By Marissa Perez
Starting a new small business comes with a seemingly endless list of to-dos. Between applying for licenses and permits, to building an effective marketing strategy, there is always a task waiting to be tackled. What many novice business owners overlook is the need for asset management. The team at Axele shares the top things that every business owner needs to know about this important subject to run a successful company.
What is asset management?
Business owners who are not familiar with asset management don’t need to stress. In fact, individuals not coming from a business background may have never heard of the term at all.
Simply put, asset management is the set of processes a business has in place to track, monitor, and manage its assets. In an organization, an asset can include company vehicles, intellectual property, office equipment, and industry-specific equipment. All assets are divided up into two categories: current assets and non-current assets. The primary difference between these two categories is how quickly cash can be accessed from them. Current assets can be sold in a short amount of time, whereas non-current assets are not as liquid.
Enhances compliance and reduces waste
Small business owners who have a solid grasp of the importance of asset management are well aware of its many benefits. Two of the main advantages of having an asset management program in place are to enhance compliance and to reduce overall waste.
First, compliance in all areas of business is critical. For example, having a TMS that integrates with your Electronic Logging Device (ELD) helps companies schedule drivers efficiently while staying compliant with Hours of Service regulations. The same is true with having an asset management software/database in place. This kind of tracking also aids business owners in reducing waste by ensuring assets are used and maintained on a regular basis, and avoiding unnecessary or premature purchases.
Allows for better financial planning and less risk
One of the obvious benefits of having an asset management process is to create more detailed and accurate financial records. When a business keeps accurate tabs on what assets they own — and the exact value of those assets — a more complete picture can be drawn. Having untracked assets makes it more challenging to plan for future business expenses, and doesn’t allow a business to know which assets are current and non-current.
Ultimately, having an accurate grasp of all company assets reduces long-term financial risk. Asset management processes make it easy to identify financial risks as they arise and to handle them in a timely manner.
All businesses should have an asset management plan
Even brand new small businesses should consider devising and implementing an effective plan to manage assets. Although it may sound like something that can wait, it shouldn’t. Having accurate records of all company assets from day one is vital for proper record keeping, risk management, and long-term success.
Since business owners already have so much on their plates, it is wise for them to hire a financial professional for this undertaking. This is even more necessary for owners who have limited to no financial or asset management knowledge.
Aside from the benefits outlined above, there are more practical reasons to have an effective, up-to-date asset management process. Financial professionals specializing in small business asset management can go into detail to further explain why this process is so valuable.
Marissa Perez wants to share her knowledge with those who have decided to take on entrepreneurship. She co-created Business Pop to provide insight and advice to those who aspire to succeed in owning a business.