A positive outlook from South African business is at last being matched by real results. Business confidence has grown since 2010 and is now accompanied in South Africa by reports that revenues and profits are increasing.
This is according to the latest edition of the Regus Business Confidence Index, which is based on the opinion of over 17 000 companies from around the world.
The study also reveals that departmental spending is on the rise, specifically sales and marketing costs but not those related to premises and property.
The Regus Business Confidence Index, now in its fourth edition, stands at 125 points, an all-time high. The index is up 31 points on its lowest trough in April 2010 and 25 since October 2009 when the survey began.
In South Africa the index reveals a higher-than-average rating of 132, which is still up 24 points since last October. Over one-third of South African companies report healthy profit growth (37%) growth and half a rise in revenues (50%).
Departmental spending is predicted to rise this year, with the exception of property where companies are maintaining a strict cost control policy. Globally, 81% of companies expect to freeze or cut their property spending and in South Africa 72% expect to follow suit. This matches other research studies which reveal a general trend towards lower cost working practices.
Joanne Bushell, vice-president of Regus African & Middle East, comments: “That Business Confidence is returning is great news as is the fact that so many companies are reporting rising revenues and profit. Planned departmental spending increases for 2011 are further confirmation of returning confidence.
“However it would seem that firms are only investing where there is a clear bottom line return, such as sales and marketing, whereas spending on property will continue to decline in 2011. This is a remarkable change on just a few years ago, when the combination of economic upturn and increasing employment would have generated a boom in traditional commercial property spending. However, with reports indicating that market uncertainty is still affecting SME profitability in particular, it looks like firms are remaining cautious in respect to property costs and now prefer to minimize risk and opt for more flexible and scalable arrangements.”
174 South African companies participated in the survey.