Survey shows region’s high-growth firms adapting to new normal to resume expansion

December 21, 2020

More than two-thirds of high-growth firms in the South West plan to continue to expand next year after adapting for a post-Covid world, new research shows.

According to the first survey to chart these businesses during the coronavirus pandemic it has created significant barriers to growth for 58% of South West firms, with operational risk highlighted as the primary concern around future growth. 

However, 68% remain motivated to grow in 2021, signalling a strong level of resilience. International growth is seen as the greatest opportunity (33%) for these businesses.

Just over 80% of high-growth South West firms said they were financially stable enough to pursue growth – compared to the UK average of 73%.

The survey, which was commissioned by BGF – the UK’s most active investor – and carried out by independent research company Delineate, also reveals that the pandemic has triggered permanent changes to the business models of six in 10 companies in the South West.

Some 95% have made some form of internal investment, with spending on employee retention coming out top (55%), followed by technology and digital infrastructure (47%), while 21% have entered new sectors.  Just 5% have made no investment in their business through the pandemic.

These changes tended to be driven by access to external finance, with 87% of saying they had taken on some form of funding. 

Some 21% accessed a government Coronavirus Business Interruption Loan and 47% utilised the Furlough Scheme to reduce expenditure.

Twenty-one per cent of owners had made a personal investment in their business in the past 12 months – with three quarters of them looking to de-risk their personal investments in the next 12 months.

Private equity was a go-to source of funding for 13% of businesses – with a strengthened balance sheet (45%) and access to additional business and strategic support (42%) cited as the primary benefits.

Just over two-thirds of investment was between £1m and £5m.

Despite months of uncertainty, 58% said their teams had worked as effectively as usual, 63% felt that their company culture had actually strengthened and 37% did not expect to go back to previous ways of working.

The survey has a mixed picture on employment with 18% of firms planning to make “a few” redundancies in the months ahead and 8% “significant” job losses.

However, 16% intend to hire a few more staff with 3% planning significant new hires.

BGF head of South West and Wales Ned Dorbin, pictured, said: “Amid the great uncertainty of 2020, South West growth economy businesses remain focused on their expansion and have the drive to grow. 

“South West growth firms have shown great resilience – uncovering opportunities to pivot their offering or enter new markets. This is positive news as we move into the new year and companies start to think about their longer-term goals once again.”

The research took place in October and November among firms turning over between £2m and £150m and employing between 20 and 499 people. 

BGF was set up in 2011 and has invested more than £2.2bn in over 330 companies. 

Recent investments made by BGF’s Bristol team include £6m city-based software developer and digital transformation specialist Amdaris, £6m in Kagool, a Cardiff, Manchester and London-based digital agency, and a follow-on investment in the iconic Gloucester-based sports brand Ruroc, best known for its signature full-face motor racing and motorcycle helmets.

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