At the start of a business, an entrepreneur buys several different items that become necessary for operations. For example, you pay money to build your office furniture, invest in computer systems, get commercial vehicles and pay for special solutions and technology.
Throughout a businesses’ journey, such items are frequently bought as your business expands. According to experts, businesses own several tangible and intangible assets that if properly managed hold significant value in terms of assessing a businesses’ valuation.
Most business owners do not think too much about them apart from their role in the day-to-day running of their operations. This is a mistake. In this article, we are going to look at five tips that can help you manage your business assets in the best possible fashion.
Understanding Business Asset Management
When it comes to any business organization, assets become an invaluable part of their existence. In its simplest form, assets can be defined as any tangible or intangible product, owned, controlled, and operated by the business. These assets either hold value in their existence or can be used to produce more value.
Business Assets can be broadly classified into two major heads-
- Tangible Assets- These include your physical computers, laptops, and desktops. It can also mean your office furniture, workspace, manufacturing equipment, commercial vehicles, and other things.
- Intangible Assets- These include your Intellectual Property Rights, Software, Apps, Websites, Data, and Subscription Agreements. In some cases, these can be much more valuable in terms of assets for a business organization.
Asset Management is a process that allows a business to purchase, use, maintain, update as well as grow the assets over a period in the most cost-efficient manner. The result of successful asset management is that it allows the business to improve its operational delivery and lower working costs at the same time.
While this is not new, in recent years, it has grown into a separate operational discipline that can contribute value and promote efficiency for a business. Profitable businesses value asset management and make sure that their assets do not depreciate.
Top 5 Tips to Manage your Business Assets
- Recording and Identifying your Business Assets-
The first thing that businesses should do is to record and document how many assets do they own. This can be done using something like SOA People’s Asset maintenance management software. This allows the business to access data and records on which assets require maintenance at what point in time. Proper maintenance helps in improving their life and output.
- Understanding how Assets work in relation to Taxes-
Every time a business invests in an asset, it is calculated under the expenditure head as far as taxes are concerned. In terms of tax implications, businesses can seek deductions on depreciating value. Getting tax breaks over longer periods can help a business improve its financial health and boost balance sheet records. This can lead to significant tax savings.
- Using the Business Assets to judge your Overall Valuation-
Many start-ups are looking to raise funds from VCs. Investors look at businesses in terms of their valuation and then decide to take the plunge. If you have significant business assets, the same acts as a safety cover for all the investors looking to pump in. This is why protecting and maintaining assets is important in fixing the valuation of your enterprise.
- Exploring how you can win on the Depreciation front with your assets-
Different assets have diverse depreciation rates, in terms of time periods. Writing them off indefinitely is not going to work with the authorities. Computers and company vehicles can have a depreciation value of five years. Furniture can be written off for seven years. Likewise, rental properties for 27 odd years and owned ones for 39 years can be written off.
- Insurance for your Business Assets to protect them and hold their value-
Natural disasters are very common in different parts of the world. If you are not insuring your business assets, you stand to incur heavy financial losses in case a flood or a storm hits your office or manufacturing facility. Insurance will help cover the losses and allow you to replace your existing assets with new ones. This ensures that your asset’s value does not take a hit.
The Bottom Line
Technology has been playing an active role in optimizing all aspects of a business’s performance. In the field of asset management as well, technology can play a major role. Using specialized software can help a business stay up-to-date with all the requirements and maintenance work on their assets. The reason is simple- the more you look after and care for your assets, the better will they help your business grow in valuation!