Entrepreneurs and SMEs Vital to Global Economies

Small is
Beautiful
(but tough)

A global report into the state and status
of entrepreneurial business
November 2010

Introduction
Mark Dixon – Regus CEO

It’s always challenging to be an entrepreneur. It comes with the territory. I know,
because I’ve done it myself. At the same time, we don’t expect things to be easy.
As they say, when the going gets tough, the tough get going. So perhaps it is no
surprise that our latest global survey (which uniquely canvasses the opinion of
entrepreneurs globally), tells us that we are more stressed, and are facing more
challenges than the generality of businesses.

On the other hand, governments the world over are recognising the contribution
of entrepreneurial SMEs (over half the world’s turnover) as well as their flexibility
and ability to generate rapid growth. Those same governments are attempting to
take initiatives to help foster SME development. Yet our survey reveals that the
entrepreneurial community remains largely unimpressed. Globally, it has become
more difficult to set up a business; SMEs feel their interests are ignored by
government in favour of larger corporates; and, access to the credit, which is needed
to take advantage of the economic recovery, is still very tight.

Something has to change. This survey reveals the priority support which SMEs are
looking for. Now it is up to governmental bodies to address those key concerns, and
concentrate on the kind of help that is genuinely going to help the sector develop.

Regus Global Report | Small is Beautiful (but tough) | November 2010 | Page 2

Management Summary
Entrepreneurial ` Small-to-medium sized businesses still feel ignored by government, ignored by the
press, unable to access much needed credit, and highly concerned that they will
small-to-medium have enough working capital to take advantage of the economic upturn
sized enterprises
` In a survey which uniquely canvasses the opinions of entrepreneurs worldwide,
(SMEs) are just as SMEs are telling government that setting up a business has become more, not
important to the less, difficult

economy as larger ` In addition, dedicated government-backed venture capital funds (86%), effective
corporations, and pressure on the banks to lend to smaller businesses (74%), and enforceable legal
penalties for late payment (72%), are the priority areas for SME support
will be an equal
` Despite all this, the entrepreneurial spirit remains undaunted by these challenges,
engine of growth with a higher proportion of entrepreneurial SMEs, compared with businesses as a
in the emerging whole, investing in economic growth by hiring new staff
economic upturn ` Moreover, SMEs are considerably more advanced than their larger counterparts in
their attitude to flexible working practices and locations for employees, and just as
positive about hiring working mothers

` Entrepreneurial small-to-medium sized enterprises (SMEs) are just as important to
the economy as larger corporations, and will be an equal engine of growth in the
emerging economic upturn

` Yet, given that SMEs are to play such a major role in economic growth, are
governments giving their SME sector the support they need?

` Regus research has revealed that most entrepreneurial SMEs feel that it has
become more difficult to set up a business (59%) in the past two years, that
national government overlooks their interests in favour of big business (75%)

` SMEs are nevertheless investing in growth, with 40% intending to hire new staff
over the next six months –a higher proportion than larger businesses (36%). This is
despite the fact that entrepreneurial SME performance has only just stabilised, with
revenues up 6%, but profits flat

` Interestingly, entrepreneurs are just as enthusiastic as larger corporations about
flexible working practices – such as non-standard working hours, virtual office
usage and using remote workcentres close to the employees home. In fact a
greater proportion of entrepreneurial businesses (76%) offer flexibility over work
location, compared to corporates (66%)

` Since entrepreneurial SMEs are by definition more volatile businesses than larger
corporates, it is not surprising to see 56% of entrepreneurs reporting rising
personal stress levels

` However, the top three causes of stress are extremely revealing. Naturally, ‘falling
revenues/profits’ comes top, but is closely followed by ‘lack of working capital
to invest in the upturn’ and ‘late payment’, corroborating the view that access to
capital and cash flow management are the two greatest threats to entrepreneurial
SME growth


The Economic Importance of
Entrepreneurs and SMEs
Entrepreneurialism is vital to any economy, largely represented in the small-
to-medium sized companies which in time can grow into hugely successful
corporations. As well as providing a barometer of growth and innovation in any
country, entrepreneurial success is an indicator for future outlook, driving innovation
and wealth generation - typically 10% of businesses in a country are start-ups.

