Zombie assets could be costing UK business £280bn per year, research finds

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Failing to put adequate asset management strategies in place could be costing UK businesses as much as £280 billion a year, new research reveals.

The research of 500 UK businesses commissioned by Troostwijk Asset Management also found that a third of businesses haven’t appointed a manager in charge of asset management.

As a result, assets are left to ‘zombify’, instead of much needed capital being released from them which can serve as an alternative growth stream.

“The real issue lies in finding someone within the business that is responsible for not only identifying what dormant assets there are, but how to develop and implement a strategy that will turn those zombie assets into fruitful capital which can be used elsewhere to stimulate growth,” said Alan Bell, International Director at Troostwijk.

“In the current business climate, I see this as an integral part of any business operations, and its worrying that so many are yet to implement a structure in place to facilitate this.”

In fact, the research which looked at the volume and value of businesses surpass assets identified that UK businesses could be collectively sitting on as much as £700 billion in unutilised assets.

If this value was to be pumped back into the businesses through alternative investment streams, the impact on their overall performance can significantly shift and ultimately make or break a business.

Bell says: “It’s widely acknowledged that securing investment is no easy feat, especially in the ever-uncertain Brexit environment where decision makers are very hesitant to make any long-term commitment.

“We’ve noticed this to be a prominent challenge amongst numerous clients. In my view there is only one way to tackle this, and that is to develop bespoke strategies, that will fast track business objectives, and future proof businesses against the ripple effects of Brexit.”

Additionally, the research revealed that up to 52% of dormant assets goes into storage, and often it’s never fully utilised. This shows the full extent to which businesses are clueless in what is the best course of action when their machinery or technology reaches its end of useful life.

The fact that the majority of businesses are allowing surplus assets to go to waste not only goes against companies Corporate Social Responsibility but also falls short of their fiscal responsibility to shareholders to make the most of their previous investment.

Bell concludes: “There is no doubt that in the next year or so, from a practical and legislative perspective there will be even more challenges thrown at SMEs.

“In my view it’s never been more important to find new ways to tap into alternative streams of capital that can be utilised for growth.

“It’s alarming that the so-called zombie assets could be costing businesses as much as £280 billion per year and I urge business leaders to implement processes that tap into such opportunities.”