The Regus Business Confidence Index 4th Edition is the result of independent research with 17,000 business professionals in 80 countries. Regus: http://www.regus.com/?utm_campaign=slideshare

1. Gearing
for Growth
The Regus Business Confidence Index
4th Edition
April 2011

2. Gearing for Growth
Global business optimism, having undergone
a slight decline in 2010, has now surged ahead,
according to the latest half-yearly Regus Business
Confidence Index.
This regular global survey shows a significant increase in the proportion of firms
reporting a rise in revenues and profits, as well as a growing alignment between
future outlook and actual results, with real revenues coming into alignment with
previous surveys’ predictions.
The survey also reports departmental spending mainly on the rise, showing that
companies are keen to invest in catching the wave of economic recovery. However,
there is one notable exception to this trend – property costs. Having been caught
out by inflexible commercial property arrangements during the recent economic
downturn, firms remain committed to scrutinising and, where possible, reducing fixed
premises costs in favour of more flexible workspace solutions that can easily scale as
growth is achieved. This reflects previous Regus surveys which have shown a trend
away from fixed office working towards more flexible working practices.
Regus Business Confidence Index | Gearing for Growth | Issue 4 | April 2011 | Page 2

3. Management Summary
• New research by Regus shows that expectations expressed in October
2010 by 61% of respondents that their revenues would grow in the following
year, have been confirmed, with 50% of companies reporting revenue growth
in March 2011. This contrasts with previous editions of the Regus global
survey, where predictions of revenue growth were not being met by actual rises.
• This positive outlook is matched by predicted rises in departmental spending
this year. 36% of companies expect to increase their marketing spend;
41% will invest more in sales; and 21% envisage putting more into
product development
• However, there is one area of departmental spending that is expected to
experience little growth or even actual decline – the property department.
• The report reveals 81% of companies globally intend to reduce or freeze their
property or premises costs this year. This result indicates a strong will on the
part of businesses to enthusiastically drive growth, but at the same time steer
clear of incurring unnecessary fixed costs related to under-used or unused
premises space.
• The Regus Business Optimism Index, which analyses aggregate positive
forward-looking statements reveals that global optimism has grown 25 points
since autumn 2009.
• Globally 41% of companies are also reporting that revenue growth is closely
mirrored by profit growth - a positive indicator that economic advance
is mostly solid with a majority of companies investing on the basis of
increasing profitability.
• Most companies (54%) believe that the full momentum of the economic recovery
will take place in the latter half of 2011 or the first half of 2012. This prediction
highlights that expectations for the peak of recovery have slipped a little to the
end of 2011, rather than the first quarter of 2011.
Regus Business Confidence Index | Gearing for Growth | Issue 4 | April 2011 | Page 3

4. Geographical Highlights
• Asian giants continue to lead growth with 60%+ of companies
experiencing both revenue and profit growth in the past twelve months in China
and India. China takes the lead with 72% of companies reporting revenue
growth compared to 67% in India. The trend repeats itself in the profits outlook,
where 62% of Chinese companies report profits rising compared to 60%
of Indian firms.
• Germany and Belgium are close behind, however, with 64% of German and
61% of Belgian companies reporting revenue growth. The proportion of
companies experiencing profit growth over the past year is also positive, at 54%
in Germany and 55% in Belgium.
• At the other end of the scale we find Japan, in contrast with other Asian
countries, with a low proportion of companies reporting profit growth at 23%,
and Spain where only 18% of companies reported profits rising. Nevertheless
these results are highly positive when compared to the October iteration of the
survey where Spanish profit growth was negative (-21%) and Japan only
had 6% of companies experiencing profit increases.
• Optimism is highest in China, Belgium, Germany and India and lowest in Spain.
The UK and the USA remain towards the lower end of the optimism scale with
other western economies such as France and the Netherlands.
• Optimism growth in the last six months has been high in Japan (+36 points)
and Spain (+33 points) indicating that although conditions for business are not
yet optimal, a significant improvement has been achieved. It is worth noting
that due to natural disaster and nuclear hazard Japanese optimism may have
taken another turn for the worse after the collection of this data.
Regus Business Confidence Index | Gearing for Growth | Issue 4 | April 2011 | Page 4

