Asset Management for Small Business: Strategies & Benefits

October 27, 2022

As a small business owner, you know asset management is important, but you may not have the time or resources to invest in a full-fledged asset management system. Your business might have some limited capabilities out of the box, but software solutions can help you record and track assets in real-time, organize assets, assign assets to users, adjust asset values when they're moved within your company, and use reporting tools to track trends like asset depreciation.

The bottom line is: investing in asset management software is an important step in ensuring the longevity of your small business.

In this article, we'll take a deep dive into the benefits of asset management for small businesses, share some tips for managing assets effectively, offer solutions for overcoming common challenges, and answer some frequently asked questions.

Main Takeaways From This Article:

Asset management refers to methods for optimizing the acquisition, use, maintenance, and disposal of tangible assets, such as inventory and equipment.
Effective asset management supports small business success by promoting resource utilization, cost reduction, business growth, and other benefits.
You can achieve efficient asset management by implementing strategic planning, diligent inventory tracking and maintenance scheduling, and leveraged use of cloud and mobile technology.
Deploying technology can help you overcome common asset management challenges such as multi-location inventory management, asset data tracking, and budget constraints.

What Is Asset Management for Small Businesses?

So just what is asset management? In this context, asset management refers to strategies for optimizing the acquisition, use, maintenance, and disposal of tangible assets such as inventory, equipment, and vehicles. (Here we're focusing on fixed assets, not intangible assets, like financial or digital asset management.)

To illustrate the purpose of asset management, consider this: workers waste an average of one full work week per year trying to locate items such as tools and equipment. By labeling items with barcodes and scanning them, you can track what you have and where it is at all times, winning you back this lost productivity.

Small businesses use asset management to keep track of what tangible assets they have, where they are, when they need to be restocked and maintained, and what they're worth. This helps you minimize downtime, prevent overstocking or shortages, extend asset lifespan, and make informed decisions that improve efficiency and reduce cost. Businesses also perform asset management in order to meet tax reporting requirements and reduce shrinkage.

Asset management revolves around overseeing the stages in the lifecycle of tangible assets. The lifecycle of a tangible asset typically follows a path from acquisition through usage and maintenance to retirement.

Asset management strategies optimize each stage by improving efficiency and cutting costs so you can maximize the value realized from the asset. For example, tracking inventory levels supports your revenue goals by ensuring sufficient supplies of goods are on hand to meet customer demand during peak sales seasons.

Why Asset Management Is Critical for Small Business Success

How can asset management help your small business achieve success? Asset management strategies help you achieve business goals in seven key areas:

Resource utilization
Cost management
Business growth
Reporting compliance
Shrinkage prevention
Productivity
Decision-making

1. Maximizes Resource Utilization

Are you getting the most out of your assets? For instance, do you have slow-moving inventory sitting around taking up warehouse space that could be devoted to items with higher sales demand? Asset management helps ensure that all your assets are being used efficiently and you're not wasting money or resources on underutilized and unnecessary items.

2. Reduces Operational Costs

Did you know poor asset management can increase your operational costs? For example, if you're not tracking your assets, you may be losing money without realizing it from theft, unbudgeted maintenance expenses, or premature equipment replacements.

3. Enhances Business Growth

When you have an opportunity to scale up, do you have the budget for the equipment and technology you need to fuel your growth? Asset management can sustain growth by helping you estimate asset lifecycles, schedule maintenance to extend the lifetime of equipment, and budget for necessary replacements and upgrades while avoiding unnecessary expenses.

4. Improves Compliance and Reporting

How many hours do you spend at tax-time conducting inventory audits? Efficient asset management supported by technology can reduce hours spent checking inventory and correcting errors, saving you time on tax filings and audits and simplifying reporting and compliance.

5. Prevents Asset Loss and Theft

What if your inventory is disappearing and you don't even know it? Asset management can reduce losses by helping you catch administrative errors, theft, and other contributors to shrinkage.

6. Increases Productivity

How much time does your team waste looking for misplaced inventory and tools, and how much is that costing your business in lost labor? Asset management increases your productivity by helping you quickly find needed items.

7. Supports Better Decision-making

Has your business run into emergencies caused by stock shortages or equipment malfunctions? Asset management technology can help you plan and budget for reorders and replacements by providing data-driven insights to predict when you'll need new stock or new parts.

Top Seven Tips for Managing Assets in Small Businesses

What are the keys to effective asset management? Successful asset management strategies utilize:

Strategic planning
Staff training
Inventory tracking
Lifecycle monitoring
Maintenance scheduling
Cloud agility
Mobile tracking

1. Create a Robust Asset Management Plan

A documented plan forms a foundation for effective asset management. A written plan provides you with a guide and reference for implementing asset management policies and procedures aligned with your business goals. Lay out detailed procedures for each stage of your asset management lifecycle, from acquisition to disposal, with specific instructions for different types of assets.

2. Train Staff on Asset Management Best Practices

Successfully implementing your asset management plan depends on your staff. Employees need to know how to maintain accurate records and avoid asset misuse. Build asset management training into your onboarding and ongoing training procedures. Adopting asset management software with user-friendly features will simplify the task of training your staff.

3. Establish an Accurate Inventory of Assets

Effective asset management pivots around accurate records of all your assets. This includes inventory, equipment, office supplies, IT equipment, vehicles, and any other assets used by your business. You can streamline the task of keeping records up-to-date by using automated tools such as barcoding, RFID tags, and asset tracking software.

4. Monitor Asset Lifecycles and Depreciation

Asset lifecycle monitoring supports successful asset management in multiple ways. Knowing when you'll need to pay for replacements and upgrades helps you plan procurement and budgeting decisions. Meanwhile, tracking depreciation helps you plan for replacements and tax deductions.

