The Unsexy Side of Investment

by David Jenyns on December 26, 2008

Not too many investors would link growth with such everyday, unglamorous things as equipment leasing, automobile renting, business-credit checking and employment agencies. As our economy matures and becomes wealthier, the business service industries assume increased importance. A society well supplied with goods and money can afford the conveniences it desires. Furthermore, the growing size, complexity and specialization of business and government favor a host of business services ranging from tax advice to marketing research.

Business services cover only a part of the much broader service industries category, which, in government statistics, includes everything, left after eliminating agriculture, manufacturing, construction and mining.

Factors favoring growth of service companies are freedom from foreign competition and absence of the excess capacity present in the nation’s basic industries. One of the fastest growing services is equipment leasing. To increase sales, it is necessary to turn over inventory. Between 1950 and 1959 there was a rise of about 150 percent in corporate debt due to the rising capital requirements of a rapidly expanding economy. Leasing obviously represents a solution, at least partially, to the multiplying capital requirements.

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