Midlands medium-sized firms plan job losses
Many medium-sized companies in the Midlands are planning permanent job losses and overhauls of their operation to survive the Covid-19 pandemic.
Three quarters of mid-sized businesses in the region say they have less than six months of cash reserves.
They will only survive the impact of coronavirus by making radical changes to their businesses, according to a survey conducted by accountancy and business advisory firm BDO.
Actions already taken by these businesses in response to the crisis include bringing in new technology (56 per cent), launching a new product or service (44 per cent), reducing supplier numbers (35 per cent), reducing staff numbers (34 per cent) and moving to an online-only model (29 per cent).
Nearly two-thirds (64 per cent) expect the jobs they cut now will never come back. This 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.
In the first of a bi-monthly survey of 200 medium-sized businesses – which together represent £3.5 billion in revenues and more than 40,000 employees - BDO’s Re-thinking the Economy explores the impact of Covid-19 on these businesses and their plans for the future.
It found that 42 per cent 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.
Also 76 per cent expect to continue using the Government’s furlough scheme until the end of October and 42 per cent of businesses say they have stopped exporting
The survey also found that Government support has played a key part in business survival with 83 per cent having made use of business support measures in some way and 76 per cent saying they felt they had received adequate support from the Government during the crisis.
Richard Rose, head of BDO in the Midlands said: “The way in which medium-sized businesses in the Midlands 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.
“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.”