Company size definition
Small business 1-49 employees

Medium business 50-249 employees

Large business 250+ employees

Entrepreneurs Respondents owning a substantial shareholding in their firm

Various studies1 have identified that SMEs, and the entrepreneurs that run them,
are a significant engine of economic growth and employment across the world - at
least as important as major corporates. It is therefore vital to understand how well
entrepreneurial business is being fostered and supported, as this will fundamentally
affect overall economic development. So just how important are entrepreneurial
SMEs across the globe?

SMEs account for In Europe SMEs make a fundamental contribution to all member economies,
employing around 66% of the EU population. SMEs account for around 50% of
around 50% of company turnover in Western Economies2. In South America SMEs also make an
company turnover important contribution to GDP with Brazilian SMEs representing 99.2% of businesses
in Western Europe in the country and accounting for a total contribution to GDP of 30%3 and Mexican
SMEs contributing 50% of GDP4.

In the US, the country historically most driven by, and devoted to fostering, the core
values of entrepreneurial capitalism, where Ronald Regan famously declared that:
‘Entrepreneurs and their small enterprises are responsible for almost all the economic
growth in the United States”, a reported 22 million SMEs represent 50% of GDP,
67% of export volume and 67% of employment5. Here, a number of now iconic
companies share the history of development from humble beginnings to global giants
(think of Steve Job’s garage as Apple’s first headquarters).

1 Asia-Pacific Economic Cooperation, APEC Ministers target growth of SMEs, 4th October 2010: European Commission, Enterprise and Industry, Small Business
Act; OECD, Bologna Process on SME and Entrepreneurship Policies, June 2000; International Monetary Fund, Outlook for the World Economy and Policy
Challenges Ahead, March 2010
2 http://www.cafebabel.co.uk/article/29090/eu-enterprise-network-businesses-small-medium.html
3 SME Loans in Brazil: Making way for large private-sector banks, Business News Americas, June 2010
4 http://www.buyusa.gov/mexico/en/financial_insurance.html
5 Empowering SMEs Worldwide: The Alibaba Story, Brian A. Wong, May 2008


In South East and South Asia, SMEs’ contribution to GDP is often very high. In
India SME contribution is reported to be 30%6 and in Japan, generally associated
with international household names, the proportion of GDP contributed by SMEs
is reported to be around 57%7. Similarly, in China SMEs contribute to around
59% of GDP, 50% of tax revenues, 68% of trade revenues and fully 75% of urban
employment. Nevertheless Chinese SMEs struggle with access to credit and lending
remains politically driven to favour state-owned organisations. The downturn hit
Chinese SMEs particularly hard with 20% of Chinese SMEs going bankrupt in March
2009. To help SMEs the Chinese Banking Regulatory Commission announced in
September 2009 that a total of 17 banks had established institutions specialising in
SMEs. Later in 2009, the government declared it would increase procurements from
SMEs and grant one year breaks on tax and social security obligations in 20108.
Interestingly, the theme of access to credit is one that recurs later in this paper.

Estimated contribution to GDP in some major economies

Many giants of industry owe their success to that entrepreneurial spirit which, mixed
with a great deal of tenacity, set in motion the process which can turn humble start-
ups into veritable empires. Examples of pioneering individuals include a 29 year old
Jamsetji Nusserwanji Tata, founder of the eponymous Tata Enterprises, and Richard
Branson whose first business involved the selling of ‘cut out’ records purchased
from a discount record dealer out of his car. Other famous examples might include
Microsoft mogul Bill Gates and fashion icon Coco Chanel9. Chen Guangbiao, the
Chinese magnate who recently made world headlines with his claims that he plans to
create a ‘charity army’ of millionaires, embodies the stereotype of self-made man and
his story from birth in poverty in rural China paying for his education by carrying water
from a well to a nearby village, is a real rags to riches parable representing what can
be achieved by a determined entrepreneur10.

6 South Asian SMEs neet to Globalise, The Financial Express, Friday March 2008
7 http://www.mb.com.ph/node/245735/looking-
8 http://www.asiapacificforum.com/sub/sub_news/ns_20100318_smes.html
9 http://www.biographyonline.net/people/richard_branson.htm
10 http://www.telegraph.co.uk/news/worldnews/asia/china/8038828/Chen-Guangbiao-wants-Chinas-richest-men-to-follow-him-and-give-away-their-fortunes.html


The Regus Entrepreneurs Study
Because of the important contribution that entrepreneurs make to economic growth,
and by virtue of their role as innovators and drivers of employment, Regus has
polled the opinions of business owners worldwide to obtain a snapshot ‘state of the
nation’ picture of the SME sector. In order to take the pulse of entrepreneurial spirit
worldwide Regus asked business owners about their companies’ performance,
their professional worries, whether the support they are getting from governments
is a case of “too-little too-late”, and what the personal toll is in terms of stress that
they are subject to, as they develop and manage their businesses in the current
economical climate.


Entrepreneurial Economic Performance
The Regus survey found confirmation that the economic outlook for the
entrepreneurial segment globally is improving with a net 6% of entrepreneurs
reporting a rise in revenues, but with profits flat at 0%, indicating that the outlook for
this volatile segment has stabilised and is ready for growth. Although the number of
entrepreneurial firms reporting a rise in profits is still net negative in some countries,
growth prospects for this segment look extremely encouraging from the hugely
positive attitude to increasing headcount described later in this section. 40% of
entrepreneurial companies intend to hire additional staff in the next six months, a
greater proportion than larger corporates (36%).

Net % of companies reporting a rise in profits in the past year

Of course national differences arise and in particular a more positive growth result for
the past twelve months was recorded in some of the countries studied.

In India, 36% net In Europe, a net 7% and 4% of British and German entrepreneurs respectively
recorded a rise in profits alongside increased revenues. Entrepreneurial growth is
of entrepreneurs also, unsurprisingly, taking place in China and India where a net 8% and 22% net of
experienced companies have turned increasing profit in the past 12 months. While in India 36%
revenue growth net of entrepreneurs experienced revenue growth, in China this was true of a slightly
lower net 22% of companies.

Perhaps surprisingly Australia and Japan are the next closest contender to India
in terms of growth with fully 18% net of Australian and 11% net of Japanese
entrepreneurs having experienced profit growth in the past year. Elsewhere on
the globe, South Africa reported a net 7% of companies that experienced a profit
increase in the past twelve months. On a more modest scale, Canada reveals net
profit growth of 1%, a positive indication nevertheless.


A decline in growth is instead found in Mexico, where security issues have been
in the limelight in the past year11. Firms reporting profit growth is down a net -8%
mirroring firms reporting revenue rises - which has also contracted -3%. Aside
from the UK and Germany, the picture painted by the rest of Europe is bearish with
net figures of -4% in the Netherlands, -5% in Belgium and a staggering, but not
unsurprising, -38% in Spain. The economic situation for entrepreneurs in France,
with a net -16% reporting declining profits seems to be spiralling perhaps due to
the massive public resistance with which any austerity measures put forward by
government are met12.

The largest economy in the world, once icon and foundation of naked entrepreneurial
capitalism, the USA reveals a disappointing net -9% of entrepreneurial firms reporting
profit growth and flat net revenue growth. With news that 59% of small businesses in
the USA finding credit unavailable, with half having actually been declined, it is easy
to conclude that lack of access to credit is at least one reason USA entrepreneurs
are struggling behind many of their peers globally where institutions and governments
may have enforced better support of the segment13.

