If you own a business, you own business assets.
Properties, machines, computers, inventory—they all make up a large part of your business operations and its overall value.
But managing such business assets is tricky, especially when you own a lot of them.
So here are seven tips for managing your business assets, no matter how many you have:
- Identify your assets and assign value to them
The first step in business asset management is to know what’s yours and how much it’s worth.
To do this, you must create an inventory list of all your current assets. This includes anything used for trade, operations, finance, administration, and other support functions.
For example, you might list computers, machines, buildings, inventory, vehicles, hardware, office furniture, and other equipment.
Next, you must assign value to each of your assets. Keep in mind that the value of an asset may not be the same as the price at which you bought it. Many assets depreciate in value, while others (like real estate) tend to appreciate.
Look for how much similar products are being sold for currently to get an estimate of your asset’s value.
- List assets on your balance sheet
Once you have a complete list of your assets and their value, you should list them on a balance sheet.
A balance sheet has two columns with all your assets on one side and all your liabilities and owner equity on the other. This provides a snapshot of your business’s financial health in terms of its debt ratio (total debt divided by total assets).
Also, be sure to update values as they change (e.g. through depreciation). You can use an accounting software or hire a professional accountant to do this for you.
A balance sheet provides a detailed record of your business’s assets at any given time.
- Insure your assets
Assets make up a large part of a business’s value. As such, you can’t afford to lose them. One way to displace the financial risk of assets breaking down, being stolen, or getting ruined by acts of nature (think fires, floods, or hurricanes) is to invest in asset insurance.
Business asset insurance will allow you to rest easy knowing even if an asset stops working, you have an insurance policy to cover its replacement or repair. Just be sure to read the policy terms closely so you get the coverage you need.
- Perform preventative maintenance
On top of insuring your business assets, you should also perform preventative (or predictive) maintenance. This helps lower your overall maintenance and repair costs by addressing issues before they turn into larger expenses later down the road.
- Write off assets on your taxes
Did you know you can write off your business assets on your taxes? That’s right. You can use the value of your assets to offset your taxable income.
And not just for the first year, either. You can write off depreciated value of an asset for several years. The IRS sets different depreciation schedules for what it calls the “useful life” of an asset.
For assets like equipment, vehicles, and computers, it’s five years. For office furniture and fixtures, it’s seven years. For residential properties, it’s 27.5 years. And for commercial buildings, it’s 39 years.
Find out what the depreciation schedules are for your assets so you can save on your tax bill.
- Leverage assets
Take full advantage of your assets by leveraging them.
You can use your business assets to attract more investors, funding, and financing. The lower your debt ratio and the more assets you can use as collateral for loans, the faster you can grow your business.
Just be sure not to overleverage your business, which means carrying so much debt that it struggles to pay for its interest and principal payments as well as operational expenses.
- Liquidate assets when needed
Lastly, it’s important to know when to let go of assets. You may want to replace assets that are becoming outdated or that have turned into a liability or tax burden.
For example, if you have a broken server, it may be time to sell instead of wasting costly energy on having it turned on.
Other times, you may just want to liquidate your entire business (e.g. because you no longer want to work). In this case, you could sell items through an auction (though you may earn more by selling directly to interested buyers on a marketplace).
Wrapping it up
At the end of the day, knowing how to manage your assets will make your business more efficient. Why work harder when you can work smarter?
Start managing your assets more efficiently today and see how much more profitable it will be.
Zaki khan is a versatile journalist who covers a wide range of news topics with depth and precision. With an insatiable curiosity and a commitment to delivering unbiased reporting, Zaki brings readers up-to-date on the most significant events and stories shaping our world. In their free time, Zaki enjoys exploring new literature and volunteering in their local community.
