Small businesses that have seen increased sales, revenue and profitability over the past year credit their success in part to an increased investment in technology, according to a new study from the financial services company Bank of the West.
Overall, 52 percent of businesses experiencing growth have bolstered their technology budget over the past year, compared with only 15 percent of declining businesses.
The research found that growing small businesses are nearly twice as likely as contracting businesses to think investing in technology will be important to their business's success in the next year. Specifically, these businesses expect technology to play a critical role in attracting new customers, providing a better client experience and making internal processes more efficient.
"While some businesses see technology as a way to improve their customer experience, it may also be an opportunity to propel small business expansion moving forward," Michelle Di Gangi, executive vice president of small- and medium-size enterprise banking at Bank of the West, said in a statement.
One way in which growing businesses will use technology to improve the customer experience is with an increased investment in point-of-sale technology. The study found that 43 percent of expanding small businesses expect to start using mobile payment systems in the next year, compared with 15 percent of contracting businesses. Additionally, 27 percent of growing businesses are planning to implement tablet payment systems, compared with 12 percent of declining businesses. [Understanding Innovation: How Businesses Adopt New Technology ]
"Technology serves an important role in advancing the customer experience, while boosting profitability by streamlining operations and freeing up resources to pursue growth," Di Gangi said. "Small businesses that can keep up with the pace of change and pinpoint strategic technology investments will push ahead of the pack."
After years of just trying to weather the economic storm, many small businesses are now trying to transition into a growth mode. The study discovered that over the past year, 35 percent of all the businesses surveyed invested in new products, while 28 percent increased their marketing budgets. Additionally, one-third of small businesses plan to hire new staff in the coming year.
Not everyone, however, is seeing the type of growth they would like. Nearly 40 percent of the businesses surveyed have made cutbacks in the last year, such as reducing employee hours, discontinuing products or services, or cutting back on marketing budgets.
"Small businesses that have built a strong foundation for expansion through sound business financials and strategic investments appear prepared to seize the growth opportunity ahead," Di Gangi said.
The study was based on surveys of 499 U.S. residents who own a business with two or more nonowner full-time employees and less than $10 million in annual revenue, and which has been in operation for at least five years.