February 13, 2019
Stark levels of stress among small business owners as they struggle to stay solvent
Chronic work-related stress has risen sharply among small business owners, with a fifth of small business owners look to taking a job elsewhere to stay afloat this year. This is according to new research from AXA, which reveals that many are adopting short-term planning and cutting reliance on external funding ahead of Brexit. Staying agile and light is a common strategy, but may not give businesses the best chance of survival if financial cushions are not in place too. The study finds a sharp increase in financial anxiety amongst business owners. Over the course of 2018, those reporting they felt chronically stressed about their businesses increased by almost 50 percent, reaching 29 percent by year end. Previous studies have shown that the self-employed tend to be more stress-resilient than other population groups, which makes the recent rise in stress even starker. While growth and hiring plans are down for 2019, the biggest pull-back is on funding, just 17 percent of business owners plan to invest in their business this year. This is a fall of 37 percentage points on 2015 when that was 54 percent, the lowest figure in five years.
Far fewer are turning to banks, government or EU-backed schemes designed to help them too: just 4.8 percent say they will seek funding from these sources, a three-fold fall on 2015. ‘Under the radar’ finance is vastly preferred, as businesses are now more likely to turn to family, friends, other small businesses and existing personal credit to fund growth.
Small businesses are also tending to defer things like insurance, pensions, savings and business banking products – another sign that many are planning month-to-month rather than for the longer term. AXA’s research found that:
- Three in ten small businesses have no insurance of any kind – a figure that has barely moved in five years. It means a large part of the UK business is not underwritten for common risks, and could potentially be breaking the law.
- Half of small businesses (52 percent) have no way of getting ‘sick pay’ – either by having staff, sub-contractors or family members who can keep the business going while they are absent, or in the form of a rainy day fund. Personal accident cover, which pays a monthly benefit to cover lost income during recovery following an accident, is taken up by just one in ten self-employed people too.
