- Research finds that financial problems are the top issue for entrepreneurs struggling with mental health and 91% have concerns about their financial situation
- 51% of entrepreneurs have experienced anxiety and 23% have experienced depression as a result of financial stress
A lack of SME-specific financial support could have dire consequences for entrepreneurs’ mental health as they rebuild their businesses from the pandemic, warns a new report.
The SME Business Owner Mental Health Report by The Accountancy Partnership has found that the vast majority (91%) of SME owners have had concerns about their financial situation at some point, with more than a third (36%) confessing to worrying often about their financial standing.
Many small business owners hoped to see some across-the-board financial support in the Chancellor’s Autumn Budget, but instead were faced with increased VAT, a National Insurance hike, and financial support limited to a small proportion of sectors and circumstances.
Against a backdrop of Brexit, rising fuel and energy prices, and supply chain issues, The Accountancy Partnership is warning that the government’s continued negligence towards the UK’s small businesses, which are about 6 million strong, could be catastrophic for entrepreneurial wellbeing.
The report reveals that over half (51%) of entrepreneurs experience anxiety as a symptom of their financial stress, and two in five (40%) say that it manifests as insomnia. Less common, but still prevalent, are social withdrawal (27%), weight gain or loss (27%), and difficulties with personal relationships (24%).
Concerningly, nearly a quarter (23%) of SME owners have become depressed as a result of financial stress, and nearly one in five (19%) have developed unhealthy coping mechanisms.
Lee Murphy, managing director at The Accountancy Partnership, said: “It is clear from our research that financial health has a direct impact on overall mental health. With only 17% of entrepreneurs saying they haven’t experienced any mental or physical health issues due to financial stress, this is a clear area for concern.”
To alleviate their worries surrounding money, half (50%) of entrepreneurs have resorted to working longer hours to secure extra income, and a quarter (26%) have sought employment outside of their own ventures. These extra hours present further wellbeing issues, increasing the risk of burnout and negatively impacting work-life balance
Lee continued: “While there is a need for the government to acknowledge how much SMEs contribute to the economy and put adequate measures in place, there are steps business owners can take to maintain a healthy business and hopefully reduce some financial stress.
“Keeping a close eye on cash flow is, of course, essential. Encouragingly, two thirds (66%) of respondents are doing this, but sometimes there are matters out of control that affect cash flow. A way to cushion this is to build a cash reserve, if possible, which half (49%) of entrepreneurs say that they do.
“From our research, entrepreneurs need to have a greater awareness of their tax responsibilities. Even if these duties are outsourced to an accountant, it is worrying that less than two fifths (38%) are informed on these matters. This can lead to being caught unaware by VAT bills or similar tax charges, and not having the funds to pay them.
“When businesses are truly struggling, a bank loan can help to assist cash flow in the short-term, but business owners need to ensure they are fully aware of the terms and conditions and understand the consequences of not paying the loan back in time.”
To read the full SME Business Owner Mental Health report, visit https://www.theaccountancy.co.uk/mental-health.