New research shows that the vast majority of design businesses (89%) have or are contemplating furloughing staff to offset the impact of the coronavirus pandemic.
The media business outlook survey was conducted by UK-based accountancy firm Moore Kingston Smith, which specialises in the creative industries among others. It reveals a mixed bag for the design industry which, like so many others, is suffering due to the disruption caused by COVID-19.
In some areas, it appears designers are decidedly more optimistic than others in the media services industries, but as is to be expected, elsewhere many are reporting worrying circumstances.
Designers turn to furloughing and pay cuts
“For most, revenue levels have been hit dramatically and quick measures have been taken to preserve the longevity of the business,” the report finds.
As we already know, designers are, en masse, taking advantage of the chancellor’s furloughing scheme, which promises to pay out 80% of an employee’s wage from the government pot. But elsewhere, the results show that many are aiming to mitigate losses through instigating pay cuts.
More than a third of design businesses (36%) reported that they were contemplating salary cuts across the board, while 14% said that they were considering cuts for senior management only. Nearly one in five (18%) were still unsure.
Beyond this, when asked if they were considering redundancies altogether, many design businesses said it could be on the cards: nearly one in five were contemplating making up to 10% of their workforce redundant, while 4% were grappling with the idea that up to half of their staff would need to go.
Cash reserve differences across the industry
Information on cash reserves gives some indication on design businesses current position. All design businesses say their cash reserves could last them longer than a month and 67% of businesses show they have enough cash to last more than four months (41% are confident cash can last more than six). Other design firms, however, report a slightly less optimistic view with a third saying that cash within the business is forecast to last three months or less.
Limited cashflow within smaller businesses was an issue raised earlier this week by chancellor Rishi Sunak, and which prompted his latest “Bounce Back Loan” support package, which rests on getting “fast-track finance” to the UK’s smallest enterprises.
Majority confident they can weather crisis
While the outlook for many is undoubtedly worrisome, there were some glimpses of hope across the results when compared to other industries. Design and branding agencies surveyed by Moore Kingston Smith were, on average, more optimistic about dropping revenue levels compared to 2019, for example.
As is to be expected, most are predicting losses in earnings because of the coronavirus crisis – but 63% of design businesses expect this drop will be limited to a third or less of their 2019 revenue, compared to 46% for other industries surveyed.
Additionally, the overwhelming majority of design businesses did not report that this crisis was likely to signal the end of their business. Just 4% of respondents believed the coronavirus pandemic would shut down their operation – while the remaining 96% of respondents were confident they could make it through, regardless of how concerned they were about COVID-19.
Earlier this month, we surveyed our Design Week readers to find out how they were faring amid the coronavirus crisis, which you can read the results of here.