Worries about finances may cause a mental health crisis among entrepreneurs, an online accountancy practice has warned.
Against a backdrop of political turmoil, a pandemic and Brexit impacts, mental wellness issues may be exacerbated unless central government support for small and medium-sized enterprises (SMEs) is introduced, The Accountancy Partnership (Tap) said.
Research by Tap showed more than half (51%) of entrepreneurs have experienced anxiety as a symptom of financial stress, and two in five (40%) reported it causing insomnia.
Other health impacts
Less common, but still prevalent, are social withdrawal (27%), weight gain or loss (27%), and difficulties with personal relationships (24%).
More than nine in 10 (91%) have concerns about their financial situation and nearly a quarter (23%) have experienced depression as a result of money worries.
Nearly one in five (19%) have developed unhealthy coping mechanisms.
Tap’s SME Business Owner Mental Health Report also revealed more than one-third (36%) of the 731 SME owners surveyed worry often about their financial standing.
No joy in Autumn Budget
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 increase, and financial support limited to a small proportion of sectors and circumstances.
Tap has now warned the UK Government’s “continued negligence” towards the UK’s smaller businesses – about six million of them – could be “catastrophic” for entrepreneurial wellbeing.
Lee Murphy, managing director, Tap, 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, Tap’s research found.
Burnout risk
These extra hours present further wellbeing issues, increasing the risk of burnout and negatively impacting work-life balance, Tap said.
Mr Murphy added: “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.
Entrepreneurs need to have a greater awareness of their tax responsibilities.”
“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.
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“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.”
