When Fernan Restrepo computerized his three-person leather wholesaling firm, he hoped that the wonders of technology would help it run more smoothly, freeing up time from tedious record keeping. But he had no idea what he was getting into.
With little knowledge of computers, he tried to teach himself to use a system that turned out to have major flaws. Since he was slow to detect the errors it generated, Restrepo nearly lost his business. If he had started with more information and had reacted more quickly to the program's apparent flaws, he could have saved himself a lot of trouble.
Choosing the cheapest hardware and software he could find, the 31-year-old entrepreneur set about entering his company's inventory and billing information into the computer, and relying on the software program to make important decisions about purchasing and which customers to pester about their bills.
But two short months after Rockville-based World Network Trading Corp. was up and running on the new system, Restrepo said, problems began to crop up. Unable to pinpoint the source of the problems, which appeared to be occasional, Restrepo went about his business and got deeper and deeper into trouble.
Five months later, he said, the errors, which were most pronounced in the accounts receivable part of the program, were close to putting him out of business. Many of the bills the computer was generating were wrong. And neither he nor his customers knew exactly how much he was owed.
"I lost control of the business," Restrepo said. He didn't know whether he was making money, and the investor who was backing the one-year-old company was not happy. Although the company was growing despite the slowing economy, keeping up with bill collections was important. Clients who usually paid on time were starting to take 60 or 90 days, so Restrepo needed to get on the phone and find out where each account stood.
"In bad times, if you don't remind people that they owe you money, then you're at the bottom of the list," he said.
Like many small-business owners, Restrepo felt the pressure to computerize. His annual receipts were approaching $500,000 and he thought his time would be better spent selling to and keeping up with customers than counting merchandise and leafing through his growing account ledgers.
But like many small-business owners, Restrepo didn't get enough education about the process. Although the system he bought handled all the business functions he needed, it may not have been the right one for him. Afraid to talk to competing wholesalers about their systems, he purchased his program without getting the recommendation of someone who had used it the same way.
After working unsuccessfully with a consultant for more than four months to get his original system to work, Restrepo decided to scrap it and start from scratch with much more expensive hardware and software designed specifically for wholesalers.
His problems could have been averted if he had done more homework, accounting and small business experts said.
Many companies get into trouble or under use their computer systems because they need more information.
"The initial hurdle is a gigantic one," said Thomas Gray, chief economist for the Small Business Administration's advocacy office in the District. Gray said he has seen many small retailers who have bought automated cash registers, only to save the tape -- with important information about the company's sales and inventory -- in a shoe box.
By learning about systems and how to use them, business owners benefit from computers more as well as avoid troubles like Restrepo's.
Pasquale De Pandi, who handles the books for his father's Georgetown clothing boutique, said their switch to computer software went smoothly because the accountant who does the company's tax work was familiar with a suitable accounting program. The accountant set up De Pandi on the new system and has been on hand to answer questions that arise.
De Pandi said he has used a Macintosh computer in the past but that the new program runs on an IBM, so the commands differ from what he was used to. "I've had little problems," he said. "It's kind of confusing sometimes."
In the absence of someone who is well-versed in accounting software, many companies bring in consultants to hold their hands in purchasing and installing equipment. While the bill for such a service can run into thousands of dollars, the alternative is doing a lot of homework.
The best place to start is usually not at a computer retailer. Several magazines on personal computers discuss the latest programs and equipment, and there are hundreds of books on the subject as well. Many small business development centers offer primer courses on setting up systems.
Consultant Leon Taksel said many business owners are not prepared to make the switch to computerized systems because they do not know even the basics of personal computers.
One common mistake Taksel said he sees businesses making is not backing up records with second copies of discs. A power surge or malfunction in the computer can cause a program to lose data.
Novice users can get themselves into trouble because they do not understand that working with computers requires a meticulous mind-set, Taksel said. They need to read the manual carefully and follow instructions precisely, he said.
In addition, if the users' accounting books are not in good shape, they may not have all the information the computer needs. "It's a process-oriented, step-by-step thing," Taksel said.
"Usually when you deal with a micro-computer-based system you'll have much greater cost on training and support than on hardware," Taksel said. Many small companies require such help, he said, because, "the average person doesn't have time to sit down and play with it all."