Properly managing business assets is one of the most important ways you can support your business success.
However, even the experts can neglect to look after their assets effectively, falling victim to high costs, rapid turnover, and poor portfolio performance.
Let’s take a look at the most common asset management mistakes and how you can avoid them.
What is Asset Management?
All businesses have assets, from technologies such as laptops and printers to vehicles and machinery. In order to work efficiently and effectively, these assets must be properly managed.
Asset management ensures assets are properly looked after. This means that updates are run, repairs are scheduled, replacements ordered, and old assets carefully and compliantly disposed of.
5 Common Asset Management Mistakes and How to Avoid Them
Your business assets hold value, to you, your business, and your employees. They support the smooth running of your operation and, therefore, contribute significantly to the success of your business. Here are the asset management mistakes to avoid.
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Regulatory Compliance
Business regulations in the UK change regularly. However, it’s your responsibility to keep on top of these changes to ensure your business operations remain compliant.
Many asset managements overlook changing regulations, failing to stay abreast of new legislations, failing to maintain their records, and as a result being issued costly fines for assets that are not compliant.
How to Avoid: asset managers should conduct regular audits of their assets. To ensure this process is managed correctly, consider hiring a dedicated compliance officer.
The role of a dedicated compliance offer is to ensure all assets remain up to date with the relevant compliance legislation. They will also keep you informed of any industry and regulatory compliance changes, as and when you need to be aware of them.
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Poor Asset Disposal
When assets are no longer needed or useful, asset managers tend to throw them away. This is understandable as nobody can use an old, broken computer.
However, when asset disposal is rushed and not carried out properly, data destruction is not guaranteed. This puts private company and personal data at risk. It also means that old electronics end up in landfill. This has a negative impact on the environment.
How to Avoid: sustainable and mindful asset destruction is vital. Asset managers should properly recycle IT equipment to protect their private data, look after the environment, and ensure old tech they no longer need or want can be used again where possible.
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Poor Risk Management
Effective risk management is essential for business success and for safe working conditions for your staff. Unfortunately, asset managers are failing to understand or, worse, underestimating potential threats.
This means they are not accounting for these risks in their reports. This can have drastic consequences when things turn south – just like they did during the pandemic (a typically unforeseen or underestimated event that drastically impacted businesses and their assets).
How to Avoid: all risks to your business are possible and should be treated as such, no matter how wild they may seem. To avoid poor risk management it is important to conduct regular and comprehensive risk assessments and develop scenario planning exercises that ensure that asset protections are in place.
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Business Strategy Missteps
Successful business entrepreneurs understand that well-defined business strategies are the bedrock for long-term success. However, asset managers are well-known for making business strategy missteps by lacking long-term vision and failing to align their asset management strategies with wider business objectives. This can lead to lack of scalability, stunted growth, cash flow issues, excessive outgoings, and more.
How to Avoid: asset managers should develop a robust technical asset management strategy that aligns with the organisation’s long-term professional goals. To support this, asset managers are advised to conduct regular strategy reviews that, among other things, ensure stakeholders are engaged and invested across all levels of the organisation.
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Efficient Business Operation Failures
Asset management plays a vital role in ensuring your business runs efficiently. In a competitive market, operational efficiency can ensure the success of your organisation above and beyond that of your competitors. Fail and you can quickly fall behind.
Some asset managers have a reactive rather than proactive approach to asset management. A reactive approach to asset management can lead to higher costs and more disruptions in the long term. It can also mean you fail to adopt modern technologies that would help streamline your operations and make everything more efficient.
How to Avoid: Proactivity is key. Asset managers should implement asset maintenance schedules that ensure assets are regularly checked, repaired, and (if needed) replaced to keep business running optimally.
Final Words
Do your best to avoid these 5 common asset management mistakes and your business operations should run smoothly, helping you retain a competitive advantage in your industry.
