How Information Technology Is Leveling the Playing Field
Various business people discuss how technology allows them to compete with the "big boys."
E-mail, networks, and easy-to-access databases are enabling small businesses to play ball with the big boys
Can information technology (IT) make a David seem like a Goliath? According to the CEOs and company presidents we spoke with, the answer is an unqualified yes. In today's world of networked databases, E-mail, CD-ROM subscriptions, and teleconferencing, success is determined less by size than by technological muscle. Even companies of 15 or 20 can gather market data in all parts of the world, establish long-distance strategic partnerships, advertise anywhere via the World Wide Web, or hold international sales meetings -- and their employees never have to leave the office.
Competing with big business is easier than ever now that IT is so affordable. Ten years ago, purchasing a high-powered computer system could set a small company back half a year's revenues. Today, $2,000 for a PC is a small -- perhaps minuscule -- investment, even for a one-person operation. Marketing dollars, too, go much further with technology. With a $2,600 laser printer, a two-store grocery chain can create ads that rival those of Kmart Corp., and for just a few hundred dollars, a storefront company can throw up a home page on the World Wide Web.
With the odds evening out, it's lack of brains, not brawn, that poses the real threat for small businesses. As U.S. Secretary of Labor Robert Reich tells us, the biggest handicap for small businesses that are trying to compete is not revenues or global reach but a shortage of people trained in IT.
Herewith the thoughts of five entrepreneurs on how IT helps them mind the store, keep up on the latest news, stay on top of a busy household, and live in the boonies while conducting business halfway around the world.
* * * Patrick McDonnell
CEO of 20-employee Spectrum Diagnostix Inc., a manufacturer of process-control and emissions-monitoring instrumentation in Andover, Mass., with more than $1 million in sales
Information technology lets small businesses communicate with customers and suppliers without regard to time, place, and sometimes even cost. Historically, that capability was limited to large companies because only they could afford to have worldwide marketing teams. Even though Spectrum has only 20 employees, E-mail allows us to communicate with customers all over the world -- without having to travel. That's important because we sell one of our products in Europe and Asia -- and one of our strategic partners has offices in Munich and Singapore.
Using teleconferencing, we held an international sales meeting with our Canadian partner and gathered marketing information from customers around the globe. The data told us we needed to add performance capabilities and modify some features in our emissions-monitoring instruments that we had not thought were important. With the help of the Internet, E-mail, and other types of technology, we've also been able to form stronger partnerships. And with strategic partnerships, small businesses can develop vertically integrated teams, like ours with the Canadian company, teams that have the flexibility and versatility necessary to compete with large businesses.
Another tool historically limited to large companies is the networking database. We now have access to those databases simply by paying an on-line fee. Through those databases we can get basic research-and-development information. For example, our business is based mainly on the use of a tunable diode laser, which produces light that travels across a fiber-optic link. It's how your phone system works. Until 1990, lasers were very expensive to use. But over the past 10 years the industry has conducted research on lowering the price of using lasers. That research has been published on the Internet and in large databases maintained by the Small Business Innovation Research program in Washington, D.C. It's helped us develop our products.
* * *Amy Miller
CEO of Amy's Ice Cream, a chain of 10 ice-cream stores, headquartered in Austin, Tex., with $2 million in sales
When employees in a small company take time off -- to have a baby, say, or for medical reasons -- it's hard to fill in the holes while they're out. In a larger company, of course, plenty of people can pick up the slack. My office manager and I both had babies this year, and I didn't know how we would manage. Technology has given us the edge the larger companies have as a matter of course.
With my Macintosh PowerBook and a StyleWriter ink-jet printer, I can do everything at home. Using Quicken, I handle all of my company's accounts-payable transactions. I can also modem the payroll information directly to my payroll company. When we applied for a loan from the Small Business Administration, I was able to compile all the historic information I needed for the application without going into the office. We got the loan -- $450,000 -- in August. I even designed a new bonus plan at home for our managers, using the fax modem on my computer to send and receive information from the office. I go into work only about once a week, to pick up a stack of bills. I worried that I would sacrifice time with my new daughter, Emma, but everything has worked out wonderfully because of technology.
Another technology that's made a huge difference in our company is voice mail. At first I was resistant to it because I wanted employees, not a machine, to answer the phones. But we installed it, and it's actually increased personal contact. For example, our catering manager not only manages the administrative part of our $150,000 catering business but also oversees events. Thanks to voice mail, he doesn't have to worry about missing the three or four calls he might get for catering jobs while he's out with a client.
* * *John Clarke
President of County Fair Food Stores, a two-store grocery chain in Mitchell, S.D., with $18 million in sales
When it comes to technology, we're right up there with the big boys. We pay only $30 a month for a satellite system that receives broadcasts from manufacturers -- including commercials and discount information specifically designed for products sold in our stores -- and then plays them over our speakers. The broadcasts help push items in the stores that otherwise might not move off the shelves fast enough. And the system saves us money because we don't have to pay to produce the broadcasts. Kmart has the same system.
Also, because we have computers and laser printers, we can create signs and price tags in-house. Kmart contracts an outside source to make its signs, but ours look just as professional. We've programmed the computer so all we have to do is enter the product information to output a sign. For instance, if we're going to run a special on Coke 12-packs, we simply scan the bar code, punch in the price, enter the date the sale starts, and hit a button. The system then prints out signs that meet size specifications we've previously set. It used to take us hours to make signs by hand. Now it takes us a few minutes.
