Now is the time to Invest in Your Business

Chip Meyer

CEO, The Chip, Inc., a Microsoft Gold Partner focused on technology solutions for small business

I don’t know about you, but when I hear a politician talk about the need to “invest” in something, I hide my wallet.  It doesn’t matter what it is, pick a subject, any subject, the translation always seems to be: I need to pay higher taxes so they can look good during the next election cycle.  Not much bang for my tax buck, if you ask me.  

Hey politicians, you listening?  As long as you keep turning to small business owners to pay for your pet pork projects, how about you occasionally acknowledge that the economy rests on our shoulders?  Fat chance.  Much more likely is that Washington and Sacramento continue to be run by people who have no idea what it means to actually run a business.   No help there.

Actually, that is the secret to the strength of small businesses: we don’t hold our breaths waiting for help from the government.  We see a problem, find a fix, get it done.  Which is why investing in small business is smart, because the money is more carefully managed by people who have proven they know how to get things done. 

So, when times are tough, small business owners need to remind themselves of all of this, and have the courage and confidence to invest in their business.  Studies have shown that companies were able to weather past recessions, and emerge even stronger, providing they remained willing to make that often painful trade between short-term profits and long-term gains.  Smart business owners focused on increasing the productivity of their employees and looking for strategic advantages over their competitors.

Generically, when I advise people about technology purchases, I steer them away from buying equipment based on what they might need a couple years from now.  Buy what you need now: in a couple years it will be cheaper.  One of the glorious features of the tech industry is that the price always drops.  Plus, with the possible exception of Vista, technology is generally a little easier and a bit more reliable with each passing year.   

Between the natural drop in technology prices, and the increased competition in time of recession, some tremendous values can be found in the IT industry right now.  It is a great time to dust off the ideas you thought were too expensive last year, and revisit them.  Look at Voice Over IP (VOIP) systems, electronic document management, messaging and collaboration, virtual offices, or just replacing your old server before it dies.  

Focus on projects that pay for themselves in less than a year, and that can be implemented with minimal impact on your staff.  Prioritize projects that improve your relationship and communications with your customers, either by allowing customers to have on-line self-service, or allowing your employees to provide faster responses.  Look for ways to improve the information you have at your fingertips, so you can make better and faster decisions as you manage your business.

Look for alternatives to the traditional “in house” solution.  There are many Internet-based companies that now offer tremendously valuable services on a low cost, monthly basis.  You can get SPAM and virus filtering, off site data backups, web and email hosting, Customer Relationship Management (CRM), and even your accounting software, on a hosted service, for much less than the cost of buying new servers and software.

For the larger projects, when you really do have to finally buy that new server or replace your phone system, keep in mind that the IRS offers an accelerated deduction on such projects.  The “Section 179” deduction allows most businesses to write-off up to $250,000 of business equipment purchased during 2009.  My CPA, Rick Grandinetti, also pointed out to me the advantages of taking the Section 179 deduction instead of more traditional leasing.  Obviously, every business ought to look at all the options and talk to experts before making such decisions.

The recession won’t last forever.  I hope Washington doesn’t keep making it worse by piling on a bunch of needless spending, but they probably will.  I hope Sacramento doesn’t stick California’s economy with another round of higher taxes, but they probably will.  Even so, I still plan on the recession ending.  One way or another, in a year or so we’ll be past the worse of it.  And at that time, the business owners that will be ready to take advantage of the better economic climate will be the ones that are investing in their own businesses right now.