Zombie companies: how to know if your business is walking dead

A green, deteriorated, Zombie-like arm raises from the ground in a graveyard.

They limp along lifelessly, feasting on the resources of business owners and their employees, groaning and wandering aimlessly. This is the dawn of the dead business model: zombie businesses.

One of the key signs you’re operating a zombie company is that it’s only making enough money to pay off the interest on your loans to the bank. Without any cash, there’s no money for investment to fuel growth. But things aren’t dire either! You can still pay off your suppliers, make payroll every month, pay the rent and keep the lights on.

What separates zombie businesses from thriving ones is a lack of means to grow. Like their flesh-eating counterparts, they’re not fully dead, but they’re not fully alive either.

The looming threat of zombie businesses

There’s only so long that zombie businesses can survive without growing. Eventually, something will kill them off. Whether it’s a change in the market or a lack of funding, these businesses simply aren’t sustainable.

Ultimately, it’s the business owners and employees who stand to suffer. With recent research suggesting that there are 49,000 of these businesses operating in the UK today, the zombie company is a monster you can truly be scared of this Halloween.

Signs you might be running a zombie company

Do you suspect your venture might have joined the realms of the undead? Put your objective hat on and have a cold, hard look at your business.

  • Are you losing customers at a faster rate than you’re gaining them?
  • Are your competitors dominating your market?
  • Do you have a great offering but people just aren’t interested in it?
  • Are you making plenty of sales but just can’t turn a profit?

If the answer to any of these is yes, there’s a good chance your business is suffering from the zombie plague.

Time to pull the plug?

Deciding to let go of a business is not an easy decision. You’ve worked on it day in, day out and have invested a huge amount of emotional energy in it. However, if you go on you’ll be doing yourself a disservice. Your energy, creativity and expertise should be put to use in a business which stands a chance of survival. Maybe it’s time you brought death to your undead business?

Closing down your business may feel like a dark cloud, but research suggests there’s a silver lining for those who are able to view the failure as a positive development experience. A 2014 study by Stanford University economics Professor Kathryn Shaw found that entrepreneurs who had previous ventures — even those that had failed — increased their chances of success as a result of the lessons they learned from the previous businesses.

Your decision to move on may be your opportunity to move up.

Thinking about your next venture? Here are four ways to finance your business without a bank loan.

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