4 Steps to Optimize Asset Management for Small Business
Running a small business isn’t easy. Once you think your systems are 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 constantly 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.
The Importance of Asset Management for Small Businesses
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, representing an incredible 99.9 percent of U.S. businesses.
It’s easy to see, then, that small businesses' ultimate success or failure creates ripple effects in the U.S. economy, for better or worse. Sadly, the failure rate for startup companies in the United States in 2019 was approximately 90 percent. That’s a stat by Investopedia in a blog post “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)
- Failure to adequately research the competition and/or the market
- And much more
The Solution: Effective Small Business Asset Tracking
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 most innovative ways to do 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 which help the organization conduct its business. They’re not sold for profit; 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 excellent 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. Instead, they’re more likely to be one part of an ongoing pattern of costly mismanagement.
Challenges Small Businesses Face When Managing Assets
Nowadays, the stakes are higher for small businesses in fixed asset management precisely because they own fewer assets. The absence of any of them will be felt more profoundly both from a productivity standpoint and 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 approaches are error-prone at best, especially when employees juggle multiple responsibilities. Those in charge of tracking assets must remain aware of what the company owns, its location, and its condition. Not knowing that information could lead to financial loss, administrative burdens, or even tax/legal trouble.
Asset Management Risks for Small Businesses
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 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.
Fixed Asset Management Software for Small Businesses
It may seem daunting to consider investing in fixed asset management software when you’re watching every penny. But the up-front investment will likely pay off 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, it's easier 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 because they don’t know what assets they already have and which need to be purchased. The result? Small businesses order things they already have in their possession. This wastes resources and leads to unnecessary wait times as employees delay completing tasks until the new item arrives— an item they could instantly access 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 businesses could quickly be adapted to fit medium and even large enterprises with multiple locations and facilities.
The task of manually keying in barcodes is time-consuming and bound to result in a typo, omission, or other error. It’s also challenging to keep up with the whereabouts of assets using a manual process. If you’re 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.
Some asset tracking and barcode system products sync with the cloud, reducing costs and giving you access to real-time data 24 hours a day. You can check items' status from your office, anywhere in your facility, or offsite— all from your smartphone or mobile device.
Barcodes are easy and inexpensive to order. Many platforms let you use your existing smart devices as scanners, significantly lowering the costs of setting up an asset tracking system.
Integration with Existing Systems
Some barcode asset tracking software programs should 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, 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
Here is an exercise that any small business should perform routinely. Do some of your small business assets have unique specifications or rules that need to be noted? How many of each item do you have? Please include details about when your small business added them to your inventory, where you purchased them, and the price.
Take advantage of asset management tools like built-in barcode scanners that enable employees to scan and track assets from their smartphones or tablets. It’s a cost-saving tool as well as you can eliminate those expensive 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? Sometimes, you could have different distribution warehouses, storage rooms, job sites, and offices spread 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 an employee will return it. 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 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's Small Business Asset Management Software
Asset Panda provides small businesses with a powerful yet easy-to-use platform for fixed asset management. Completely customizable and flexible, Asset Panda empowers small businesses to save money and time while they protect their investment. Our small business asset management software comes with a free mobile app that syncs with the cloud and includes a mobile barcode scanner.
Try Asset Panda's small business asset management software with a free 14-day trial (no credit card required)! You’ll receive full access to user guides, video tutorials, free mobile apps, and call-in and live chat support from our fantastic Asset Panda support team.