A new tax year is steadily approaching and will manifest many of the changes announced in the Autumn Budget.
While business owners are worried about rising costs, there is widespread belief that a certain subset of companies will face closure in the next 12-months.
The zombie company apocalypse is coming and it is important to know how your business will be affected.
A zombie company is a business that barely makes enough money to cover its running costs and has little economic impact outside of that.
It is a disparaging term that may be reflective of the annoyance felt by competitors of the business who see it as soaking up valuable resources that would be better served in more agile companies.
However, it does speak to the struggle that many businesses face in attempting to do more than survive in the current economic climate.
Low-interest rates have facilitated a number of loans that have enabled businesses to stay afloat even as their organic cash flow has constricted.
This has been noted with the steady increase in working capital loans, wherein businesses take out loans purely for keeping up cash flow rather than to invest in growth.
While working capital loans are not necessarily the death knell for a business, they are an indication that the business is struggling in the economy and that a serious reconsideration of finances may be in order.
As operational costs increase, it is believed that many zombie companies will be wiped out.
While this may have a positive impact on the medium and long-term economic prospects of the country as a whole, the short-term impact will present some challenges.
Those currently employed by these businesses will struggle in the face of rising unemployment.
However, for businesses that can weather the storm, the removal of zombie companies provides them with an opportunity.
The customers and clients served by the zombie company will be looking for a new business to work with and their money may be what your business needs to move towards growth.
If growth is happening for you, recruiting some of the talented individuals displaced by the closure of zombie companies could be a way to boost your chances of success.
If zombie companies are a barrier to the economy, then their removal will free up the organic flow of commerce and should enable some employees to find themselves in businesses better suited to developing their careers.
To ensure that you are on the right side of the situation, it is important that you seek out professional financial support.
We can help you manage the rising operational costs and understand ways to strengthen your cash flow.
This should help your business avoid becoming too reliant on short-term solutions and avoid the fate of the zombie company.
For financial support that will give your business new life, speak to our team today.
Jim Botton – Pleasure Beach (Skegness)
