Chapter One The Wired Small Business THERE IS NO DOUBT THAT SMALL BUSINESSES JUST AREN'T WHAT THEY USED to be. Gone are the days when a small business was thought of as a local hardware store or the corner mom-and-pop store selling bread and milk. Businesses are leaner, meaner, and faster than ever, and they are competing on an increasingly larger geographic scale with businesses of all sizes. To thrive, or sometimes just survive, small businesses have turned to many sources for help, including technology. For small businesses, the competition has never been fiercer. But the technical tools available have never been more extensive. The Small-Business Environment IF YOU ARE WORKING IN A SMALL BUSINESS, YOU ARE CERTAINLY NOT ALONE. There are about 7.5 million small businesses (defined as companies with fewer than 100 employees) in the United States, and that number is growing. Corporate downsizing, a good economic environment, and the ever-present dream of being your own boss have all contributed to those numbers. In addition, it has never been easier to start a small business. With favorable laws for small businesses, low interest rates, and more opportunities to find your niche, the possibilities are endless. However, starting a business is a lot different from staying in business. Certainly you have heard all of the morbid statistics of the number of businesses that go out of business every year. While the numbers are often exaggerated, there are many internal and external challenges that small businesses face today. The internal challenges of owning and managing a business are enough to put anyone on edge. Managing cash flow, profitably pricing products or services, making your company's presence known, hiring and managing employees, customer issues, and a host of other problems come up daily. At best it makes for long days. At worst, the combined problems can make you unprofitable or put you out of business. And as if the internal pressures of running a business aren't enough, most small businesses face almost insurmountable levels of competition from every angle. For starters, you have to compete with other small businesses. Small businesses often attract the best and brightest in the business world. Like you, these highly skilled workers are looking for the diversity and challenge of having a large stake in a small business. Oftentimes they have lived for years in the corporate world gaining experience and knowledge before venturing off on their own. Many of these former corporate warriors bring with them an appreciation for technology and what it can do for them. In addition, small businesses regularly compete with medium-size and large businesses. Your company may be in a niche market, defending itself by holding on to or carving out a specialized business that the larger guys can't afford to go after. Or, you may find yourself in an out-and-out battle with a company that has more people, resources, and money than you do. In addition, the playing field has gotten geographically bigger Businesses today are reaching out further and further across the world, increasing competition for global customers. As a result, your new competitor could come from across town or across the world. With these internal and external challenges facing small businesses, there is no doubt that you need to increase your competitive posture to survive. Overcoming your internal challenges can include measures such as increasing the efficiency of your internal processes, communicating better with co-workers, suppliers, and customers and cutting costs to maintain profitability. From an external perspective, you need to keep up with customer demands and provide a better product or service than the competition. Networking and Small Businesses You may be asking yourself how a computer network can be the answer to your problems. After all, you have done well so far without one. How is connecting your computers together or to the Internet going to make or break your company? It can because a network can help your business become more profitable, more efficient, and more competitive. For years, small businesses have adopted technology to survive. Just look around at the telephone and the calculator on your desk and the postage machine in your shipping area. All of these devices were once too big, too expensive, or too complicated for general use by all businesses, and all eventually made their way to your business when they became simpler and less expensive. The personal computer is a great example of a technology tool adopted by small businesses that has improved many areas of operation. A recent study of small businesses by the consulting and research firm Charles River Strategies, Inc., found that overall, small businesses that used multiple personal computers generated $110,000 in sales per employee per year, while those with no computers only made $83,000 per employee. That difference is an indication of the power of computers in business. Look at the other technologies you have learned to rely on as well, such as fax machines, voice mail, cellular phones, and pagers. You could probably live without some of these devices, but it would be extremely difficult for you to be as productive as companies that use them. Imagine if you had to tell your customers that you couldn't fax a proposal to them because you don't have a fax machine, or the look on their face if they received a document produced on an old manual typewriter. They would expect you to be running your business out of a cave, and your competitors would be running all over you. Many businesses have the attitude that they can't afford networking technology. But it won't be long before networking and the Internet will be just as critical to the competitiveness of your business as that fax machine sitting in your office. Networking is becoming a strategic investment, one that reaps quick returns on investment and lifts companies to a new level of competitiveness. Table 1-1 shows how this can be the case. The second part of the Charles River Strategies study shows that those businesses with computer networks saw even more sales per employee than those with just standalone computers. In fact, while those companies with multiple computers generated $110,000 in sales per employee per year, those with networks generated $134,000 in sales per employee. Table 1-1. Small-Business Sales per Employee Average Sales Per Employee by Technology in Company ($000s) Industry No PCs One PC Multiple PCs Networked PCs All industries 83 96 110 134 Service 39 58 72 92 Construction 120 140 152 173 Wholesale 139 159 172 192 Manufacturing 72 92 105 125 Retail 40 59 73 93 Finance 58 79 91 100 After adjusting for other factors. These factors include percentage of white-collar employees, years in business, number of employees, percentage of college graduates, and major industry. Source: Charles River Strategies Networks help businesses become more productive because they leverage the resources and capabilities of computers and other devices, letting users share resources, files, applications, hardware, information, and ideas. Networking provides three distinct advantages (which will be discussed further in Section Two). Those advantages are (1) resource cost savings; (2) increased communication/collaboration and sharing of information; and (3) increased productivity. Because networks, including the Internet, have become such an important tool, they are a staple in the corporate world. But while large companies have reaped the benefits of networking, it is still a mystery to most small businesses, something that seems so foreign to them that they don't even know where to start. So, you're asking yourself, if networking is so great, why aren't all small businesses networked? The main reason is that until recently, networking hasn't been all that easy to understand. In the past it has seemed as if you needed a Ph.D. and an interpreter just to get through all of the acronyms and cryptic technolanguage, and a crystal ball to know what you were doing. But networking has become simpler. Microsoft's Windows 95 was the computer operating system that made it simple to start a basic network. Also, many networking companies have developed products that are designed and priced specifically for small businesses and that are easier than ever to understand, install, and maintain than earlier programs. This combination of new hardware and software is making it easier for small businesses to set up a network and see a return for their investment. With these improvements, the only gap that remains is small business owners' lack of understanding of what is available to them. That is the purpose of this book: to show you that the technology is available at your disposal. Networking is not difficult to understand, learn, or implement. The benefits of networking are measurable and tangible. All you need is an understanding of your options, an ability to assess your needs, and knowledge of where to start. With that, let's get started. Chapter Two Networking Overview This chapter begins your network education. In it you will learn more about the benefits of networking and the three basic types of networks covered in this book. But first, we take a little detour for a lesson in English. TLAs Just a word of warning here: This is the first chapter where you are introduced to TLAs. That is technical speak for three-letter acronyms. If you have ever read or heard anything about networking, then you know that the networking language is just filled with them. You may have already asked yourself, what's with the acronyms? Why can't anyone speak plain English? Well, many people sympathize with you. But it doesn't make the acronyms go away. You will find that this book uses acronyms as sparingly as possible, and when they are used they are accompanied by an explanation. Remind yourself that acronyms serve a good purpose; they make it easier to communicate, as long as both persons know what the acronym means. Imagine, for example, that you worked for the federal government and had to say Federal Bureau of Investigation all the time instead of the acronym FBI. It is much simpler to say the FBI as long as everyone knows what it stands for. As you read this book, try to learn the acronyms as best you can and focus on the concept behind the acronym rather than on the exact wording. Many people in the networking world understand what an acronym means, even when they don't necessarily know what each letter stands for. If you know the meaning, you too can be on the inside looking out. What Is a Network? A simple definition of a network is two or more computers connected together for the purpose of sharing. This definition is broad enough to include a connection between two personal computers that sit in the same office, or a system as vast, complex, and disorganized as the Internet. A network provides a connection between your computer and other computers and resources. Once you're connected, there are four basic things you can do with a network: 1. Share hardware resources . Hardware sharing includes any devices that can connect to the network. In the past, that mostly meant sharing printers. But today, peripheral devices can include just about anything, such as printers, modems, hard drives, CD-ROM drives, removable media storage, scanners, and even cameras. 2. Share files . Sharing files is another great networking application. Think of all those times you have gone to someone and asked for a specific file from his or her computer. You have to walk over to the person's desk, hand your coworker a floppy, and wait for that person to copy the file and give it to you. Then you take it back to your desk and copy it to your computer. This type of file sharing is a big waste of time. And with the increasing size of some files today, they are often too large to fit on one floppy disk, making the process even harder. A network provides a link between computers that lets users share files quickly and easily. 