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What are the top areas that businesses invest in when they are optimistic?
I am looking for answers that provide insight into investments such as: hiring in specific areas (e.g. sales, HR, etc.); capital expenditures (e.g. technology, equipment, etc.); and strategic initiatives (e.g. marketing, etc.).
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4 Answers
I don't think it's necessarilly sales that businesses invest in when they are optimistic, in that it's sales that drives the optimism in the first instance.
I think it tends to be areas with demonstrable business benefits, that could have been ignored in tighter times, such as HRMS systems (enables further gearing for growth, high time savings and cost efficiencies but high initial investment), training (always the first thing to be dumped when times are hard), or large scale marketing programs (media progression for print to TV for example).
But really smart businesses invest in the right things at the right time, and will (if they're able) scale up during the rough times (you can get higher discounts, better supplier relationships etc.) because it's more economic to do so.
I agree with Nik, and would add the observation that optimistic companies tend to invest in IT more than pessimistic companies. This is likely because as Nik points out, IT-enabled solutions such as those for HR management, CRM and sales force automation (SFA) can improve productivity, customer care, lead nurturing and other functions that contribute directly to revenues and profits. I've seen several enterprises run by really smart people increase their investments in IT with clear business benefits, in boom times and even otherwise -- not only for the reasons Nik mentioned, but also to gain a lead over more hesitant competitors.
Another point of view -- according to a recent blog entry at InformationWeek SMB's Small Biz Resource, "Business Owners See Stockpiling Cash As Best Survival Strategy," "Stress levels for business owners are at an all-time high and most believe that hording cash is a better strategy than investing in the business." Not the most strategically elegant strategy, nor very promising for solution providers, but an interesting finding nonetheless. Read the entire blog entry at http://smallbizresource.informationweek.com/bmightyblog/main/archives/2010/03... -- and share your thoughts with the Focus community!
We serve a large client base of SMB's primary in the greater NY metro area. We are seeing a distinct rise in optimism over the last two months and companies are becoming willing to invest. There is a big up tick in interest and investment in Customer Relationship Management (CRM) and Purchase to Pay solutions. This is driven by a desire to increase sales, improve customer retention and managing costs more effectively. It is also driven by management's desire to have a better handle on what is going on in their companies. This interest is also reflected in a big interest in better reporting an business intelligence tools.
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