The busy day to day activities of running a small to medium enterprise or company (from a one man show to an organization with multiple employees), can often leave the business owner(s) or management, little time to focus on the importance of establishing or fine tuning the nuances of a financial plan for their business.
For those that have not established a plan, they are often of the belief that their business is too small or the business's profit or turnover is not significant enough to warrant the added expense of financial planning services, as every cent that is earned is re-invested into the business, or that the importance of doing so does not occupy space on their list of priorities.
In this day and age, the complexities of strategic financial management in the arena of investment management, superannuation for staff/employees, business protection (i.e. insurances in relation to its liabilities, overheads, key employees, partner/shareholder protection, income for business owners) and ultimately succession of the business itself, can often be overlooked or placed in the too hard basket.
As this is often the case, it is not surprising that many small business's do not succeed or perform to its utmost capacity or ability as a result of not possessing a sound business plan with contingencies. Moreover, the situation can often be exacerbated by not employing or implementing a business financial plan, creating a roadmap by ascertaining the current status of the business and subsequently identifying financial strategies to create business efficiencies in the aforementioned areas of Superannuation, Insurances and Managed Investments.
Given the importance of superannuation as a savings tool for our futures and the recent government changes which can obviously have a big impact on the lives of employers, employees and individuals, we have highlighted some of these important changes. These include;
Choice of superannuation fund:
Tax-free super payouts from age 60:
More flexibility and choice in how you take your super payout:
A better deal for the self-employed
These are just some changes that will affect individuals and employers. By having a good understanding of these changes, employers and employees can better structure their savings plans to take advantage of these changes to suit the unique circumstances of each individual.
By way of a simple example to highlight the importance and advantage of keeping abreast of these changes; when superannuation choice legislation changes were made, employers were struggling to meet their obligations under the choice of superannuation rules. A survey of 400 employers by industry fund Superannuation Trust of Australia found that 40% of employers had not handed out super choice forms to their employees by the July 28 deadline. One in five had not chosen a default fund. Of those which had already chosen a default fund, more than 90% have continued with their pre-existing relationship with a superannuation provider.
Consequently, many employer's and employees did not act on the opportunity to take advantage of this choice, which may have allowed them to perhaps restructure their individual super from balanced to growth or an alternative arrangement to take advantage of the prevailing economic environment.
This highlights a deficiency in implementing and executing these changes that could have facilitated better results for employees and ultimately employers. Conversely, if opposing action had taken place, employees may have viewed their employer as showing concern and being attentive to the welfare of its employees. Hence, the positive action could have created the view for employees that its company is the company of choice, ultimately creating higher staff retention rates.