An interesting article in the Times by Ed Conway on 8th May “Zombie Assets are the price of huge transitions” prompted me to write this article.
Zombie Assets are defined as assets on a balance sheet that no longer justify their value because the world has moved on.
We have had many huge transitions in the past; think back to canals once enormously profitable, but when the railways came along these huge investments and assets became a drain on the businesses that owned them, becoming uneconomic.
For a number of years now “The High Street” once feted by investors has become almost un-investable with many closures and empty sites due to online competition, high rates and many other factors. Making many once profitable assets Zombie Assets.
So, as social distancing requires businesses to have a lower density of people and more demonstrate they can work from home effectively, are the new gleaming high-rise offices going to retain their value?
Consider your business:
· Do you have buildings that will no longer have the same value?
· Is your stock still needed in the new environment?
· What about equipment, Cars, Vans?
There will be positives to come out of this situation; the just-in-time delivery systems are too fragile; they have broken down and affected society and business badly. Moves have already been made to bring more supplies back on shore and the impact of Covid-19 and Brexit will accelerate this process.
- Are you in a position to benefit from these major changes?
- What can you do to make your business more prepared for this change?