Power Surge

This story appears in the November 1998 issue of Entrepreneur. Subscribe »

If it wasn't for technology, Richard Pollock's company might be out of business. Software for managing inventory and an online connection to customer credit reports have turned International Neon Products Inc., Pollock's Chicago sign-parts distributorship, from a firm struggling with outstanding client debts and poor customer service to one enjoying robust growth and profits.

"Every employee here has a PC--the guys in the warehouse, the receptionist, the salespeople--even I do," says Pollock. "Now when somebody asks for credit, we dial in to the computer system and give them an immediate answer. That's gotten rid of the bad debt."

International Neon Products' inventory system allows anyone in the company to see if any part is in stock at any time. "Before, when a customer came in, somebody would have to run to the back and see if we had it," says Pollock. "Now our customer service is phenomenal."

Pollock is far from being the only entrepreneur benefitting from technology, according to the results of a recent study by Dun & Bradstreet (D&B), an international business information provider. In December, D&B surveyed 500 business owners nationwide, posing technology questions in 20-minute phone interviews. Businesses ranged in size from one to 500 employees, and sales ranged from less than $100,000 to more than $10 million. Most had one to five employees. Responses were categorized by each firm's size and according to the owner's ethnic background and gender.

The study found that, by and large, small businesses are embracing technology, from fax machines and pagers to laptop computers and Web sites--and with generally positive results.

Among the key findings was widespread, rapidly growing use of the Internet. Nearly 69 percent of small-business owners polled were connected to the Web. Survey respondents also reported nearly universal use of late-model desktop computers; a full 95 percent said they used Pentium-level PCs. They also indicated a generally high level of comfort with technology. Nearly three-fourths rated themselves as up-to-date with the latest technology.

The survey's highlight was the 69 percent Internet usage figure, says Mike Azzi of Murray Hill, New Jersey-based D&B. It's especially sizable considering that in a survey done six months earlier, D&B found just 47 percent of respondents were on the Net.

"Our basic impression from this survey is that small business is making a decent amount of progress with technology," says Azzi. "But the 22 percent jump in the number of small businesses using the Internet--in a six-month period--that's pretty significant."

A Mark Of Resistance?

Of course, some small businesses have been slow to embrace technology. Sheree Thomas, president of Smoke Busters of Texas Inc., has grown her Cedar Park odor-elimination service to six people in six years without the benefit of anything more than a fax machine, pager, cell phone and a single PC which, she confesses, she uses mostly for playing solitaire.

"Right now I don't even have Internet access," says Thomas. "But I hate to admit that. I feel so backward." Thomas says she intends to get e-mail soon to communicate with a company that's marketing a smoke-cleansing product she invented, and she may consider putting up a Web site to help franchise her company.

The study found entrepreneurs as a group are lagging behind big businesses in networking their computers--only three in 10 firms have LANs, and just 10 percent of those without LANs are planning to install them in the next year. In addition, many entrepreneurs lack internal e-mail--just 23 percent have it. And only 32 percent of those with Web sites are taking precautions to protect the sites' integrity.

For many relatively low-tech entrepreneurs, lack of gadgetry is a personal preference. Jane Wesman, president of Jane Wesman Public Relations Inc. in New York City, got e-mail for her six employees a little more than a year ago and still asks employees to use paper planners and keep their addresses in a desktop card file.

Paper-based information can't be lost in system crashes and disk failures, contends Wesman. And, for her purposes, she considers a low-tech system faster. "It takes me one second to look up a name in my Rolodex," she says. "I don't have to close one program and open another to get it."

But while entrepreneurs may differ in their levels of devotion to technology, the general trend is clear. Nearly four in 10 surveyed said they plan to buy new PCs in the next year. And nearly half the owners who use the Internet at work feel they're not taking full advantage of its business potential.

Power Up

Eric Schechter, president of Great American Events Corp. in Scottsdale, Arizona, says his 20-employee promotions and marketing company would be hard-pressed to put on its annual conference without computers to prepare materials and manage registration lists. "In fact," says Schechter, "we couldn't do it without technology. If the network goes down, we're in trouble."

Despite using e-mail for only a little more than a year, Wesman already sees it as indispensable. "My business wouldn't run without e-mail and Internet access," she says. "All our clients want to e-mail us."

Technology helps small businesses compete on a more level playing field with bigger businesses and eventually become big businesses themselves, according to Russ Finney, an IT professional who reports on business technology for New York City Internet directory service The Mining Company. "If you want to move from a 25-person operation to a 100-person operation and then a 500-person operation," says Finney, "having that technological backbone is [imperative]."

Tech Notes

Many of the survey findings correlated with company size and age. Companies with fewer than 100 employees were less likely than larger firms to have in-house experts to manage technology and provide support. Instead, small companies rely on consultants and third-party service suppliers.

This is due to the limited amount of time small firms can take away from critical operational and marketing tasks to devote to technology support, theorizes Azzi. Thomas agrees: "When I'm out in the field all day [deodorizing] cars, how can I keep up with technology?"

