Australian small business owners have low incomes, however they make up for this in assets, a new study has found.
The research, conducted by University of Western Sydney Deputy Vice-Chancellor (Research and Development) Professor Scott Holmes and Dr Mark Sargent from Newcastle University, looked at the wealth of more than 2.1 million owner-operators of small or micro-sized businesses.
In 2010, the average weekly income of the business owners was $1,975, whereas the average weekly income of wage earners was $2,173.
In a press release Professor Holmes explained that the low wages were made up for by personal assets.
“The typical small business household has assets of over a million dollars ($1,095,000 in 2010), whereas wage earners have only about two-thirds of this ($673,000),” said Professor Holmes
Small business owners were also realising the value in superannuation funds as it is more protected and secure than relying on the value of their business. Dr Sargent said that policy that has encouraged retirement planning among Australians has been successful in the small business sector.
“Putting all your eggs into-the-one basket has always been a highly risky strategy, since business selling prices can fluctuate widely and any business venture is often highly exposed to legal claims and liabilities.”
The importance of succession planning for small business
The business is an important asset for small business owners and there should be a succession plan in place if selling the business is a consideration.
A succession plan should be done in advance and can help minimise any interruption to business operations due to change of ownership, increase the return on investment (ROI) and ease the transition process of ownership and control, explains the Queensland government business and industry portal.
MDL’s commercial lawyers in Arana Hills, Capalaba, Cleveland, and the CBD can help you with succession planning and check all your commercial contracts are up-to-date. Call us on 07 3370 5100 or get in touch online today.