approximately 10 nondepository lending institutions to make SBA-guaranteed loans targeted to New Market small businesses. This initiative could lead to investment of as much as $15 billion in these areas, according to the SBA.
MAKING WAY FOR Y2K
Studies show that one-third of small firms haven’t even addressed the Y2K problem because they have limited financial means to recover from business losses or to make emergency technical adjustments.
“It’s not too late to implement Y2K solutions,” says Creighton W. Lee of IBM. “If you don’t, your applications won’t run, which would have an impact on invoicing customers and supplier relationships.”
To protect yourself from the millennium bug, see our recommendations in “More Y2K Glitches That Could Bug You,” October 1999, and consider these recommendations from Information Management Resources CEO Martha V. Daniel:
- Make sure your equipment is Y2K compliant. Form a committee or designate someone to create an inventory of equipment; decide what needs to be done (repair, replace or throw away equipment or the software that runs on the equipment); decide if you can make adjustments internally or need to hire a qualified and competent IT consultant; set a budget; fix your equipment; test and retest your equipment; go through a trial run of your Y2K-compliant equipment and set up a contingency plan and update it often.
- Address banking relationships and potential cash flow issues that may be impacted by Y2K. Extend credit lines with your existing financial institutions to address account receivables problems. “Most small businesses operate with three to four large corporations as their client base. If these clients’ accounts receivables don’t pay on time, you’ll have a cash flow situation,” Daniel says.
- Talk to your clients’ accounts payable departments about issues they would have in making payment. Make sure your firm is at the top of the list to be contacted should problems arise and work out alternative payment methods, such as being paid one month in advance.
- Prestock your inventory, especially if you are a manufacturer. This could head off potential cash flow issues if you aren’t able to get supplies to fulfill your contracts. If you run out after the first of the year and Y2K becomes real, you may have to spend more for supplies that will be more in demand.
- Investigate alternative means to moving your product. Set up relationships with suppliers in different geographic locations so that if you’re unable to get supplies to the West Coast and you’re on the East Coast, you’ll have inventory or supplies on the West Coast.
- Where practical (and legal), form relationships with your competitors to create teamwork agreements. Should Y2K create problems, you’ll have the means to keep each other in business by sharing clients and suppliers.