It may come as no surprise that younger small businesses are more likely than their elders to embrace the Net. The survey reports small businesses are using the Net for e-mail, research, advertising, recruiting and videoconferencing, as well as purchasing and selling goods. But companies less than one year old were more likely to have Web sites than were older companies--46 percent vs. 40 percent for firms 2 to 5 years old, and only 26 percent for firms that have been around more than a decade. Overall, about one-third of surveyed companies had Web sites. For those who are on the Net, reaching new customers was their primary goal, but other reasons for going online included research, public relations and education.

When it comes to software, the word was Microsoft. Sixty-two percent of those polled used Windows 95, and 95 percent ran a Microsoft operating system, including Windows 3.1, Windows NT, DOS and Windows 98. Microsoft's Office suite was the most popular application, used by half the respondents. Other popular software applications included those that handle graphics, desktop publishing, database marketing, drafting and inventory management. Desktop publishing software was far more popular with women-owned firms.

Not all the technology that entrepreneurs use is computer-based. Fax machines were the single most common type of office technology in use, at 79 percent, followed by cellular phones (64 percent) and e-mail (52 percent). Copiers were about as common as voice mail, at 43 percent and 42 percent, respectively.

About one in eight companies reported using laptop computers. Hispanic-owned firms were the most likely to use personal digital assistants such as the Apple Newton and the Palm Pilot. Mainframes, once the dominant form of computer, were employed by only 18 percent of small-business owners.

The most common computer peripherals were modems, used by more than 70 percent of respondents, with three in 10 modems being 56 Kbps models. And Internet-knowledgeable entrepreneurs looking for an edge over their competitors might want to look at high-speed hookups: Cable modems, ISDN lines and T1/T3 dedicated data lines accounted for just 3 percent of the Internet connections combined.

Future Focus

As the survey shows, entrepreneurs' use of technology is definitely up. More than one-third of surveyed business owners expect 1999 outlays for technology to increase, while just one in 20 expects a decrease. Internet-active companies expect to spend even more. Among specific technologies whose usage is expected to increase are upgrades to the Windows 98 operating system, which are planned by 74 percent of respondents.

Entrepreneurs credit technology with improving access to information, boosting productivity and streamlining communication, to list only the most important effects. The Internet is reported to have a powerful effect on sales. Owners who do business over the Net say it's responsible for 28 percent of total transactions. A majority--61 percent--say they have a Web site or will have one in the near future. And two-thirds expect Internet business to increase--not one respondent predicted a decrease.

Entrepreneurs moving onto the Internet are on the right track, says Azzi. At International Neon, Richard Pollock is developing a Web site he hopes to use to sell sign parts over the Internet. But that's just part of this forward-thinking entrepreneur's focus on technology. "We're going through a big upgrade to get everything Windows-based," he says. "We're already online with D&B, Visa and MasterCard. We know a Web site is going to take a long time to develop, but you have to get into it."

Technology Rules

Just starting to tech up your business? Here are some tips to move you along.

Wondering just how to implement technology in your business? First, try desktop PCs that run mainstream applications for administrative functions such as accounting, word processing and creating spreadsheets, advises Russ Finney, an IT professional who reports on business technology for The Mining Company, a New York City Internet directory service.

Next, try out niche software specifically designed for your business, Finney suggests. Using special programs for industries such as retail, manufacturing, real estate, health care and the like gives you the benefit of the developers' experience with other firms like yours.

If at all possible, try before you buy, advises Noel Pennington, director of consulting for Harris Technology, a Houston software marketing and training firm. Many software publishers provide free trial versions by mail, or you can download them from their Web sites.

Get professional advice before making large purchases, adds Finney. And budget continuing amounts for training and support of new technology. Pennington says a good rule of thumb is to allocate $2 for training and support for every $1 you spend to purchase new technology.

Finally, don't try to go tech overnight. Phase in new technology by introducing features of new systems gradually. "I've seen companies that started with three-by-five cards, and when they go to a computer, they want everything in the world," Pennington says. "It's better to decide on the key things you need, and schedule them in."

About Dun & Bradstreet

Dun & Bradstreet (D&B), with the world's largest business information database, tracks more than 50 million companies worldwide, 11 million in the United States alone. Businesses use D&B's services to find new customers and evaluate their creditworthiness, identify potential suppliers, and collect overdue receivables.

Through face-to-face and telephone interviews and public-records searches, more than 200 million financial transactions are added annually to D&B's files in the United States. D&B updates its information base continually--more than 750,000 times each business day.

When businesses are entered into the D&B database, they are issued D-U-N-S numbers (similar to Social Security numbers for companies). The U.S. federal government requires companies to have this number to bid for government contracts. Also used by the United Nations and the European Union, the D&B D-U-N-S number is quickly becoming the universal standard for identifying businesses on the World Wide Web as well.

For more information about D&B, call (800) 234-3867 or visit the D&B Web site at http://www.dnb.com To register for a D-U-N-S number, call (800) 333-0505.

Contact Sources

Great American Events Corp., (602) 430-4310, pres@duckrace.com

Harris Technology, (713) 461-3220, sales@harris-tech.com

Information Systems Guide, http://mis.miningco.com, rfinney@itmweb.com

Jane Wesman Public Relations, 928 Broadway, #903, New York, NY 10010, (212) 598-4440

Smoke Busters of Texas Inc., P.O. Box 953, Cedar Park, TX 78630, (512) 335-5858