How to Effectively Manage Company Property and Assets – Part 1 of 3
By Angel Rosario, Industrial Property Management Specialist, Defense Contract Management Agency (DCMA). If you have comments, please email it to Angel.Rosario@SmartBizPractices.com.
About half of all new establishments survive five years or more and about one-third survive 10 years or more. –SBA.Gov
Often times the difference between successful startups and failing companies is sustainability. If a company is unable to become self-sustaining (breaking even or turning a profit) then inevitably the company will “fail.” This article will share strategies and tips you can incorporate immediately to your very own company, whether you’re in defense contracting or not. Using a free resource, the Federal Acquisitions Regulation (FAR), can help you establish an efficient property management system you can institute starting TODAY.
Before we get too ahead of ourselves, please note that this article is the first of a three part series discussing cornerstone elements to help you effectively manage company property and assets.
I will utilize the FAR as a reference because it is a time proven regulation adopted by the United State’s top defense contractors to manage billions of dollars worth of tools and equipment. If the FAR is good enough to help contractors manage millions of line items, chances are it may be good enough to help you manage our small businesses.
Government Property is defined by the Federal Acquisitions Regulation (FAR) part 52 as “property in the possession of, or directly acquired by, the Government and subsequently furnished to the Contractor for performance of a contract…”
So what can YOU learn from an organization that acquires and manages millions of items that require tracking through its life cycle? Turns out, a lot!
As a property management professional and business owner I have found that FAR clause 52.245-1 provides a great guide for managing your very own company property, when supplemented with industry leading practices. Adopting a property management system as outlined on this FAR clause allows you to:
- reduce fraud, waste and abuse
- reduce losses and risks associated with your inventory and assets
- increase profitability
So now that we’ve touched some of the benefits of having a successful property management system, let’s briefly talk about the property system elements.
Please note that in this article the term ‘property’ is used synonymously with ‘assets’ and not specifically residential or commercial property such as buildings, land, residential or commercial.
This element addresses the adequacy of a contractor’s (or your
own business) policies, procedures, and controls. This includes desktop procedures and process you can implement that allows for consistent and duplicable action. As an entrepreneur or solo-preneur you may be the one-person business handling all facets of your organization. Establishing procedures and controls are a great way to ensure you do not forget a step in the operations (imagine missing a quality check that leads to a negative review). Another benefit of having procedures in place is that it allows you the opportunity to identify functions that can be automated or offloaded to another person.
The acquisition of property management refers to documentation required to ensure material, equipment, and tooling purchased is consistent with your company’s needs. Fewer instances irritate me more than carrying too much inventory or raw materials, because this means my money is tied up until the products are sold and offloaded. In addition, periodically analyzing the quantity and quality of items purchased help me identify what are my recurring orders (what do I always buy, and how much). Another benefit is that I can analyze the benefit of ordering materials in bulk at a lower cost, while negotiating delivery schedules and payments.
The element of Receipt is beneficial because it helps companies account for deliveries of acquired property as they arrive to the work sites (even if it is a home based business). Adequately documenting the receipt, inspection, identification of your property can help identify discrepancies as they arrive. Instituting procedures for inspecting items as they arrive,
This is part 1 of a three part series. In Part 1, we have described Property Management procedures, Acquisition, Receipt of Property. In Part 2, we will describe Records, Physical Inventory, Sub-Contractor Control, Reports.