Almost one third (30%) of European businesses have been forced to cut staff or wages to survive during the pandemic, with business finances set to be further stretched when government support winds down, according to a new survey from accountancy and business advisory firm BDO.
In total, two thirds (65%) of European businesses polled by BDO acknowledged that government support via business loans and subsidised wages had been important in helping them manage cash flow through the crisis. One in five said they would have gone out of business without government help.
BDO’s survey of 244 senior business leaders across eight European markets* also revealed how businesses have shifted their priorities in response to COVID-19.
Respondents said their top business priority is now reducing overheads and other business costs, compared to just six months ago, when the top concern was attracting and retaining high quality talent. In total, 92% said that reducing overheads would be important for their future survival and success.
Meanwhile, just 20% of businesses stated they are now focused on aggressive growth, down from 35% at the end of 2019. Business leaders also indicated a shift in priorities away from launching new products and services in favour of adapting or improving existing offerings.
Among other key findings:
- Nearly four in ten (39%) described the impact of the pandemic as ‘major’ or ‘severe’. However, an encouraging 20% said the impact for their organisation had been limited.
- The crisis has prompted a fundamental rethink of business models, with 44% planning to make changes in response to the crisis. Digitisation and rethinking the customer experience rank as top priorities for respondents seeking to realise change.
- 45% of those surveyed say that COVID-19 has highlighted weaknesses in their supply chain. More than a third (35%) say at least one of their key suppliers has ceased trading during this time. As a result, a majority of these businesses (59%) say they will take action to diversify their supply chain as they emerge from the crisis.
- Businesses have adapted quickly to agile and homeworking, with more than half (56%) saying that increased levels of homeworking will remain after the public health risks subside.
Paul Eagland, managing partner at BDO, said, “Support from governments across the Continent has provided a lifeline to many businesses during the pandemic. But as these programmes begin to wind down, businesses face hard choices to ensure their future sustainability.
“Unsurprisingly, some businesses have reined in their growth ambitions in order to focus on business resilience. The pandemic has also forced many to rethink and adapt their operating models.
“As we emerge more fully from lockdown, business leaders will need to continue to act with agility and creativity to ensure their businesses are in the best shape to take advantage of the recovery.”