It’s Tax Season. So like many Americans, I’m taking a closer look at my finances than I usually do. Many things cost more this year than last year. A few things cost less. And some areas where I put my money in the past don’t seem to be garnering the results that I had planned (hoped).
So it’s time for a change – and maybe a new approach to the way I handle things.
The Advice Classics
Decrease debt, cut costs and increase contributions to savings are the standard nuggets of advice that we seem to get anytime we’re trying to fine-tune finances. I get the same feeling of disappointment with that as when I receive the “diet & exercise” wisdom yet again. I’d rather have something easier to get me where I want to be – naturally – but the classics are usually the best tools for the job.
Just because shortcuts aren’t the answer, doesn’t mean that you can’t get some solid and quick results if you look at things from a different perspective. This isn’t a revolutionary concept – but given our penchant for routines, trying something different can feel like it is.
Our business budgets are no different. The classics are the most effective tools to rein in spending. But just lowering budgets to get there is frequently met with resistance – and can even impact morale – which can impact productivity, which can impact income and so on.
But spending can be lessened if you get a little creative (or at least less traditional) in your approach.
Take the case of your assets budget. Your organization’s investment in assets to run your business is likely your biggest expense after labor. Operations budgets typically have a solid amount devoted to investment in the expansion, replacement and maintenance of assets.
That amount is also frequently padded for Just In Case, Hot Spares, and other unplanned needs that may arise if there is an issue with the assets that you have. After all, if you don’t have (or can’t find) a key item right when you need it, the consequences can sometimes be expensive – and other times, catastrophic.
But what if you could lessen that Just In Case pad amount of the budget by investing a little more in understanding the state of the assets that you already own?
A Flaw In The Plan
When most organizations are asked how they handle managing their assets, the most common response I hear is “we have a system for that.” If you probe a little about that system, the majority of the time it comes down a manual inventory solution (think pen & clipboard) or a basic electronic system that can capture a count.
Once upon a time, approaches like that may have worked (like when your business existing in just one room). But if you actually have to pad your operations budget to deal with potential issues surrounding your assets – your solution does not work.
Check the Numbers
Look the amount of your operations budget padding. What if (for likely less than that amount) you could have a solution that would give you the information that you needed about your assets (where it is, who has it, what state it’s in, etc.) and eliminate the need for that budget padding? Would you consider it?
If you didn’t have to spend that money on Just In Case, I’m thinking that you might find other uses for it. Maybe you could invest in something more gratifying than a panic purchase of a tool because the one that you thought you had seems to have wandered off?
Another aspect to consider is that if you had accurate information regarding your assets, the amount that is budgeted in general for asset maintenance, planned replacement, etc. could be fine-tuned since you could trust that your decisions were based in facts and not perception or estimation.
If I’ve learned anything over the years of doing this Adult thing – when I create my budget based on estimations – and not truly looking at the facts of what I have and how I spend – then I’m just setting myself up for a financial headache. But if I take a little time and look at the facts, I usually find areas where I don’t need to spend.
Contact me if you’d like to take a few minutes and see if we could help you to save some money – and headaches – surrounding your assets. You only have a little bit of time – and that budget padding – to lose.
Anne Hale is the Director of Client Services at HL Group, Inc., a premier provider of mobile inventory management, RFID and supply chain solutions. She manages our client engagements, helps with sales and marketing and is relieved to be done with her taxes.