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 employ 2 to 10 people, have been in operation for 5-10 years and are solely responsible for the decisions of the business are most likely to have suffered higher levels of anxiety and stress over their business finances, according to the survey.
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.
Financial advice necessary to ‘assuage’ concerns
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.
Todd Davison, MD of Purbeck Personal Guarantee Insurance said: “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.
“One way to tackle financial fears on a practical level is through Personal Guarantee Insurance. It exists to offer small business owners greater peace of mind and confidence when securing a personal guarantee backed loan.
“We know the connections we have facilitated for small businesses as part of our claims service have often made a big difference to the mental well-being of the owner as well as the financial standing of the business.”