Less than a fifth of South West businesses believe they will cope with 6 months of crisis

Published by

Nicky Godding

Only 16 per cent of SW businesses believe they will be able to cope if coronavirus crisis lasts for six months

A new Chamber of Commerce survey of more than 1,100 South West businesses highlights the un-paralleled scale of the economic impact being faced by companies grappling with the coronavirus pandemic.

The survey, conducted between 2^nd-17^th April by Business West Chamber of Commerce - the South West’s largest business membership organisation - shows a high number of firms with concerns about their current and future financial position, whilst confidence in their ability to survive falls sharply when asked to consider the continuation of lockdown measures.

When asked the question: “Do you have concerns about your financial position due to the impact of COVID-19 currently or in the future?” 62% of all firms said that they had concerns currently, whilst 88% said they were concerned about their future financial position.

The survey asked for their views on the viability of their business if the current crisis continues. This show a very steep decline in their confidence of their ‘ability to cope’, which gets sharper as it moves from one, three and six months, up to a year.

Small firms are reporting worse financial impact and greater pessimism about the future than larger firms. The band of small businesses with 5-9 staff are most pessimistic about their ability to cope over three, six and twelve months, with only 11% saying they would be able to cope over six months - dropping to 5% over twelve months.

Ian Mean, Director of Business West in Gloucestershire said: “Our survey spells out just how hard many firms are being hit – the impact of the coronavirus is far worse than the financial crisis of 2008 or any recession we can remember. These are critical weeks for the economy and for the fate of many firms. We are hearing from the coalface stories of firms, built up by individuals over decades, now looking into the abyss.

“We found plunging confidence in businesses’ belief in their ability to survive over a more prolonged period, particularly among small firms. This is a stark reminder of the potential depth of this crisis, with the damage to business risking being cumulatively greater the longer the crisis continues.

“Any exit plan from the current lockdown must be led by the science and by the need to save lives. However, our findings suggest that uncertainty and lack of clarity from government may be exacerbating a crisis in confidence in small companies’ view of the future. A longer lockdown period would mean we need government support to step up a gear and critically to address the gaps in support for those companies that find themselves unable to access current government support programmes. Firms falling through cracks in support packages for a few weeks can be managed, but when these weeks start to become months, they cannot be left unsupported.”, Mean said.

As well as individual firms’ cash flow and viability, the survey also underscored that, even with the government’s generous furlough scheme, many businesses were still taking measures to cut labour costs in order to survive.

The survey found that 37% of all firms said they would be taking or considering taking other measures to reduce labour costs. Of these 37%, the most common actions firms had already implemented or were considering implementing were:

79% reducing working hours
65% reducing salaries
60% cutting back on contracted workers
48% voluntary unpaid leave
47% starting redundancies for staff with under two years’ service
33% starting redundancies for staff with over two years’ service

Ian added: “The furloughing scheme has been a massive lifeline for many firms, but the shock of this economic crisis looks likely to lead to major damage in the labour market and with individual workers. Government now needs to think about how we ensure this damage is only temporary and firms are able to drive a recovery that gets back to our previous excellent regional jobs performance.”

Top answers to the question: “In what ways has your business been affected? (tick all that apply)” were:

72% had seen decreased orders and sales
56% had lost business due to cancelled contracts or orders
50% reported cash flow issues
30% reported supply chain issues

Greg Pilley, Managing Director of Stroud Brewery, an independent organic brewery and taproom in Stroud, Gloucestershire responded to the survey and comments: “We could be worse, and we are certainly grateful for the furlough scheme.

“My estimate is that we are certainly fine for the next three months. We are maximising what we can do online but the real challenge will be when we start looking at opening up again with all the overheads and suppressed trading conditions.”

Nicky Godding

Nicky Godding is editor of The Business Magazine. Before her journalism career, she worked mainly in public relations moving into writing when she was invited to launch Retail Watch, a publication covering retail and real estate across Europe. After some years of constant travelling, she tucked away her passport and concentrated on business writing, co-founding a successful regional business magazine. She has interviewed some of the UK’s most successful entrepreneurs who have built multi-million-pound businesses and reported on many science and technology firsts. She reports on the region’s thriving business economy from start-ups, family businesses and multi-million-pound corporations, to the professionals that support their growth and the institutions that educate the next generation of business leaders.