One in four small business owners say cost of living crisis is harming their mental health

Around a quarter of small business owners have reported that the cost of living crisis has had a damaging impact on their mental health as they face rocketing costs and reduced consumer spending, according to a new study.

The study commissioned by HSBC found that many small business owners believe that soaring costs are taking a toll on their mental health as well as their profit margins.

One in four (26 per cent) of the small business owners surveyed reported that cost of living pressures are causing a decline in their mental wellbeing.

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Businesses reported rising inflation as the main threat to their company (41 per cent), followed by the decline in consumer spending (38 per cent), rising energy costs (36 per cent), wage inflation (22 per cent) and cash flow management issues (19 per cent).

Small business owners report financial threats such as rising inflation and reduced customer spending are impacting their mental healthSmall business owners report financial threats such as rising inflation and reduced customer spending are impacting their mental health
Small business owners report financial threats such as rising inflation and reduced customer spending are impacting their mental health

The survey also found that many small business owners were reluctant to talk about the pressures they were facing.

More than half of those surveyed (55 per cent) have not disclosed to anyone the impact the cost of living crisis was having on their business.

Around 73 per cent of respondents said they had not talked to their bank about needing financial support and a third said they had used their own personal savings to fund their business over the last few months. Over half (52 per cent) said they preferred to research financial support online.

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Commenting on the findings, behavioural psychologist Jo Hemmings said: “With the rising cost of running a company, on top of an increase in the cost of living, small business owners are facing a perfect storm.

“It’s not surprising that many are struggling with their personal wellbeing and it’s understandable that some feel reluctant to open up about the challenges ahead.

"But business owners shouldn’t see talking through their personal or professional concerns as any kind of admission of failure and research shows that internalising anxieties will not help.

“They are not alone and I’d urge those feeling the pressure of running a small business at this difficult time, to talk through their challenges with professionals who can provide practical help, including their bank.”

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Nearly two thirds (65 per cent) of the business owners said they were confident their business will survive. One in three (38 per cent) expected to see a jump in profits next year, with professional services firms leading the way (67 per cent).

Peter McIntyre, Head of Business Banking at HSBC UK, said: “With the current economic environment creating business uncertainty, it’s fair to say that many small companies have had a rough ride these last few months.

“Owners are at the helm, so it’s no surprise that navigating cost challenges is having an impact on their own personal wellbeing. The good news is that when customers engage with us early on they are more likely to avoid going into financial difficulty.

"We encourage all business owners to get in touch with us if they are worried about their financial situation – we are here to help.”

The survey was conducted by YouGov on behalf of HSBC UK. The sample size was 604 owners of businesses with a turnover of up to £5m.

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