small business survival is an understanding of how the entrepreneur and small business owner thinks about risk taking and risk assessment: Risk taking is in their blood - Risk assessment is not! If it was they wouldn't be running their own business in the first place.

The basic credo expressed by nearly every entrepreneur is: "I am extremely hard working and very resourceful therefore I can survive anything." On the whole, this is a very great asset but it can also cause dangerous blindness to impending catastrophe.

The year 2000 situation as it applies to small business must be viewed in this light. Many small business owners start out with the frailest of business plans so why should we think their year 2000 plans are much different? Optimism reigns supreme, but common sense is sometimes in short supply.

Unfortunately, it's not being made any easier by the continuing misrepresentation of the problem in the popular press, they've got it mostly wrong:

It's primarily A BUSINESS PROBLEM!

This presentation is to help you become knowledgeable in "2000 Readiness" as it applies to small business. "2000 Ready" is what you need to be. Readiness and compliance are not the same thing.

There are many shades of 2000 "compliance," and What works fine for one business is disastrous for another. Being "ready" does not necessarily mean that everything in the business must be 2000 compliant. There are many software programs that will continue to be used for a few years into the next century even though they are not 100% compliant. They will be used because some features such as tables, date codes are things not used by the business in the first place.

As a business consultant or owner you MUST be able to determine the risks a business faces in a quantitative manner. The basic process is: Inventory risks, Analyze, Fix, Test, Document and Follow up. You must view Y2K preparation equal in importance to an IRS audit. If you have business loan(s) from the SBA or your local bank they will expect you to do a well thought out Y2K project.

Critical Questions:

• Do you have a Y2000 Readiness, (compliance), plan for your business?
  
• Is your computer hardware 2000 compliant?
  
• Are you running 2000 compliant versions of your operating systems and network systems?
  
• Are you running 2000 compliant versions of your accounting software?
  
• Is your desktop software 2000 compliant? (Backup software, Office suites, Works packages, Project manager, Contact manager, Scheduler, etc.)

Very Necessary Additional Questions:

• Are your vendors 2000 ready?
  
• Facilities: Are they ready?
  
• Are your customers 2000 ready?
  
• Have you used "due diligence" and documented your 2000 efforts? This is the most Critical Question you can ask. - If something does go wrong, you may have to prove that you and your client did everything possible to avoid having problems.

Top Ten Deadly Myths about Year 2000 "Compliance"

We don't know how some of these myths got started, but they are persistent. Just because you read it in the Wall Street Journal, Time magazine or the Tribune you shouldn't assume it's correct.

1. "We can always go back to manual methods until we get it fixed - it worked before!" Who in the current company even remembers how except the owner who started the business in his garage 10 years ago? Employees that knew the old system have often gone elsewhere. Manual processes are very different - retraining needed. This will work for only the simplest of businesses.
   
2. "We use MacIntosh computers therefore we have no Problem." MacIntosh hardware is 2000 compliant and has been since the Mac was invented, however, you can still construct non-compliant spreadsheets and databases on a MacIntosh.
   
3. "We just bought new computers this year, so we don't have a problem." Sorry, recent surveys have shown that: 8% to 18% of all PC's sold in 1998 are non-compliant. PC's purchased in 1997 are over 21% faulty. Units purchased before 1997 were found over 90% non-compliant. EVERY PC must be checked for hardware compliance!
   
4. "We just installed Windows '98/'95 so, we are up to date." NOT! All versions of Windows are in one respect or another non-compliant if used in their out-of-the-box configuration: Certain files need to be downloaded and replaced, (winfile.exe, etc.) Regional Date settings must be changed to a four digit year.
   
5. "We just switched to MS Office '97, (Corel-Eight, Lotus Suite 2000), we are OK." Users must be re-trained in the proper manner of constructing and entering dates in spreadsheets and databases. Using Microsoft's "Wizards" to build databases or spreadsheets results in non-compliant data! If you make extensive use of spreadsheets or databases, your applications, templates and associated data must be fixed. "OK" is very conditional.
   
