Your business assets are cornerstones to your business operations. Without them, you can’t generate revenue and deliver a service to your customers. Spending the time and money on managing your assets more efficiently may sound like an unnecessary expense to the business. In our experience, business owners are more concerned about whether an asset is tax deductible, but as the business grows, managing your assets becomes vital to your financial wellbeing.
Every business should have full visibility to the lifecycle, performance and profitability of their assets so that they don’t ever become a “black hole” in the business, draining your profits and harming potential new growth.
What is a business asset?
Business assets include tangible items such as real estate, cars, equipment, technology, and machinery. They also include intangible items such as digital or software assets and other systems which support workflow productivity.
You should expect your business assets to contribute to your financial growth in sales and profit. After all, they are the tools with which you operate your business.
By taking the time to develop a strategic plan to manage your business assets, your business will be able to grow more sustainably. You’ll have more confidence to venture out and explore new products and services, knowing that your business assets are working optimally and that they will support you.
What is asset management?
Asset management is a process which ensures visibility of a business’s assets for their entire lifecycle. This lifecycle has five phases:
- Planning
- Procurement
- Operation
- Maintenance
- Disposal
A well-executed asset management plan makes the best use of your assets, leveraging their value to the business, supporting your business to grow, and then cost effectively being phased out when they have come to the end of their purpose.
The benefits of a business asset management plan
You buy assets for your business for one simple reason – to enhance productivity which ultimately increases revenue. An asset management plan which gives you complete control and visibility over all the assets in your business means you’ll achieve the maximum return on your investment and grow your business.
Here’s why.
Improved business reliability
Your business relies on your assets to be working all the time, not just some of the time.
All too often, business owners are confronted with expensive repairs and downtime to the business which could be avoided with some planning ahead. For example, when the warranty period on IT equipment expires, repairs can be expensive and can take days to resolve. But if you have a warranty plan in place, the cost of the warranty will be insignificant compared to reduced business productivity. At Port Phillip Group, we insist on 3 year warranty terms for all our assets and often request onsite repairs. This saves us time and money and our staff can get on with their work with minimal fuss.
Improved reliability of your assets
An asset management plan tracks the lifecycle of your assets and tells you when it’s time to upgrade or when it’s time to phase them out and replace them with newer technologies.
Reliable assets mean reliable business and therefore the trustworthiness of your business increases which imparts both staff and clients.
Reduced maintenance costs
Old assets that drain profits or simply expensive assets to the business become visible with an asset management plan. When you have the visibility, you can do something about it. In our experience, we have found that when people implement an asset management plan, they quickly see areas to save costs on underperforming or redundant assets.
For example, when asset warranties expire repairs or upgrades are likely to cost more than anticipated. Motor vehicles are a simple example to demonstrate this point. If outside the warranty period and the gearbox fails, this is expensive to the business. You are better off paying for an extended warranty period and changing your vehicles every 4-5 years. A detailed asset management plan gives you visibility across all your assets so you can plan ahead and minimise financial disruptions to the business.
Central register of all your assets makes them easier to manage
Asset management software provides a single dashboard view of the assets in your business. Real time reports provide all the information you need to manage your assets including the asset type, purchase date and price, the location, the asset’s depreciation, and its market value.
In other words, you know where your assets are, what they are being used for, how well they are supporting the business, and when it is time to move them on.
With this level of visibility, it is much easier to keep track of your business assets both onsite and offsite, and if they ever go missing, to make an insurance claim.
Need some help with your business assets?
At Port Phillip Group, we work with our clients to bring clarity and understanding about the profitability and value of each of their business assets. We work though each asset, and detail the lifecycle specifying warranty periods, service and maintenance costs today and into the future as these assets age. We also define the point where it makes sense to dispose of assets so that the business’s productivity and profitability are not impacted.
Give us a bell on (03) 8790 7700 or email us at reception@portphillipgroup.com.au if you would like to discuss implementing an asset management plan in the business. Our accountants are located in our Mt Eliza offices and we support local businesses across the Mornington Peninsula and throughout Melbourne.
