Making chicken mcnuggets out of Chicken Little.

• Author: MILNE, JOHN

Chicken Little would be proud.

Writers for the major business papers, magazines and TV news have declared the sky is falling on the Internet and dot-com scene and the NASDAQ chart for the past month is offered as clear evidence. Top that off with a surge of bankruptcies, Bill Gates losing a few billions of net worth and Dell Computers running a fire sale, and who would blame the average consumer of business news for nodding agreement?

While fingers are pointing in every direction imaginable, not many writers seem willing to stick an imaginary pin in the hot air balloon that carried investors ever upward toward a sky that seemed to have no limits.

Investors, incubators, and government largesse aside, it seems a lot of players forgot to put the basic truth of profitability into their much-vaunted business plans. Income has to be greater than expenses for a company to survive. Direct investments and revenue from selling stock in a company isn't income. Income is derived from selling goods or services for cash. Seems a lot of people either didn't know this or forgot it along the way, and, when they used up the investment they laid off their cherished employees by the thousands to stop the hemorrhage of expenses. Eventually, when they still hadn't sold anything, they closed their doors.

Kids with degrees in computer science or engineering don't have the skills or knowledge to run a business. You can dress them up in suits, make them carry briefcases and train them to handle media interviews, but they still won't know anything about cash flow, marketing or sales.

None of this makes the Internet as had as the doomsayers would have us believe.

There are business people Who have built successful corporations with real sales and positive cash flow who have added e-business to their offerings the right way...as a marginal business generator. They didn't squander millions of dollars on their schemes. They started small but With a plan for growth as business developed.

Case in point: Lee Valley Tools in Ottawa sells fine woodworking and gardening hand tools. Over the years Leonard Lee built the company's reputation and sales on excellence in product and customer service. There are now well-appointed stores in Toronto, Halifax, Calgary, London, Winnipeg, Edmonton and Vancouver, but a vast portion of total sales results from wide distribution of their premium-quality mail-order catalogues to people in remote spots like Sudbury and Spusm where the company...