Small Businesses Expect Spending to Increase in 2013

A third of the smallest and largest companies surveyed said they expected spending on Web-related promotion to rise this year.

More than 60 percent of businesses of all sizes expect their spending to increase in 2013, including nearly 70 percent of businesses with 25-49 employees, according to Pex Card’s first Benchmark Expense Survey aimed at charting the expenses of small and midsize businesses (SMBs).

Conducted in December 2012, the survey found more than a third of all respondents attributed that anticipated increase to spending associated with growing their businesses. The largest companies (25+ employees) spend the least in sales and marketing as a portion of total expense (26 percent), however, advertising represents nearly 50 percent of their total sales and marketing expense – significantly higher than the 34 percent mark across all companies.

A third of the smallest and largest companies surveyed said they expected spending on Web-related promotion, including website maintenance, registering domain name, site creation, development, upgrades, and other costs, to rise this year.

Staffing expense, including sales staff compensation and incentives, health care insurance and workers compensation, represented half of all itemized expenses. Companies with more than 10 but less than 25 employees spend the greatest portion of their total expense on staffing at 57 percent.

Equipment and office supply costs represented 15 percent of expenses across all segments, however the report noted it represents 20 percent of the expense budgets for the smallest companies. Insurance costs accounted for 14 percent of total expenses, and the relative burden differs significantly across company size, representing 17 percent of expenditures for the largest companies, 9 percent for midsize firms and 12 percent for the smallest businesses surveyed.

Fuel expense, which increased at most companies in 2012, represents 7 percent of the total expense across all companies. Smaller companies see the smallest bite proportionately with 5 percent. For example, a company of 10-24 employees on average spent $61,400 in fuel in 2012 or 7.4 percent of their total expenses, according to the report.

The average SMB spends nearly $800,000 in the categories itemized in the survey. Expense varies markedly by size of company, from $378,000 for companies with less than 10 employees, to $1.7 million for those that employ more than 25.

One way small businesses are looking to reduce costs in on travel expenses, leading to a rise in interest in unified communications (UC) platforms. Despite these investments, a recent survey by American Airlines found approximately 86 percent of responding SMB travel managers project that their companies' travel will either stay the same or increase up to 24 percent over the next year. Another 6 percent anticipated a travel increase of 25 percent or more over the next 12 months.