Opening your own business can be as thrilling as it is overwhelming. With the upfront costs, logistics, and day-to-day happenings during the initial years of your business, it’s easy to forget about planning for the long term. But it is this oversight that could potentially cause your business to close prematurely.
What would happen if you couldn’t work for an extended time?
A study performed by REST Industry Super, one of the largest superfunds in Australia, found that there are concerning gaps in the financial planning of small to medium-size business owners. One in five admitted that, should they encounter difficulties and be unable to work, they would not be able to sustain their business for more than a week.
The gap is also present when it comes to insurance coverage. The same study found that one in five small to medium-size business owners surveyed would only be able to cover living expenses and livelihood for up to a week based on their current coverage. Considering this group employs 4.7 million Australians, this is a concerning statistic.
What happens when it’s time to retire?
So what is the long term plan for most small to medium-size business owners? A majority believe that selling off their business when the time comes will fund their retirement. While this may bring in some funds, it’s hard to tell if it will be enough to survive on as the owner passes retirement age.
How to plan the future of your small business
Better financial planning can make a huge difference in the success of your business and the happiness of your employees. With proper planning, you can make sure the money will be there in case of a setback or emergency that keeps you away for weeks or more. What’s more, carefully choosing a super and offering contribution matching is a great way to attract skilled new hires.
The first step is creating a plan and making changes to your existing super if needed. Contact Jonathan Grant Accountants today to learn more about how we can help you financially fortify your business.