Businesses across the world have been struggling under the huge weight imposed by the coronavirus pandemic.  Those who have been able to continue operating have faced uncertainty over staffing and customer demand, with a great many more forced to shut their doors entirely during lockdown procedures.

Indeed, data from the Enterprise Research Centre showed that 61,472 limited companies went bust between March and mid-April, with a similar fall in the number of new businesses being created during that timeframe. These numbers are around 70% higher than the same period a year ago, with the number of new startups 23% lower.

Startup strain

Similar challenges have emerged from a recent survey from Startup Genome, which highlighted intense capital pressures faced by startups around the world.  The data showed that 42% of startups globally have less than 3 months of cash to maintain operations, which suggests that 4 out of 10 startups will crash if they fail to secure additional funding in the next 3 months.

The cash flow problems faced by startups has had a profound impact upon their operations, with 58% laying off staff.  The exposure is significant, with 71% of startups operating in industries that are directly affected by the pandemic.

This is compounded by an apparent lack of support from the government, with around half of startups not expecting help from the various relief policy measures offered during the crisis.  The biggest area of help requested by startups is help with liquidity, with nearly twice as many startups needing assistance in this way compared to protection for employees and instruments to boost investment.

The economic fallout of the pandemic is likely to be severe across society, but, as with other areas, those with little slack are likely to suffer the most.  Startups have traditionally flown by the seat of their pants, so it was perhaps expected that they would struggle to cope with a disruption on this scale, but the impact is nonetheless significant.