3. Share applications . Networks also let you share applications across the network. You can buy a network license to put an application on a high-speed server and run the application from any or all desktop computers across the network. This is often more cost-effective than buying separate applications for everyone in the office. It is illegal, however, to share a single-user copy of a software application across the network. This should only be done with an application for which you have a network license. Read software license agreements before sharing any software on a network. 4. Share information . How many times have you walked into your office and found your computer has been used as a $2,000 bulletin board, covered with those little sticky notes from your coworkers? Or perhaps you have a pile of memos that someone has typed out and placed on your desk. Instead of using the outside of your computer, why not use your computer to send and receive messages electronically across a network? Information sharing across the network can be done using electronic mail (e-mail) or groupware such as Lotus Notes, or by posting information for others to read from their own computer. This latter solution is often known as an "intranet." These solutions are explained further in Chapter Six. Benefits of Networking Networking can benefit almost any business. The biggest benefits to businesses are: 1. Cost savings . One of the most obvious and tangible benefits to networking is the cost savings achieved by sharing resources. These resources can include both hardware (e.g., printers) and network applications. Oftentimes these savings are by themselves large enough to pay for the cost of the original network investment. Take a simple example of five users with computers. All five users want to use a high-quality laser printer for their work. But good laser printers cost more than $1,000 each. It would certainly be infeasible to buy a separate laser printer for each user's computer. Yet it is unproductive to connect a printer to a single computer. Other users would have to go to that computer with the attached printer, kick the owner off, insert a disk containing their file, and print it. Imagine doing that several times per day. The person on that computer would never get anything done. But for a fraction of the price of a second laser printer, all five computers can share the single printer simultaneously without interrupting anyone's work. Software cost savings can be equally dramatic. Say you have a particular application that everyone in your office uses. Instead of purchasing a single-user copy of the software for each person, you can buy a multiple-user version for the network (usually at a lower cost per user) and run it on the network. 2. Informed, collaborative employees . Networks give users a medium to improve communication and collaboration. Do you need to get information to everyone in the company on a new policy or a big sales proposal? Do you want to let employees know the time for a meeting? Send it to the entire company through e-mail and you will make sure it gets to everyone in less time than walking around to each individual. You will also find that a network will improve collaboration. For example, say that you have a question or problem that you want to hear everyone's opinion on, but you don't feel the need to hold a long meeting. Poll everyone by electronic mail and wait for the responses to come back. Or you may have a proposal that you are sending out to a client and you want a few key people to review it first. Send it out to them over the network and they can review it and get it back to you, with changes to the actual document. With a network you can keep people more informed and they, in turn, can work better together. How many times has someone in your company said, "I never got that information," or "I didn't know where to find that"? With a network, you can remedy that situation through various ways of sharing and publishing information so that it is available to anyone or everyone. You can give others access to documents, spreadsheets, sales literature, presentations, policies, photographs, anything. If you can put it in electronic format, you can share it over the network. Networks, specifically the Internet, also give you the ability to access information from outside resources. Workers can access information on a wealth of topics, such as market research, competitive information, tax and copyright laws, and hundreds of thousands of other topics on the World Wide Web. This information allows workers to make better informed, more accurate decisions. 3. Increased productivity . If you have ever had to share a file with someone, you know that it isn't a big deal. You take the file, copy it onto a disk (as long as it fits on the diskette), and walk it over to the other person's desk. They take the disk and put it into their computer and use it. This is affectionately known in the networking world as "sneakernet"--you let your feet act as the network. It works pretty well for sharing a single file. But imagine what happens when the people you've lent your disk to are done modifying your file: They go through the same process to get it back to you. Then you realize you forgot to add something to the file, so you go through the process again, and on, and on, and on. Now take that time that you spend waiting for the file to copy, walking it over, having that person copy the file, and multiply it by the number of people going through the same process in your company. Then add in the number of people doing the same thing to print to someone else's printer. Now add in all the time that people are walking around