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Risky Business: Why Your Business Needs Asset Management
So, you don’t have a reliable asset management system. What’s the worst that can happen?
Well, for one, your assets—from more costly investments like technical equipment down to the desks and chairs everyone sits at every day—are all important to your business functionality. Assets are indeed fluid as employees and company cell phones go in and out of the office. People change offices, thus office furniture, computers, and other necessities move and so on. Further, software programs become out of date, and you need to know that information. All these assets need tracked to know what you have and what you need at any given time. There are many risks if you don’t have a solid
asset management system at your business. Here are a few of them in more detail.
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If You Don't Know What You Have, It's Costing You
Although it seems obvious that an organization would want to know, without much doubt, the assets that they have, many choose not to track assets. More specifically, the 2017
State of Small Business Report found that over half of the participants either
used a manual process or didn’t perform any type of asset management at all.
If you fall into this category, you’re gambling with your business’ profitability. And it’s time to get serious about asset management, like the Arizona Cardinals’ production team did.
Soon after Nick Heller was hired to lead the Cardinals’ Scoreboard Production Department, he realized their
production equipment wasn’t tracked. When up to $100,000 worth of equipment is flowing in and out of their department during any given event, there was no doubt equipment theft or loss would be imminent. And when items came up missing, the crew had no way to know where they might have ended up or who may have had them last. Each potential loss could cost them thousands of dollars, so they needed a way to track their assets.
Ghost Assets Can Haunt Your Business
Some of the Cardinals’ production team had an idea of what assets were on hand and where they were kept. But the company didn’t keep any accurate real-time records or designate set locations for an item with quick reference. Equipment often went missing. These ghost assets are items that have been either
stolen or lost, but are still on record. Such items were obviously purchased at some point to help make money but either disappeared from the physical location or were rendered unusable. The problem with ghost assets is they are likely still on the books and in tax returns, but haven’t contributed to the bottom line since they disappeared.
If you are one of the 55% of companies who use a spreadsheet or handwritten records for asset management, it’s quite likely ghost assets are costing you each year. An automated asset management system removes ghost assets from record.
Without Accurate Overviews, You’re At Risk
You’re likely all too familiar with the regular maintenance necessary to avoid fines and other legal trouble. If you can’t show an accurate documentation of your assets you own or need to test, then your business is liable in the case of an accident.
There are a number of risks directly associated with poor maintenance. Consider this example: if you have not properly maintained an air conditioning system, it could negatively affect your management. Some equipment requires users to wear protective clothing, use specific tools, or take special precautions. If it’s not clear what particular measures need taken, it makes for a hazardous working environment.
Negotiation Will Be More Difficult
Simply stated, if you don’t have insights into the performance of your equipment, you make it much harder on yourself to negotiate with suppliers. If you don’t know what your assets are worth, you don’t know what conditions you can impose on the suppliers. When you don’t know how many of each item you have or the conditions of those items, it’s next to impossible to get a reliable quote for maintenance. They will have no idea how much maintenance they’ll need to perform.
Budgeting Becomes Challenging
There were always multiple events going on at the Arizona Cardinals’ stadium, and the technology was always on the move and being used. As mentioned earlier, at times Nick Heller didn’t know the whereabouts of up to $100 thousand in production equipment.
And that’s a problem when part of your overall goal is to help your organization make a profit. Without accurate, real-time asset management, it makes more difficulties at the financial level. You won’t know what maintenance budget to request because you won’t know exactly what business assets there or the condition of those assets. It’s very possible you’ll replace items you already have, needlessly costing your company. When you can prove, with little question, the status of your assets, budget negotiations with management become much easier.
In fact, once Heller implemented an asset management system for his production department, the time savings alone as accumulated to around one-thousand man hours. And that translates into saved money.
Subpar Management Equals Uuhappy Workers
When you have frequent business asset problems, you’ll have cranky employees. Whether it’s the unhealthy air conditioning issue, the elevator is always out of service, or necessary technology is never available because it’s “lost.” Any of these asset issues can be fixed with better policy and more accurately maintaining assets. When you know what’s going on with your assets, you can take quicker action to fix problems before they get out of control and frustrate good employees. When you are proactive with your assets, it keeps your staff happy and productive.
Asset management not only makes you more aware of what you have and helps avoid potential risks, it optimizes the life cycle of your assets from the time you acquire them through usage, decommissioning, and disposal. When you recognize your need for better asset tracking, you can put plans in place to avoid pitfalls and give your organization an opportunity to excel.
