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SMALL BUSINESS STRATEGIES | TECHNOLOGY

Small Businesses Could Feel Sting of Y2K Bug

Owners cannot afford to ignore potential problems of computer glitch, as some of the chaotic consequences already begin to surface.

October 14, 1998|VICKI TORRES | TIMES STAFF WRITER

Mention the Y2K problem to many small-business owners and you will get a big "Huh?"

For business owners struggling to keep up with their current workloads, the only Ks they regularly deal with are 401(k)s.

"Y2K" stands for year 2000 and the so-called millennium bug. Basically, the problem is that computers and tiny chips implanted in all sorts of machinery and devices were designed to record dates as two-digit numerals, 98 for 1998, for example.

Log in 2000 and beyond and the computers and chips are thrown into chaos because, to them, "00" means 1900.

Doomsayers say the resulting glitches in all kinds of systems could bring on a worldwide recession. What-me-worry types say the whole thing is overblown and exaggerated.

What's a small-business owner to do?

Well, ignoring the whole thing is definitely not the way to go, yet that's precisely what many small businesses are doing, according to a survey earlier this year by the National Federation of Independent Business and Wells Fargo Bank.

Of 500 small-business owners surveyed, only 41% had addressed or intended to address the Y2K problem. And 18% said they were not at all or barely aware of the problem.

Yet 82% of all small-business owners are at risk, according to the survey, because they use computers in their operations, use time/date systems that might be affected, or sell, lease or install equipment that could be impaired. Urban businesses are particularly at risk because 92% of them use computers, compared with 63% of rural businesses.

So, why aren't more small businesses taking action?

"The last thing small-business owners need to do is focus on something else, they have no IT [information technology] officer to turn to, fixing it will probably cost money and the whole thing sounds sort of goofy," said Eugene Carlson, associate small-business administrator in Washington.

The goofy part comes from alarmist scenarios of elevators jamming, cars refusing to operate, airplanes falling from the sky, ATMs and banks being unable to provide cash or log transactions, sprinkler systems freezing on or off, computers everywhere being unable to function or spitting out unreliable data, air conditioners shutting off, and burglar alarm systems shutting down. The list goes on and on so that small businesses simply consider it too fantastic to be real, said William Dennis, a senior research fellow at the NFIB.

"There's been relatively little in the general press on what are the consequences," Dennis said. "It's just generally alarmist--the world will come to an end--and small businesses need more discussion about specific consequences."

A few of those consequences have popped up already.

Some cash registers won't accept credit cards with expiration dates of 2000 and beyond. Some manufacturing plants have seen their time-dated goods shuffled directly into the trash bin immediately after manufacture because computers read "2000" as "1900" and dumped what it considered expired goods.

In general, businesses are affected by Y2K in four main areas, said Greg Faciane of the International Interactive Communications Society and owner of Digital Media Design in Sierra Madre.

* In-house computers: Small-business owners who use a computer for billing and accounts receivable, inventory control, payroll, sales tracking, operations, word processing and a host of other functions could face Y2K problems in both computer hardware and software. If no measures are taken, a business owner might not even recognize that there's a problem until information suddenly gets logged in the wrong place, spreadsheets don't tally correctly or data are not available.

* Embedded systems: That's the term for chips buried as time/date devices in all sorts of machinery, for example, a forklift that automatically signals when it's time for maintenance or a security door admittance system.

"This may be the category of device that proves most difficult," Dennis said. "You can focus on your computer and software, but the rest of these things come in strange places and strange ways. They're a little bit more sneaky."

* Business relationships: You might correct your own in-house systems, but what about your vendors, suppliers, banks, customers or anyone else you are dependent on for business? If they go down, you go down.

* Legal liabilities: If you can't deliver as promised because your system breaks down, you could be sued. However, what if it's not your fault but the fault of your suppliers or the folks who sold you your equipment? Do you sue them? Attorneys expect a crushing number of lawsuits after 2000.

To protect themselves legally and operationally, small-business owners should inventory their own systems immediately, check and correct them if needed and ask those with whom they do business to make sure the other companies have taken corrective steps, Faciane suggested. Get it in writing as a legal protection later, he added.

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