Medium-sized companies in the North West, responsible for a 7.6 million workforce across the UK, predict they will only survive the impact of the coronavirus pandemic by making radical changes to their businesses according to a survey conducted by accountancy and business advisory firm, BDO.
Nearly two-thirds of these companies (64%) expect the jobs they cut now will never return.
This threatens to reverse the job growth driven by the country’s mid-tier, which had created half a million new jobs in the previous year.
In the initial round of a bi-monthly survey of 200 medium-sized businesses, when combined represent £3.5bn in revenues and employ more than 40,000 workers, BDO’s: Re-thinking the Economy survey, explores the impact of coronavirus on these businesses and their plans for the future.
Although 79% of those surveyed expect to recover from the impact of the pandemic, more than half of those (56%) believe their businesses will be fundamentally altered as a result.
Since the start of the crisis, 44% of medium-sized businesses have launched new products, while almost a third (29%) have moved to a full online-only model.
The research shows almost half (42%) of medium-sized businesses expect revenues to return to pre-coronavirus levels in less than 12 months, with the same number believing it will take up to three years to recover.
The immediate future however, is not without its challenges as 75% of mid-tier companies have less than 6 months of cash reserves and 76% expect to continue using the furlough scheme until the end of October.
The results also point to a smaller, more domestically-concentrated mid-tier. 42% of businesses those say they have ceased exporting and almost half (47%) have reduced the number of products or services they proffer.
In addition, the BDO survey found that support from the government has played a crucial part in business survival.
83% have, in some way, made use of the government’s business support measures and 76% felt they had been given adequate support during the crisis.
Ed Dwan, head of BDO in the North West, said, “The way in which medium-sized businesses in the North West emerge from the pandemic will play a huge part in the recovery of the region’s economy. We know that companies have been hit hard and job losses have been, and will be, a painful outcome. But it is encouraging to see that medium-sized businesses are confident about their overall prospects and are planning for long-term recovery. They are making swift changes to their operating models to give their companies the best chance possible, with some seizing the opportunity to expand into new areas.” He added: “There is no denying that this will be a long haul and improvements will be gradual. “Careful management of the transition to life without government support will be critical. Medium-sized businesses are saying they are ready to take decisive action and are hopeful they will come through this, returning their businesses to pre-COVID trading levels.”
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