The Small Business Owner SUPER CHALLENGE!

small business, financial advice superannuation

A client who runs his own laundromat business came to see me last week. Barry was in a bit of a state. He told me it had suddenly dawned on him he was getting closer to retirement and had been reading all these stories in the paper about how much a person needed to have in super for a comfortable retirement.

The final straw was when Barry started putting feelers out about selling the business he’d shed blood, sweat and tears over for so long. Buyers were only prepared to pay half what he thought it was worth.

Too busy managing his business; Barry hadn’t been paying much attention to his super. In fact, he didn’t even know how much he had before he came to see me.

Sadly, I have heard the same story so many times in recent years.

The many reasons

According to the Australian Bureau of Statistics, small business owners have the smallest superannuation balances of any sector. These are the most common answers I get when I ask why:

  • 'I want to reinvest profits back into my business';

  • 'I’d prefer to put my money into something I have control over';

and the most common excuse,

  • 'I don’t believe in super'.

Although these reasons sound good in theory, rarely do they help you retire in the style you have always dreamed of after years of hard work.

Take control of your retirement funding

Remember that super is just a tax structure, it’s not an investment in itself. You can still control where you put your hard-earned cash. You can own a little bit of Australia’s other successful businesses, ones far bigger than your own, at a fraction of the cost. You can park money in a term deposit or invest in property, if that’s appropriate. The key is to spread your investments.

Tax treatment is great for business owners

As a small business owner, you can claim a 100% tax deduction on what you contribute to super up to $25,000 per annum. Earnings are taxed at only 15%. There is also the co-contribution scheme available for small business owners.

It’s not just for employees

You’re paying super for your employees so you need to follow suit and ‘pay yourself first’. A simple way to start is to set up an automatic debit each month or quarter, just as you do for your loyal staff.

This is what I suggested to Barry

After I’d settled Barry down, we looked at his situation. He had left it a little late but it was still salvageable. He was 48 and had just $50,000 in super, built up from an earlier career. I suggested he start contributing 9.50% of his salary from now. He paid himself a salary of $80,000pa so that equated to $7,600 a year towards his super.

Based on a net return of 7% pa (a typical balanced fund long-term average), a projection shows that Barry could end up with approximately $357,000 at age 65. Not a bad outcome from such a small contribution and a good ‘back up’ to the eventual sale of his business.

Being able to contribute more would of course give him a better nest egg at retirement.

We advise small business owners every day!

If your situation sounds similar to Barry’s and you would like some suggestions on how to grow your super without relying too much on your business, give me a call. We’ll help you set up a plan to achieve this, as well as provide valuable budgeting and cash flow advice.

You’ve worked too hard not to enjoy the best retirement a healthy super balance can buy!

small business financial advice superannuation

We help busy Small Business Owners around the Bayside and Redlands every day. Book in a free Financial Health Check at or call us on 1300 124 683.


The information in this communication is information only and has been prepared on a general advice basis only. The information has been prepared without taking account of your specific objectives, financial situation or needs. Accordingly, you should, before acting on the advice, consider the appropriateness of the advice having regard to your objectives, financial situation, and needs. In cases where the advice relates to the acquisition, or possible acquisition, of a particular financial product, you should obtain a Product Disclosure Statement (or other relevant information statements) and consider such document before you make any decision about whether or not to acquire the product. For these reasons, it is imperative that you seek advice from your financial adviser before making any investment decisions. Investment Zone Pty Ltd (ABN 18 104 622 611) provides financial services as a Corporate Authorised Representative no. 296974 of Financial Force Pty Ltd ABN 42 091 425 464, AFSL no. 238337

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