Small Business Is Borrowing? Then It Must Be Spending
Two surveys out this week report that loan demand from small businesses is on the rise, and —depending upon what statistics you examine, at its highest level since 2005or November 2007.
If small businesses are borrowing, they must be spending. We asked members of our Small Business Councilto fill us in on whether they are planning to spend in 2012, and if so, what they plan to buy. As always, these guys were happy to oblige. From restaurant renovations to purchasing new buildings and equipment, this group of business owners tell have plans for growth in 2012.
Madelyn Alfano, president, Maria’s Italian Kitchen: “Customers are a valuable commodity so we to provide a comfortable, clean environment. I’m budgeting at least $150,000 over our 10 locations to do things such as remodel our bakery to expand into the wholesale market at a cost of $25,000, and redesigning the bar in our downtown location to appeal to young professionals, who seem to have discretionary income. That will cost about $50,000.
Beezer Molton, president, Half Moon Outfitters: We just purchased a Sprinter Van at a cost of about $34,000. And we are buying a new building to add a store in 2012. We will be taking advantage of the great owner/occupied bank financing that is available, coupled with historically low prices. This will allow us to get into a market we could not have afforded five years ago.
Larry Mocha, president, Air Power Systems: “We were motivated in December to buy new equipment because of our concern that the IRS’s Section 179 deduction (in its present form) may not be available in 2012. Because we had a good year last year and anticipate a similar experience this year, the opportunity to have the benefit of accelerated depreciation is important to us.
We ordered a new machine from a factory in Kentucky that had a backlog of orders; it will be several months before we receive the machine. I assume that means other companies also had a good year and that things are picking up for U.S. manufacturers. These machines run about $100,000 per machine, plus set-up. The last time we purchased equipment was about six years ago. Technology has changed and the equipment has improved, so we welcome an improvement in the economy that gives us the opportunity to upgrade our equipment.
Marc Schupan, president and CEO, Schupan & Sons: We have no hard number for a budget this year, but we have funds available if needed. We’re looking at acquisitions which could certainly require additional capital. Long-term, we view slow improvement throughout the year. We have taken an optimistic view. It is a little like an economist’s predictions of, “If you live long enough, at some point in time, you will be right.” In light of that, we had capital expenditure projects in all three of our divisions last year; these were done to support 2012 expectations. Our projects included spending $2.2 million to increase the size of a warehouse in Michigan; improving our communications system with a new VoIP system to link all 10 facilities across four states for a cost of $160,000; and converting 16 semi-tractors to natural gas.
Ric Cabot, owner and founder, Darn Tough Vermont: “Our branded business has doubled the last two two years, and we are eager to keep pace with demand. To that end, we are planning on capital investments this year for additional machinery and computer infrastructure investments. We may also expand our physical footprint.”
Joseph Dutra, president, Kimmie Candy Company: “I felt that, after very good sales increases in our traditional slow months of mid November to mid January, I could risk capital and more of my hair for market growth.
We’re planning to add production capacity to our Reno facility this year. The cost of equipment , chocolate storage and packaging equipment will cost anywhere from $150,000 to $250,000. We had put off expansion last year until we felt the economy and our candy business had a little more stability. I can’t say the economy is great, but I feel a little better on where we are going in 2012 and understand better the hurdles.
David Greiner, president, Greiner Buick GMC: This year we will be making some structural capital expenditures that are aimed at enhancing the customer experience and increasing revenue. The capital expenditures are aimed specifically at making more money from existing volumes rather than a projected increase in the number of customers.