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What Are Your Business Assets Worth?

Last updated February 12, 2013
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Do you have an asset register? If yes do you know what your assets are worth and have you included everything? Time to check?

While we are all heavily focused on cash flow you cannot afford to ignore our business assets. Your assets can be used to leverage cash, funding, borrowing and expansion.

But what are business assets? Well pretty much anything that the business owns, it licenses or is owed. And for as many assets as you have, there are just as many values that can be put on them.

Asset Register.

Your asset register should hold full details and descriptions of each and every asset. It should also include:

  • Date of purchase and the purchase cost (plus cost of finance if applicable)
  • Date that the asset is released from financing and becomes fully ‘paid-for’
  • Depreciation period and rate of depreciation
  • Replacement value for insurance purposes
  • Scheduled date for replacement
  • Re-sale value
  • Asset financing value.

As and when you decide to replace a business asset, you will be making regular assessments regarding current replacement value of new equipment, re-sale value, how quickly you can source a new asset and the cost of doing the actual swap.

So now that we know what an asset register is, you can see how important it is to have one and keep it up to date.

Related Article : Building Valuable Assets

Here are some other ‘values’ to consider these as a starter.

1. The Asset Value on your Balance Sheet

Each asset owned is slowly being written down by depreciation (e.g. plant & machinery) or they may be re-valued periodically such as land and premises.

2. Insurance Value

If you just take the asset value from the balance sheet to determine your sums insured, you'll be woefully under insured. And we know the problems that that can cause. Depending on your insurance contract you'll probably have new for old cover, in which case you need to insure for the replacement value including delivery and scrapping of the old asset.

3. Asset funding

Of course the money tied up in some assets (fully paid) can be unlocked to support asset financing. Well worth reviewing your own position with your bank or asset finance company.

4. Rental Value

Some assets have rental values which you may be able to leverage. This might be an important income stream if you don't utilise that asset often. This is a typical technique used by farmers to hire out seasonal equipment.

5. Resale Value

Resell values might be important to you if you are upgrading your assets – how can you get the best deal? Or perhaps your maintenance costs are starting to spiral out of control so that you are forced to upgrade. Knowing the re-sale worth of your asset will help you decide whether or not to replace it. Trade-ins values might also be important, for example vehicles.

6. Stock

How much is your current stock worth? How do you value it FIFO or LIFO for accounting purposes and whichever you use is that the correct insurance figure? When did you last do a stock-take and were you surprised by the results?

7. IP

Time limited assets such as patents and licenses have a value too. Intellectual property is often overlooked on the asset register, but it should be included.

Now, is it time to review your assets values and see what they might be earning you; insuring you for, or providing leverage or valuing your business?

Shirley Mansfield
Master Business Problem Solver

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