11 http://www.guardian.co.uk/world/2010/oct/13/mexico-drugs-war-security-business
12 http://www.nytimes.com/2010/10/21/world/europe/21france.html?_r=1&src=mv and http://www.bbc.co.uk/news/world-europe-11594000
13 http://www.marketwatch.com/story/banks-deny-half-of-small-business-credit-requests-2010-10-18?dist=countdown


Increasing Staff – the Positive Indicator
In spite of these mixed performance statistics the overall growth indicators
for business owners shows signs of stabilisation. Compared with established
corporates, the very nature of entrepreneurial business is risky, highly volatile and
more sensitive to profit and revenue peaks and troughs. More indicative of a positive
confidence in near-term growth, is the attitude of entrepreneurial SMEs to increasing
their staff numbers. With small businesses accounting globally for over half of
employment in many economies, the fact that 40% of entrepreneurs declare that
they are intending to hire more staff in the next six months is extremely positive for
economies as a whole. Their bullishness is higher than the sample of ‘all businesses’
globally (36%), underlining that entrepreneurial positivism is at the same benchmark
as the economy as a whole.

Entrepreneurial businesses and ‘All businesses’ intending to hire new
staff in the next 6 months

In China, 67% net Employment prospects in the entrepreneurial segment are positive, not just with over
a net third of entrepreneurs in most major economies declaring they are planning to
of entrepreneurial increase headcount, but also with no countries planning a net decrease. China leads
companies plan to the entrepreneur employment league with fully 67% net of companies planning to
add staff add staff - perhaps an indication that small businesses there are embracing the fact
that without excellent staff it will be difficult to grasp full advantage from the global
up-turn. Australia (53% net) and Japan (47% net) follow, confident that their profit
growth can be boosted with the addition of new staff.

The outlook is also very positive on this front for South Africa (45% net) which
evidently believes that it can keep up the momentum built up by the World Cup
in 2010 and Spain where a net 45% of entrepreneurs plan to create new jobs
(compared to the 27% amongst the Spanish ‘all businesses’ sample). This is an
important indication that entrepreneurs in Spain are prepared to take risks to fuel


economic growth and are preparing to invest in the national economy unlike their
larger counterparts. Over two fifths of entrepreneurs in Germany (43% net) and
Mexico (42% net) are also intending to hire new resources.

Indian and US entrepreneurs are a little less bullish about making new hires with
respectively 37% and 36% net planning to increase their staff. At the heart of
Europe, however, are some less positive findings. In Belgium, where unemployment
was reported to be 8% in January 201014, only 14% net of entrepreneurs intend to
increase staff in the next six months, in the Netherlands double that number (28%
net) intend to do so. France, which faces huge union and public resistance to even
mild austerity measures, confirms its position as a country where business owners
are facing a greater struggle with only 16% of employers in this segment planning to
invest in human resources.

14 http://www.state.gov/r/pa/ei/bgn/2874.htm


Attitudes to Flexible Working
Globally, 76% of To attract new staff, entrepreneurs are no less prepared than their larger counterparts
to offer flexibility benefits from alternative working hours to tele-working or the
entrepreneurial
possibility to work from a location that is closer to home. In fact the survey found that
businesses offer companies in the entrepreneurial sector are more flexible about work location than
flexible working average with 76% of respondents declaring that their company offers this flexibility
(compared to 66% of ‘all businesses’ globally).

Entrepreneurs - Attitudes to hiring and flexible working

Entrepreneurs are also no less keen on hiring returning mothers with 36% of
business owners, (the same proportion as all businesses globally), declaring that they
plan to hire working mums in the next two years. Over half (54%) of entrepreneurs
declare that part time mothers are valuable to them as they bring skills and
experience not otherwise available in the employment market, just 2% fewer than the
global ‘all businesses’ average.

Propensity to hire working mothers by SMEs that also
offer flexible working options to employees


The Entrepreneurial Environment
Many governments have initiatives in place to encourage and foster entrepreneurial
SME development. However, the jury is still out as to whether these initiatives are felt
to have any real effect. Certainly, entrepreneurs responding to this Regus global survey
stated firmly that they still feel neglected by government, ignored by the press and in a
deteriorating entrepreneurial environment where it has become more difficult to set up a
business, and where access to much-needed credit has tightened.

