According to the latest Citibase Confidence Index for Q3 2017, which surveyed 1,100 SMEs across the UK, there is a rising appetite for short-term and flexible office contracts as business owners no longer trust the government to secure a good deal in their Brexit negotiations.
As a result, SMEs are taking a “flight to flexibility” when running their businesses, according to Citibase, one of the UK’s largest operators of fully serviced offices and a champion of small businesses.
The appetite for flexible office space is reflected in Citibase’s annual results, delivering its best year of business in its 24-year history, with a 23% rise in year on year earnings (EBITDA).
The survey, by flexible office specialist Citibase of over 1,100 SMEs across the UK, revealed that 21% of SMEs cited Brexit as having a negative impact on revenue. This figure has grown by 2 per cent each quarter this year, according to the latest index, now in its third quarter.
83% of respondents have seen a fall or no increase in their business confidence following the political uncertainty surrounding the election.
Highlights of Citibase Confidence Index for Q3 2017:
- Trust in government’s ability to secure a good deal for UK businesses post-Brexit falls to 35%, down 9% from the previous quarterly index.
- 21% of SMEs see revenue drop; 83% of small businesses see a fall or no increase in confidence following election
- Rising appetite for short-term office contracts as business owners seek flexibility
- Regional divide on who is best to lead Brexit negotiations
- Citibase CEO Steve Jude highlights opportunity for SMEs and landlords to thrive in the chaos
“Flight to flexibility”
Cost-conscious SMEs’ increasing desire for flexibility is revealed in their preferred length of office contracts, with leases between one and three years remaining the most popular option over all three quarters of the index, reaching their peak this quarter (41%), with the North East showing the highest at 54%.
According to Citibase CEO Steve Jude, political and economic uncertainty caused by Brexit and a minority government, is creating a new appetite for cost-effectiveness and agility among the UK business community.
He said: “These results are a wake-up call for the Government. SMEs are the lifeblood of our economy and it is essential to rebuild their confidence in the future for UK business. We have entered a new era where a nimble approach is vital for SMEs who want to succeed.
“Our exclusive survey shows how turmoil has given rise to a flight to flexibility by business owners. There is a real opportunity to thrive in the chaos of this new world order. Smart building owners will recognise this, and will look to providers like Citibase, who have been pioneers of the flexible officing sector for nearly a quarter of a century, to revitalise their under-utilised office buildings and obtain a steady cash flow from their assets.”
SMEs are a vital part of the UK economy, with 5.5 million in total nationwide*.
Steve Jude said: “Serviced offices provide a simple solution for start-ups based at home looking to take their next steps into the world of business. By providing an office environment without the risk of a long term contract, we offer SMEs the opportunity to grow on terms that suit them, allowing them to focus on what really matters – running and expanding their business.”
Jude continued: “Thousands of small companies, the engine room of a healthy economy, are thriving in flexible office space. The age of the long lease is over for the majority of businesses – and that includes larger corporates too. The average lease length is now 4.5 years, down from 21 years in 1991 (Source: IPD) – the world of work has truly changed! The government now needs to ensure that they take a similar agile approach to the future of the UK, allowing SMEs to thrive.”
The Citibase Business Confidence Index reflects the views of small businesses across a wide variety of sectors, including finance, marketing, legal and IT, gauging real opinions on the impact of political events on important factors such as revenue, morale, and expectations for the future.
*FSB, UK Small Business Statistics
Key takeaways:
- The amount of SMEs who are confident in the government to secure a good Brexit deal for UK businesses fell 9% from 44% to 35%. The number of SMEs who don’t trust the government’s negotiation skills is now higher (39%) than those that do (35%)
- 83% of SMEs have seen a negative effect or no impact on their business confidence since the political uncertainty surrounding the election
- 21% of SMEs have seen their revenue drop as a result of the Brexit vote
Comparative changes between quarters from the Citibase Business Confidence Index 2017
- The amount of SMEs who have seen a negative impact on their revenue as a result of the Brexit vote has risen by 2% each quarter (Q1 = 17%, Q2 = 19%, Q3 = 21%)
- Office contracts between 1 and 3 years in length have remained the most popular option over all three quarters of the index, reaching their peak this quarter (Q1 = 30%, Q2 = 38%, Q3 = 41%)
- Trust in government’s ability to secure a good deal for UK businesses post-Brexit fell by 9% from the previous quarter, from 44% to 35%
- The amount of SMEs who have seen a positive impact on their revenue as a result of the Brexit vote fell 3% between Q2 and Q3, from 18% to 15%.
