What You Need to Know About Asset Management for Small Businesses
Profits, staffing, client relations—these are just a few of the things you probably worry about as a small business owner. Asset management? Not so much. However, a basic knowledge and implementation of asset management is critical to your entrepreneurial success. As TRC Consulting explains, this can help you save money, improve efficiency, and mitigate risk.
Asset management can be daunting if it's a new concept to you. Not to worry. The below guide from Davinci Virtual Office Solutions covers the basic tenets of asset management for small business owners and explains how to make the process work for you.
Understand what makes for a great asset management system
Your business possesses various assets. Assets can be tangible (e.g., property, machinery. inventory, etc.) or intangible (e.g., intellectual property). Asset management is all about recording, tracking, and leveraging those assets to maximize your business's success. Charles Phillips outlines the key principles of an effective asset management system. Among other things, it should be holistic and systemic.
Take stock of all of your business assets
Great asset management is all about information—knowing what you have, how much of it you have, and how to best use it. The first step in implementing an asset management system is to create a comprehensive overview of all of your assets. Make a spreadsheet detailing your assets and how much they are worth. Examples of assets include vehicles, cash, inventory, accounts receivables, and more.
Set up means of managing your assets
Once you have an overview of your assets, consider how to best manage them. The appropriate system will depend on what you’re monitoring, such as finances. You want a system to track everything from inventory and sales to payroll and cash flow. Also, if you decide to dig deeper into asset management or you simply want to advance your general business knowledge, don't rule out going back to school. There are MBA programs you can flex to your schedule, and this is just the kind of personal investment that will give you a massive advantage in your field.
Look for ways to better leverage your assets
Once you've got a handle on your assets, it's time to start getting strategic. Think about how you can better harness the power of your various assets. SKMurphy notes that you can leverage current assets to promote future growth. The key to success is determining which assets you can leverage the most effectively to achieve the greater impact. You can also leverage existing assets to develop new ones.
Know when to outsource
As you work to manage a growing list of assets and factors in your business, you will undoubtedly identify a few of the more mundane day-to-day aspects—like reception—that can be handled virtually and are best outsourced. A service like Davinci can provide live call answering, voicemail management, call screening and call forwarding, conferencing, and more, leaving you free to focus your attention elsewhere.
Understand asset value and depreciation
Asset management is an ongoing activity. You will undertake this task regularly. Why? First, you are likely to lose and acquire assets as your business evolves. Second, assets decrease in value over time. Asset depreciation needs to be accounted for when considering your business's overall value. This impacts how much it's worth, which is critical information if you ever sell it.
Incorporate asset management into your business contingency planning
Keeping an up-to-date overview of your assets is also critical for business contingency planning. This essentially refers to what you will do if your business faces problems that impact profits, like supply chain shortages or a global pandemic forcing a pause in operations. SkillMaker explains that a contingency plan might involve emergency measures like selling assets in case of cash flow issues.
Asset management may seem confusing at first but it's fairly straightforward. The above guide covers some of the basics you should know as a small business owner. With just a little planning and diligence, you’ll be meeting—and exceeding—your goals in no time.
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