There are a number of studies that calibrate how favourable each national environment
is for SMEs. However, all these studies base their calculations on an academic model
that reflects the theories of those models’ authors, but does not take into account the
views of the entrepreneurs themselves. This Regus study uniquely aims to span this
gap, by researching the views and opinions of a large sample of entrepreneurial SMEs
worldwide as to whether their national economic and governmental environment is truly
supportive.

The findings of the Regus survey reveal that, while the global view was broadly negative,
in a few selected countries the entrepreneurial environment was felt to be largely
supportive.

To provide an at-a-glance perspective of the national environments in which
entrepreneurs are striving to develop their businesses, this Regus study has created an
Entrepreneurial Environment Index. The Index combines a number of relevant factors
including: the ease of setting up a business; perceived levels of government support;
and the effectiveness of various support initiatives. The global average of 100 points has
been taken as the base level of entrepreneurial satisfaction against which to measure the
performance of each country in fostering SME and entrepreneur interests.


The Regus Entrepreneurial Environment Index

Key
Global average: 100 points
Less positive entrepreneurial environment More positive entrepreneurial environment

25-50 51-75 76-100 101-125 126-150 151-175 176-200 201-225

Looking at some of the individual indicators which make up this Index, 59% of
respondents globally reported that it has become more difficult to set up and launch
a business in the past few years. In Mexico and South Africa this issue is particularly
pronounced with fully 75% and 72% of respondents respectively agreeing this is the
case. In the aftermath of the recession GDP fell nearly 2% in South Africa and Forbes
reports that the country’s ease of doing business rating has fallen since 2009 due to
lack of technology15. In India (35%) and Japan (39%), in spite of a sharp contraction
in business investment and in demand in the latter during 2008, the entrepreneurial
environment appears to be much more encouraging16.

An overwhelming three quarters of respondents (75%) confirmed that entrepreneurs
feel that the interests of small and medium-sized enterprises are typically overlooked
by governments. Spanish and Mexican companies are particularly disillusioned
with the interest the government takes in SME concerns with 91% and 83% of
respondents agreeing that the attention devoted to their segment is very poor.

15 http://www.forbes.com/lists/2010/6/best-countries-10_South-Africa_CHI036.html
16 http://www.forbes.com/lists/2010/6/best-countries-10_Japan_CHI021.html


Particularly worrying is the fact that in an economy as large as the USA fully 82% of
entrepreneurs believe their interests are overlooked.

Two slightly more positive notes are provided by France and India where 37% and
42% of companies feel that support by the government is strong and effective
and looks as though it is set to increase. In India in particular the government, the
Reserve Bank of India and Public Sector Banks have taken a number of measures
to provide SMEs with stimuli ranging from extending the loan limit under the Credit
Guarantee Scheme, increasing guarantee cover, creating an advisory to Central
Public Sector Enterprises to ensure prompt payment of bills and a reduction of
interest rates for micro enterprise borrowing17. A third of Chinese companies also
appear optimistic about government intervention.

17 http://smetimes.tradeindia.com/smetimes/news/top-stories/2010/Apr/28/govt-protecting-msmes-from-global-slowdown-patel61361.html


Supporting Entrepreneurial SMEs –
What is Needed?
Respondents to the Regus survey gave strong and clear indications about the
support they would regard as effective in helping them grow their businesses and
markets.

