The long-term benefits of superannuation for café entrepreneurs
13 April 2017
Posted by Equus Partners
Ah, superannuation. The word alone is enough to invoke apathy in small business owners—if not downright resentment.
Especially when those small business owners are café entrepreneurs.
But superannuation doesn’t have to be like that. You may even learn to love it. It’s a fantastic asset that can help you create financial freedom using your café business.
A tale of two café owners
Paul and Michael were both café entrepreneurs. They both ran three cafés, and had teams that fluctuated around the 40-person mark. So as you can imagine their quarterly superannuation payments were quite large.
But the two men had quite different opinions about it.
Before starting his first café, Paul worked at a local restaurant. And while he was there, one of his managers referred to superannuation as “a compulsory long-term savings plan”.
Paul liked that idea. And when he started running his first café he continued putting money into his superannuation.
It was tough to begin with. Paul wanted to keep the money—for his business as much as for himself—but he knew it would be worth it in the end.
And it was. Paul’s superannuation balance grew, and allowed him to take advantage of opportunities as they came up, such as buying a property for his next café.
Making the quarterly superannuation payments to his team felt like more of an opportunity than a burden. He even heard some of his staff talking about the benefits of superannuation to the rest of the team. .
Paul’s superannuation was an asset that could help him grow his business now, and achieve financial freedom in the future.
Unfortunately, Michael didn’t share Paul’s enthusiasm for superannuation.
Like Paul, Michael worked at a restaurant before starting his first café. But while Paul’s manager saw superannuation as an opportunity, Michael’s manager shared the same view as a lot of people in the hospitality industry.
“Superannuation is a terrible idea,” he’d say. “It cripples small business.”
So when Michael started his café business he refused to put any money into his superannuation fund. Whenever his bookkeeper mentioned how much superannuation he’d paid to his staff, Michael would shudder and curse. And if anyone on his team had a question about it, he’d brush them aside.
“Here’s the email address of my bookkeeper,” he’d grumble. “Ask him about it.”
As far as Michael was concerned, his business was his superannuation fund. And he’d have plenty of money to retire on once he sold it.
Problem was he didn’t know when (or even if) it would be sold, or how much it needed to sell for. So while he told everyone he was creating his financial freedom, the truth was he didn’t know if he’d have any freedom at all.
And all because he never understood the long-term benefits of superannuation.