As a small business or organisation, you will own assets - whether it’s trademarks or even your place of work. To effectively manage an asset throughout its lifecycle, you must develop an asset management strategy.
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How to Develop an Asset Management Strategy
What is an Asset Management Strategy?
An asset management strategy is a plan that businesses and organisations develop to manage physical, financial, and intangible assets. This plan will give your business the tools necessary to optimise the lifecycle of assets and reach the objectives of the business or organisation while keeping risk and costs low.
The main elements of an asset management strategy include:
- Asset Inventory - A detailed inventory of all assets owned by the business, including its location and condition.
- Asset Classification - Assets are categorised depending on their importance, value, and role in achieving organisational goals. This helps prioritise resources and efforts.
- Lifecycle Planning - Detailed plans for each asset's lifecycle. This includes acquisition, operation, maintenance, and disposal. This ensures assets stay efficient throughout their life.
- Risk Assessment - Identifying potential asset ownership and operation risks, including safety hazards, regulatory compliance, and market fluctuations.
- Performance Measurement - Defining key performance indicators (KPIs) to evaluate the asset performance. This will likely include metrics like asset utilisation and return on investment (ROI).
Read more: Four key metrics to measure your inventory management success
Why Are Asset Management Strategies So Important?
Asset management strategies play an important role in sustaining a business in the long term. Understanding your asset resource allocation and conditions can improve your decision-making capabilities and your business assets lifecycle.
Let’s take a look at why having an asset management strategy in place is essential for your business or organisation.
1. Optimising Resource Allocation
Effective asset management strategies can help your business allocate resources efficiently. By understanding your assets condition, value, and performance, you can make better decisions about where to invest your time and money, ensuring that you use resources and assets to their maximum effect.
2. Cost Control
Asset management strategies can help your business save on costs. Proactive maintenance and asset lifecycle planning reduce unplanned downtime and expensive emergency repairs. By taking control of how your business uses and maintains assets, you can reduce the amount you spend on unnecessary or extra assets that aren’t needed.
3. Mitigate Risk
Assets aren’t risk-free. Your business could face breakdowns, safety hazards, and issues with regulatory compliance. Asset management strategies help identify and address potential risks, mitigating the risk of costly incidents and legal penalties.
4. Maximising Asset Value
Assets depreciate over time. However, effective management will extend your business asset’s useful life and maintain its value. In some cases, asset management strategies will even boost the value of assets from upgrades, modifications, or better utilisation.
How To Implement Your Own Strategic Asset Management Plan
Building a strategic asset management plan involves careful planning and iterations. Here are the steps you need to create an asset management strategy suitable for your business or organisation.
1. Review Your Business Structure
Begin by understanding your organisation's structure, goals, and operations. Consider how assets support these goals and which departments or teams are involved in asset management. Ensure that key decision-makers and stakeholders are aware of your intent to implement an asset management plan.
2. Carry out An Asset Assessment
Conduct a thorough assessment of your assets. This includes creating an inventory of all assets, categorising them, and documenting their current condition, location, and value. This assessment helps you understand what assets you have and their importance to your organisation.
3. Create an Asset Management Action Plan
Develop a detailed asset management action plan based on the information gathered in the assessment. The plan should outline specific strategies and activities to effectively manage and maintain your assets. Key elements to include in your action plan are:
- Asset Classification - Categorise assets by importance, criticality, and value.
- Lifecycle Planning - Determine how each asset will be acquired, operated, maintained, and eventually disposed of.
- Maintenance Strategy - Establish maintenance schedules and procedures, including preventive maintenance.
- Budget Allocation - Allocate resources and budget for asset management activities.
- Performance Metrics - Define KPIs to measure asset performance and monitor progress.
- Compliance and Regulations - Ensure that your plan aligns with relevant laws and industry standards.
- Environmental Considerations - Incorporate sustainability goals and eco-friendly practices.
- Communication and Training - Clearly communicate roles and responsibilities to your team members and provide necessary training.
- Technology Integration - Implement asset management software or tools to streamline processes.
4. Review Your Progress
When implementing your asset management plan, you must regularly assess your progress by tracking activities and measuring your performance using KPIs. Look back at your plan and ensure you’re following it, adjusting when necessary to address any changes to your business operations.
5. Gain Feedback
Feedback from employees, stakeholders, and team members can help your business gain valuable insights into how the plan is going and how you can improve. By talking to professionals with strong knowledge of your assets, you can make continuous changes to your asset management process.
6. Keep Records
To improve your reporting and auditing capabilities, ensure you keep detailed records of your assets. This includes maintenance logs, repair histories, and any financial data associated with your asset. Reports will help you understand your asset's history and stay transparent with costs.
7. Monitor and Adapt Your Plan
Asset management is an ongoing process. You must continually monitor and adapt your plan depending on your business’s changing circumstances. If you adopt new technology or change your business goals, you must reflect this in your asset management plan.
How QuickBooks Can Help
Speed up the process of developing an asset management strategy with QuickBooks Online. With QuickBooks inventory management software, you can track inventory, automatically log purchases, and get automatic notifications when stock is low. Sign up for QuickBooks Online today with a free 30-day trial.
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