4 Steps to Optimize Asset Management for Small Business
Running a small business isn’t easy. Once you think you have your systems all figured out and you’re ready to rock, something in your industry changes, or your business starts to grow or expand. Small businesses will always be evolving. But one thing that won’t change is the need for small business asset management.
A company’s assets are the glue that keeps the business running. No matter the size of your business, recognizing that asset management is a critical part of managing a dynamic and profitable business is vital.
What exactly constitutes a “small business”? The U.S. Small Business Administration (SBA) defines a small business as one with an employee count of 500 or less. In its 2020 Small Business Profile, the SBA states that in 2017, U.S. small businesses employed 41 percent of the private workforce. Currently, there are 31.7 million small businesses in the United States, which represents an incredible 99.9 percent of U.S. businesses. It’s easy to see, then, that the ultimate success or failure of small businesses creates ripple effects, for better or worse, in the U.S. economy. Sadly, the failure rate for startup companies in the United States in 2019 was approximately 90 percent. That’s a stat shared by Investopedia.com in a blog updated Nov. 9, 2020 (“How Many Startups Fail and Why?” by Sean Bryant).
Twenty percent of U.S. small businesses fail within the first year of operation, 50 percent have failed by the end of their fifth year, and about one-third of those businesses are still open by the 10-year mark.
Startups fail for a variety of reasons, but the common factors contributing to their demise are cash-flow problems, lack of demand for their products or services, staffing issues (not hiring the right people with the right skillsets), and failure to adequately research the competition and/or the market. One of the most effective strategies for startup survival is to live like a pauper – to save, save, save, even if you feel that business is going well. And one of the smartest ways to do just that is to take care of your fixed assets.
Fixed assets, of course, are tangible items or property leased or purchased for long-term use, and which help the organization conduct its business. They’re not sold for profit; rather, they help the small business make a profit. Common examples include office space, office furniture, IT equipment, machines, tools, office supplies, company-owned vehicles, and more. All of these items have value and depreciate over time. Keeping track of how many fixed assets they own, the condition those items are in, and where they’re located is in the small business’s interest because proper management can save the company significant money and time. Again, when one considers the numerous factors that can bring down a small business, smart asset management makes great sense. It may be tempting to assume that an occasional lost item or big-ticket repair can’t have a lasting impact on a small business – especially one that seems to be doing well. However, these incidents of mismanagement are rarely isolated. Rather, they’re more likely to be one part of an ongoing pattern of costly mismanagement.
Challenges Small Businesses Face When Managing Assets
In fact, the stakes are higher for small businesses when it comes to fixed asset management precisely because they own fewer assets, and the absence of any one of them will be felt more profoundly both from a productivity standpoint and at the bottom line.
Smaller businesses often require employees to wear multiple hats and take on several roles simultaneously. Manual asset tracking – or not tracking your fixed assets at all – might be your current practice. However, both of those approaches are error-prone at best, especially when employees are juggling multiple responsibilities. For those who are charged with tracking assets, they must remain aware of what the company owns, where it’s located and what condition it’s in. Not knowing that information could potentially lead to financial loss, administrative burdens or even tax/legal trouble.
Let’s say you’ve assigned an employee or employees to manage an Excel spreadsheet where they’ve logged all of your fixed assets. Over an average day or week, will they remember to update that spreadsheet with new assets or updates for existing ones? What if they’re pulled away on other hot projects and forget to keep up with the spreadsheet? Or what if they enter a typo, which is an all-too-common occurrence when manually entering barcode numbers? What if that employee takes time off or changes jobs? The point is that it’s very, very easy for items to fall through the cracks and become lost. Theft, either from within or outside your company, is another risk. It’s challenging for employees to keep up with preventive maintenance schedules, software updates, audits and depreciation. Your fixed assets are moving, breathing entities that require continual monitoring. Fixed asset management software performs these functions -- and more -- in an organized, accurate way. Quite simply, fixed asset management software is the best way for small businesses to track and manage the entire lifecycle of each of their fixed assets.
It may seem daunting to consider investing in fixed asset management software at a time when you’re watching every penny. But the up-front investment is likely to pay off many times over in the long run. Fixed asset management software incorporates the use of barcodes and scanners to keep business owners up to date on the location, condition and whereabouts of their assets, as well as other critical details related to their use like depreciation, maintenance history, insurance policies, warranties, check-in/check-out status and more. Perhaps best of all, the software consolidates all asset-related data in a single location, so users no longer have to spend hours hunting down paperwork or searching through electronic files to find the information they need.
