Coronavirus business rescue package creates 'zombie companies'
The BBC has reported that there is a tsunami of debt-laden firms, referred to as “zombie companies” that are functioning day-to-day but don't have the means to pay off the full debt they owe or access funds to invest and grow. These businesses are on a cliff edge as the support initiatives such as job retention, tax deferrals - the £160bn government business support package - comes to an end.
The Institute for Fiscal Studies (IFS) says many firms, who have survived so far, have piled on debts and will struggle to continue.
Stuart Adam, from the IFS, said:
"Many firms have been tided over during the period of hibernation partly through loans and tax deferrals, but those mean piling up debts that will make it harder for them to carry on in the longer term."
Mark Harris, from The Business Company, said:
"It is obvious that businesses who were struggling pre-covid may have unfortunately been postponing the inevitable. However, in my experience (over four recessions), providing business leaders adopt a proactive and pragmatic approach to the current challenges by means of a structured business review including the revised market landscape, customer base, key competitors, impact on current business, etc and develop clear objectives for the short term will not only survive but thrive.
Many organisations will call on experienced objective advisers to support this process and ensure a level of objectivity and structure."
The Business Company has over a decade of experience in this field, and is keen to support the economy across The Marches/ West Midlands by offering a free ½ day initial analysis to support businesses from all sectors who would welcome support.