5. Introduction
Reports globally confirm that the economic recovery
is advancing, Asian giants continue on their high
growth path as Western Economies recover from
the downturn, but governments warn that the speed
of recovery is not as fast as hoped.1
The IMF is Nevertheless, the differing conditions that economies face affect their outlook for
the coming year with the IMF predicting 4.2% global growth for 2011; developed
predicting global countries are expected to grow at half that pace, whereas and India and China are
growth of 4.2% expected to move faster at more than 6%.2
in 2011 In Asia, potential effects of the Japanese tsunami and earthquake disaster are not
expected to excessively impact the bilateral trade with China, although Japan is
China’s largest source of imports particularly in the high-tech automotive products
arena. Effects on the Eurozone are also regarded as negligible.3 China’s industrial
activity, is reported by Markit to have risen in March after a slower February.
Positive indication of the success of government’s policies to contain inflation without
affecting growth was found in the slowing of input and output prices sub indices
growth.4 India remains positive with the sharpest growth in the services sector since
July 2010 being recorded in February, whilst manufacturing remained unchanged
since the start of the year.5
In the Eurozone, Markit’s PMI highlights that economic activity continues to
expand at a rate of growth which is second only to that recorded in July 2007
with manufacturing taking the lead (although the services sector also expanded).
Germany and France fared particularly well in March, while the situation in the rest of
the currency zone was reported unchanged or weaker than February. Output prices
rose for the eighth month running keeping inflation close to high February levels.6
In particular the UK government reports that inflation will remain between 4% and 5%
this year before dropping to its 2% target in 2013. Mr Osborne, the UK Chancellor,
has also highlighted that the pace of growth has not been as rapid as expected
and the Budget indicates that unemployment is expected to rise to 8.3% in the last
quarter of 2011.7
The UK is not alone in bemoaning the slow speed of recovery in the last year - US
GDP has only grown only 2.8% instead of the original government projection of
3.2%. Lower consumer spending and a fall in demand for long-lasting consumer
goods exports are partially to blame for this figure, contrasting with Germany where
the IFO Institute found in February that growing export demand is boosting business
confidence.8 In spite of this, the USA labour market appears to be recovering with
the advance unadjusted insured unemployment rate down to 3.4% during the week
ending March 12th compared to 4.1% a year before.9
Regus Business Confidence Index | Gearing for Growth | Issue 4 | April 2011 | Page 5

6. Introduction
In South America, high levels of confidence are reported by Grant Thornton’s IBR
(International Business Review) and the Mexican government is bullishly raising
its growth forecast for 2011 on the basis that strong domestic demand will fuel
economic momentum. Ernesto Cordero, Mexico’s Finance Minister is reported to
have declared that Mexican economy will expand 4%-5% in 2011.10
1
Grant Thornton, IBR, 2011, PwC , Growth re-imagined, 2011;
2
1 IMF World Economic Outlook (October 2010). Estimates for shares of the world economy made on a purchasing power parity basis.
3
Reuters, Global recover marches on, prices soar in Europe, 24th March 2011
4
Markit, HSBC Flash China Manufacturing PMI, 24th March 2011
5
Markit, HSBC India Services PMI, 3rd March 2011
6
Markit, Flash Eurozone PMI, 24th March 2011
7
The Daily Mail, Economic Recovery is taking longer than we expected admits Osborne, 24th March 2011
8
The Financial Times, US economic recovery weaker than thought, 25th February 2011; Reuters, Global recover marches on, prices soar in Europe, 24th March 2011
9
United States Department of Labor, Unemployment Insurance Weekly Claims Report, March 24th 2011
10
Bloomberg, Cordero Says Mexico’s 2011 GDP May Expand Up to 5% on Domestic Consumption, 22nd March 2011
Regus Business Confidence Index | Gearing for Growth | Issue 4 | April 2011 | Page 6

