Tag Archive for 'Small Business Management'

Is your business paying you more than just a wage?

Does running your own business payoff? The answer is yes, and no.

In a recent BRW Magazine article, University Of Western Sydney researchers revealed that even though small business owners still don’t earn as much as the typical wage earner, they’re becoming richer and smarter with their money as they tend to accumulate more assets.

Australian business owners report a lower level of weekly income. In 2010, they took home an average weekly income of $1975 compared with those on a wage who took home $2173.

But a new University of Western ­Sydney study shows business owners outstripped their more secure counterparts by accumulating assets worth more than $1 million ($1.095 million in 2010), whereas wage earners ­accumulated only two-thirds ($673,000) of this amount.

“As a small business owner, you sometimes sacrifice some income in favour of reinvesting that,” Mark ­Sargent from Newcastle University said. “There’s evidence the typical model, where you take the risk and get greater returns, actually is the case.”

Using data from the Australian Bureau of Statistics and HILDA (Household, Income and Labour Dynamics in Australia), the study  found there are more than 2.1 million owner-operators of small businesses in ­Australia and the proportion of superannuation investment by both wage earners and small business owners has increased markedly.

The value of superannuation holdings in the sample group shows contributions from salary and wage earnings households between 2003 and 2010 rose 60 per cent whereas the contributions from unincorporated small businesses nearly doubled to 112 per cent.

“The magnitude of the change was quite surprising,” Dr Sargent said.

“Traditionally, people have started their own businesses with a view of one day selling their business and using the proceeds to fund their retirement.

“What we have now begun to detect is that more business people are ­dramatically building up their superannuation funds. This is a far more ­protected and secure environment for wealth creation.”

This is both good and bad news for small business owners.

First the good news: At least business owners are rewarded with capital appreciation of their assets. It is assumed the capital growth difference with their salaried peers actually compensates for the lower income and would the greater access to business deductions.

The bad news: The risk borne by small business owners is usually very high, with many primary residences collateralised for business bank loans and the on-going risk of default and bankruptcy especially in times of economic and geopolitical turmoil. An employee might lose a job, a business owner his/her job AND his/her house!

The great news: Some small business owners succeed at making a higher income and create greater capital appreciation than their peers. This small, elite group of business owners learns powerful strategies that are tried and tested. If you would like to join them, contact us. We’ll let you know if you qualify to join them.

Are you in the entrepreneurial jail?

One of the sad things I see in my line of work as The Exponential Growth Strategist is business owners who are slaves to their business and won’t admit to themselves.

They put up appearances and “posture” when I meet them, claiming they are decisive and “in charge”, but just a little probing reveals the truth.

They are working for their employees and not the other way around.

Now don’t get me wrong. Great employees are fantastic, but toxic employees are a life-threatening, profit killing cancer to a small business.

I put together a quick quiz you can take to determine if you’re in the entrepreneurial jail or not.

Are You Really In Charge? Problem Employees, Bad Employees

Yes = 1, No= 0, Not Sure = 0

Total your points and let’s see how you measure up:

If you scored 1, 2, or 3: You’re on death row
You know there’s very little hope for freedom unless you make dramatic changes.

If you scored 3, 4 or 5: You’re got a life sentence with a chance of parole
You have a job with tax benefits and poor working conditions.

If you scored 5, 6 or 7: You’re on parole.
Like most business owners, you like to think you’re the boss, but you realise your personal life and schedule revolves around your staff showing up physically and “mentally” to get the job done.

If you scored 8, 9 or 10: You’re Free!
Y
ou’re in control and happy to be master of your own destiny. You are the exception to the rule. Well done!

If you scored 0, you know you’re taking your last breath, time has run out and all the appeals have been used. It’s over.