6. "We bought/upgraded our accounting software last year, so I don't think we have any problems." Popular small business accounting software such as Quick Books, Peachtree, MYOB or OneWrite are OK. (Versions less than 2 yrs old.) Don't assume just because an accounting software package is DOS that it's NOT compliant. A number of accounting software publishers are only now delivering 2000 compliant upgrades; this is particularly true of more expensive software. If you have any doubts: Get it in writing or test it yourself.
   
7. "We just installed a new network in March 1998 - It's gotta be OK!" Sorry, it's probably NOT OK! Microsoft and their NT network operating system: Making NT 4.0 mostly compliant requires a recent "service pack." Novell only recently supplied 2000 "patches" for it's 3.12 and 4.11 Netware operating systems. Lantastic compliance depends both on hardware readiness and having version 7 or 8 Early versions of these NOS's or other network OS's must be upgraded or replaced.
   
8. "Our computer guy says he'll have everything sorted out for us before September, 1999" Very optimistic, I'd say. This assumes that your "computer guy" will be available to do the work next year. Large corporations are running short of IT personnel. He's likely to be working on contract to a Fortune 1000 at double what you can afford to pay him. Small businesses must start now, even if the problem is simple. As 2000 grows closer, supplies of upgrade hardware and software may also be in very short supply.
   
9. "We use a custom software package/(vertical market package) recently written for us by an excellent programmer, I'm sure it's under control." You can't assume anything because old programming habits die hard. Your "custom" program may consist of many snips of program code written years ago. Get compliance statements in writing.
   

But, the Number One 2000 Myth is:

"Bill will fix it!"

Sorry, the Bill from Redmond is tied up in court and the other Bill from DC in a nasty little war. Don't expect a "Silver Bullet" to come from any direction, especially from Redmond. Microsoft has had enough trouble figuring out and explaining what "compliance" means in each of their own product categories to bother with what anyone else is doing. This is "Magical thinking" of a most delusional nature.

All software publishers are being cagey about compliance statements because compliance often depends on how the product is used. And, unfortunately, the lawyers have gotten involved.

Since mid-1998 many software publishers have actually downgraded their original compliance statements about certain products. Thus, what was "compliant" in 1998 maybe considered non-compliant or unsupported today, mid-1999. This is why Y2K projects are an ongoing effort - they're never finished.

Other 2000 myths:

• "All the problems will occur on January one, 2000." No, some problems are occurring already. Other critical dates are 9999 which is a code often used by programmers in the past to indicate "data not available or something similar. Those institutions that have fiscal years that start after January of 1999 will also have problems doing budget if their systems are not compliant.
  
• "We'll wait to see what breaks, then fix it." Do you really think you'll be able to find someone to fix it in January of 2000? That can be hard under normal circumstances, and the century changeover is not a normal circumstance.
  
• "It's all a trick to sell more computers." Yeah, We only wish!

Who's most at risk:

Who's most at risk of not surviving if they don't succeed in fixing their 2000 problems? The following list is my opinion, but others think in a similar manner:

A business that does extensive data interchange - EDI, wire transfers, etc. - .If not compliant, they'll probably fail because they will not be allowed to conduct business until all Y2K problems are fixed. One bad link in the chain can cause enormous problems for everyone else in the chain.

Larger "Small" Businesses with internally developed software - IT personnel are Infinitely optimistic! Need external "reality checks."

Manufacturing, particularly those using JIT inventory - Dependency on vendors, transportation.. Lots of embedded computer systems used in machinery.

Date dependent services: Insurance, Finance - Luckily, the big guys are far ahead on this. Good merger possibilities.

Business with custom software externally developed - This is still a high risk area, but probably a top priority of vendor of vertical market software. Enough time to fix and test?

PC's bought prior to 1998 - because over 90% of these units are not 2000 compliant. Luckily, it's easy to fix compliance issues in most hardware.

Businesses with less than two weeks of working capital - Some disruption is inevitable, that is a given. You must have enough money available to weather it!

Avoid Legal Fallout:

Before issuing compliance statements, check with your lawyer. Keep track of remediation expenses because there maybe special tax breaks ahead. Document everything you do toward 2000 Readiness. Good luck in your efforts!

You can get additional help and information at our websites:

http://www.firstbiz.com/2000
http://www.y2kontrol.com