The UK’s medium-sized companies will only survive the impact of Covid-19 by making “radical changes” to their businesses, according to a survey conducted by accountancy and business advisory firm BDO.
Nearly two-thirds (64%) said they expect the jobs they cut now will never come back, which BDO said “threatens” to put into reverse the job growth driven by the UK’s mid-tier, which had created half a million new jobs in the previous 12 months.
It also found that 42% of medium-sized businesses expect revenues to return to pre-Covid levels in less than a year, but the same number believes it will take up to three years for trading to recover.
In addition, three quarters (75%) of mid-tier companies have less than six months of cash reserves. A similar number (76%) expect to continue using the Government’s furlough scheme until the end of October.
BDO said the findings also point to a smaller, more domestically focussed mid-tier. 42% of businesses say they have stopped exporting and nearly half (47%) have reduced the number of services and products they offer.
The survey also found that Government support has played a “key part” in business survival. 83% have made use of the Government’s business support measures in some way. 76% felt they’d received adequate support from the Government during the crisis.
The Covid-19 Corporate Financing Facility was the most utilised, with well over half (56%) of medium-sized companies drawing from it.
Paul Eagland, managing partner at BDO, said: “The way in which the UK’s medium-sized businesses emerge from the pandemic will play a huge part in the recovery of the UK 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.”