7. 2011: Where prediction
and outcome meet
Now in its fourth edition, the Regus Business
Confidence Index has found that optimistic business
expectations are at least being matched with the reality
of revenue increases.
50% of companies Compared to the revenue growth levels recorded a year ago in April 2010, 38% more
firms have achieved their objective in April 2011 (50%). In late 2009 the Business
have recorded Confidence Index survey found that only 55% of firms expected to experience a rise
a revenue increase in revenues in the following year. Of this modest group of optimists many must have
been disappointed as only a 19% total of firms could report a revenue rise a year
later in October 2010.
Similarly in early 2010 only 12% of companies reported a rise in revenues and fully
64% optimistically expected a rise in revenues. Six months later only 19% reported
a revenue increase, but a year on and finally the 50% of companies actually
recording a revenue increase begins to align with the 64% expecting to achieve it a
year earlier. This alignment looks even closer if we consider that 6 months ago, 61%
of companies expected a revenue rise within the next year and half way through the
period 50% have already achieved this.
Regus Business Confidence Index | Gearing for Growth | Issue 4 | April 2011 | Page 7

8. The Regus Business
Confidence Index
The current economic climate is nevertheless
exceedingly volatile with unpredictable events such
as the natural disasters that blighted Australia and
Japan in the past few months adding instability
to what is a period of slow recovery in Western
Economies, and a period of great but also extremely
speedy, and therefore difficult to manage, growth
in emerging economies.
More than 17,000 In order to align their plans for the coming twelve months with global sentiment and
trends, businesses rely on timely and realistic information from peer companies
respondents in around the globe.
80 countries
The Regus Business Confidence Index Survey was devised specifically with this
objective in mind: to provide businesses with up-to-date information on the views
and confidence of other businesses around the globe to inform their future decisions.
The survey is based on over 17,000 responses from businesses around the world.
The pool of respondents is highly representative of senior managers and business
owners and is broadly representative of industries in each geographical region.
Companies in 80 countries were asked about their revenues and profits over the past
year, about their intentions to invest in specific departments within their organisation
and about their revenue expectations for the next 12 months.
Regus Business Confidence Index | Gearing for Growth | Issue 4 | April 2011 | Page 8

9. Revenues and profits
around the globe
Globally revenue and profit growth were found to
be roughly aligned with 50% of companies reporting
a revenue increase and 41% declaring that profits
were on the rise.
This is an important indication that rates of growth are sustainable and therefore that
the recovery is overall strong enough to result in improved profitability for more and
more businesses if they are able to ‘read’ the global market and react accordingly.
China and India continue their course of remarkably fast growth with the former in
the lead. An enormous 72% of Chinese businesses reported a rise in revenues in
the past year and 62% noted an increase in profits. In India also 67% of companies
recording revenues rising was matched by 60% of firms where profits rose, indicating
that these emerging economies are harnessing growth while containing overheads.
This contrasts widely with Japanese results which indicate the second lowest
score of rising-profit companies (23%) after Spain (18%). China and India are also
optimistic about their future revenues as nine out of ten Indian companies (89.5%)
expect their revenues to rise in the coming year and 80.5% of Chinese companies
expect the same.
I expect my company revenues to rise in the next twelve months
India
SA
Canada
Mexico
DE
China
Global Average
USA
Belgium
Spain
FR
Australia
ND
UK
Japan
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Regus Business Confidence Index | Gearing for Growth | Issue 4 | April 2011 | Page 9

10. Revenues and profits
around the globe
Close behind these vibrant economies we find Germany, which has been benefiting
54% of companies from strong export demand. Although reports indicate that confidence has slipped
recorded a rise slightly since February due to concerns over the possible consequences of the
in revenue earthquake in Japan and unrest in the Middle East,11 the survey found that 64% of
companies recorded a rise in revenues and of 54% a rise in profits in the past year.
Apart from Belgium, which also reports profitability increases for 55% of companies,
the rest of the Eurozone is less profitable, with Spain confirming its place as country
with the lowest proportion of rising-profit companies (18%) and France (32% )
also straggling.
In the UK and the USA, where the economic slowdown is proving harder to shake
off than initially hoped, around a third of companies report their profits increased
in the last year. Over two fifths of companies in both Australia and Canada also
reported a rise in profits.
Global business revenue - expectations and reality converge
90% 70%
80%
60%
70%
50%
60%
50% 40%
40% 30%
30%
20%
20%
10%
10%
0%
Sep 2009 Mar 2010 Sep 2010 Mar 2011
I expect my revenues to rise over the next year
My revenues have risen in the last six months
11
The Financial Times, German Business unruffled by the Japan quake, 25th March 2011
Regus Business Confidence Index | Gearing for Growth | Issue 4 | April 2011 | Page 10

