54% of Singapore firms burdened by costs of unnecessary office space

Difficult access to cost effective capital also added to corporate distress, says Regus.

Stable revenues and increasing profits cause business confidence to rise, but firms maintain need to impose cost-cutting measures.

According to the release of Regus Business Confidence Index (BCI) for April 2012,  Singapore businesses confidence has bounced back 5 Index points to 122 since September, inverting the decline recorded between March and September 2011, according to the global Regus Business Confidence Index. A further mark of optimism is that companies reporting revenue growth remained stable at 56%, while companies reporting profit growth (50%) increased 6%. Mindful of the need to contain costs in the quest for sustainable growth, businesses identify increased use of pay-as-you-go business services, increasing flexible workspace and a shorter supply chain as the most effective cost cutting measures for the coming months.

To summarize, looking back, Singapore firms identify paying for unnecessary office space (54%) as the main reason for corporate distress during the downturn followed by difficult access to cost effective capital (47%). Respondents identified increased use of pay-as-you go business services (46%), increasing flexible workspace (45%) and a shorter supply chain (43%) as the areas where companies could best make savings without damaging growth prospects.  Singapore firms report that a wider distribution of customers (39%) and more flexible working conditions for staff (38%) 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).

Filippo Sarti, Regus CEO for Asia Pacific 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 revenue is stable and those reporting profits have increased. However, in order to grasp growth opportunities in a sustainable way, businesses globally are still looking to cut overheads without damaging their growth prospects.

“In particular, a significant proportion of businesses believe that the cost of unnecessary office space, one of the major burdens borne through the global economic downturn alongside the well documented bank lending and capital squeeze, is an area where businesses may focus their cost-cutting efforts successfully. Respondents further 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.”