Budgeting

Andrew Buchan, of HLB Mann Judd in Brisbane, the financial adviser for Martin Meek – who sold his business after 20 years of hard work and pondered what to do with the income, and indeed the next 20 years – notes that people who have built a business can have different needs and priorities.

“Martin’s wealth is his ability in business,” Buchan says. “It doesn’t matter if I could get him a 5 per cent or 10 per cent return on an investment. His real ability is his business nous.”

Buchan believes this applies equally to, say, a sports star with a brand name: wealth management for people like this is not just about the split between equity, bonds and property, but encouraging an individual’s attributes and their assets as a person.

These types of entrepreneurs are natural candidates for self-managed super funds, so that they can match their expertise and enthusiasm with self-directed investments. Involving an accountant on the tax side is crucial.

Case study: Hatch a plan for a healthy retirement

Martin Meek is an example of an entrepreneur with a clear goal. Like many successful businessmen, he got his big break from an unexpected route.

A teacher at first, Martin’s wife’s family was in retail. One day over dinner he disagreed with his father-in-law about plans for a new store. “Do you think you could do better?” the older man asked. “Yes, I could,” Martin replied. He redesigned the store, then gave up teaching to build it, and finally ended up running it.

Two years on, Martin reached the next life-changing moment. He and his wife were thinking about having children, so he looked at his financial prospects and decided he wanted to buy in to the business. “I didn’t have any money,” he says. “But I had a house. So I sold it and bought in. That was 20 years ago.”

It was a bold move not many of us would make, but that’s entrepreneurs for you; and it worked. Along the way Martin and his father-in-law shifted from a model of building a health-food store and selling it, to a franchising one in which buyers could use the name. This became Flannerys Natural Grocers, which thrived for two decades and was sold in 2008.

This was another pivotal time: the windfall from a working life’s effort. But Martin was still young. So the next step was to decide on the next step. Given he’d signed a non-compete clause, he retained two stores and ran those as a franchisee until the clause ran out two years later, then sold them.

Now, he’s setting up a new organic commodities import-export business. “I’m moving up the food chain, supplying to the people I used to be competing with,” he says. Noting his risk profile has diminished as he has got older, the new business is structured to have low costs. “The upside is good, but if things don’t work out I can fire-sale the stock and walk away having dropped 10 or 20 grand and a bit of time,” he says. “As I get older, I look more at the possibility of ‘what if it goes wrong?’. When you’re young you think you’re indestructible. You don’t have that fear. Now I’m older, I’ve got more to lose; I don’t want to have to start again at 46.”

Martin is a canny operator and has appointed advisers who understand that his main asset in building wealth is his own skill as an entrepreneur.

Andrew Buchan, his financial planner, hasn’t tried to push him towards a traditional portfolio model, but has accepted his expertise and enthusiasm and worked around them. Not surprisingly Martin has a familiarity with property, and that represents the main pool of his assets today: he has two warehouses on the Gold Coast (“no-nonsense, easy, give a good return for a low amount of outlay”) and a residential property in Brisbane.

It should be no surprise to learn that Martin has a self-managed super fund; the vehicle was invented for people like him. “I enjoy research,” he says. “I’m a little bit of a control freak.”

Having reached a key stage with the sale of the business, Martin and his adviser sat down and came up with a number. They worked out how much money he wanted to have, per day, upon retirement, and then worked back to establish what that total figure should be. It was a big number. “It was a scary thought, but a good scary thought to have,” he says. “It made me more proactive on: this is what I need. When looking at things and making decisions, I ask: does this get me closer or further away from that number? It really simplifies things. I would encourage people to have a number.”