74% of Highlighting that access to credit is an issue for entrepreneurs 74% of respondents
declared that banks should be forced to lend more to entrepreneurial ventures and
respondents
small businesses. Australian and Canadian entrepreneurs, however, seem to face
declare that banks a more favourable lending environment than elsewhere as only 57% and 62% of
should lend more respondents declared that enforced lending policies should be pursued.

to entrepreneurs
Effective support initiatives for entrepreneurial businesses

India tops the table for greater enforced bank lending, at 87%, showing the huge
appetite for growth from the Indian Tiger. At the other end of the scale, it is also
interesting to see that relatively fewer US entrepreneurs believe that the banks should
be forced to lend more to small businesses, despite the well documented fact that
SME access to credit in the USA is extremely tight. This may well be because of
the imbued ‘small state’ mentality of North America as a whole, reflected in the
strong resistance that healthcare reform proposals have experienced in recent
months. Nevertheless, it should be noted that the US still has an overall majority of
entrepreneurs in favour of enforced greater bank lending to SMEs.

Other forms of finance are also highlighted for special attention. 86% of
entrepreneurs stated that government venture capital funds should be available
to support entrepreneurs and their business initiatives. South Africa (95%), Japan
(94%), France (93%), and China (92%), were particularly keen on greater availability
of state-sponsored venture capital. German entrepreneurs were the least enthusiastic
about this suggestion, yet still polled 69% in favour.


Indicating that maintaining cash flow is an issue for small businesses and
entrepreneurs globally, 72% of respondents declared that legal penalties should
be introduced for late payment of invoices. Cash flow problems are the most
likely cause of small business failures, the majority of which occur in their first 18
months of trading. The European Commission, Council and European Parliament
announced in September 2010 that the Late Payments Directive will also be applied
to business-to-business payments, where all suppliers must be paid within 60
days unless otherwise agreed. The final version of the Directive is up for vote in late
October 201018. This measure would rally particular support in Belgium and would
also be welcomed by an above average number of entrepreneurs in the UK where
respectively 81% and 74% of respondents declared that fines should be introduced
for late payments.

18 http://www.esba-europe.org/1501A/ESBA_Bulletin_of_9_September_2010.aspx


Stress and Professional Concerns
46% of The difficult economic environment of the past two years has left a mark on
business attitudes and the global economy. The impact they may have left on
entrepreneurs
entrepreneur’s personal lives, so closely tied up with their business lives have yet
report rising to be measured. Certainly, this Regus study has revealed that a net proportion of
stress levels in 46% of entrepreneurs report their stress levels having risen markedly in the last year.
The Regus survey asked entrepreneurs to rate how worried they are about various
2010 issues. Their responses provide an up to date overview of the top concerns currently
preoccupying entrepreneurial SMEs.

First, the Regus survey took a barometer reading of overall stress levels experienced
by entrepreneurs during 2010. On balance, had they risen or fallen?

When the net figure was calculated, (stress rising minus stress falling) an interesting
picture emerges.

Net rise in Entrepreneurial businesses and All businesses stress in 2010

Reflecting cultural traditions, the Dutch and the Japanese are least stressed, closely
followed by the Australians and the phlegmatic British. Indian stress levels also slip
below the global average, in huge contrast to the Chinese, who top the table for
entrepreneurial stress (although this is the stress of keeping up with a very rapidly
growing economy). Spain’s woes have produced the second highest stress levels
amongst the main countries studied, closely followed by Mexico, which is perhaps
catching a cold from the neighbouring US slowdown. The USA, where the global
financial market’s crisis originated in the real US economy, is rubbing shoulders with
Germany, where entrepreneurs may be worrying about how strong or fragile the
export economy may prove. Canada and South Africa sit respectively on and just a
little below the global average, as does France even despite its revenue and profit
woes.


Stress levels in profitable entrepreneurial businesses compared to
all entrepreneurial businesses

Aside from overall stress levels, the study also examined the major preoccupation
behind that stress. Globally, entrepreneurs related that they are most concerned with
falling profits and revenues. The second key concern, however, was a lack of cash or
working capital to invest in the economic upturn, followed closely by worries over late
payment. So aside from revenues, cash flow and access to finance are the two major
areas where stimulus and support is required.

Rising taxes is a top three concern in the US, the UK, Canada and Mexico, perhaps
giving government pause for thought about potential tax breaks targeted especially at
the SME sector.

