In any business, one of the most central concerns is always going to be what assets there are, and which are most important. This is something that every entrepreneur needs to get to grips with. In particular, it is important to understand what kind of value each kind of asset might have, and in what situations they each might prove to be useful. This is one of those matters which you probably want to look into before your business gets off the ground. The more you understand it, the more likely it is that you will make sensible decisions in relation to it.
Tangible Vs Intangible
The first concept any business owner should get their heads wrapped around is that of tangible versus intangible assets. Put simply, a tangible asset is one which relates directly to something physically real. A building is a tangible asset, as is a computer or even a stapler. These are concrete items which have real value, and as such are always going to be important for the business as a whole. An intangible asset is often something you can’t readily see: nonphysical items such as intellectual property, trade secrets or even software. Both are real capital in terms of what they mean to the business, but they work in subtly different ways. Understanding the difference is an important first step in getting to grips with assets on the whole.
As long as a business is doing well financially, you will not have to worry too much about how much each asset is potentially worth. You can keep a record of such figures (which is probably sensible) but it won’t really concern you. That is, until it comes to the point where you need to provide some kind of collateral for a loan, or you need to come up with fast capital for a quick entrepreneurial shift. In these cases, you will need to get a quick and efficient evaluation. Another option might be to find no collateral business loans, to save you the hassle in the first place. But there will always be situations where it is important to know such values.
Keeping The Balance Sheet Healthy
Running a business often seems like doing little more than balancing the finances. It’s true that this is always going to be a large part of any business owner’s job, and it is something you will want to get used to as soon as possible. Fortunately, keeping any balance sheet healthy is something which will always be aided by having the right approach to your business assets. This is the most important reason that you should try not to lose track of what assets your business has, and how much they are worth. They are not just dead weight in the business, but real live capital which could be used at any moment. They can be effective leverage during times of expansion, and you should try to respect the value that they offer.
A greater understanding of assets often leads to a more secure and profitable business, so make sure you get to grips with it as soon as possible.