(FORTUNE Magazine) – Yaffah daCosta, a 30-year computer systems and project-management veteran, hung out her shingle as a Y2K consultant in Texas a year ago, only to find customers staying away in droves. "There's no business out there," she says with some bitterness. "Small companies have their heads in the sand, ostrich style."

She's right. Big businesses have so far spent billions to quash the Y2K bug and have largely succeeded, according to a Congressional report published last month. (Unless you've been in a coma, you know that date-dependent computer systems get flustered or shut down when they see a year denoted as "00.") Nevertheless, "small businesses are not out of the woods," says Tom Oleson, the principal Y2K analyst for IDC research of Framingham, Mass. According to IDC, 31% of companies with fewer than 100 employees will not be prepared to face the new year. And companies with fewer than ten employees--particularly retailers, business and legal services, and small manufacturers--are the least prepared of all.

No one can know for sure exactly what will occur when the world's computers experience their universal hiccup.

Still, with so little time left, Y2K experts say, it's time for entrepreneurs to plan for contingencies. Here's what you should be doing in the remaining days of 1999:

Fix your most critical hardware and software. If your PC was manufactured in 1997 or later, or you own an Apple Macintosh, your computer's system software will likely continue to operate. Otherwise, upgrade your system or install a software patch. Also, check the Websites of software manufacturers to find out whether your applications will continue to work. To hedge your bets, back up your files and print out critical data.

Develop manual processes for critical business functions. Make a list of the things on which your business depends, and fix those first. These could include a malfunction in your computerized customer database, refrigeration system, or telephone call center. Afterward, develop manual alternatives.

Line up backup inventory and suppliers. If your suppliers can't guarantee timely service come Jan. 1, look elsewhere. Consider partnering with other local businesses in search of the same products to find millennium-ready vendors.

Establish an emergency fund. Have enough reserve cash to cover unexpected business snafus and to meet payroll for two weeks. Besides tapping a line of credit, consider turning to the SBA (www.sba.gov), which is offering Y2K Action loans through Dec. 31, 2000.

Check your company's telephone lines. Make sure your phone company is ready for Y2K; if it isn't, switch to a company that is. Customer premise equipment (CPE)--internal telephone systems that handle call accounting and voice mail--may not work. If your company uses CPE, make sure you have at least one outside telephone line that's not linked to the internal system.

Send and receive mail early. Major package and postal couriers such as FedEx and UPS may face problems in January if air-traffic-control systems mess up. The U.S. Postal Service had lagged behind its repair schedule. To avoid possible delivery problems, consider sending or receiving as many materials as possible now.

Protect your company from potential lawsuits. In June, Congress placed a cap of $250,000 on lawsuits arising from the Year 2000 technology problem. But disgruntled consumers, vendors, and suppliers could still go after you, so make sure your commercial general-liability insurance policy is up to date.

Get your files in order. Make sure you have paper copies of everything related to your business, including insurance, invoices, payroll forms, bank statements, and receipts. The IRS computers could well experience problems, so keep copies of all your tax information and check all transactions for errors.

Prepare for emergencies. Contact your landlord to make sure the security systems, heating, and other services in your building will work in January. It's also wise to find out how local community organizations such as the Chamber of Commerce, YMCA, and fire department are gearing up to help small-business owners. These measures should inoculate your business against the millennium bug.