You can’t expect to manage a business successfully if you don’t understand its value. To make informed decisions, you need to know what your company holds, what they cost and what value they bring. You need to identify and manage your assets.
While this seems relatively straightforward at first, a business’s best assets are often unclear. Some things like cash and real estate are evident and easy to quantify, but they’re not always the most valuable parts of your company. Finding your best assets can be more involved than you may expect, but it’s a crucial step in good management.
Common Best Business Assets
To find your best business assets, start with what are often other company’s most valuable parts. Most people may immediately think of tangible things like raw materials, machines and inventory, as these provide quantifiable, often immediate value. However, intangible assets are frequently more important than tangible ones in the long run.
Here’s a look at four common types of assets that are often among a business’s best.
An oft-cited article from The Economist states that data is the most valuable resource in the world. Considering Netflix’s use of big data is what led it to be worth more than Disney, it’s easy to see why. No matter what type of business you run, you likely have abundant data, bringing significant value to your company.
Every electronic transaction you have with a customer generates data you can use to drive further improvements. Buying trends show which items are most popular, conversion rates show marketing’s efficacy and so on. While data may not have a specific dollar amount tied to it, it’s likely one of your best assets.
Another valuable intangible asset for many businesses is their intellectual property. Any patents, trademarks or copyrights your company holds can be some of its greatest strengths. These are things that you alone can benefit from, so you should consider them a prized asset.
One of the most challenging to quantify yet important intangible assets is customer loyalty. A loyal base will continue to choose you over competitors, driving success despite whatever promises they offer. Similarly, a loss of allegiance can be devastating to your business, solidifying it as a crucial asset.
Not all your best assets are intangible, but many of the most valuable tangible ones are noncurrent. Since current assets convert to cash within a year, they provide only short-term value. Noncurrent assets, while less liquid, are often more important because they provide longer-term, typically higher benefits.
Buildings and machinery are the most obvious examples of noncurrent assets. Some of the most important examples today are technology, software, investments and client lists. You’ll notice that many of these noncurrent assets are also intangible.
How to Identify Your Best Assets
To identify your best assets, start by compiling everything you have. The frequently valuable types listed above are an excellent place to start and keep an eye on. As you start listing everything your business holds, you’ll likely need to turn to an asset management solution (AMS).
An AMS provides real-time asset tracking and compiles everything into a centralized location. This will help keep track of assets as you tally them up. Remember that anything your company owns and can turn into economic value is an asset.
After you have a centralized list, you’ll want to quantify them to determine what they’re worth. This is often easy for tangible assets, and your AMS can help you calculate depreciation and other factors. For intangible assets like intellectual property and customer loyalty, this will require more work.
You can value your intangible assets by looking at how much money they’ve generated in the past. For example, profits from past data analysis initiatives show how much your data is worth. Remember that these are rough estimates.
Once you’ve assigned a dollar value to all your assets, the most valuable ones will be clear. The ones that provide the most financial gain over the longest amount of time are your best.
What to Do After Identifying Assets
Identifying your business’s best assets can help you capitalize on them more effectively. You can make more informed business decisions when you know what they are and how much they’re worth. It’s also crucial to understand what they are so you can take more care to preserve them.
Keep an organized record of your assets’ value, location, maintenance history, who can access them and any other relevant information. It’s best to use an AMS for this, as manual systems are harder to manage and update.
Having an organized, frequently updated asset management system has many strategic benefits, including:
- Increased efficiency
- Greater visibility
- Improved asset reliability
- Reduced maintenance costs
Remember to review your asset management periodically to ensure it’s up to date. Your assets’ value will shift over time, so you’ll need to perform this process again.
Asset Management Is Critical
Without reliable asset management, you’ll struggle to make effective business decisions. Start with these steps and identify what your leading assets are, then organize them accordingly. You can then adjust your operations to make the most of your resources.