Firms Plan to Hire and Invest in Tech

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While cutting back tops the list of many New Year's resolutions, many small businesses plan to beef up a bit in 2007. Overall, companies don't expect spending that's off the charts, but they say they will staff up, add space, buy equipment, and invest in technology, according to several recent small-business surveys.

Small-business owners aren't as starry-eyed about this year as they were last year, but still about half plan to add space, according to AllBusiness.com. Companies say they are having a tough time finding bodies to fill open spots, meaning they will keep spending money on hiring. It won't be a bad year for companies that want to make those investments, says William Dunkelberg, chief economist at the National Federation of Independent Business. Steady oil prices and interest rates have made the climate fairly friendly for expansion. "The best time to start a small business is the day before recession ends, because everything is cheap," he says. But right now "the cost of doing business has not spiraled up."

Prospects are also looking up for the corner store, which has been hit hard in recent years as more big boxes have moved into the neighborhood, says Peter Horan, CEO of AllBusiness.com. This year the small retailers will figure out how to fight back. "The core notion for small business right now is that you can't just wake up in morning and expect good things to happen," he says. The successful companies will be the ones that can offer something that a big company can't. Horan uses the example of a bicycle maker that started crafting $5,000 custom bikes when it realized it couldn't compete with low-cost models from Taiwan.

Technology will play a big part of that fight, Horan says. The number of small companies with websites jumped to 61 percent from 50 percent last year. But this, Horan adds, will be the year they figure out "how to do it well."