Small but promising level of U.S. economic growth may be the reassurance American businesses need

October 27, 2011

On the morning of October 27, the U.S. Department of Commerce's Bureau of Economic Analysis (BEA) released some promising statistics regarding the American economy. According to the BEA's advance estimate, the real gross domestic product (GDP) of U.S. businesses rose at an annual rate of 2.5 percent in 2011's third quarter. This is a 1.2 percent increase from the previous quarter's rise, when real GDP spiked by 1.3 percent.

Although the BEA release points out that these numbers are stemming from incomplete data, the announcement of any growth in the economy is being seen as cause for guarded optimism. Given the well-documented economic difficulties that the U.S. has experienced in the past few years, this can be understood.

Ian Shepherdson, an economist with data analysis company High Frequency Economics, told the New York Times, "I want to see 4 percent, but given that people were talking about a new recession, I'll take 2.5 or 3, thanks very much."

A primary signpost of this growth is an increase in business investment, including a 17.4 percent uptick in purchases of equipment and software. This development should be the focus of small- and medium-sized businesses (SMBs) in equipment manufacturing.

Since investors are well-aware that production of all types of equipment – industrial, technological, automotive, and so on – is essential to the creation of countless other goods, it is the responsibility of the manufacturers who produce this equipment to consider courting the support of these individuals. Their willingness to invest enough in the livelihood of these businesses to cause an increase of almost 20 percent in equipment purchases is indicative of confidence in the sector.

With that taken into account, the time may be ripe for SMBs to begin efforts to open lines of communication to those who demonstrate a desire to support businesses with the clear potential for success, regardless of their size. Companies should seek out venture capitalists and angel investors with a track record of providing funding for businesses in their sector.

Companies will largely rely on hard performance data – production figures, profits, revenue, efficiency metrics, et. al. – when attempting to court investors. Convincing those with funds to part with them will also involve the promotion of a salable, marketable image.

It is essential for company representatives to prove to investors that their business can outperform competitors in all aspects while also maintaining the public profile of a reputable firm. This can have the added bonus of inciting skilled workers to seek out employment with their company.