In a recent article in the Telegraph, we were interested to read that the recovery of the UK economy is at risk from zombie businesses – the report, by Begbies Traynor, highlighted the increasing proportion of small businesses which, it said, fell into the category of the living dead companies in the UK – symptoms include an obvious deterioration in working capital and increase in county court judgments filed against them. This is where small business coaching can help.
What Is A Zombie Business?
These companies – as many as 5000 it has been estimated – appear to be burdened by debt but are still generating enough cash to survive due to lack of action by creditors (perhaps themselves paralysed by cost of chasing outstanding monies and allocating staff or professional consultants & advisors to do so – and the fact that the servicing of their loans remains a low cost because of low interest rates.
Over to Julie Palmer of Begbies Traynor… “These zombie companies are only just generating sufficient cash to pay the interest on their debts and keep creditors at bay. They are in no position to deal with unexpected costs, lost orders or bad debts or to fund increases in working capital and invest in growth.”
Tools & Systems for Business Growth
The problem is that these Zombie businesses act as a drag on the UK recovery by continuing to take sales from competitors who may be in a more healthy position, as well as other assets, including people, that could be better utilised by growing & healthy companies that will contribute to a strong economy in the longer term. Learn more about why productivity matters so much for the UK and how we're fixing it.
Leave a comment