The Hidden Costs of Entrepreneurship: Why Small Business Stress is Rising
The life of a small business owner is often romanticized, but a new report from Xero reveals a stark reality: a significant rise in stress levels. A concerning 75% of New Zealand small business owners surveyed reported feeling more stressed this financial year than in previous years, with nearly half considering giving up their businesses due to the pressure. This isn’t just about financial worries; it’s about an “emotional tax” – the personal sacrifices and hidden burdens that come with running a business.
Financial Pressures and the Emotional Toll
Rising costs are a major contributor to this stress, cited by 48% of respondents. Unpredictable demand follows closely behind at 30%. But the impact goes beyond the bottom line. Xero New Zealand country manager, Bridget Snelling, emphasizes that the stress doesn’t remain confined to perform hours. It bleeds into personal lives, impacting family time and well-being.
The end of the financial year is a particularly challenging period, with 42% of business owners finding it more stressful than other times of the year. This is often fueled by administrative burdens – 34% struggle with chasing paperwork, and 31% worry about making mistakes. A surprising 54% have been caught off guard by unexpected tax outcomes, most of which were negative.
Productivity and Wellbeing at Risk
The consequences of this stress are far-reaching. Business owners are losing an average of five hours of productive work each week – equivalent to 30 working days a year. This lost productivity represents a significant drag on economic growth and innovation.
Perhaps even more alarming is the impact on personal health. Over half (55%) of business owners report getting less sleep since starting their business, with 12% losing five or more hours of sleep per night. This chronic sleep deprivation can lead to a host of health problems, further exacerbating the stress cycle.
The Importance of Support Networks
Despite the challenges, resilience and a strong support system can make a difference. Business owner Mat Pedley highlights the “absolutely pivotal” role of his wife, friends, and team in helping him navigate difficulties. He emphasizes the importance of having a support network, whether it’s within the business community or a personal circle of trusted advisors.
Proactive financial management is also crucial. Snelling advises business owners to get ahead of potential issues and avoid unpleasant surprises. This includes seeking professional advice, utilizing accounting software, and staying organized throughout the year.
Frequently Asked Questions
- What is the “emotional tax”? The emotional tax refers to the hidden personal costs small business owners pay, such as sacrificing personal time, experiencing stress, and impacting their well-being.
- What are the main causes of stress for small business owners? Rising costs, unpredictable demand, administrative burdens, and fear of negative tax outcomes are key stressors.
- How much productivity is lost due to stress? On average, business owners lose five hours of productive work per week, totaling 30 working days per year.
- What can business owners do to manage stress? Proactive financial management, seeking professional advice, and building a strong support network are essential strategies.
Tom Raynel is a multimedia business journalist for the Herald, covering small business, retail and tourism.
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