The Unique Needs of Small Business Owners

The Unique Needs of Small Business Owners

The main reason people go into business for themselves is quite simple – to have more control. For others, wealth creation is the main focus, although small business also brings with it the higher chance of failure and loss. Is the hard work and extra risk worth it?

If you are a small business owner or have dreams of becoming one, consider the following and how it might apply to you.

Earn less now to create future wealth

Every small business owner knows there’s no such thing as a 37.5 hour working week! When you’re the boss you generally work more hours than your employed counterparts of similar age. However despite these longer hours and more responsibility, small business owners have lower levels of income.

Although they earn less, the net worth of small business owners is based on the value of their business and, on average, they have a higher net worth than employed people of a similar age and gender. However, their super balances are generally much lower than their employed counterparts. The reason for this is simple – given the choice, many small business owners prefer to use surplus funds to grow their business with the expectation that its eventual sale will fund retirement.

Protecting their investment

It’s common for small business owners to use their home as security for business borrowings. This is a requirement of many lenders that want to ensure the owner has a vested interest in the success of the business. For this reason, managing the associated risk is imperative. Life insurance can be used to protect the income, home and other personal assets in case the business owner dies or is unable to work to meet loan commitments.

Another area that is often overlooked by small business owners is the need for key person and business overheads insurance. These policies are designed to protect the business rather than the personal position of the owner. If the business can continue to meet its obligations, the corresponding personal risk to the owner is reduced.

When it comes time to sell

With fewer than one in three business owners having a succession plan, most of these entrepreneurs don’t plan well for the future and with over 1.3 million Australian small businesses having no employees, the owner IS the business. This limits the value of the business as a saleable asset, meaning that when the time comes, many owners will struggle to extract the value of the equity they’ve built up in the business.

For owners who do sell their business, the correct use of the small business capital gains tax (CGT) concessions, for example, can significantly reduce a potential tax liability.

Don’t do it alone

A key characteristic of the small business owner is their ability to rely on themselves, however there is a time for specialist advice. We have the knowledge and skills to help with matters such as business structuring, ownership strategies for personal assets, and the correct insurance cover. Give us a call to help ensure your life’s work meets all of your life’s needs.


NATSEM (2011), AMP/NATSEM Income and Wealth Report Issue 11, There’s No Business Like Small Business, July 2005

Australian Bureau of Statistics (2014), Catalogue 8165.0 – Counts of Australian Businesses, including Entries and Exits, Jun 2009 to Jun 2013. Published 13 June 2014.

About Reuben Zelwer


Reuben Zelwer established Adapt Wealth Management in 2011 to help time poor clients achieve financial freedom. For over 15 years, Reuben has helped professionals, executives, business owner and those approaching retirement make the most of their circumstances by making good financial decisions. Reuben’s professional practice is complemented by substantial voluntary work, which has included setting up financial literacy and savings programs in the local community.