11. Revenues and profits
around the globe
Profits and revenues risen in the past year
China
India
DE
Belgium
Canada
Australia
ND
SA
Global Average
FR
USA
UK
Mexico
Spain
Japan
0% 10% 20% 30% 40% 50% 60% 70% 80%
Revenues Profits
Regus Business Confidence Index | Gearing for Growth | Issue 4 | April 2011 | Page 11

12. The Regus Business
Confidence Index
In every edition, the Regus Business Tracker presents
an updated Business Confidence Index.
This index, a measurement formed on an aggregate of positive forward-looking
statements combining year-to-date revenue and profit trends with views on the
expected economic upturn in the coming six months, aims to provide businesses
with a single point of reference of the survey’s key findings. Its benchmark average
was set at 100 in the first publicly published edition of the Regus Business tracker
in September 2009.
Business Confidence Index, April 2011
Spain
UK
Australia
France
USA
Japan
Netherlands
Mexico
Global Average
Canada
South Africa
India
Germany
Belgium
China
0% 20% 40% 60% 80% 100% 120% 140% 160% 180%
It is immediately evident that overall confidence has climbed up the scale by 25
points and now, at 125, is at its peak since the first edition in October 2009, as well
as being some 31 points up on its lowest trough in April 2010. This positive forward
indicator provides a strong endorsement for the recovering global economy and
provides solid grounds for businesses to enjoy a rosier outlook.
Regus Business Confidence Index | Gearing for Growth | Issue 4 | April 2011 | Page 12

13. The Regus Business
Confidence Index
The Regus Business Confidence Index - Global Average
130
125
120
115
110
105
100
95
90
85
80
October 2009 April 2010 October 2010 April 2011
Unsurprisingly, countries that have April 2011 Oct 2010
achieved more satisfying results in
the past 12 moths are also more China 155 127
bullish about the future, with China Belgium 139 99
(155), Belgium (139), Germany DE 135 93
(135) and India (134) topping the India 134 119
scale for optimism. At the other Canada 132 99
end of the scale we find Spain
SA 132 108
(92), the UK (108) and Australia
(118), the latter lately affected by Global Average 125 98
natural disaster and the slowing of Mexico 122 96
the Asia Pacific region. The USA Japan 120 84
remains close to, if slightly below, ND 120 95
the global average at 119 points,
FR 119 95
although the increase in optimism
in the region is 32 points up on USA 119 87
six months ago, confirming Grant Australia 118 107
Thornton reports which show that UK 108 100
business leaders in the USA are Spain 92 59
more optimistic that recovery will
take hold in the next six months.12
12
Grant Thornton, IBR, 2011
Regus Business Confidence Index | Gearing for Growth | Issue 4 | April 2011 | Page 13

14. Investing in growth,
but cutting property costs
The latest Regus research uncovered an important
strategic trend and identified that a positive proportion
of companies globally are keen to invest in growth,
starting from increasing sales (41%) and marketing
(36%) budgets, and even investing more in the
creation and launch of new products (21%).
More interesting still, however, is the evident intention of companies to hold true
to the lesson learnt during the economic downturn and avoid making property
or premises investments that may become underused and expensive fixed costs.
This downward pressure on property costs is consistent with findings from previous
Regus global surveys, particularly a trend away from fixed premises working and
towards more flexible working practices, along with an enthusiasm across the globe
to employ more part-time employees and working mothers. If attitudes towards fixed
premises working had remained as enthusiastic as in the past, then a growing global
economy combined with depressed rentals and an increase in new staff employment
would be expected to generate increased investment in traditional commercial
property, not less.13
While in a few economies we find a very modest increase in premises is planned,
a majority of companies intend to downscale with the exception of Canada that plans
to make no changes to premises budgets. Spain (-28%) and Japan (-21% ) are the
most likely to reduce their premises costs shortly followed by the Netherlands (-14%)
and the UK (-12%) where businesses are also being very careful about incurring
fixed property costs. Even where they exist, plans to increase premises expenditure
are much less pronounced than plans to increase sales and marketing or product
development budgets with a modest 9% of Chinese businesses the most likely
to expand their premises.
13
Regus, Renewal and Recovery, October 2009; Regus, Taking the Pulse of the Global Recovery, April 2010; Regus, People Power, October 2010;
Regus Business Confidence Index | Gearing for Growth | Issue 4 | April 2011 | Page 14

