March is national Asset Management Awareness Month. What does this mean? This is a time for businesses of all types to examine the various ways asset and property management tools and systems are part of your overall business success — Helping you hit key financial and operational goals along the way.
For many business owners there may be a knowledge gap when it comes to exactly what “Asset Management” means to the bottom line. Asset Management is a broad brush description of all your business assets — Tangible and intangible — that are key to your operations. March is an ideal time to pause and examine the ways a comprehensive Asset Management strategy can benefit your business:
Avoiding Overspending — One key attribute of an ongoing Asset Management program is to avoid overspending, particularly on maintenance. Too often a business owner or manager may feel it is best to self-manage your assets — Think about self-managing an apartment building, overseeing a fleet of drivers for vans you rent out or even doing your own bookkeeping. While you may spend less initially, you often overspend by paying for services or add-ons that might be covered by a professional asset manager. Additionally, you may find yourself overspending on piecemeal maintenance versus approaching a ‘whole asset’ approach with outside management.
Protecting Those Intangible Assets — Assets go far beyond buildings, inventory and bank accounts. Your business has equity invested in intangible things such as a web domain, social media accounts, customer mailing lists, Google/Yelp reviews or intellectual property. As you map out all the assets that need to be maintained, be sure to include those things you might not be able to see or touch and outline a plan to manage those as well — either by contracting with outside vendors for web or social media, investing in comprehensive database backup tools or consulting with an intellectual property attorney to ensure any relevant materials are properly protected and managed.
Examining Asset Tracking — How are you currently tracking or monitoring physical assets like inventory or supplies? When was the last time you examined your protocols? This month is a good time to look at potential new, more streamlined options you might not have had access to before. Digital tools and apps, RFID trackers and more are constantly improving to allow you to keep tabs on your business assets in a real-time manner, allowing for flexibility and accuracy.
Preparing for an Asset’s End of Useful Life — An important part of overall Asset Management is developing a plan for the end of an asset’s useful life. Home Owner Associations (HOAs) frequently do this in the form of a Reserve Study, attempting to determine how long part of a property (roof, paint, etc.) will last and an estimated cost for repair or replacement — and how to prepare to pay for that cost. Your Asset Management plan needs to have a similar structure when it comes to assets with a defined lifespan. For example, your start up costs for your restaurant may include a full sound and light system to go with live music on weekends. However, those elements will eventually come to the end of their useful life and need to be replaced or upgraded. It is essential that an overall Asset Management plan includes budgeting and saving for replacement and/or repair of key assets each year so that they can be addressed when the time comes.
Determining When to Dispose of an Asset and Financial Implications — In addition to having a replacement/repair plan for end of useful life timelines, you also need to ensure that your Asset Management plan includes an outline for when an asset is completely disposed. If this is an asset associated with ongoing costs, you need to reflect the removal of that assert from your budget. Were there tax implications or benefits from using a specific asset? Keep your accountant or tax advisor up to date for potential impacts. Asset Management when it comes to disposal also involves looking at future repair and maintenance costs and determining the cost benefit analysis to determine when it makes sense to let an asset go completely and replace it from scratch versus attempting maintenance.
Assuring all Assets are in Compliance — Beyond the financial elements of an Asset Management strategy, it is essential to also monitor and map the various legal and regulatory requirements that go with all of your assets — again, tangible and intangible. For example, ADA regulations may have changed that dictate a previously installed piece of equipment needs to be modified to ensure usability. Under the same regulation, you may also need to go into your web site and add physical descriptions of pictures for those with vision impairment that use screen readers. Schedule time with your HR team or compliance consultant and go through each division or part of your company to flag any areas that need to update compliance issues.
Examining Your Big Picture — An Asset Management plan can help you see all the parts of your business as a whole, versus individual elements. This typically happens in your personal finances, where you become focused on managing your household budget separately from investments, separate from taxes, separate from home improvements, etc. Each individual asset requires attention and it is far too easy to develop a myopic view and miss key trends or gaps in your operations. Developing a full Asset Management plan where you lay everything out together can often help identify synergies or costs saving/bundling options you may have previously missed. Spending time to develop a big picture Asset Management plan can definitely result in greater successes down the road!
