Close Close

Life Health > Running Your Business

Most business owners plan to invest in their companies

Your article was successfully shared with the contacts you provided.

Life insurance and financial service professionals who cater to small and mid-size businesses should be cheered by a new survey, which concludes that investing by business owners is on the rise.

A new BMO Harris Bank study finds that the majority of business owners/executives plan on investing in their business in 2014, with upgrading/purchasing new equipment being their primary planned expenditure. Conducted by Pollara, the survey polled 601 American business owners in November.

“Businesses, large and small, are expressing confidence in their prospects for the future,” says Dave Casper, executive vice president and head, commercial banking, BMO Harris Bank. “They’re displaying their confidence in a variety of ways — from technological and equipment purchases, to investments in their most valuable asset, their people.”

When business owners/executives were asked where they would make those business investments:

  • 42 percent said they would upgrade or purchase new equipment;
  • 26 percent plan on hiring more employees;
  • 25 percent are focused on modernizing technology and systems; and
  • 24 percent plan on expanding operations.

“The numbers shouldn’t come as a surprise,” adds Jud Snyder, managing director and head, BMO Harris Equipment Finance Company. ”They reflect what we’ve seen over the past 18-24 months, with companies making more investments in capital expenditures for both maintenance and expansion.”

Thirty-six percent of respondents are not planning on making business investments in 2014, the most popular reasons being the state of the economy and a lack of capital. Some respondents note also that upgrades aren’t now necessary.

Notably, business executives and owners of companies with revenues of more than $20 million per year are particularly bullish, as more than 80 percent plan on investing in their business in 2014. 

The majority (58 percent) plan on making their business investments with cash reserves. Eleven percent plan to fund the investments entirely through borrowing, while 31 percent plan on doing a combination of both.

“These findings display continued conservatism when it comes to the use of debt for funding growth, a conservatism that stems from lessons learned during the recent recession,” says Snyder. ”However, with interest rates still at historically low levels, in many cases, intermediate-term borrowing should still be strongly considered as an option for financing future growth.”