15. Investing in growth,
but cutting property costs
On the other hand sales budgets will be increased ranging from 64% of companies
in Mexico to 21% in the UK. Marketing departments globally can expect more
budget, but this is particularly the case if they are in China or India (58%), South
Africa or Mexico (44%). There is also investment in new products on the cards
for many businesses, with China leading (44%), and Spain (6%t) and the UK (7%)
stragglers in this field.
Net increase of departmental spending
Spain
Japan
ND
UK
USA
Belgium
Global Average
Mexico
Canada
SA
DE
India
Australia
FR
China
-70 -56 -42 -28 -14 0 14 28 42 56 70
Product management & development Marketing Sales Property/Business Premises
Regus Business Confidence Index | Gearing for Growth | Issue 4 | April 2011 | Page 15

16. Optimism and size correlation
Overall fewer small businesses have experienced profit
or revenue growth over the past twelve months with
only 46% of small companies realising an increase in
revenues compared to 65% of large businesses.
Similarly only 36% of small companies have experienced a profit increase compared
to 61% of large businesses. This, however, has not dampened their enthusiasm as
the proportion of companies expecting a rise in revenues is equal (77%) in all three
segments.
I expect my revenues to rise in the next 12 months:
Small Medium Large
0-49 50-249 250+
employees employees employees
77% 77% 77%
Revenues and profits increase in the last year by size of business
LARGE
MEDIUM
SMALL
0% 10% 20% 30% 40% 50% 60% 70%
Revenues Profits
Regus Business Confidence Index | Gearing for Growth | Issue 4 | April 2011 | Page 16

17. Optimism and size correlation
Size does, however, seem to impact future budget allocation. More large businesses
are inclined to reduce their premises or property costs (-12%) indicating that unused
or underused premises are regarded as a particularly heavy burden by larger
businesses whose size impacts their flexibility and agility in reacting to the volatile
recovering market. By reducing fixed premises costs, large businesses can achieve
some portion of that agility which characterises smaller businesses. Small firms are
also keen to reduce property costs with -4% wishing to break free of unnecessary
property expense.
Impact of size of business on intention to cut or increase premises costs
LARGE
MEDIUM
SMALL
-14% -12% -10% -8% -6% -4% -2% 0% 2% 4% 6% 8%
In spite of less satisfying results than large businesses on the profit and revenue
growth front, small businesses are more keen to invest in sales and marketing than
large businesses. 41% of small companies plans to divert more budget to sales,
and 39% to marketing, in the coming year compared to 36% and 23% of large
businesses, once again giving proof of that entrepreneurial spirit that characterises
smaller firms.
Larger businesses (25%) are instead a little more likely than smaller firms (20%) to
invest extra budget into product management and development, highlighting that
they are willing to take on long-term investments in equipment and R&D which
smaller businesses may have difficulties in funding after a long downturn and in light
of the difficult business lending conditions experiences by this segment globally.14
14
The Euro Area Bank Lending Survey, January 2011, The European Central Bank; Trends in Lending, January 2011,
Bank of England; The January 2011 Senior Loan Officer Opinion Survey on Bank Lending Practices, January 2011, The Federal Reserve Board.
Regus Business Confidence Index | Gearing for Growth | Issue 4 | April 2011 | Page 17

