Confidence index finds businesses still looking to reduce overheads

Maltese businesses confidence has soared 15 index points to 113 since September, according to the global Regus Business Confidence Index, inverting a decline recorded between March and September 2011.

The index found an increase in companies reporting revenue growth, reaching 57% compared to 40% six months ago. "Companies reporting profit growth (50%) also increased 17%. Mindful of the need to contain costs in the quest for sustainable growth businesses identify more sales through third parties, a shorter supply chain and increasing use of pay-as-you-go business services as the most effective cost cutting measures for the coming months," the report said.

The index also found that Maltese firms feel that making permanent staff redundant (58%) was the main reason for corporate distress during the downturn; followed by inflexible margins paid to resellers, distributors or introducers (54%) and the cost of property leases (50%).

Respondents also identified more sales through third parties (54%), a shorter supply chain (46%) and increasing use of pay-as-you-go business services (46%) as the areas where companies could best make savings without damaging growth prospects.

Maltese firms report that a wider distribution of customers (54%) and more flexible working conditions for staff (29%) 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).

"Finally, after a significant setback between March and September 2011, business confidence is beginning to grow again," Mauro Mordini, regional vice-president at Regus said.

"In addition to this, the proportion of companies reporting revenue and profit growth has started to increase. However, in order to grasp growth opportunities in a sustainable way, businesses globally are still looking to cut overheads without damaging their growth prospects."

Mordini said a significant proportion of businesses believe that inflexible office leases, one of the major burdens borne through the global economic downturn, was an area where businesses may focus their cost-cutting efforts successfully.

"Respondents confirm their outlook on flexible working practices, declaring that greater flexibility for staff can improve business stability as a platform for future growth. 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."