5. Implement Regular Maintenance Schedules

Planning preventive maintenance schedules can help you extend asset lifespans and avoid emergencies triggered by unexpected breakdowns. Technology can assist you with planning by applying data analytics to predict maintenance needs. To ensure your maintenance schedule gets implemented, set up automated reminders or logs.

6. Leverage Cloud-Based Asset Management for Flexibility

Cloud-based tools can provide you with more flexibility for managing your assets than their desktop-native counterparts. A cloud-based asset management system lets you track and update assets from any location on any device. This becomes especially invaluable if you store inventory at multiple locations. Cloud tools also make it easier to integrate your asset management software with related tools that may store asset data, such as sales and purchase requisition software, saving you time on manual data entry and error correction.

7. Use Mobile Devices for Asset Tracking

Mobile technology can save you significant time entering and updating asset data. Asset management software that integrates with mobile devices can allow you to use RFID tags and barcode scanning to simplify asset tracking on the go.

Common Challenges in Small Business Asset Management (and How to Overcome Them)

When you start to put your asset management strategy into practice, you may run into obstacles. Some of the most common challenges stem from tracking assets across multiple locations, keeping records accurate, and meeting budget constraints. Fortunately, technology can help address these issues.

Tracking Physical Assets across Multiple Locations

Asset management gets more complicated if you're tracking physical assets across multiple locations. For example, you may have a central office, a storage warehouse, and off-site job sites, all requiring asset tracking. This creates issues such as requiring multiple inventory counts and trying to keep data from one location in sync with updates at other locations.

Cloud-based and mobile tools can ease the difficulty of managing assets at multiple locations. A cloud-based interface provides a centralized portal for keeping data from all your locations in sync. Combining a cloud platform with mobile tools such as RFID tags and GPS tracking allows you to perform instant inventory updates from anywhere.

Ensuring Data Accuracy and Preventing Loss

At one time, manual logs and spreadsheets served as the predominant asset management tools, and many legacy systems still rely on these methods. But manual and spreadsheet updates expend enormous time, while multiplying the risk of data entry errors, making it more difficult to keep records current, and increasing opportunities for shrinkage loss.

Today's asset tracking tools rely on automation to ensure data accuracy. RFID tags and barcode scanners make it simple to enter data accurately and update information instantly.

Budget Constraints and Cost-effective Solutions

At this point, you may be wondering, how much is this asset management technology you keep talking about going to cost me? Budgetary constraints can be a legitimate concern. If you're a smaller business, you may not be able to afford the same type of tools available to enterprises.

Fortunately, demand for asset management technology has promoted the development of solutions for companies of all sizes and budgets. Free asset management software options include both open-source tools and proprietary tools. These free solutions generally have more limited functionality than their premium counterparts, but they can serve the needs of entrepreneurs and small businesses on limited budgets. High-end solutions often integrate with enterprise resource planning (ERP) suites.

RedBeam’s cloud-based fixed asset management software runs on Google Cloud, leveraging Google’s cost-efficient hosting services to provide a solution affordable for both small businesses with a limited number of users and mid-level and enterprise users with larger teams.

Overcome Small Business Challenges with RedBeam

Asset management provides your small business with an easy way to maximize resource value, cut costs, increase productivity, and save time and labor on inventory and compliance. The hours it can save you searching warehouses, updating inventory, and compiling reports make asset management software a smart investment.

RedBeam can help you implement an effective asset management strategy by providing a single platform for tracking and managing your assets. RedBeam simplifies your asset management through an easy three-step process of barcoding, scanning, and tracking. RedBeam's asset management software can help your small business:

Replace disorganized spreadsheets with cloud-based tracking
Streamline inventory time by up to 70%
Save countless hours searching for items and updating records
Cut unnecessary expenses from inefficient processes and lost labor

FAQs

How Much Is Asset Management?

Asset management software ranges from freeware and premium solutions starting around $35 a month to enterprise software that may cost as much as $250,000 a year. Pricing varies with factors such as how many assets and users you need to manage and your plan term length. RedBeam offers plans starting at $899 per user per year for an unlimited number of assets and locations.

What Types of Assets Should Small Businesses Track?

You should track any assets relevant to your operational, accounting, and tax reporting needs. This includes fixed assets such as machines, IT equipment, office furniture, and vehicles as well as current assets such as cash and inventory. Although it falls outside the scope of this article, you also should track financial assets such as stocks and intellectual assets such as patents.

How Often Should Small Businesses Conduct Asset Audits?

We recommend that you run internal asset audits at least quarterly, but larger organizations may need monthly audits. For fixed asset audits, most organizations conduct audits on cycles of three to five years, but if you own volatile assets, you may need to conduct limited annual audits of these items.

What Is the Difference Between Asset Tracking and Asset Management?

Asset tracking monitors the physical location of items, while asset management uses tracking data to optimize utilization of assets throughout their lifecycles, from acquisition to disposal. Asset tracking forms a critical part of asset management, but asset management has a broader scope.

What Are the Common Mistakes Small Businesses Make with Asset Management?

Common asset management mistakes include relying on manual methods and spreadsheets, failing to update software, neglecting software license compliance, and failing to document asset management procedures. Other frequent mistakes are overlooking staff training, disregarding inventory procedures, neglecting depreciation and disposal, and ignoring data security.

What Are the Risks of Not Managing Assets Properly?

Poor asset management puts you at risk of misplacing assets, wasting time, impeding productivity, and losing money. You also risk suffering maintenance emergencies, squandering sales opportunities, overlooking theft and shrinkage, making accounting errors, and incurring compliance penalties.