From the November 1997 issue of Entrepreneur

Bring up the subject of computer networking, and small-business owners start to get a little nervous. For many, networking is something of a mystery. It's perceived to be difficult to understand and costly to implement, so why even consider it?

There are several reasons why you should look into setting up a network in your small business. In recent months, leading technology vendors have released networking products designed with small businesses in mind. They're fairly simple to install and manage, and actually fit into most small-business budgets. Plus, there are a slew of benefits and cost savings to be found.

Mark Lyon, who owns Lyon & Associates Creative Services Inc. with his wife, Susan, 32, has been using network technology at his small design and advertising firm since the company had just two computers to link together. Not only do all eight employees of the couple's Encinitas, California, business have access to the Internet, but they also share files, review each other's progress and work together by having their 15 computers connected through a network.

"We strongly believe in the need to share information," says Mark, 35. "The network has been great from the standpoint of collaboration and efficiency within the office."

The Big Idea

The growing acceptance of the Internet as a standard part of business is one factor driving the networking market today. Employees need access to the Internet to communicate with customers, locate business-related information and check out competitors. But without a local area network (LAN), Internet access can be very inefficient. Some companies wind up having employees waiting to share one computer with an Internet account or pay for individual accounts and phone lines for each user to connect to the Internet, which can get costly.

When computers on a LAN are connected to the Internet, however, businesses save money because one line is shared, and you only pay for one account through an Internet service provider. Moreover, because you share only one line, you might be able to afford a faster connection such as an ISDN line that speeds up your access.

Perhaps the most common reason small businesses implement a network is to share peripherals such as printers and scanners. When a printer is connected to your LAN, any employee on the network can use it.

Another benefit of networking: sharing files and applications. If your employees waste time storing files on floppy disks and distributing them around the office, a network is a better solution. Everyone works more collaboratively when files are stored on the network because all employees have easy access to them. What's more, you can save money by buying network versions of software and having employees share them. You can also take advantage of groupware products to help distribute documents and manage projects around the office.

If you have a fax server and PC faxing software installed on each computer, users on a network can fax directly from their desktops instead of waiting around for an available fax machine. Remote access to files, efficient backup of companywide data and internal e-mail also become a reality for your business.

Getting Connected

Networks are simply a series of computers, printers and other hardware linked together with cables that allow them to "talk" to each other. There are two basic types of networks appropriate for small businesses: peer-to-peer and client/server. A peer-to-peer network is a system of computers that are all connected to allow sharing of files and peripherals with each other. In a peer-to-peer network, there is no central computer, or server, in control. Generally, peer-to-peer systems are most appropriate for businesses with five PCs or less.

If you have more than five computers or want to share large files and databases, a client/server network is probably your best bet. The server, a high-speed workstation or PC with lots of processing power and storage capacity, stores all shared applications and files; employees must access the server to use them.

While configurations and components differ, the basic parts of a network are the same. In either environment, each networked computer must have what's called a network interface card (NIC) that allows the device to communicate with other machines. In a client/server network, there's also a server (with NIC) and a network hub that routes cabling to a central location. Finally, there must be cabling to connect all the devices together. There are two preferred types of cable for small-business networks: 10BASE-2 and 10BASE-T. In general, 10BASE-2 has been a common choice for networks with five or less PCs; however, 10BASE-T cabling is the most popular overall because it's relatively inexpensive and offers easier maintenance and higher flexibility.

Most entry-level networking solutions cost just a few hundred dollars. The OfficeConnect Networking Kit from 3Com, for instance, is available for $299. Think of it this way: If you've saved yourself from buying another printer by installing a network, you've paid for the cost of the network while reaping all the benefits it has to offer.

The thought of installing a network can strike fear into even the most intrepid small-business owners, which is why many vendors package all-in-one solutions for small businesses. For example, the OfficeConnect Networking Kit, sold through retail and reseller channels, comes with all the hardware you need to connect up to three PCs. The kit includes one hub, three NICs and three cables; you have the option to buy additional NICs and cabling as your business grows. With a basic understanding of networks, you can probably set one up yourself; Lyon installed his OfficeConnect network in just a few hours. He also spends only about one hour per week managing it, so it doesn't take too much time out of his busy schedule.

Similarly, NetGear's Network Starter Kit ($179), sold primarily through retail channels, also comes with one hub, two NIC cards and cabling to connect two PCs. One unique feature: Its NICs have built-in technology to reduce your hardware costs should you decide to upgrade your network. Data is transferred along a network at two speeds: 10 Mbps and 100 Mbps. Generally, NICs are designed to work with one of these speeds, but NetGear's 10/100 Mbps network cards operate with either speed, so if you start out with a 10 Mbps network but want to upgrade to a 100 Mbps system later on, you don't have to buy new NICs; however, you will have to upgrade to a faster 100 Mbps hub.

MangoSoft has a new software solution that utilizes the resources of a networked environment differently. Instead of the traditional client/server environment where all PCs connected to a network must access the server to share data, MangoSoft's Medley97 software uses "CacheLink architecture" to pool the storage and memory resources of all the connected PCs. For example, if you have 10 users connected to a network and each contributes 100MB of hard-drive space, a total of 1GB is designated for use as a "Medley drive" across your network. With Medley software, all the PCs then act as both a client and a server.

The benefits? With all PCs on the network taking over the role of the server, there's no need to invest in this costly piece of hardware. Plus, because the software automatically stores data across all the machines, files may be stored in close proximity to you--possibly even on your own machine--so the time it takes to retrieve them may be reduced. A Medley two-connection software starter kit costs $249 (networking hardware not included); each additional connection costs $199.

Final Steps

Once you've decided you need a network, proceed carefully. Chuck Yort, director of small-business operations at 3Com, recommends asking yourself five questions:

1. How do you plan to use your network? Determine what you want to gain from your network now and in the future, such as the ability to share files, access data remotely and so on.

2. How many PCs do you have? This impacts the way you'll design your LAN, from the types of cabling you use to its structure.

3. Where do you plan to buy it? Retail is an option if you're familiar with networks and plan to install it yourself. If not, it's usually best to use a reseller that can choose equipment for you, install it and provide ongoing support.

4. Get to know the terms. To make the best decisions, you should become familiar with basic networking terminology.

5. How crucial will your network be? Think about how dependent your business will become on the network and what could happen if it breaks down. Then, be sure to put the proper controls in place and, if necessary, additional personnel to manage it.

On Good Terms

Following are a few networking terms to get you up and running:

  • Network interface card (NIC): A device that allows a machine to communicate with other machines
  • Network operating systems: A set of operating system protocols (Windows NT, for example) that control the resources of a network
  • Node: A communication device attached to a network, such as a PC or a server
  • Port: A place where a physical connection is made between a computing device and a cable
  • Router: A device that connects multiple networks and forwards blocks of data between them
  • Switch: A multiport device that provides high-speed packet switching between ports

Contact Sources

3Com Corp., (408) 764-5000, http://www.3com.com/smallbusiness

Lyon & Associates Creative Services Inc., (760) 634-1886, ext. 11, mark@lyonassoc.com

MangoSoft Corp., (888)88-MANGO, info@mango.com

NetGear Inc., (408) 988-2400, http://www.netgear.baynetworks.com