Despite Covid-19, South West growth economy businesses remain ambitious about growth


BGF releases first survey into the attitudes of growth economy companies in the UK:

  • Two thirds (68%) of South West respondents say they are still motivated to grow their business in 2021, despite challenges of Covid-19

  • 63% of South West respondents say that the pandemic has prompted them to make permanent changes to their business

New research released today by BGF – the UK’s most active investor – has highlighted for the first time how growth economy companies are responding to Covid-19.

According to the survey of 532 companies, carried out by independent research company Delineate, the pandemic has created significant barriers to growth for over half (58%) of South West respondents, with operational risk highlighted as the primary concern around future growth.

However, despite the obvious headwinds, over two thirds (68%) say they remain motivated to grow their business in 2021, signalling a strong level of resilience across these firms. International growth is seen as the greatest opportunity (33%) for firms in the South West.

It appears that the pandemic has changed how growth economy companies are operating – for good. Six in 10 companies in the South West said that the pandemic has triggered permanent changes to their business models. 47% have invested in digital infrastructure and 21% have entered new sectors.

Promisingly, and looking ahead to 2021, 82% of regional growth economy companies stated that they are financially stable enough to pursue growth – compared to the UK average of 73%.

There are more than 21,000 growth economy companies in the UK, according to research undertaken by PwC for BGF. Six percent of these businesses are in the South West. Growth economy companies have revenues between £2.5m and £100m – the majority are fast-growing and profitable, with total turnover rising 4% a year on average (between 2013-18), compared with average GDP growth of 2% a year over the same period.

It appears that continued investment is seen as critical by the respondents. 95% of growth businesses in the South West made some form of internal investment during Covid-19, with the highest numbers of businesses focusing investment on employee retention (55%), followed by technology and digital infrastructure (47%). Just 5% made no investment in their business through the pandemic.

Overall, the use of external funding to meet their financial needs has been prevalent throughout the pandemic with 87% of South West companies indicating they had taken on some form of funding.

The survey has shown that local businesses have taken on additional levels of debt, with 21% accessing a government Coronavirus Business Interruption Loan, and 47% utilising the Furlough Scheme to reduce expenditure. 21% had made a personal investment in their business in the last 12 months and three quarters (75%) will be looking to de-risk their personal investments in the next 12 months.

Private equity has been a go-to source of funding for 13% of businesses – with a strengthened balance sheet (45%) and access to additional business and strategic support (42%) cited as the primary benefits of equity finance.

Growth economy companies are of the view that targeted investment of between £1m and £5m (67%) would have the greatest impact on the growth trajectory of their business.

Despite the uncertainty of the pandemic, 58% reported that their teams have worked as effectively, and 63% feel that the company culture has strengthened over this time. However, over a third (37%) do expect to revert to previous ways of working when able. This is less than the national average signalling more people in the South West are keen to maintain elements of flexible working.

When asked about staffing levels, 18% of respondents said they planned to make a few redundancies in the months ahead and 8% said they planned significant redundancies. However, 16% of respondents said they planned to hire a few new staff and 3% said they planned significant new hires – signalling that overall employment across the growth business population will remain robust.

Ned Dorbin, BGF’s head of South West and Wales, said:

“Amid the great uncertainty of 2020, South West growth economy businesses remain focused on their expansion and have the drive to grow. South West growth firms have shown great resilience – uncovering opportunities to pivot their offering or enter new markets. This is positive news as we move into the new year and companies start to think about their longer-term goals once again.”

Andy Gregory, head of investments, UK & Ireland, BGF, said:

“The research suggests that despite the obvious headwinds, growth economy companies have demonstrated high levels of resilience during the pandemic. Importantly, they appear to be thinking ahead to the next 12 months, working to reposition and refuel their companies to pursue growth. As businesses look to either enter new markets or refocus their operations, closing any skills gaps and bolstering their senior leadership teams will be critical.”

The research took place in October and November 2020. It comprised of interviews with 532 respondents (38 based in the South West) who identified as CEOs, board directors, COOs or CFOs, and owners or partners of growth economy businesses. Respondents are spread across the UK, with a turnover between £2m and £150m and between 20 and 499 employees.

For more information, and to download the Growth Economy Survey Whitepaper, visit: