When the Red River recently overflowed its banks and flooded Grand Forks, N. Dak., it displaced more than 50,000 residents and devastated virtually every small business in the downtown area. But at least one longtime Grand Forks business owner was able to keep Mother Nature from crippling his company--primarily because he'd decided to automate seven years earlier.

Howard Palay has lived in Grand Forks all his life. His 16-employee company, Palay Display Industries Inc., sells retail fixtures and supplies--everything from candy racks to mannequins--through a mail-order catalog. The company has occupied the same spot since 1960. Back then, Palay's father, Robert, used paper-based systems to track orders and inventory. Today computers have streamlined the process: customers place orders via 800 numbers that ring in either Grand Forks or a branch office in Minneapolis, a good 320 miles away; operators punch data into computerized customer files; and labels are automatically printed out in a main stockroom.

Once it became clear that Grand Forks would be evacuated, Palay knew what he had to do: load his family and the server holding the company's records into his minivan and hightail it to the office in Minneapolis. That office uses only dumb terminals, connected to the main server in Grand Forks by a 56 KB direct line. For inventory, he would have to rely on a stash of fixtures in Minneapolis. "If the server had gone under, we would have been done," says Palay.

With the shrill whine of air-raid sirens ringing in the Saturday night background, Palay--with his wife, Patti, and their three children--shoved their belongings and the server into the van and drove hastily off to Minneapolis. "It was scarier than heck," he says, adding that the scene brought to mind "London during World War II."

When Palay reached Minneapolis the next day, he spent about four hours rigging the dumb terminals to the server. "It's a pretty big deal for me to run a toaster," he says. Fortunately, he wasn't all alone. Minneapolis-based Saber Systems, Palay's hardware and software supplier, helped him work out the kinks. By 9 o'clock Monday morning, he'd rebuilt the network, and the company was up and running as if nothing had happened.

In fact, Palay may have been too efficient. Few of the company's 5,000 customers thought to place orders. Most just assumed that the small business would be closed for a while. "We worked hard to get everything smoothed out," says Palay. "It's tough, but you just get through it."