The SME Business Owner Mental Health Report: Chapter Three

Awareness around the importance of financial wellbeing and its intrinsic link to mental health is growing. As a result, many larger organisations now provide financial wellbeing resources such as workshops for their employees, acknowledging that reducing their financial worries can help to improve their performance at work.

But who is looking out for the self-employed and small business owners? In this chapter of our mental health report series, we focus on the financial worries this demographic typically experiences, the effects these worries have, and explore whether SME owners are taking active steps to improve unfavourable situations where they arise.

Financial worries – how prevalent are they for SME owners?

Few business owners are in the fortunate position where they never worry about their finances. But, among SME owners – and in light of the challenges presented by Covid-19 and Brexit – just how common are financial worries today?

Perhaps predictably, a clear majority of respondents (83%) answered ‘yes’ to the question of whether they worry about their financial situation. Over a third (35%) reported that they often worried about it, and a similar proportion (34%) said they sometimes worried about it. 14% claimed they too worried about their financial situation, but only rarely.

An interesting subset of respondents reported that their financial situation was something they had worried about in the past but had since ‘taken steps’ to improve their standing while a lucky 9% reported that their financial situation was something they never worried about.

Do you ever worry about your financial situation?

• Yes, often – 35%
• Yes, sometimes – 34%
• Yes, but rarely – 14%
• I did, but have since taken steps to improve my situation – 9%
• No, never – 9%

Tactics for alleviating financial worries

Where financial worries become too great, SME owners often look to other means of securing extra income. For the respondents to our survey, working longer hours was the most common resort with half (50%) pointing to lengthier days as a means of alleviating concerns.

Others had responded by taking on work they would not otherwise consider (45%), or by seeking employment outside of their business (26%).

Unfortunately, for one in three (32%), there have been times that worries have mounted to a point where they have considered giving up self-employment altogether.

Have you ever done any of the following as a result of money worries?

• Worked longer hours – 50%
• Taken on work that you would not have otherwise considered – 45%
• Considered giving up self-employment – 32%
• Taken extra employment – 26%
• None of the above – 16%

The toll of financial stress for SME owners

Fears around personal finances have long been identified as one of the main causes of poor mental health. The way in which this manifests varies from person to person.

Over half (51%) of our surveyed SME owners reported experiencing anxiety as the main symptom of their financial stresses, and 40% had experienced insomnia. Less common but still prevalent were social withdrawal (27%), weight gain/loss (27%), and difficulties with personal relationships (24%).

Of some concern is the near quarter (23%) of SME owners who had become depressed as a result of their financial stresses and nearly one in 5 (19%) had developed unhealthy coping mechanisms. A fortunate 17% claimed not to experience financial stress at all.

Have you experienced any of the following as a result of financial stress while running your own business?

• Anxiety – 51%
• Insomnia – 40%
• Social withdrawal – 27%
• Weight gain/loss – 27%
• Relationship difficulties – 24%
• Depression – 23%
• Unhealthy coping mechanisms – 19%
• I don’t experience financial stress – 17%
• Physical ailments – 10%
• Other – 2%

Steps to maintain business performance

Maintaining a healthy business requires owners to undertake a range of endeavours outside of their usual day-to-day operations.

For our respondents, two thirds (66%) kept a close eye on cash flow, and nearly half (49%) had built cash reserves as a contingency. Whether or not it’s because they outsource their tax duties to an accountant, a potentially concerning just 38% of SME owners claimed to keep themselves informed regarding their tax responsibilities.

A statistic of interest is the mere 16% of SME owners who told us they had taken a bank loan. It is a figure that conflicts with the findings from the Small Business Finance Markets report which instead found that 45% of SMEs applied for external financing in 2020, compared to 13% in 2019 and 2018.

Have you taken any of the following steps while running your own business?

• Kept a close eye on cash flow – 66%
• Built a cash reserve – 49%
• Kept informed about tax responsibilities – 38%
• Networked to build stronger client base – 26%
• Taken a bank loan – 16%

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