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My Business Is My Super – Isn’t It?

By September 20, 2016March 15th, 2019Business, Estate Planning, Retirement, Superannuation, Uncategorized

When we commit all of our resources, family, financial and emotional to our business, there had better be a reward at the end which we and those dearest to us can enjoy. As business owners there are rewards in just the doing, which we get to enjoy, but our families don’t (well not always anyway).


We need to be aware that business is such a transient thing, that having all our eggs in that particular basket is a recipe for disaster. I always advocate that business owners have 2 plans, one for the business and one just ticking away for when there is no longer a business (see this article)

Disaster can always strike when we least expect it to, illness, loss of customers, loss of key staff, or just a steady decline in the fortunes of our industry. How do we face our families when our collective financial future has been committed to just one possible outcome – the ability to sell our business for enough to allow us to have the choice to retire?

A recent survey by MYOB  and reported on by Channel 9 here indicated ” a third of small business owners are not putting money aside for their own retirement nest eggs. Even more surprising, the survey by business software provider MYOB found small and medium sized enterprise owners believe they will need around $1 million to retire comfortably, yet over half will not have saved enough when the time comes.”

Most business owners are sensible people, and if it came to superannuation not many would choose to invest in a single share operating in a single industry. Dick Smith Electronics for example could easily have been a disastrous investment if all of your super had been invested in it. So why is the dependence on your own business as the sole source of retirement security any different?

Similarly, many business owners will commit the entirety of their superannuation savings to purchasing the premises from which they operate their business via a self managed superannuation fund. Before doing so, the same risk assessment of the potential loss should the property become vacant needs to be applied. If you did an objective assessment of the ongoing financial viability of the tenant (you) how would you fare? Is owning your business premises in your own super fund a mask to reduce your rent (and thereby make your business more viable)? What are the growth prospects for commercial property in your area? If the building next door came up for sale, would you buy it? Is the rental return on the premises you occupy competitive with other investments (including property) in your market?

Failing to adequately secure retirement savings is all about opportunity cost for most business owners. “I will get around to that when the economy gets better”, or “I will be able to smack some money into super if I land this big contract”. The thing is, would you make similar statements about your other employees super? (you’d better not be); will there ever be a time when your business does not have “better” things to consume its resources on than your retirement plan?

At the very least, we need to let our families know what we are doing, after all their retirement plans are bound up in our strategy. I would put neglecting your retirement planning in favour of your business in the same basket as redrawing on your mortgage to fund business cash flow. For a VERY short time it can work if the debt is repaid, but as a long term strategy it is just not viable. The consequences for those nearest and dearest to us are very much the same – they need to know.

We business owners are all passionate about our business (well mostly anyhow) and would do nearly anything to ensure its ongoing success, both financially or otherwise. Let’s remember there will be life after business, or there should be, and we need to plan for it.

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