A Different Way Forward – The Growth Economy Post Covid – BGF in partnership with Delineate

Foreword about the sample

BGF commissioned research firm Delineate to carry out a survey between October and November 2020 to understand the concerns, hopes and needs of the senior managers who lead growth economy businesses. The researchers spoke to 532 executives, board members, senior managers, owners and partners of businesses with at least 20 employees and turnover in excess of £2 million. 

We believe that the results reveal important truths about the challenges and opportunities facing the growth economy. Getting to grips with these findings is essential for the UK to move forward in the post-Covid world.

A Story of Resilience

The Covid-19 crisis has dealt the UK an economic blow the likes of which have not been seen in decades. At the same time as businesses have been dealing with the disruptions of the coronavirus, they have also had to prepare for a period of uncertainty following the end of the Brexit transition period on 31 December 2020.

Two-thirds of respondents (67%) feel that Covid-19 has created significant barriers to growth for their business, while 57% predict that Brexit will create significant barriers for them.

Of course, not everyone has suffered in the pandemic, many businesses see growth opportunities related to Brexit; however, the evidence from our survey confirms what many feel – the year 2020 has been extremely challenging. 44% of firms in our sample said their revenues had fallen during the pandemic compared with only 14% who said revenues had gone up.

All this would appear to add up to a rather gloomy picture. However, what our survey also identified was a strong sense of resilience among growth economy companies. Despite the challenges of Covid-19 and Brexit, three-quarters of respondents said they were still motivated to grow their business in the next 12 months.

Opportunities and Obstacles

Further evidence of a resilient mindset among growth economy companies was revealed when respondents were quizzed about their most promising business opportunities next year. The most popular choice was market growth, followed by international expansion, entry into new sectors in the UK, and taking market share from competitors. 

There are tangible obstacles, though. When asked about the factors that were stopping their businesses from growing, respondents were most likely to say, “there is too much operational risk in the sector in which my business operates”, a result that seems likely to be related the Covid-19 pandemic, which has significantly disrupted many sectors. The second-most popular choice was “there is not enough demand for our products and services”, a result which may also be connected to Covid-19.

Another finding was that 12% of respondents said there was too much debt on their balance sheet to deliver a sustainable profit. The pandemic has forced many businesses to resort to borrowing and there is a serious risk that the cost of servicing these debts will constrain business expansion in the years ahead.

Adapting and Thriving

Businesses have not been idle during the pandemic. The most popular adaptation declared by respondents was investment in digital infrastructure. For many businesses, system upgrades and other investment was needed to allow their staff to work effectively from home during coronavirus lockdowns. Although these investments were, to an extent, forced on management teams, these upgraded systems will be a positive legacy of the virus. Online collaboration tools, cloud computing and other digital investments ought to pay dividends in the years ahead.

Of course, some firms had to take more drastic action. The second-most popular adaptation was to reduce headcount, an unfortunate outcome. Other firms had to discontinue operations in some areas of business as a result of the pandemic, while others still adapted by changing their route to market. Again, there were positive signs. More than a quarter (27%) of businesses reported that they had entered new sectors during the pandemic, while 17% said they had not made any significant changes to business operations.

Given all the measures taken, it is perhaps not surprising that 61% of respondents said the pandemic had prompted them to make permanent changes to their business model. These include more flexible working for staff, an increased use of videoconferencing, and a greater emphasis on e-commerce as opposed to traditional bricks-and-mortar premises.

Attitudes to Staffing

Of course, there have been hard choices to make, particularly around headcount. Redundancies have been made despite the unprecedented measures, such as the furlough scheme, that the government implemented to protect employees during the crisis.

Further job losses are expected as this government support inevitably tapers off. When asked about staffing levels, 21% of respondents said they planned to make a few redundancies in the months ahead and 8% said they planned significant redundancies. In sectors that are expected to be most affected, such as the travel industry, restaurants and bars, these job losses will be painful for staff.

The data indicates that businesses in London and the South East are most likely to say they plan to make redundancies, while businesses in the East of England and the Midlands are most likely to say they plan to take on new staff. Businesses in Scotland and Northern Ireland were most likely to say they did not plan to change their headcount.

Funding amid Covid 19

The pandemic has complicated the environment for business funding in the UK. Exactly half of respondents said it was harder to access funding now than a year ago – a concerning finding as it implies the pandemic has imposed a constraint on business growth.

When asked about the relationships with banks, our respondents had had mixed experiences. 42% said their bank had been slower to respond than usual during the pandemic – understandable given the disruption of the coronavirus but no doubt frustrating for businesses with urgent needs. On the other hand, more than half of respondents (56%) said their bank had been very supportive of the business during the pandemic.

The most popular funding source was the furlough or job retention scheme, accessed by about a third (34%) of businesses in the sample. This was followed by the Coronavirus Business Interruption Loan Scheme (CBILS), accessed by more than a quarter (27%). Private Equity funding was accessed by nearly a fifth (19%) of businesses, making it the third most popular funding source on the list, ahead of both the Future Fund and the Bounce Back Loan Scheme (BBLS). 

Growth Plans for 2021

Clearly, 2020 has been an exceptional year, in which many businesses have resorted to exceptional measures to stay competitive. They may have relied on schemes such as CBILS and BBLS, when ordinarily they would be wary of taking on too much debt. The spectre of an overly indebted growth economy is a concern for many in the business community. 38% of respondents aim to refinance their balance sheet in 2021.

Which funding provider is their first port of call in this refinancing effort? Perhaps unsurprisingly, banks are still the most-popular first choice, selected by nearly half of respondents. Private Equity and/or venture capital was chosen by 17%. The third most-popular answer to this question was high-net-worth (HNW) individuals and/or angel investors, followed by capital markets. 

Regional Highlights

One notable finding was that businesses based in London and the South East were significantly more pessimistic than average about barriers to growth stemming from Covid-19 and Brexit. 

Respondents based in the North West were considerably less likely than average to say that morale had been negatively affected by the pandemic. Businesses in the Midlands were more likely than average to have invested or plan to invest in digital infrastructure. They were also more confident about their growth prospects than the sample as a whole.

Businesses in the North East, Yorkshire and Humberside, on the other hand, were more likely than average to have discontinued operations in some areas of the business in response to the pandemic. They were also more inclined to think that Brexit would offer new opportunities for their businesses and were generally more positive and motivated to grow in the next year than respondents whose companies were based elsewhere.


This research report has revealed that growth economy companies face significant challenges relating to the Covid-19 pandemic. However, the research also underlines how resilient these companies are. They have responded by increasing their investment in digital infrastructure to enable their staff to work remotely. These and other investment made during the crisis will be an enduring, positive legacy of the virus.

Some companies have clearly benefitted from the pandemic, e.g. Amazon, but many others have had their business models thrown into doubt. 

Many firms have been kept in business thanks to emergency action from government in the form of the furlough scheme, CBILS, BBLS and the Future Fund. In the months ahead, these businesses will face a reckoning as this emergency support runs out. 

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