Paul Swenson's company, Kortec, makes machines that make the plastic for beverage bottles. And while there's nothing stylish or flashy about the business, Swenson is finding that he pays more attention to design than he ever thought he would.

Back in 1996, when his machines were still just prototypes, CEO Swenson decided to pay a visit to a creative consultant, Richard Emmanuel, and ask him to design Kortec's logo and letterhead. Swenson recalls telling Emmanuel that he wanted something that looked big and strong: "Not some wispy willow tree." He feared the logo would be expensive, and in fact, at $25,000, it wound up representing about 15% of the young company's total expenses for the year. But Swenson was adamant about getting a good design.

Why? A major factor was the price tag on Kortec's own machinery, which ranged from $500,000 to $1 million (today it sells for $2 million to $5 million). "People won't want to spend $1 million on some podunk little company that's never done this before," he remembers thinking. "We knew we could go someplace else and get something for a couple thousand or we could try to make something on the computer, but when it came to making that first impression, we didn't want to blow it."

Emmanuel designed Kortec's bold yellow-and-black K logo to reflect the "massiveness" of the machines that mold the plastic. "Simplicity," he says, "is the keynote to beauty." Swenson says he felt a return on his investment even in the confidence he was able to exude when presenting his business card for the first time to potential clients. Today, he says, "everyone in our industry recognizes that logo. People have always thought we were a bigger company than we actually are. It's all about creating a positive impression in the minds of the clients, and it's hard to do that with a stupid little thing you made yourself on Microsoft Word."

Looks matter more than ever. We've all heard critics and consumers wax poetic about iMacs, iPods, and even Target toilet brushes. Interior design has become a national pastime, and shows such as Trading Spaces, Extreme Makeover: Home Edition, and Queer Eye for the Straight Guy enjoy a popularity that Bob Vila could only imagine. In her recent book, The Substance of Style, author Virginia Postrel (a former Inc. staff writer) argues that we increasingly make purchasing decisions based on how products make us feel. "In a crowded marketplace," she writes, "aesthetics is often the only way to make a product stand out." In other words, for more and more companies--even manufacturing companies with relatively prosaic products like Kortec's--design is becoming extremely important. It can sometimes be the difference between success and failure.

These days, even an investment research firm like Morningstar is keenly aware of making a good appearance. In the early '90s, founder Joe Mansueto hired the late Paul Rand (a renowned graphic designer who created logos for IBM, ABC, and UPS) to design the Morningstar logo--narrow red lettering with a rising sun as the O-- for $50,000. "Keep in mind this was back when our revenue was only a couple of million dollars. It was a lot to spend," says Mansueto, but he reasoned that it was for a high-quality product that he wouldn't mind keeping for a long time to come: "A logo is something that you want to last." He considers it one of his best investments and continues to put an emphasis on incorporating aesthetically pleasing forms and visuals in the company's print materials, CD-ROMs, and website. "I know that as a consumer, I'm drawn to products that are designed well," says Mansueto. "My house is filled with Sony products because I like their design."

The arguments for good design are especially compelling for consumer products, particularly those made by smaller companies that don't have big advertising budgets. "Big brands like Coca-Cola and Budweiser spend lots and lots of advertising dollars to create an aura around their products," says Michael Bierut, a graphic designer and partner at Pentagram, a multidisciplinary design firm with offices in the U.S. and Europe. For smaller companies without that luxury, he says, their entire chance to convey a message about themselves to the customer is often in the look of the packaging.

For the Flying Fish Brewing Co., whose packaging Pentagram designed, that boiled down to the labels, the caps, and the cardboard cartons. On the one hand, says Bierut, "if it looks like Bud, people will just buy Bud." On the other, "the design needs to follow a certain amount of convention." If something looks too radically different, he says, people aren't as trusting; they suspect it's of lesser quality. "At the most, you want to project an attitude," he says. "At the very least, you want them to know this product won't kill them."

At the most, you want to project an attitude. At the very least, you want them to know this product won't kill them."

Before he started Flying Fish, which is based in Cherry Hill, N.J., founder Gene Muller had worked in advertising. He'd met Bierut on a project and decided to send him a case of beer bottles with blank labels and a note that read, "This space available for good design." He told Bierut that he wanted something fun, something different from the "mountain-range motif" that everyone else seemed to be doing, something that would pop out on the shelf next to a hundred other beers. Bierut sent back several ideas, but the one that Muller liked best was the fish-bone propeller plane. He says the eye-catching imagery not only helped sell his beverage, but the company's merchandise sales (T-shirts, hats, pint glasses, even scrunchies) have been surprisingly strong. "Whenever we go to festivals, we always sell a lot of merchandise," says Muller. "That's been a really nice side benefit."

In some competitive industries, such as the restaurant business, aesthetic appeal is becoming less of an option and more of a necessity. "There are plenty of restaurants with good food. Design is equally as important," says Stephen Starr, a Philadelphia restaurateur whose multiple fine dining enterprises include Morimoto, an ultramodern Japanese restaurant (complete with booths that change color) designed by Karim Rashid. Though Rashid is famous for designing stylish, low-cost home decor items such as trash cans and dish-soap containers, he had never designed a restaurant before. Starr says he chose Rashid because he felt the designer had a great sense of the current Eastern aesthetic. "I wanted something modern and cutting-edge, something you would see in Tokyo today," says Starr, who is opening another Morimoto in New York City this year, this one designed by renowned Japanese architect Tadao Ando. While Ando has done restaurants before (as well as churches, shopping malls, and factories), he is best known for the cultural institutions he has designed, including the Naoshima Contemporary Art Museum in Japan, the Pulitzer Foundation for the Arts in St. Louis, and the Modern Art Museum of Fort Worth in Texas.

Of course, not everybody's buying the idea that you have to be pretty and spend big bucks to profit. Companies like Newport Furnishings, a Phoenix-based furniture retailer, have enjoyed phenomenal revenue growth by taking the opposite approach. In the case of Newport Furnishings, that meant selling its cheaply priced designer furniture out of a stark, no-frills warehouse. "If you go to a Pottery Barn in the mall, it's really a beautiful presentation. That stuff pretty much sells itself," says founder Chuck Haney. "But there's a big price tag that goes with all of that." And apparently there's room for his strategy--his company has grown 909% since 1998.

Postrel argues that adding flair to your business doesn't have to translate into higher costs and higher prices. Just look at Starwood Hotels, she says. When the company gave its hotels an aesthetic makeover, it kept the same budget but intensely scrutinized its costs. It ended up getting rid of the most expensive piece of furniture in their rooms-- the armoire that most hotels use to hide the television. "They thought, 'Hey, if we get rid of that armoire, we'll have more money to spend on the bed, the chair fabric, or a larger desk," says Postrel. "Better design is not necessarily something that has to be superexpensive. A lot of times it's just a matter of thinking about it."