BUSINESSWEEK ONLINE: DECEMBER 4, 2000 ISSUE

Frontier -- In Box EDITED BY
KIMBERLY WEISUL

Make Hackers Hate You

Skilled hackers number only 3,000, says William Malik of researcher Gartner Group. But most small-business defenses are weak, and hackers know it. You stand a 50% chance of getting hacked by 2003 if you manage your own computer security, Gartner says--and more than half the victims won't be aware of the breach.

How to protect yourself? For dial-up access, consolidate individual desktop modems into one easy-to-defend unit or ''pool.'' Outsource fire wall and intrusion services--for less than half the salary of a good tech pro, says Gartner. Smaller companies can get a free five-user fire wall from NetGuard Inc., at www.netguard.com.



Model Entrepreneurs

A star hasn't been born--yet. But clothing maker Slates is auditioning entrepreneurs for its fall 2001 advertising campaign.

Slates says it's looking for ''passionate entrepreneurs.'' Mark Thornton figures he qualifies. The 27-year-old studied conservation in Tanzania for five years, then co-founded Livingstone Expeditions, a San Francisco-based African safari company. ''We're fairly attractive guys,'' says co-founder Sam Cimino. ''It's worth a shot in the dark.'' Which they hope will lead to a shoot under the lights.



TABLE: A Reluctant Helping Hand

You'd think President Clinton's recent order that federal agencies give at least 5% of their work to small and disadvantaged businesses would be good news for the small and disadvantaged. Well, the Departments of State and Labor already have 5% goals, and they do a lousy job meeting them. In 1999, the Small Business Administration contracted 7.5% of its work with qualifying companies. Too bad SBA's goal was 8%.

Now that federal agencies have to contract 5% of their work to small disadvantaged businesses, who will make the grade?

1999 SHARE
OF CONTRACTS
Leaders
AGENCY FOR INTERNATIONAL DEVELOPMENT 10.6%
TREASURY DEPT. 7.8
SMALL BUSINESS ADMINISTRATION 7.5
COMMERCE DEPT. 6.9
GENERAL SERVICES ADMINISTRATION 6.5

Laggards
HOUSING & URBAN DEVELOPMENT 2.9%
NASA 2.7
LABOR DEPT. 2.5
STATE DEPT. 2.1
OFFICE OF PERSONNEL MANAGEMENT 0.6

DATA: FAILING TO MEET THE GRADE, OFFICE OF REPRESENTATIVE NYDIA VELAZQUEZ



A Date with an Angel

Since Nasdaq's April plunge, angel investors have become a lot more careful about where they put their cash. Frontier asked David Gerhardt, head of angel group The Capital Network, for some funding advice in these more demanding times.

What's important to investors now that didn't matter eight months ago?

Customer verification. Entrepreneurs need to really talk to customers or potential customers. They need to get a sense that customers will buy their product and pay enough for it.

Have expectations changed about time frame and return?

Angels start to get excited nowadays when they see a 5-to-10-times return over three to five years. Before, the window was just 18 months to two years.

Which industries do investors like?
There's more interest in health sciences. It was hot 10 years ago, then the bubble popped. Now, it's back. That's the cycle. Maybe next week it will be wireless.



For Armchair Entrepreneurs

So you've had it--time to move to the south of Spain and open an inn. Or maybe a high-tech company out West is more your style. Thanks to a slew of new Web sites, you can daydream online--and maybe even find a business to buy. Try BizQuest.com for detailed info up front. BusinessesForSale.com, with its international scope, is the most fun to browse. Ventures4sale.com lets you apply for financing online. Of course, you'll still have to go kick the tires, but at least you'll know if it's a junker or a Jaguar before you look.



A Better Way to Do Business?

Dave Longaberger was a restaurateur, grocer, and pharmacist before he founded Longaberger Co. in 1972. In Longaberger: An American Success Story, he argues that business is about philanthropy, that management is simple, and that small-town living is underrated. Nave? Not so fast--in 1998, Longaberger Co., a basket manufacturer, reached $700 million in sales.



Frontier Online

V.C. Fever Abroad
U.S. startups, despite their reputation as technology innovators, are about to face tougher competition from Europe. While the amount of venture investing in the U.S. has slipped for two consecutive quarters, global venture investing, including buyout funds, is expected to jump 47%, to $200 billion this year. Of that, some $70 billion is expected to go to Europeans, says PricewaterhouseCoopers and 3i Group PLC, an equity investment firm in London. In 1999, a banner year for American venture investing, U.S. firms raked in about $36 billion.

European investing has boomed thanks to new stock markets designed for small-cap companies, changing tax laws and deregulation. The very success of the U.S. has proved inspiring, too. European investors have adopted a ''mass belief in the economics the U.S. has achieved with low inflation, low unemployment, high consumer demand, and high innovation,'' says Martin Gagen, president and CEO of 3i's U.S. operations.

Small Biz Slowdown
The stumbling stock market and slowing sales are forcing small businesses to reexamine their forecasts and budgets. ''People are looking at the markets and starting to get worried,'' says Christopher Wysocki, president of the Small Business Survival Committee. ''It's gut-check time.''

Only 3% of small businesses reported higher sales in the third quarter, says William C. Dunkelberg, chief economist for the National Federation of Independent Business. Dunkelberg expects sales to weaken further in the fourth quarter, and he says that cutbacks in capital spending are reminiscent of those that preceded the past two recessions.

For the full stories, click Online Extras at smallbiz.businessweek.com



One Iota

TAKE THIS JOB...
64% of small-business owners say they make more money than they did as an employee





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Cover for Dec. 4, 2000 issue of frontier
Contents for Dec. 4, 2000 issue


STORIES:
Make Hackers Hate You

Model Entrepreneurs

TABLE: A Reluctant Helping Hand

A Date with an Angel

For Armchair Entrepreneurs

A Better Way to Do Business?

Frontier Online

One Iota

INTERACT
E-Mail to Business Week Online


 
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