Research conducted by Purbeck Personal Guarantee Insurance, marking Mental Health Awareness Week (15-21 May 2023), underscores the mental health toll the cost of living crisis has exacted on small business owners.
Small Business Owners: The Emotional Price of Autonomy
The study revealed that those at the helm of micro to small enterprises, employing between 2 to 10 people and being in operation for 5 to 10 years, are the most susceptible to heightened anxiety and stress tied to business finances.
This group, who bear the sole responsibility for business decisions, exhibit higher levels of financial stress.
The impact on mental health is even more pronounced among individuals who have resorted to personal debt to finance their businesses in the past year.
Of the business owners and directors who believe their mental health has been affected by financial concerns, 60% have taken on personal debt for their businesses, while 69% have procured or anticipate needing new finance within the next year.
For 43% of these individuals, these funds are earmarked for settling outstanding debt.
Moreover, 65% are either already personal guarantors or plan to become one for a business loan.
Unless they have personal guarantee insurance in place, they stand to lose their homes and savings if their business goes under.
The Crucial Role of Financial Advice
The survey also shed light on where small business owners seek financial counsel and support.
Accountants topped the list with 37%, followed by lenders or bank managers (23%).
Additionally, 1 in 5 (20%) business owners turn to their family members for advice. Surprisingly, only 1 in 10 (10%) reported seeking advice from fellow small business owners.
Todd Davison, MD of Purbeck Personal Guarantee Insurance, commented on the issue: “Financial worries can be a source of huge anxiety and we’ve had all the ingredients in the past year to increase stress levels for small business owners, as reflected in our survey.
“Often, the finances of a small business are linked to the personal finances of the owner – whether that’s because they have taken on a personal loan to help the business, borrowed from friends or family or they have signed a personal guarantee for a business loan.
“That just adds to the worry, creating a huge burden for the owner/manager.”
Small businesses access unsecured, fast funding from Got Capital. As an alternative lender, Got Capital offers financing solutions specifically designed for and catered to the needs of SMEs.
