Almost a third of Burnley start-ups severely at risk amid coronavirus crisis
Almost a third of start-ups and growing businesses in Burnley are at severe risk of failing due to the coronavirus crisis, new research shows.
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 firms tracked by Beauhurst in Burnley, 31% were classed as either severely or critically at risk in April.
This means they have either suffered serious disruption to their operations, or are facing an "existential threat" to their ability to continue trading.
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.
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% are 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 Burnley, 10% of businesses fell into this category, compared to 15% across the UK.
The remaining local companies were either moderately at risk (31%) or at low risk (28%).
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.
He said: "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."
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.