April 12, 2022
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Let's get straight to it. You cracked seven figures last financial year. You have a few hundred grand sitting in a business transaction account. Every time you log into your banking app, that number looks great. It strokes your ego. But it's actually bleeding value every single day.
Inflation is a silent killer. We all know the cost of living is up. The cost of doing business is up too. Your default business transaction account pays you absolute peanuts in interest. Do the math. You're actively losing purchasing power because you are too paralysed to make a decision.
I had a client last month, a commercial plumber up in Joondalup. He was sitting on $450,000 in raw cash. He told me it was his rainy day safety net. I showed him the reality. I calculated how inflation chewed up nearly $18,000 of his real wealth in just twelve months. That is the literal cost of doing nothing. What is the point of grinding eighty hour weeks, fighting with suppliers, and dealing with staff headaches just to let the bank use your money for free?
You need operating capital. You need a buffer. I get it. But anything above a three to six month runway is lazy money. Lazy money needs a job.
The default advice from internet business gurus is to pour every single cent back into the machine. Buy more ads. Hire more staff. Upgrade your fleet. Expand your warehouse.
Sometimes that's the right call. Often, it's completely stupid.
You need to look at your actual return on investment. Throwing another hundred grand at Google Ads doesn't automatically double your lead flow. Sometimes a local market is entirely saturated. Sometimes your operations team is already redlining and cannot handle more work anyway.
I watch founders buy shiny new equipment just to claim an instant asset write off before the EOFY deadline. They buy a brand new dual cab ute to save a few bucks on tax. Then that vehicle sits idle in a driveway five days a week. Spending a dollar to save thirty cents in tax is a terrible wealth strategy. Reinvest when the math proves it will increase your net margin. Otherwise, pull the cash out.
Your business is your primary wealth generator. It's also your absolute biggest risk point. If the market turns, if regulations change, or if a new rival undercuts your business, you want a massive firewall between your company and your personal financial freedom.
You need external assets. This is where most founders drop the ball. They ask their accountant for investment tips. That's a mistake. Your accountant is fantastic at looking backwards and reconciling your tax returns. They aren't wealth creators.
You need someone who looks forward. Find a professional who has nothing to sell you but their time and expertise. If you run your company on the west coast, booking a session with an independent financial advisor Perth is a highly logical first move. You want someone to look at your entire financial landscape without trying to push you into a dodgy managed fund just so they can clip the ticket on a secret commission.
Get objective advice. Build a separate portfolio that doesn't rely on you working until you are seventy years old.
If you really want to leverage that surplus cash, you need to look very closely at your superannuation. Most business owners treat their super like an annoying afterthought. They dump the minimum required guarantee into a massive industry fund and ignore it for a decade. That's a massive wasted opportunity.
Money inside the super environment is taxed at just fifteen percent. Compare that to your marginal personal tax rate or even the company tax rate. It's a no brainer.
An SMSF essentially puts you in full control. You dictate exactly where the money goes. You can buy a commercial warehouse. You can then lease that exact warehouse back to your own business. You pay rent into your own retirement fund. It's brilliant. You can invest in alternative assets. It isn't for everyone, obviously. It requires real paperwork, strict compliance audits, and actual brain power. But if you have serious cash reserves, it remains one of the most powerful and tax effective vehicles available in Australia today.
Once you have an SMSF up and running, the entire investment world opens up to you. Some of my most successful clients are moving away from volatile tech stocks and looking for physical assets. They want things they can physically touch and verify. Bullion is a massive trend right now for guys wanting to hedge against global economic stupidity and local inflation.
But here is the catch. The Australian Taxation Office doesn't mess around with alternative assets. You cannot buy bullion with your superannuation and stick it in your home safe. You cannot hide it under the floorboards in your office.
If you try that amateur move, the ATO will audit your fund and hit you with compliance penalties that will make your eyes water. You absolutely must use certified, secure, third party vaults. Setting up proper SMSF gold storage is non-negotiable. It ensures your assets are fully insured, properly audited, and completely compliant with strict superannuation laws. You must do it by the book or you shouldn't do it at all.
Having surplus cash is a great problem to have. It's still a problem.
Leaving it to rot in the bank is lazy. Wasting it on unnecessary business expenses just to dodge tax is foolish. You busted your gut to build a profitable company. Now you need to build a concrete fortress around that wealth.
Look at your numbers this week. Work out exactly how much working capital you actually need to operate safely for the next six months. Take the rest of it and put it to work immediately. Talk to an expert who actually knows what they are doing. Look into your super options. Buy assets that hold real, tangible value. Just make a choice and do something.
Holding excess cash in a business transaction account is a losing strategy because inflation silently erodes its value. While it might feel safe, the minimal interest you earn doesn't keep pace with rising costs, meaning your money's purchasing power is actively decreasing every day.
Not always. Reinvestment should be a strategic decision based on a clear return on investment. Spending money on new equipment or ads without a solid plan can be wasteful. It's especially unwise to spend a dollar just to save thirty cents in tax, as this is a poor wealth-building strategy.
An SMSF gives you direct control over your superannuation investments. For a business owner with surplus cash, it's a highly tax-effective vehicle, with earnings taxed at just 15%. It allows for flexible investment strategies, such as buying your commercial premises and leasing it back to your own company.
Absolutely not. The Australian Taxation Office has very strict rules for storing alternative assets like bullion held within an SMSF. You must use a certified, secure, third-party vault. Storing it yourself is a compliance breach that can lead to significant penalties.
While your accountant is essential for tax matters, you should seek advice from an independent financial advisor for wealth creation. Look for a professional who can provide objective, forward-looking strategies for building wealth outside of your business, like the experts at Robin Waite Limited.
