One of the provisions of the newly passed tax cut package is a quadrupling of the expensing limit for small businesses to purchase capital items to improve their businesses, to $100,000 from the current $25,000. But where should small businesses invest to bring the biggest return? In our increasingly wired world, IT provides the greatest business benefits. Here are five examples:
1. Improve customer loyalty. Customer loyalty is the heart of business success, and it often results from having a greater understanding of what customers want and need. By harnessing customer relationship management (CRM) software or business intelligence tools, small businesses can more successfully identify, develop and retain customers.
2. Boost employee productivity. Enabling workers to be more productive--whether in the office or on the road--focuses their time on tasks that will deliver immediate bottom-line results. For example, sales-force automation tools eliminate many repetitive tasks of managing a sales team. New wireless technologies can make business travelers, off-site workers or even employees on the factory floor more productive by giving them the tools to access company information wherever they are.
3. Increase security to protect vital records. For most small businesses, the information on its computers--such as customer lists and financial data--is irreplaceable. Business recovery solutions, emergency response management systems, and self-healing software and hardware can help small businesses minimize potential security risks.
4. Enhance operating efficiency. As a small business grows, it should think about integrating its financial software with other systems. For example, accounting can be part of a larger software solution that tracks orders and inventory more efficiently and assists in invoicing. Marketing automation tools, meanwhile, can help businesses better track the effectiveness of advertising or marketing efforts.
5. Achieve faster growth. Getting involved in e-business by using the power of the Internet is a key opportunity for growth. For example, a company with a brochure Web site can start selling or servicing its customers online. It can use information it gathers from its site to begin an Internet-based marketing campaign, targeting messages and offers based on these user profiles. It can even set up an extranet to share information with its key trading partners, reducing the time it takes to fulfill orders received online.
The proposal to quadruple the current expensing limit for depreciable items is a recognition of the crucial role small businesses play as an engine of the economy and in new job creation. For many businesses today, there is perhaps no expenditure capable of delivering a return on investment equal to that of IT.
Greg Adams is vice president of Small and Medium Business for IBM Americas.