The measure, signed into law on Sept. 27, will not only spur lending to small businesses to the tune of $30 billion, but also will provide $12 billion in tax breaks.
One of these tax breaks increases the amount of investments businesses are able to write off to $500,000 — twice the previous limit. With this legislation, small businesses that invest in new technologies can reap efficiencies that immediately translate to a strong return on investment (ROI).
It is reality that small businesses do not have access to the resources that large businesses and federal government agencies have when making technology decisions. That is one of the reasons why small businesses have been less bullish about expected IT investments compared to their larger counterparts during the budding economic recovery. We see in the findings of our ongoing research, the CDW IT Monitor, a bimonthly indicator that has tracked the direction and momentum of the U.S. IT marketplace since late 2007.
However, as we head toward the end of the year, small business owners are beginning to show more confidence in their ability to make technology investments that will help their businesses evolve and become more efficient. In fact, the latest CDW IT Monitor reveals that 26% of IT decision makers at small businesses think budgets will increase in the next six months, a 3% increase from this time last year.
With small businesses more confident about anticipated IT budgets, the new legislation provides them with an extra incentive to refresh and update technology to drive increasing business efficiency and productivity to take advantage of the slowly emerging economic recovery.
Why the increased optimism about budgets?
The rise in confidence about anticipated IT budgets among small business IT decision makers is based on two underlying dynamics: first, the growing need to replace outdated technology, which, for many businesses is overdue owing to spending curbs during the economic downturn; and second, the constant need to maximize efficiency to remain competitive.
Small businesses typically go through a three-year technology refresh cycle, which means many have already put off their refreshes for as long as possible and are now coping with older and less effective technology. Investing in updated technology could speed up daily operations and allow business owners to focus on what’s important – adding to the business bottom line. One of the biggest areas of investment is in enterprise mobility solutions.
According to Research and Markets' 2010 State of the U.S. Small & Medium Business Mobility Market Report, "mobility is king." There has been a significant shift among small businesses towards adopting smartphones and mobile database solutions which provide an immediate competitive edge in serving and selling their customers, all while reducing transportation costs and increasing efficiency. Mobile technologies increase the productivity of the work force, in most cases allowing business owners to address new business opportunities that arise, regardless of location or time of day.
Other new technologies for small businesses are also helping to increase productivity. For instance, virtualization provides a cost-effective way to access storage and server solutions, enabling companies to increase data storage capacity as they grow without incurring huge overhead costs.
Below is a breakdown of year-over-year CDW IT Monitor results outlining the incremental increases in confidence among IT decision makers at small businesses.
While sentiment about the effectiveness of IT and budget increases have made only small increases over the past three years, the emerging post-recession rebound combined with the new legislation (the Small Business Jobs Act of 2010), is creating the ideal environment for technology investments that will help spur growth in the coming months. What is your company doing to take advantage of this unique opportunity?
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