Digital Entrepreneurs The programs--from databases to accounting and office suites--you need to make it work
(FORTUNE Magazine) – If you're a small business owner, you've got some big clout--and plenty of new software designed to meet your needs. After years of trotting their wares to FORTUNE 500 firms, software companies are suddenly paying heed to the small business market. And why shouldn't they? The rapid growth of small businesses is enough to make any vendor salivate--and any small business owner feel strength in numbers. Small businesses now employ more than half of the private-sector work force and contribute 50% of the private gross domestic product, according to the U.S. Small Business Administration.
What's more, they are big spenders on technology. The average small business spends about $1,900 a year on software, for a total market of $11.1 billion, says the Software Publisher's Association (SPA) in Washington. Businesses with fewer than 100 employees are buying new computers at a rate twice that of larger businesses, according to IDC/LINK, a market research firm in Framingham, Mass.
Small businesses can be more agile, too, in quickly adopting new technology. They converted to Microsoft's Windows 95 more rapidly than many larger companies, and they've also been crowding onto the Internet.
So it's no wonder that companies from Microsoft to Intuit are stepping up their introductions of software tailored for small businesses, and adding new features and communications links to existing products. Small businesses have special needs, too. Unlike big corporations, they generally don't have an information technology staff--so ease of use, training, and the availability of technical support are often more important than price alone. "They're much more sensitive to things like service and access to the technology," says Cheryl Ball, director of research at BRG, a market research firm in Newton, Mass.
It's not that small business owners aren't technologically savvy. Many digital entrepreneurs are expatriates of corporate America: some of the best from the likes of AT&T and IBM who left to set up their own businesses. They are computer literate, but they don't have time to fiddle with unnecessary features. "These people need something really minimal--they don't worry about audit trails or understanding financial dynamics," says Ron Verni, president of accounting software vendor Peachtree Software. In accounting and payroll programs, for example, small businesses often don't need the account consolidation or multi-currency features that larger firms do.
In today's market, small businesses can meet most of their software needs by buying an office suite, which bundles must-have programs, like word processing, spreadsheets, and databases, with clever extras ranging from clip art to multimedia. The leading suites--Microsoft Office 97 Small Business Edition, Lotus SmartSuite 97, Corel WordPerfect Suite 8 Professional, ClarisWorks Office, and Microsoft Office for Macintosh--offer power and sophistication at attractive prices. The latest versions generally feature better integration among component programs, with consistent menus and tool bars for each. And they've been upgraded with new features for Web publishing and other tasks.
Not surprisingly, Microsoft Office is the hands-down favorite, followed by the Corel and Lotus suites, according to PC Data, a research firm in Reston, Va. Yet each of these suites is a resource hog, requiring up to 100MB of disk space and 16MB of memory to run. Smaller businesses should also check out the new ClarisWorks Office, a lighter--but still worthy--package that only requires half as much disk space as the others.
Although quite versatile, the office suites won't meet all of your needs. Of the must-have software not included in suites, the most important for small businesses are accounting and payroll programs. More than 78% of PC-owning small businesses use an accounting and finance program, according to the SPA. Quicken's QuickBooks Pro is the market leader, followed by Peachtree Complete Accounting and Best!Ware's M.Y.O.B. Accounting With Payroll. Recognizing that most small business owners are not certified public accountants, software vendors have designed these programs to combine power with ease of use.
A desktop publishing program also belongs on the must-have list for many small businesses. Despite the Internet, most businesses rely heavily on brochures, newsletters, and other print materials for sales and marketing. The desktop publishing programs for small businesses generally cost less than $100 and provide all the 3-D rendering, animation, and layout features you'll need. Software Publishing has two contenders, for larger and smaller small businesses respectively, in Serif Publishing Power Suite and Serif PagePlus Home/Office. Micrografx's small business publishing program, Ready, Set, Go, helps users create business cards, stationery, and flow charts. It provides some of the sophisticated layout features of the leading, professional desktop publishing programs, Quark's QuarkXPress and Adobe's PageMaker, at a lower price.
You may want a separate database program as well. Most of the office suites include one, though Microsoft Office Small Business Edition does not. A database organizes information and lets you quickly pull up any fact or piece of information. There are several good databases available. Microsoft's Access, which is included with the regular version of Office, is the most powerful, easy to use--and expensive--database for stand-alone personal computers. Other contenders include Claris's FileMaker Pro, Corel's Paradox 8, and Alpha Software's Alpha Five.
As you build a portfolio of software, you'll probably want to include a contact management program, too. Keeping track of who's who is essential. Good contact management software offers strong call-management features, flexible note-taking capabilities, customization options, and the ability to synchronize information with the leading databases. There are dozens of programs available, with Symantec's Act!, NetManage's Ecco Pro, GoldMine, and Maximizer leading the crop.
The latest trend is to use contact management software with PDAs (personal digital assistants) and other handheld devices. "The need to retain your customers is all-important," says Michael Gama, director of marketing service at Now Software, maker of the new Connecteer contact manager product line. Many of the programs provide the ability to synchronize the contact information on your desktop machine with other devices--from handheld computers to cell phones and pagers.
Digital entrepreneurs are quickly getting hip to the power of other programs. Project management software--once mainly for 747-sized engineering projects--has been downsized for small businesses in programs such as Microsoft Project, AEC Software's FastTrack Schedule 5.0, and Scitor's Project Scheduler 7. These programs will help you keep complex projects running smoothly. Fax utilities and other programs that transform the computer into a versatile communications hub are also popular, and no one should compute without trouble-shooting and maintenance utilities software. As the Safety First story in this issue demonstrates, there is a wide range of utilities and maintenance software to choose from.
Perhaps the biggest change for many small businesses is the sudden popularity of the Internet. Almost overnight, the Net has gone from being a curiosity to an essential resource, marketing, and communications tool. According to BRG, 61% of small businesses are now connected to the Internet, compared with just 15% in 1996. Vendors of small business software are providing Internet links so users can upload data from their applications to the Web. And use of Web publishing tools--which enable small businesses and individuals to design their own Web pages and manage small sites--is soaring.
The rush to the Net is not surprising. These days digital entrepreneurs must continually step up their use of technology to compete effectively. "There's a high correlation between owners' techno-savvy and how advanced the company's use of technology is," says BRG's Ball. "If they don't 'get it,' they hang back or make big mistakes."
Of course, like any market, the small business sector has its leaders and followers. BRG has identified at least five market segments--ranging from the "Hip to Technology" to the "Luddites." The "hippest" group is the largest, representing nearly a third of the small business market and spending the most on information technology. In the middle are businesses that are gamely trying to use the latest technology, as well as those who are slowly following the crowd. Then there are the Luddites, who account for about 13% of small businesses and either don't understand technology or don't think it is important.
But that's a big risk. Today, immense computing power and the resources of the global Internet are available even to the very smallest businesses. In the digital economy, businesses--large or small--that don't take advantage of the latest technology may not survive for long.