What is a Zombie Company?

what is a zombie company?

What is a zombie company?

A zombie company is simply a company that is neither dead or alive.

In other words, the company is so overwhelmed by debt that any cash generated, is being used to pay off the interest on the debt owed to creditors. In many cases, the debt is not being reduced. With this, the majority of ‘Zombie’ Companies are unable to invest in any future growth of the business. Therefore, are unable to employ more staff.

The first sign that a company is turning into a zombie will often seem like symptoms of unusual health.

However, in some instances, the company will appear to be thriving and its executives will be justifiably proud of this success. But Zombie companies, like zombies in movies, slowly move forward, but only just.

Since they’re only just managing to get by week by week. They can’t hire anyone new and they can’t afford to pay out redundancy, as there’s no cash for a payout. The business stagnates slowly but surely, with sudden growth being as much a problem as a downturn in business.

If you’ve seen any films about these members of the undead, you’ll know that zombies don’t tend to last long. This could be the fate of any zombie company that doesn’t properly address its issues. If you’re paying off the interest on a loan and the interest is suddenly raised, your company can die. If someone business-critical leaves their role for a better job at a company that is enjoying healthy growth and you can’t afford to get someone of the same caliber, your business will slowly die.

Ignoring a zombie company won’t do any good. Unfortunately, they’re often created because businesses ignored signs that all wasn’t healthy in the company finance book. That’s why it’s so crucial businesses get help early on, raising their company back to the land of the living.

How Bell & Company can help

Whether it’s worth refinancing the debt, selling off a non-crucial asset in order to reduce the debt and giving the business a little more cash, or speaking with a business consultancy to achieve a company turnaround, there are ways of helping your business to get back on its feet again.

A business consultancy move will help advise you on the best course of action, bringing a fresh pair of eyes to your company and seeing what you work with daily, before coming up with a plan to rescue your business.

Call 0330 159 5820 for further information if your company is in a zombie state.

https://www.bellcomp.co.uk/blog/insolvency-worst-happens/

Businesses Must Have A Brexit Strategy

Businesses must have a Brexit strategy

Mid last year the UK took the momentous decision to leave the European Union. Those on the Leave side rejoiced whilst the Remain camp dismayed at the vote, predicting an Armageddon-style doom for the UK economy and a mass flight of businesses from Britain, driven away by what many considered to be a form of economic suicide.

It’s safe to say that hasn’t happened, although this is mainly due to the fact we haven’t actually left the EU yet. This brings into question the strategy of businesses post-leave; are they prepared for what lies ahead? Many fear that the rocky state of the current Brexit negotiations will cause people to hold onto their cash, causing businesses to have less cash than they’re used to. So what strategy should businesses be taking?

Push for a soft Brexit…

A huge majority of business figures believe that a soft Brexit, in which the UK essentially remains in the single market, would be the best option for Britain. No new trade deals would have to be created and business would continue more or less as normal. This is the reason the current strategy of so many companies and business leaders seems to be, at the moment, putting on as much pressure as possible to ensure the UK doesn’t leave the single market. This may not be possible, however, and businesses must likewise have a Brexit strategy should the UK leave the single market.

But prepare for the worst

The UK will lose an estimated 75 billion by being cut off from the single market, with investors across the channel very likely to be put off from investing their cash into a shaky UK market. If the UK defaults to World Trade Organization (WTO) tariffs many businesses will be put off selling to Britain due to the extra charges they may have to pay to sell to us.

French winemakers, for example, may have to pay an extra 32% on their goods to sell them to us, and vice-versa with our own goods. The farming industry, too, will suffer negatively in terms of finance due to receiving considerably less funding. Farmers received £3bn in support from the much-reviled common agricultural policy last year, over £2bn in direct payments and about £600m in rural development payments.

Having said this, some businesses are looking at Brexit as an opportunity rather than a disaster. Although some economists have savaged the idea of a ‘free trade nirvana’ that will allow Britain to forge new trade deals all over the world, it would be stupid for businesses to not factor this idea into their strategy. The UK will indeed be free of European rules which have prevented many deals being struck with the world outside the EU as a past.

Operating as a solo trading nation, Britain will only have to make sure two sides are happy with a deal rather than the 28 of the EU member states. Businesses should certainly consider factoring the increased ability to create new deals with countries outside of the EU into their Brexit strategies; making deals with new countries post leaving could make or break many UK companies after we leave.

Bell & Co could provide your business with expert advice before we leave the EU; give us a call today to see how we can help ensure your Brexit strategy is the right one.

Alternatively, read our blog on what to do when facing with Insolvency: