Investing in Growth

Putting money into your business, even when times are bad, reaps a richer harvest when the economy picks up, according to a new study

By Karen E. Klein

"You have to spend money to make money," the old saying goes -- and the latest look at U.S. small-business owners appears to support that traditional wisdom. Conducted by accounting software giant Intuit (INTU ), the survey polled a national sample of small-business owners in May and June, 2004, and found that 64% who had invested in their companies saw growth over the last 12 months.

The most common investments were: increased advertising/marketing efforts (40%); hiring new employees (25%); acquiring new technology (23%); and offering new products or services (20%). (Respondents were allowed to choose more than one answer.)


  "Investing in your business...may sound like common sense, but it's often a scary proposition when things look uncertain in the economy," says Jill Ward, an Intuit vice-president. "Those with the foresight to invest, however, are clearly doing better than those who don't invest."

The study also found that business owners working with an accountant were more likely to describe their growth as "significant." The majority of the small-business owners surveyed said they rely on their accountants for much more than tax preparation and day-to-day bookkeeping. Some 62% said they looked to their accountants for news ways to cut overheads, and 49% reported that accountants had helped them master new office technologies and improve performance.

When it came to challenges, respondents listed their most pressing concerns as generating fresh revenue streams, coping with rising insurance costs -- and a cause of sleepless nights to amount of investment can dispell: keeping up with competitors.

Have a question about your business? Ask our small-business experts. Send us an e-mail at Smart Answers, or write to Smart Answers, BW Online, 45th Floor, 1221 Avenue of the Americas, New York, N.Y. 10020. Please include your real name and phone number in case we need more information; only your initials and city will be printed. Because of the volume of mail, we won't be able to respond to all questions personally.

Karen E. Klein is a Los Angeles-based writer who covers entrepreneurship and small-business issues.

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