putting sticky-note memos on each other's computers. Are you starting to see the pattern? There is a lot of time involved in walking around with information that could be sent electronically in a fraction of the time, saving time for more productive activities. You can also save some wear and tear on the office carpet. Once you understand the impact of these benefits, you can review your own needs and determine how to justify your company's investment in a network. (Note: For readers from the accounting side, keep all of these benefits in mind for a later discussion.) Types of Networks Okay, so you have the idea of just how helpful a network can be. So what networking options are available? When people hear the word network they may think about different things. Some picture a huge corporate network stretching across many floors of a building. Others think about a series of networks on a university campus, connected together into one large communications infrastructure or the Internet, with its vast resources and ability to search out important information or even the most ludicrous, unproductive material. Still others think about a couple of computers connected together so that they can play their favorite game with a player on another computer. (Hey, we all have our needs.) Although the lines between networks are becoming blurred, there are essentially three types of networks: local area networks, wide area networks, and the Interact. Local Area Networks A local area network is just what the name implies. It is a network that is local, meaning that it is within a close proximity. A local area network, or LAN (rhymes with pan), connects computers and other resources together. It usually operates in a fairly small environment--for example, within a single room or a single building. On a few occasions, a LAN may go between buildings that are very close to each other. A LAN uses special cabling that goes only a short distance, usually within a few hundred meters at the most. However, LANs are usually quite fast, enabling you to easily share files and other resources. Wide Area Networks A wide area network (WAN) is much broader in scope than a LAN. It is designed to connect multiple LANs, each in a different geographic location. For example, if you have an office with a LAN in New York and another office with a LAN in San Francisco, you can use a WAN to connect the two networks together. WANs use special connections through the telephone company and are also usually much slower than LANs. The Internet Though technically a WAN, the Internet is something quite different from what is normally understood by the terms LAN and WAN. It is a conglomerate of interconnected computers and networks throughout the world. The Interact includes computers, servers (high-speed computers), mainframes, and other devices. Unlike a LAN or a WAN, it is not something you can implement; it is something that you connect to. You are one of a vast number of connected devices to an extremely large worldwide network. The Internet is comprised of many different organizations that use it for many different purposes. Schools, government agencies, small and large businesses, nonprofit organizations, and even individuals connect to the Internet. There are as many reasons to use the Internet as there are people on it. A Word About Network Speeds Before going further, we need to touch on an important topic: network speed. You will find speed discussed throughout this book, so it is important to understand it. Network speeds are rated in bits per second (bps). A bit is the most basic unit of information for a computer to process, designated as a 0 or a 1. When we talk about bps, it translates to how many of those bits can theoretically be sent or received per second across the network. Prefixes such as kilo (thousand), mega (million), and giga (billion) along with a number designate how fast a network runs. Thus, if a network can run at 10 megabits per second (10 Mbps), it can send and receive 10 million bits per second through the network cable. That doesn't mean much to you. I know, because it doesn't really mean much to me. But it does help us understand relative speed. That relativity will help you evaluate how much faster, for example, your 10 Mbps network is than your 56 Kbps (kilobits per second, or thousand bits per second) modern connection to the Internet. Where Do I Go From Here? If I haven't scared you away yet with this brief overview of network types, then you are ready to move on. You may already have an idea of what is best for your needs and even how it may benefit you. For example, if your company doesn't have more than one location, you probably don't need a wide area network. Or, if you need to communicate with customers, you may want to read up on the Internet to find out how to make best use of this resource. The rest of this book is assembled so that you can move from subject to subject and find specific areas that may help you. Don't worry about jumping ahead and ruining the ending because the conclusion--that networks are important for your small business--is the same no matter how you get there. My suggestion is that you use the next three sections of the book to develop a more in-depth view of the types of networks that you think may benefit your company. Each section is independent of the others, with information on the technology, explanations, and examples to give you an idea of how networks are implemented. Taken together, the chapters in this book will help you to get started so that you can know what decisions you need to make. This book was designed to start you on the right path to implementing the solutions your business needs. So follow through the information provided, look at what will work for your business, and begin improving your business through networking and the Internet. Copyright © 1999 William E. Kilmer. All rights reserved.