Red tape, in the form of new regulations are also seen as a stifling influence by
entrepreneurs in the US, the UK, Belgium and South Africa. In France, India, China,
Japan and Australia, there are major entrepreneurial concerns about reducing the
cost of fixed overheads, something that anecdotally reflects Regus experience in
these countries, where there has been particularly high levels of interest in reducing
non-occupancy rates in office space through more flexible solutions. Finally, access
to finance, in the form of ‘reduced bank credit’ is preoccupying entrepreneurial minds
particularly in Spain and Germany. This pinpoints two countries where the experience
may not only be refusal of new credit applications, but actual reduction of existing credit
limits.

Among entrepreneurial businesses that have experienced a rise in profits Spanish
businesses pin point high fixed overheads and falling revenues among their top
three reasons for concern. In Canada this segment is also very worried about lack of
working capital and access to the latest technology and in Belgium lack of colleagues’
competence is a concern.


Top Three Professional Concerns, by country
Global

1. Falling revenues/profits
2. Lack of working capital to invest in the upturn
3. Late payment

US India

1. Falling revenues/profits 1. Late payment
2. Taxes rising 2. Lack of working capital to invest in the upturn
3. New regulations 3. Fixed overheads too high

UK China

1. Taxes rising 1. Fixed overheads too high
2. Falling revenues/profits 2. Good staff leaving/Difficulty finding good staff
3. New regulations 3. Market shrinkage

France South Africa

1. Falling revenues/profits 1. Lack of working capital to invest in the upturn
2. Late payment 2. Late payment
3. Fixed overheads too high 3. New regulations

Germany Japan

1. Reduced bank credit 1. Fixed overheads too high
2. Late payment 2. Market shrinkage
3. Lack of working capital to invest in the upturn 3. Lack of working capital to invest in the upturn

Belgium Australia

1. Falling revenues/profits 1. Falling revenues/profits
2. Late payment 2. Lack of working capital to invest in the upturn
3. New regulations 3. Fixed overheads too high

Netherlands Canada

1. Late payment 1. Taxes rising
2. Falling revenues/profits 2. Falling revenues/profits
3. Market shrinkage 3. Fixed overheads too high

Spain Mexico

1. Late payment 1. Taxes rising
2. Market shrinkage 2. Late payment
3. Reduced bank credit 3. Lack of working capital to invest in the upturn


Conclusion
With entrepreneurial SMEs facing the upturn with squeezed resources, conditions
appear to have stabilised. These businesses are sufficiently confident across the
globe to be investing in new staff in the coming six months, in order to ride the
coming new wave of world economic growth.

Yet to provide the most fertile environment for SMEs to thrive, governments need to
increase the supply of state-backed venture capital, insist on greater bank lending to
SMEs, and legislate to penalise late payment.

Entrepreneurial SMEs are very concerned that the economic upturn may gather
momentum, but if they do not have the means to raise sufficient working capital, they
may miss the boat.

In the meantime it is important to note that entrepreneurs are taking destiny into
their own hands and increasing take up of more flexible working arrangements
better suited to rapid and elastic expansion as the economy improves without
further increasing fixed overheads. As a result, we are seeing a greater interest in
employment of part time mothers and of flexible working arrangements such as
flexi-time. In addition to this, to concentrate cash resources on future growth, many
businesses are reducing their asset costs particularly those associated to unused
or underused office space and expensive property leases by providing workers with
opportunities to tele-work or to work from locations other than the head office that
are closer or more accessible from their homes.


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 network 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 85 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 10,000 business respondents, including more than 5,600 business owners,
from the Regus global contacts database spanning 78 countries were interviewed
during August and September 2010. The Regus global contacts database of over
1 million business-people worldwide is highly representative of business owners
and senior managers across the globe. Entrepreneurs were asked a wide variety of
questions including ones about their recent revenue and profit trends, along with their
main concerns and causes of stress in the past years. The survey was managed and
administered by the independent organisation, MarketingUK.


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.

Entrepreneurs and SMEs Vital to Global Economies

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