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Article | 7-minute read

Five ways to protect your growing business right now

By Kevin Smith, ANZ Financial Adviser

Nothing is ever guaranteed in business.

Being a business owner has so many perks - you only answer to yourself and the profits go back to you. But with great power comes great responsibility as there are many things that are out of your control. Whether you’re dealing with the loss of a key supplier, the integration of a new income tax, or a global pandemic, the ups and downs of business ownership mean that it’s important to put measures in place in the event that something does go wrong.

With almost 10 years of experience as an ANZ financial adviser, it’s my job to ensure that when you’re setting up your business, you’re set up for success. I work with entrepreneurs from a range of industries from hospitality, to the auto industry and also professional services. I’m also a business owner myself, importing and exporting baby goods to the United States. So I’ve faced the same challenges everyone faces when scaling a business for growth.

Over the years, I’ve found that while no two situations or clients are the same, everyone (myself included) is usually working towards the same thing - financial stability. My aim is to offer direction so that business owners are in a strong position to drive business growth and can safeguard it from any future problems. Here are my top five tips on how to protect your growing business right now:


1. Begin with the end in mind

Every business owner should consider building a solid plan and the best place to start is at the end. I encourage clients to think about their goals: do you want an annual turnover of $50,000 or $1 million? They’re quite different numbers which will then lead to the question: what's the right business structure for you?

  • Sole Trader: A simple structure for individuals with a small business turnover. For example, you may sell two to three products and as the sole trader, you are legally responsible for all aspects of the business, including debts and losses. For tax purposes, the business doesn’t have a lot of protection but you are only required to declare your sales and expenses.
  • Private Company: As the owner in this structure you will be the nominated director of the company and taxed at the company tax rate, which could be significantly lower compared to sole traders depending on the level of income earned. Your personal wealth and business expenses are separated giving you an additional level of protection.
  • Trust: A common structure to distribute business income and is often the most tax-effective. As the trustee, you can share tax income or split it between your beneficiaries such as your adult children or spouse.

If you need to change business structure - it’s not that difficult, but it can be expensive. It’s quite common because you’re not always going to get everything right when you first start a business. You may start as a sole trader, build up the business, but then your earnings increase and so will your tax bill, leading to a business structure change. By getting your business structured properly to suit your needs, you’re taking steps to help protect your assets and potentially save more money down the track.

2. Do your research and know your numbers

It’s also important to do your research and understand the competitive landscape. A SWOT analysis is a good place to start so I always encourage clients to head towards the ANZ Business Planner which offers some great tools and templates for free including SWOT templates, cash flow forecasting templates and more.

Some of the biggest hurdles business owners face result from not staying on top of their numbers. I’ve had a few clients over the years that have come to me looking for financial advice, but they didn’t have any understanding of their actual profit margins or revenue. Without that information they didn’t know if their business was succeeding or if it was even worth their time and energy. When you understand your numbers you are arming yourself with the knowledge to steer your business through the challenges that may arise.

3. Keep your business wealth and your personal wealth separate

As a small business owner, it’s easy to mix your business and personal wealth - like putting your personal expenses on the company credit card - it’s an easy mistake to make. But, if you ever want to sell your business, or get a true reflection of your business’s performance, all personal transactions must be eliminated.

I have a client who is about to take a share of the business he works in - so he’ll be a business owner AND a salaried employee - so he wants to keep his business and personal wealth separate. We’ve developed a strategy to use his business share to fund a commercial property portfolio, while his existing salary will fund his personal wealth. We’re working closely with his accountant to ensure he has the right tax structure in place. He’ll also have a true picture of the business’s performance so he can make informed decisions now and into the future.

4. Where should you stash the extra cash?

As your business grows, it’s important to consider your options: should you leave your hard-won profits in the bank or make your money work for you through strategic investment? Of course, there are a wealth of choices, from investing back into your business to managed funds and super. A good place to start is to revisit your existing goals and objectives and determine if now is a good time to shift capital and diversify from your business.

If you want to have a tax-efficient structure in retirement, then consider making additional contributions to super because you’re allowed to have up to $1.7 million in your fund that is tax-free. One of my clients has a growing business and part of their strategy is to put some of her business profits into super where it is charged the lowest tax rate possible - 15%.

However, if you want to efficiently distribute your wealth easily to the next generation - managed bonds may be another option to consider. There is tax that is applicable to managed funds as a sole investor so some of my clients have set up investment companies to invest in managed funds. However, there are additional responsibilities that come with running a company so it’s best to discuss your options with a financial adviser who can help identify the best strategy for you.

5. Protect those who drive your business

Business owners can wear many hats – from CEO to Sales Manager and don’t forget your role at home if you have a family. You are the business’s driving force and have ownership responsibilities that are the key to your success. What happens if you need a sick day? What would happen to your business and finances if you needed 6 – 12 months of sick days?

You may even have key staff members or business partners that are critical to success and projected growth. A contingency plan is key if they need time off work or are unlikely to be able to return to work due to sickness, injury or death? Fortunately, there are insurance covers that can protect the people who help drive your business and your bottom line.

Another important consideration for those with multiple business owners is succession planning. What would you like to happen to the business’s shares if an owner was to become incapacitated or pass away? Often it will fall to a family member of that owner, who steps in and tries to fill the position. This could be to the business’s detriment and the relationships among business owners.

A buy-sell agreement is a contract among business owners that will buy out an owner’s share in the business in the instance of disability or death. Usually, this is underpinned by insurance policies on each of the business owners so that an event doesn’t disrupt the business’s cash flow or capital.

No business owner has ever gone into business knowing all the answers. What’s important is knowing where to find the people who do. When starting your business, a financial adviser can help you take a step back, look at the big picture and build a plan that’s in line with your goals. It’s our job to help you identify new strategies to drive success. ANZ’s financial advisers recommend valuable solutions for your unique needs whether they are from ANZ or another provider.

As a business owner, you owe it to yourself to take steps to protect the business you built from the ground up. By ensuring that you have plans in place when things do go wrong, you’re on your way to safeguarding your business from the curveballs life throws at you.


An ANZ Financial Adviser will be happy to work with you on your personal and business goals. Find out more and book an appointment. 

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