Zombies Economy

It’s popular in modern mythology that the world will end because of a Zombie apocalypse.  Little did even the most hardened prepper think that this would come in the form of defunct businesses.

It is predicted that 1 in 7 companies are so called “zombie companies”. Companies that should have gone into liquidation but have been kept alive through government bailouts / bailout loans.

Added to this that 55% of bailout loans applications have been deemed fraudulent, resulting in the majority of UK banks ceasing to offer business bank accounts.  The picture that is being painted is very grim.

1 in 7 businesses effectively being insolvent, that’s over 1,000,000 businesses, 2.5 million employees potentially looking at job losses. A very scary, but real problem.

The unfortunate main area where this impact will be felt, is the small business, under 50 employees and £12m in turnover.

Similar stats are being bounced around in Germany, estimating around 500,000 small businesses, 14,000 medium sized companies and 15,000 large companies being classed as Zombie companies.

The key will be to reduce the impact of these businesses on your own company, look at your supply chain, understand which poses a risk to you, both in terms of supply and as a debtor. Cashflow is key, but understand the value of stock you hold, who owns its, who owes you, potentially even who owes them. When you remove the zombie element from this, the real effect will be a cascade of dominos and once the first one falls, it won’t be long before the impact is felt. With the world opening up again, government support will cease, this will cut off the artificial lifeline for many of these businesses, it may be sad, but it’s happening.

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