Confidence bounces back as businesses think of efficient growth initiatives
South African business confidence has bounced back 2 Index points to 117 since September, inverting the decline recorded between March and September 2011, according to the global Regus Business Confidence Index. Although companies reporting revenue growth decreased, those reporting profit growth (39%) remained stable with a 1% increase compared to six months ago. Mindful of the need to contain costs in the quest for sustainable growth businesses identify introducing more use of pay-as-you-go business services, more flexible workspace and increased sales through third parties as the most effective cost cutting measures for the coming months.
· Looking back, South African firms identify difficult access to cost effective capital (49%) as the main reason for corporate distress during the downturn followed by the cost of inflexible margins paid to distributors, resellers and introducers (47%);
· Respondents identified more use of pay-as-you-go business services (50%), reducing fixed workspace (45%) and increased sales through third parties (41%) as the areas where companies could best make savings without damaging growth prospects;
- South African firms report that a wider distribution of customers (48%) and improved access to capital (32%) and would make the greatest contribution to enhancing future business stability as a platform for growth;
- Globally, the Business Confidence Index rating is lower for small businesses (107) than for large firms (124).
Kirsten Morgendaal, Area Director for Regus SA comments: “Finally, after a significant setback between March and September 2011, business confidence is beginning to grow again. In addition to this, the proportion of companies reporting profit growth has remained largely stable. In spite of this better outlook businesses globally are still looking to cut overheads without damaging their growth prospects.
“In particular, as more positive signs of confidence appear in South Africa, with gross domestic product growth accelerating to an annualized 3.2 % in the last quarter of 2011, it is interesting to note that respondents confirm they are seeking to rely on more flexible working practices ranging from a greater use of pay-as-you-go services to reducing expensive and often underused fixed office space. With solutions readily available on the market for flexible workspace arrangements there is no doubt that the number of businesses benefiting from more nimble and scalable arrangements will increase in the coming years.”