18. Country Highlights
Country Profit rise Revenue Increased Increased Property cut Expect revenue
rise sales budget marketing increase in the
budget next 12 months
UK 31% 38% 21% 18% 12% - 25% of 63%
large businesses
USA 37% 44% 28% 30% 9% - 11% of 75%
large businesses
France 32% 49% 45% 33% 14% of large 75%
businesses
Germany 54% 64% 45% 31% 1% plan 82%
to increase
China 62% 72% 58% 58% 9% plan 81%
to increase
India 60% 67% 61% 58% 4% plan 90%
to increase
Belgium 61% 55% 44% 38% 5% - 37% of 75%
large businesses
Netherlands 52% 34% 34% 14% - 16% of 70%
small businesses
Spain 18% 32% 28% 22% 32% of large & of 75%
small businesses
South Africa 37% 50% 44% 44% 14% of large 86%
businesses
Japan 23% 25% 32% 28% 21% - 32% of 62%
large businesses
Australia 46% 53% 32% 33% 7% plan 74%
to increase
Canada 44% 53% 41% 29% 0% 85%
Mexico 26% 38% 64% 44% 4% 82%
Note: highlights are in bold
Regus Business Confidence Index | Gearing for Growth | Issue 4 | April 2011 | Page 18

19. Conclusion
With profits and revenues rising across the board,
it is not surprising to find that global business optimism
has reached a peak since the bleak conditions
of late 2009. As a result of this optimistic mind
set, companies are reconsidering their investment
strategies and deciding to channel budget into different
areas that they judge will help them catch the wave
of economic recovery.
In particular businesses are keen to invest more in sales and marketing departments,
upon whose skills and activities they will rely to take full advantage of economic
recovery. Firms globally also revealed the intention to invest in the development and
management of new products revealing that where capital is available or loans are
achievable, there is the expectation that benefits will be long-term.
The notable exception to this enthusiasm for investment is the issue of premises and
property costs. Aside from emerging economies, which are growing at breakneck
sped and needing to accommodate new staff faster than they ever imagined, the
majority of world businesses is intent on reducing premises costs regarded as
a fixed expense which is often unnecessary and underused.
By cutting down on premises costs businesses can easily adapt to the changing
economic landscape and manage unexpected events such as temporary peaks
in growth and sudden reduction of activity without wasting desk and office space
as well as the lighting, heating and cooling associated with each desk position.
Fortunately savvy businesses have taken from the downturn an important lesson
of agility and are making use of the more flexible workspace arrangements
on the market.
Regus Business Confidence Index | Gearing for Growth | Issue 4 | April 2011 | Page 19

20. About Regus
Regus is the world’s largest provider of workplace
solutions, with products and services ranging from
fully equipped offices to professional meeting rooms,
business lounges and the world’s largest work of video
communication studios. Regus enables people to
work their way, whether it’s from home, on the road or
from an office.
Customers such as Google, GlaxoSmithKline, and Nokia join hundreds of thousands
of growing small and medium businesses that benefit from outsourcing their office
and workplace needs to Regus, allowing them to focus on their core activities.
Over 800,000 customers a day benefit from Regus facilities spread across a global
footprint of 1,100 locations in 500 cities and 86 countries, which allow individuals
and companies to work wherever, however and whenever they want to. Regus was
founded in Brussels, Belgium in 1989, is headquartered in Luxembourg and listed on
the London Stock Exchange. For more information please visit: www.regus.com
Methodology
Over 17,000 business respondents from the Regus global contacts database were
interviewed during February 2011. The Regus global contacts database of over
1 million business-people worldwide, is highly representative of senior managers
and owners in businesses across the globe. Respondents were asked about their
recent revenue and profit trends, along with their future views on a number of issues
including plans for investment in various departments. The survey was managed and
administered by the independent organisation, MarketingUK.
Regus Business Confidence Index | Gearing for Growth | Issue 4 | April 2011 | Page 20

21. Whilst every effort has been taken to verify the accuracy
of this information, Regus cannot accept any responsibility
or liability for reliance by any person on this report or any of the
information, opinions or conclusions set out in this report.