From Zombie to High-performance

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In today’s economic climate, many businesses find themselves in a precarious position, generating just enough revenue to keep the lights on but lacking the momentum to grow. These so-called “zombie companies” are on the rise, particularly in the UK mid-market, where the number of businesses struggling to stay afloat has increased significantly over the past year.

As Professor Jagjit Chadha puts it, the country has been stuck in a cycle of short-termism, stagnating at a dismal ~1% trend growth rate. But while policymakers debate fiscal rules and interest rates, there’s a quieter revolution happening in boardrooms.

The core issue many SMEs face: they’ve become zombie companies, stuck in survival mode, unable to innovate, adapt, or grow. Conal said “These businesses aren’t dead—but they’re certainly not alive in a productive sense.”

The good news? The antidote isn’t theoretical. It’s practical. And it starts with smarter people strategy.

Why Businesses Are Struggling to Grow

Recent research shows that nearly 16% of mid-sized UK businesses are now in danger of becoming zombie companies. In the property sector alone, the figure is even higher, with one in four businesses exhibiting signs of stagnation. This isn’t just a temporary setback, it’s a structural challenge driven by:

  • Rising costs and high interest rates have led to many businesses funnelling resources into debt servicing rather than growth initiatives.
  • Economic uncertainty, instability in markets, supply chain disruptions and fluctuating demand are making long-term planning increasingly difficult.
  • Companies that rest on past successes rather than adapting to changing market conditions risk falling behind more agile competitors.
  • A narrow focus on acquiring new customers, rather than nurturing existing relationships, leads to unsustainable churn rates.

The risk isn’t just stagnation, it’s long-term irrelevance. But there are proven ways to escape this cycle and build resilience.

Breaking Free from Business Stagnation

In our experience, businesses that successfully overcome stagnation share common traits. They invest in future growth, embrace change and remain agile. Here’s how you can do the same:

  • Review cost structures, optimise cash flow and explore alternative funding options, this can help you avoid being over-leveraged.
  • Invest in innovation, whether through digital transformation, product development, or process optimisation, it’s critical to remaining competitive.
  • Reassess your market position ensuring that your offerings continue to solve the right problems for customers.
  • Strengthen leadership and company culture, foster adaptability and high performance, which are crucial for meaningful change.
  • Expand strategically by diversifying revenue streams and partnerships creating long-term sustainability.

Practical tactics that deliver

At People Puzzles, we’ve seen first-hand what works:

  • Inciner8 saved £500k through smarter processes, achieved 20% year-on-year growth, and reduced attrition through better engagement

  • Chapel Properties scaled without adding headcount, saving £350k in overheads and speeding up delivery timelines

  • Yewdale gained £3m revenue in 18 months and a 6% margin lift through strategic HR appointment

  • Hansbury Group outperformed revenue targets by 30% and built a repeatable operating model by aligning culture and leadership

These aren’t unicorn cases, they’re practical results from clear people strategy. It’s not always about shiny new programmes, it’s about doing the basics, brilliantly and consistently.

Real-Time Growth Markers

Just as Chadha calls for real-time growth metrics at the national level, we advocate for dashboards that track ROI on people investments:

  • Absence rates and attendance controls
  • Turnover cost per hire – known, reflected on and actioned
  • Engagement survey delta – spot trends, evaluate leadership impact, focus of specific issues/depts
  • Productivity per head

It’s about moving from instinct to insight. And the ROI is measurable.

What’s Next for Businesses Looking to Thrive?

While economic pressures remain, businesses that take proactive steps today will be the ones that emerge stronger. Conal has seen time and again that ‘zombie businesses don’t die overnight, they fade into irrelevance.’

If your business feels like it’s stalled, don’t wait for the next crisis to act. Reset your structure. Rethink your people strategy. Rebuild momentum.

Because high performance isn’t about doing more. It’s about doing the right things – better.

 

Conal Scholes, People Director