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Ahead of the Pack

Small businesses are zipping past bigger companies on the tech-investment track.

By Eric Bender

Opinions expressed by Entrepreneur contributors are their own.

Yes, growing businesses do squeeze every dollar until the eaglegrins, especially during uncertain times like these. Butthey're leading the way in boosting their purchases of computerproducts and services. U.S. companies with 20 to 99 employees havethe highest expectations for improved IT budgets in 2004, with anaverage increase of 10 percent, says research firm Gartner Inc.That contrasts with projected spending growth of less than 1percent among the largest corporations.

Smaller firms are responding more quickly to this year'sincreased cash flows and profits, says Lewis Clark, a principalanalyst with Gartner in Lowell, Massachusetts. They're alsoexploiting a short-term tax break for first-year depreciation.(Covering up to $100,000 in equipment purchases, this break isscheduled to run out in September 2004.) "We're seeing alarge amount of growth in the small- and midsize-businessmarket," agrees Meredith Child, an associate analyst withresearch firm Forrester Research Inc. in Cambridge, Massachusetts.A recent Forrester study found 44 percent of firms with sales lessthan $100 million boosting their IT budgets during 2003. Onaverage, these companies will increase their IT spending by awhopping 17 percent.

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