If stay-at-home orders amid the Covid-19 crisis have made some of your business assets idle, you’re not alone.
According to the latest report from Motus, unused assets cost businesses over $55 billion in March and April 2020.
Unused Business Assets Due to Pandemic Response
Due to the coronavirus crisis and subsequent lockdowns, most small businesses had to voluntarily or mandatorily allow their employees to work from home.
Indeed, remote working offers multiple benefits to small businesses. But the sudden move has turned office spaces, company-owned vehicles, and company-owned devices into a financial burden for many businesses.
Idle Assets: A Financial Burden
Despite the fact that remote working is a win-win situation for both the employers and the employees, not all businesses were allowing their employees to work from home before the coronavirus crisis. This means they have to rent office space, which is a costly affair. And the cost of office space is fixed whether a business uses it or not.
The Covid-19 crisis has made approximately 55% of workforce remote workers during March and April 2020. This caused 11 billion square feet of office space to become idle, costing businesses $54 billion, states Motus report.
Company-owned vehicles also contributed significantly to idle assets. During March and April, business activities slowed down steeply. And most companies had to bear the cost of idle company-owned vehicles over six weeks when there were stay-at-home orders. This costs companies $1.5 billion nationally, finds the Motus report.
Although, with local authorities easing lockdown restrictions, business activities are resuming. But companies have to bear the additional cost of their idle vehicles as they move forward their businesses.
The lockdown has the least impact on the usage of mobile phones. However, the report discovered that unused phone lines cost companies between $7,800 and $10,600 per 100 devices every year.
Business assets, such as office space, company-owned vehicles, and mobile phones become costly expenses when companies are not in the position to use them.
Now, when the Covid-19 has interrupted cash incoming for most small businesses, you should try to find ways to lower overhead and increase liquidity.
How You Can Cut Business Cost
80% of small businesses are hit by the pandemic. To mitigate the impact of Covid-19 on your small business, you should make use of all the available resources. Also, you should try to cut business costs to have more cash in hand.
Following are some proven cost-cutting ideas for your small business:
- Allow more employees to work from home if it is feasible
- Try to adopt free cloud tools, such as Google Drive, Skype, etc.
- Outsource short-term projects
- Purchase used equipment for your business
- Look for discounts from your local chambers
- Adopt a Bring Your Own Device (BYOD) program
- Look for tax deductions
You can think about keeping your employees remote permanently to save on office space.
Also, you should try to find ways to turn your fixed assets into more flexible approaches like reimbursement. The more reimbursement programs you have, the few dollars you will attach to idle assets.
Ken Robinson, market research manager for Motus, said in his prepared statement, “Although businesses are starting to recover financially as states reopen, they are still absorbing additional costs for their idle assets every year,”
“By finding ways to convert fixed-cost assets to more flexible approaches, businesses can adapt quickly to unexpected or changing economic conditions. One approach to minimize the dollars tied up in unused assets is to reallocate funds from company-provided assets to reimbursement programs,” He continued.
About the Report
Motus performed the cost analysis of 2,000 fleet vehicles, 17,000 company-provided phones, and 1,000 office locations to drive the conclusion of this report. If you want to know more about the report, you can click here.
Get the latest headlines from Small Business Trends. Follow us on Google News.