Benefits of Improving Small Business Asset Management
The benefits associated with improving small business asset management include:
When you and your employees have an efficient way of tracking where assets are, who’s using them, and whether they require maintenance (as well as dozens of other parameters), the result is that everyone has what they need when they need it. This reduces wasted time and allows your organization to avoid confusion and delay while accomplishing everyday tasks.
When you can more accurately track your assets and their condition, you’re better equipped to track future costs related to those assets. These include maintenance and repair costs and the costs to replace assets that have outlived their usable lifespan. With a quality barcode system, a quick scan is all it takes to pull up a report on an asset’s maintenance record and determine any upcoming costs associated with that item.
Reduced duplicate purchases
Tremendous waste occurs in organizations due to the simple fact that they don’t know what assets they already have and which need to be purchased. The result? Companies order things they already have in their possession, which not only wastes resources but also leads to unnecessary wait times as employees hold off on completing tasks until the new item arrives— an item that they could access instantly if they knew it was already available in your facility.
Scalable asset management
Barcode asset tracking software is scalable based on the size of your business. Depending on the platform you choose, there is no limit to how many assets you can track using an asset tracking platform with barcode scanning capability. A barcode system for small business could quickly be adapted to fit medium and even large enterprises with multiple locations and facilities.
If you’re accustomed to manually itemizing, tracking and managing every asset you own, you’ll immediately understand how much more accurate and efficient barcode asset tracking software makes this process. The task of manually keying in barcodes is time-consuming and bound to result in a typo, omission or some other error. It’s also difficult to keep up with the whereabouts of assets using a manual process.
Some asset tracking and barcode system products sync with the cloud, reducing your costs and giving you access to real-time data 24 hours a day. That means you can not only check on the status of items from your office but also from anywhere in your facility or even out in the field— all from your smartphone or another mobile device.
Barcodes are easy and inexpensive to order, and many platforms let you use your existing smart devices as scanners, which can significantly lower the costs of setting up an asset tracking system.
Integration with existing systems
Some barcode asset tracking software programs are built to be easily integrated with legacy systems and other commonly used software solutions.
Simplified and intuitive tracking
The best asset tracking systems for small businesses are simple and intuitive to use, so your employees won’t have to take time from their busy schedules to participate in extensive training.
Steps to Overcome Asset Management Challenges
Step 1: Take stock of all the assets and inventory you own
This is an exercise that any small business should perform on a routine basis. Do some of them have unique specifications or rules that need to be noted? How many of each item do you have? Include details about when they were added into your inventory, where they were purchased from and how much you purchased them for. Take advantage of asset management tools like built-in barcode scanners that enable employees to scan and track assets right from their smartphones or tablets. It’s a cost-savings tool as well as you can eliminate those pricey handheld scanners that are often lost or broken. Plus, you can easily create and conduct routine asset audits to ensure that your information is accurate.
Step 2: Know where your assets are and where they are going
Do you house your assets in one location or multiple locations? In some cases, you could have different distribution warehouses, storage rooms, job sites, and offices spread all across the country. How do you plan to keep up with assets that are traveling from place to place? It’s helpful to create a “parent-child” association between locations to ensure you can accurately track an item down to the shelf it’s on! Again, this is where a barcode scanner is handy. Employees can scan the asset as it’s checked out and all allocated users know who checked the item out, where it is going, what it is being used for and when it will be returned. With this knowledge, the workflow doesn’t stop, and everyone is in the loop about an asset’s whereabouts.
Step 3: Know who’s using your assets, how they’re being used, and how often
How many times do employees simply take something they might not necessarily need? With small business asset management tools, companies can keep up with who needs or is using what. This keeps items that are reserved for specific uses, like construction equipment or AV tools in the hands of those who need to use them.
Step 4: Assign a value to each of your assets
Note that the accurate value of an asset won’t be its initial purchase price, as the value depreciates over time. Accurate depreciation is vital both for accounting and tax purchases. You’ll need to figure out the appropriate depreciation schedule for your assets.
Asset Panda provides small businesses with a powerful yet easy-to-use platform for fixed asset management. It’s powered by a free mobile app that syncs with the cloud and includes a mobile barcode scanner. Completely customizable and flexible, Asset Panda empowers small businesses to save money and time while they protect their investment. To learn more, get a demo today!