Coronavirus update: Survey shows many West firms ‘looking into the abyss’ as pandemic hits sales

April 23, 2020

Fewer than one in six West of England firms believe they will be able to cope if the coronavirus crisis lasts for more than six months, according to the results of the first major survey highlighting the impact of the pandemic on the region’s businesses.

More than 70% of firms have already suffered a decrease in orders and sales while half are experiencing cashflow issues, the survey results reveal.

Smaller businesses are being particularly hard hit, with just 5% saying they would be able to cope if the crisis lasted more than a year.

The survey of more than 1,100 firms was conducted by Business West, the organisation that runs the Swindon & Wiltshire Initiative, which warned many long-established firms were now “looking into the abyss”.

The results paint a gloomy picture of the un-paralleled scale of the impact on companies in the region and the measures they are being forced to take to grapple with it.

A month on from the start of the lockdown, some 56% of all firms taking part said they had already lost business due to cancelled contracts of orders while just under a third reported supply chain problems.

As a result, many firms are struggling with labour costs. According to the survey results, 37% of all firms are now taking or are considering further measures to reduce their payroll.

Of these, 79% are – or will be – reducing working hours, 65% cutting salaries, 60% cutting back on contracted workers and 48% asking staff to take voluntary unpaid leave.

Just under half are starting to make staff with under two years’ service redundant and a third are shedding staff with more than two years’ service. 

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 they did, while 88% said they were concerned about their future financial position.

Asked about the viability of their business if the crisis continues, the answers show a steep decline in confidence of firms’ ‘ability to cope’, with it getting sharper as it moves from one to three and six months up to a year. 

Small firms reported a harder financial impact and greater pessimism than larger businesses. Those employing between five and nine staff were the most pessimistic, with just 11% saying they would be able to cope for more than six months – a figure that dropped alarmingly to just 5% for a period longer than a year.

Swindon & Wiltshire Initiative director Ian Larrard, pictured above, 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.”

He said while any exit plan from the current lockdown must be led by the science and the need to save lives, the survey findings suggested 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,” he said.

“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.”

As well as individual firms’ cashflow 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 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,” added Mr Larrard.

“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.”

The survey was conducted between April 2 and 17 by Business West Chambers of Commerce & Initiative.


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