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More than half of Cornwall start-ups at risk amid coronavirus crisis

More than half of Cornwall start-ups at risk amid coronavirus crisis

Published by Sarah Yeoman at 10:00am 12th July 2020.

More than half of startups and growing businesses in Cornwall are at risk of failing due to the coronavirus crisis.

That is according to a study of almost 30,000 new and growing businesses in the UK by analyst Beauhurst, which has warned any national financial recovery will be impeded if these "economic powerhouse" firms are not targeted with support.

Beauhurst analysed various factors to determine the risk facing each business, such as whether their premises had been closed, social distancing had prevented them providing a product or service, or they were having to offer their products at a reduced cost.

Of the Cornwall firms tracked by Beauhurst, 57% were classed as 'at risk' in April.

That includes 10% at severe risk, meaning they have suffered serious disruption to their operations, and 9% that were critical, and facing an "existential threat" to their ability to continue trading.

The remainder were at moderate risk – although that means they have still suffered disruption "beyond mere inconvenience".

The data tracks start-up businesses alongside so-called scale-ups, which are established companies that have moved beyond their initial phase to focus on growth.

woman with money

Across the country, 17% of start-ups and scale-ups were deemed to be at either severe or critical risk, affecting 615,000 jobs, while a further 36% were at moderate risk.

But some businesses could see a positive impact from the pandemic, if they are able to grow their operations or have otherwise seen a surge in demand, with tech companies faring particularly well.

In Cornwall, 10% of businesses fell into this category, compared to 15% across the UK.

Henry Whorwood, head of research and consultancy at Beauhurst, said start-up and scale-up companies will be integral to the UK’s productivity as it moves towards an economic recovery.

"The companies we track are the UK’s economic powerhouse. They employ millions of people, have received billions in investment and grants, and operate in sectors as diverse as AI and catering.

"It’s therefore crucial to understand how the Covid-19 epidemic is impacting these businesses. Our data shows just how much is at stake.

"It’s crucial to make sure the interventions proposed by the Government reach these companies."

Henry Whorwood, Beauhurst

Worker

In April, the Government launched its Future Fund scheme to provide loans of between £125,000 and £5 million to companies that may not be able to access other government support schemes because they are yet to turn a profit – provided they secure equal funding from private investors.

But Beauhurst said the scheme would be difficult to access for most firms, with investors “wary of putting money into ambitious companies in return for equity right now”.

It has called on the Government to instead reward employers who retain staff in active employment instead of furloughing them, and to make changes to research and development tax credits to promote investment in innovation.

Beauhurst said regional inequalities were clear, with a high concentration of severely at risk businesses in the South West and devolved nations.

London meanwhile is home to the highest proportion of potentially positively impacted companies (17%), which Beauhurst put down to an abundance of tech firms.

You can find all the source data here.

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