Y2K largely ignored by state’s small businesses

Grace Leong

Wednesday, Oct. 13, 1999 | 10:48 a.m.

Nevada small businesses are still mostly unconcerned about the possibility of operational problems resulting from the century date change, and many haven't tested their operations for Y2K compliance, say U.S. Small Business Administration officials.

SBA officials came to this conclusion after a series of federally funded Y2K solutions seminars held in 14 cities in Nevada.

"The truth is, every business is vulnerable," said John Scott, SBA district director. "And no segment of society is more vulnerable than Nevada's 83,000 small businesses, the heart of our state's economy."

Of an estimated 83,000 small businesses, 33,000 are businesses with one or more employees and 50,000 are sole proprietorships and home-based businesses, the SBA said.

The sessions, called "Year 2000 Tools and Solutions," started in Reno on Aug. 16 and ended in Pahrump on Sep. 15. They were attended by more than 250 businesses statewide including manufacturers, restaurant owners, office suppliers, casino service operators and senior citizens.

The sessions examined the nature of the Y2K problem, how it affects computers, software applications and other data-sensitive electronic equipment such as fax machines and cash registers, and what they can do to upgrade and make remediations to keep functioning beyond Jan. 1, 2000.

Also addressed at the seminars were the issues of supplier and vendor readiness and business liability should the business owner not take action to fix the problem.

"If their competitor is ready and they are not, they will lose business. A lot of businesses have done a lot, but a large number of companies still hold this issue on the back burner. Most companies are just doing what they can on a day-to-day basis," said Roger Hopkins, SBA's public information officer in Las Vegas.

The Y2K issue exists because many computer systems and applications currently use two-digit date fields to designate a year. As the century date change occurs, date-sensitive systems may recognize the year 2000 as 1900, or not at all. This inability to recognize or properly treat the year 2000 may cause systems to incorrectly process critical financial and operational information.

"No one is absolutely sure what the damage will be. No one can say what's going to happen. It's a situation that's brand new to our society. But some things are certain," said Chesa Keane, an SBA workshop presenter. "Any business that doesn't take care of this problem is at the very least going to lose business to a competitor who does."

Small businesses in Las Vegas voted with their feet when only 15 of the 60 registered showed up for a seminar held here on Sep. 14. The SBA had initially expected a turnout of 200 businesses.

Keane attributed the unexpectedly low turnout to a general apathy brought on by an overdose of warnings that range from one extreme to another, from urgings to stockpile food and weapons to insistence that it is no big deal.

"Many small business owners do not accept Y2K as a problem that deserves their attention. They feel that Y2K is a long-term concern they can put off indefinitely while they deal with more immediate problems, or they may think their business is not technologically advanced enough to be affected," SBA's Scott said.

Hopkins said small business apathy has caused some vendors and conventions to postpone their Y2K compliance operations to after Jan 1, 2000, when the problem will likely be more clearly exhibited. "But that's what we want to prevent because by then, the small businesses will already be suffering the impact."

"We want to make people realize that Y2K is not just a Dec. 31, 1999, problem. It may appear that they are not having problems initially, but it may show up on their billings a few weeks into the year 2000. For example, if the Feb. 29 date isn't in the computer system, this will throw off bookkeeping and accounting etc.," Hopkins said.

Next February has 29 days.

"Interdependence is the most serious issue small businesses are concerned with because they rely on each other to stay alive," said Keane. "If you are a supplier you have to make sure your vendor can continue to get supplies to you. If you are in the service business, you have to make sure your employees are prepared and customers can pay you."

"Y2K is a business management issue, not just a computer issue. Small businesses must look at their operations and functions and apply a level of criticality to their functions. If your business is a retail shop, you have to make sure the bank you're doing business with or your merchant account service is Y2K compliant," she said.

"The big corporation, casinos and banks are quite well prepared. That's why (we're) targeting small businesses that have 1-10 employees, and those up to 50 employees since most of these operate on a tight market and limited margin," said Hopkins. "There are things they can do without buying a new computer system or hiring a consultant for thousands of dollars."

Of the 250 small businesses that attended the statewide seminars, most were concerned about their banks, their financial statements and whether they can meet payroll. Supplier-dependent manufacturing, mining and industrial businesses were concerned about whether their suppliers are Y2K compliant.

Retailers were concerned about their cash register and credit card swiping operations, while wholesalers and suppliers were concerned about possible interruptions in supplies, especially with the upcoming Millennium holiday celebrations.

"Many companies tend to just order materials and parts as required and these are delivered by suppliers to meet a production schedule already in process. That's a good philosophy if the supply chain is intact. But what if it isn't?" Keane asked.

Small businesses in Nevada could face potential litigation if they haven't exercised due diligence in preparing for the Y2K problem, or responded to their business partners' requests for disclosures on their level of Y2K compliance, said Bill Milligan, a conference coordinator.

"But they can make disclosures of their Y2K problems without fear of liability under the Year 2000 Information and Readiness Disclosure Act," he said.

Under this law, businesses are encouraged to make disclosure of their Y2K problems or plans with respect to their products or services, in return for which the law provides that such disclosure shall be inadmissable in court to prove the accuracy or truth of any Y2K statement.

The protections, however, do not apply to securities offerings, nor do they alter existing intellectual property rights, contracts or tariffs or limit actions brought by state or federal agencies in a regulatory or enforcement capacity, according to the act. The SBA said it will use its phone greetings to give a "last call" to the nearly 30 percent of small businesses that may not have addressed their Y2K computer problems. SBA staffers will direct non-Y2K compliant businesses to one of the agency's programs or to outside sources available to small businesses.