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Small Businesses Still Cost-Conscious, But Making Targeted Investments in Tech

Ring Central Blog


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2 min read

With the state of the economy still uncertain, many entrepreneurs remain focused on preserving cash. But recent statistics also show that small business owners are growing more bullish on their prospects: according to the National Federation of Independent Business, business-owner sentiment rose to a four-year high in February 2012. Additionally, poll data suggests that entrepreneurs are budgeting for targeted technology investments in the next few months.

Sales uncertainty and its effects
By and large, the small business community is adopting a cautiously optimistic approach. Many small business owners are concerned about sales and future cash flows; the NFIB found that just 12 percent of business owners, on net, expect revenue increases in the near future.

So it should come as little surprise that few companies are ramping up hiring. Nearly three-quarters of small firms reported no net change in hiring in February.

Wage increases, too, are staying subdued. SurePayroll, an online payroll solutions provider, found that small-business employees actually earned 0.2 percent less in February than they had in the prior month.

The conclusion, therefore, is that small-business owners remain laser-focused on staying lean.

Tech investments proving resilient
Yet, even as businesses look to keep their payroll expenses in line, many continue to plan for growth in the near future. According to SurePayroll, 50 percent of business owners expect to invest in technology in the next six to 12 months.

Small firms, the payroll company said, hope to make technology upgrades in marketing, business management and infrastructure – three areas that are crucial to boosting sales and profits.

Echoing SurePayroll’s findings is the Equipment Leasing and Finance Association (ELFA), a trade group for the equipment-finance industry. The organization says companies are spending aggressively on technology improvements, particularly in “business process improvement, efficiency, automation [and] healthcare IT.”

Offering further evidence that the private business sector is eager to invest in tech is a recent report from Accenture and Microsoft. The two companies found that nearly 75 percent of oil and gas firms spent as much or more on IT in 2011 as they had in 2010.

And, Accenture and Microsoft say, energy companies are extremely interested in technologies that enable the processing of vast quantities of data from a number of different sources. That means cloud-based data services are well-positioned to take off in the energy sector.

Companies that implement cloud solutions are already reporting record sales as more businesses look to harness the productivity and efficiency benefits that the cloud provides. EMC, for example, saw its consolidated revenue jump 18 percent between 2010 and 2011 — a rate of growth that may only increase this year.

For most business owners, cautious optimism is the order of the day. But the fact that so many companies plan to invest in technology speaks to both the importance of having a robust technological backbone and the cost-effectiveness of tech platforms and services. Even as cost containment remains a focus, tech upgrades are garnering the attention of small business owners — a powerful indication of the value of smart tech investments.

Originally published Mar 27, 2012, updated Aug 07, 2020

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