A new survey conducted by Purbeck Personal Guarantee Insurance, the provider of personal guarantee insurance to small business owners, to mark Mental Health Awareness Week, 15-21 May 2023 has uncovered the emotional cost of being your own boss during the cost of living crisis.
The owners of smaller businesses which took part in the survey employ 2 to 10 people and have been in operation for 5-10 years. They are solely responsible for the decisions of the business and are most likely to have suffered higher levels of anxiety and stress over their business finances.
Survey Findings Explained
- 49% of small business owners feel the financial aspect of running their business has negatively impacted their mental health in the past year
- 60% of these people have taken on personal debt to finance their business
- 65% of this group are personal guarantors for business loans, or plan to become a personal guarantor in 2023
- Accountants are the most valuable source of tips and advice to small business owners
1 in 2 small business owners (49%) believes their mental health has suffered from the stress of managing their business finances in the past year.
Mental health impacts are also more likely to be amongst those people that have taken on personal debt to fund their business in the past year.
Amongst the directors and owners who feel the financial aspect of running their business has impacted their mental health, 60% have taken on personal debt for their business while 69% have taken on or will need new finance in the next year. For 43% this will be for paying off outstanding debt.
Furthermore, 65% are already personal guarantors or plan to become one for a business loan. This means that unless they have secured personal guarantee insurance, their home and savings would be at risk if their business fails.
The survey also found that when small business owners want financial advice and support, their accountant comes top of this list (37%) followed by their lender or bank manager (23%). Family members are also called on by 1 in 5 (20%). Just 1 in 10 (10%) also sought advice from another small business owner.
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.Todd Davison, MD of Purbeck Personal Guarantee Insurance