The importance of asset management for small businesses
Operating costs for businesses are often the largest outlays they experience and as a result they require plenty of good management.
More than half of small and medium sized businesses in the South West have revealed higher operating costs, with two thirds saying this had negatively impacted upon them.
This was severely disrupting the cash flow in some firms while the situation was found to be worse in the North West where two thirds of firms reported rising costs.
The figures come from the latest Close Brothers Business Barometer, a quarterly survey of SME owners from a wide range of sectors that focus on both financial and economic issues.
More than a third of firms revealed that rising energy bills were causing problems to their cash flow while around one fifth of firms said the costs of raw materials and stock were causing most financial pressure.
Amid rising prices, asset management becomes increasingly important as any unnecessary stock or assets should be sold on and removed from a company’s portfolio.
This not only frees up funds for other parts of a company’s operations but it also reduces levels of unnecessary spending.
Streamlining a business is an essential part of working towards success and it is why help from insolvency practitioners should be sought if a firm feels it is spending needlessly.
Some costs can be passed on to customers but this is not always possible which is why removing assets that are disrupting the cash flow is recommended.
Many small businesses operate on tight margins where the slightest issues can cause cash flow trouble, so easing the pressure is beneficial.
There are many ways that a firm teetering on the edge of financial trouble can aid itself – from cutting down energy usage and reducing bills to selling off unused office space or excess stock.
Operational costs could continue to increase throughout 2015, meaning many businesses will need to keep a close eye on their business plans, assets and expenditure in the months ahead.
By Phil Smith