Perfect storm of financial blows spells danger for entrepreneurs’ mental health
Entrepreneurs are facing a perfect storm of financial issues, which will have a detrimental impact on SME-owner’s mental health, according to new research.
These mounting business pressures have been brought about by the National Insurance increase, the cliff edge ending of furlough, and other financial pandemic support, as well as ongoing supply chain issues and concerns over the gas shortage and rising energy prices.
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. The Accountancy Partnership, a provider of online accounting services, conducted the research into the state of SME-owners mental health, following a rise in calls from concerned entrepreneurs.
The research also found 12% of entrepreneurs have sought professional help over the state of their mental health, while a quarter (24%) have spoken to a friend or family member as a result of a decline in their wellbeing.
Lee Murphy, managing director at The Accountancy Partnership, said: “The current mix of economic and business pressures has the potential to paint a bleak picture for many of the UK’s small business owners. This on top of what has been a difficult 18 months for everyone could lead to a considerable decline in mental state of millions of entrepreneurs. We have seen examples of this ourselves with a surge in enquiries as owners seek to get their financial affairs in order.
“It is clear from our research that financial health has a direct impact on overall mental health, with a quarter of entrepreneurs citing difficulties supporting themselves financially as the main issue that has made working for themselves less enjoyable than they expected.
“While funding a strong health and social care system in the UK is important, the National Insurance hike will disproportionately affect small businesses which do not have the disposable income to cover the increased price of staffing. The new rate, an increase of 1.25 percent, means that an employee on the living wage outside of London will cost their employer £241.87 per year more in National Insurance. Self-employed sole traders are taxed on income after business expenses and as they pay their own salary, a tax on earnings will directly reduce income.
“In addition, Coronavirus financial support measures, such as furlough and business grants are coming to an end imminently, there are serious supply chain issues in the UK, and gas supply problems are bringing about fears of energy prices rocketing, which all threaten business profitability.
“This perfect storm is likely to be daunting for small business owners, so the most important advice is to understand and prepare as early as possible. Speaking to a finance professional as early as possible will allow entrepreneurs to assess their current cash flow and explore options that help minimise the financial impact on both the business and employees. Having a robust plan in place to manage troubles arising from increased taxation and running costs will make the transition smoother and keep financial concerns arising as a result to a minimum.”