Last week we took a look at recent trends in the three major sources of small business financing. With that in mind, today’s post will focus on where those funds are being spent by the businesses that acquire them.

A recent study by Visa Small Business, released in November, identified key areas in which small businesses are increasing their spending levels. Today we’ll talk about 3 of those areas.

1. Capital Investments
According to this study, there’s been an increase in the number of businesses that plan to invest in things like inventory, machinery, and facilities — capital investments that will grown their businesses. This is a great sign in terms of what it means for the place of small businesses in the economy. The fact that so many business owners are investing in the future of their businesses means that they feel optimistic about their business having a future. Several years ago, that level of confidence in the economy was uncommon.

2. People
Another positive sign for the state of small businesses today is Visa’s finding that companies are increasingly planning to pay their employees more. That’s a great indicator of the health of those small businesses. After all, when a company is failing or feeling doubtful about the future, employee wages (and employees themselves) are often among the first items to be affected in a small environment. At the time it was conducted, the study found that 23% of small business owners were planning to increase employee pay, while that number was at just 17% the previous year. That’s an encouraging 6% jump.

3. Marketing & Advertising
Interestingly enough, the percentage of companies planning to increase their spending on marketing and advertising also rose 6% during the same time frame. At the time of this study, 27% of small businesses planned to increase their spending in this area. One key insight that Visa uncovered when looking at the actual expenditures of Visa Business cardholders was that while their marketing spend has increased overall, the average transaction amount has actually declined by 8.1%. This is an indicator that companies are seeking to ‘market smarter, not harder’ and invest in lower-cost marketing strategies.

One of those strategies is likely social media. As a cost-effective advertising solution, social media marketing has seen a boom in investment in recent years — both in money and in terms of time investment. With this in mind, it’s interesting to note that a small business survey by Manta last April found that a whopping 61% of small businesses don’t see any return on investment on their social media efforts, despite increased time investment. To explain this perceived lack of success, Manta’s CEO Pam Springer points to business owners not knowing how to recognize ROI on social media. An article on usatoday.com sums up Springer’s explanation this way:

“Small businesses get returns from social media – they just don’t know what they are when they see them, and she [Springer] says it’s “good news” that companies are spending more time on social media. If they’re really getting no returns, she says, it’s probably because they don’t know how to launch a successful social-media campaign, and they give up too fast if the campaign falls flat.”

So let that be a lesson to all you small business owners frustrated with your social media efforts thus far — don’t give up on social too quickly, and make sure you know what you looking for when you search for that ROI.

In what areas do you plan to increase spending this year for your small business? Let us know in the comments below.

About the Author: Sarah Matista is the Online Content Specialist and resident blogger at Webs. Loves branding, marketing, whales. Get more from Sarah on Webs’ Blog and Google+.

2 Responses

  1. Reply
    andrea
    Jul 19, 2013 - 08:29 AM

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