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Posted by Revive Financial on Jul 4, 2022 9:04:48 AM

The catch-22 of financial stress, mental health, and business survival

The past couple of years have been tough on Australian business and business owners, and, since the arrival of Omicron, the challenges continue. In fact, now that many government fiscal supports have ended, in many cases, things are tougher.

According to a Business NSW survey of 2,000 members carried out in January this year, 40 per cent of SMEs currently don’t have enough cashflow to see them through the next three months. There just isn’t the staff or customers to provide it.

But recent times aren’t just taking a toll on income, profits, and business security. Financial problems and uncertainty are also leading to immense feelings of stress among business owners, which can manifest into a range of mental health challenges.

Unfortunately, these conditions aren’t only detrimental to the wellbeing of business owners, but they also fuel financial distress, making it much harder to deal with the catch-22.

The financial stress and mental health connection

When your business is under financial stress, including insufficient cash flow and debt strain, your own stress levels can skyrocket as you struggle to survive.

When this happens, the stress hormones kick in and our cortisol levels rise, producing the fight or flight response, increasing your heart rate and creating fear and tension. Over time, chronic stress can lead to a range of physical ailments, including:

  • Headaches
  • High blood pressure
  • Gastrointestinal problems
  • Diabetes
  • Weakened immune system
  • Fatigue
  • Loss of sex drive

On top of this, studies have shown that chronic stress can also significantly increase the risk of mental health challenges, with the most common being anxiety and depression.

Mental health issues rife among Australian business owners

A 2021 study by business solutions provider MYOB found a significant presence of mental health challenges among Australian business owners – a finding which isn’t unexpected in the current environment.

Forty-five per cent of those surveyed thought running a business over the past year has caused them anxiety and depression – with 29 per cent citing financial concerns/cash flow as the cause. This was followed by concerns relating to COVID’s wider economic impact.

Unfortunately, having these conditions can make business survival tougher.

Anxiety, depression, and their impact on business

So how exactly do anxiety and depression affect business survival?

Anxiety is a condition that takes stress to the next level. It can leave you feeling restless, wound-up and on edge. It can also create tension, fatigue, sweating, difficulty controlling feelings of worry and further impacts our concentration and decision making.

Depression, on the other hand, is a persistent feeling of sadness or loss of interest in things we once enjoyed, including work and family. Not only can it exacerbate the physical symptoms of stress, but it can create a lack of desire to be proactive.

On top of this, chronic stress, anxiety, and depression can lead to a range of unhealthy behaviours that can further negatively impact your wellbeing and the ability to ruin your business, including:

  • Suicidal thoughts
  • Substance abuse – caffeine, cigarettes, alcohol, drugs
  • Social withdrawal
  • Neglecting of family and work responsibilities
  • Nervous behaviours – including nail-biting, teeth grinding and foot-tapping
  • Decline in performance or productivity

Is-Your-Business-In-Financial-Distress

Reduced mental functioning equals poor business decisions

When our business is under financial stress, we need to be on the ball every day. We need a clear head to be able to think straight. However, this becomes a struggle when we’re experiencing mental health challenges and the various areas of our lives that are impacted.

These challenges impair our cognitive functioning, which includes making it difficult to concentrate and making smart decisions, mental health challenges can prevent us from effectively taking control of the situation and avert us moving forward.

In fact, when we’re in a high state of chronic stress, anxiety or depression, not only can your decision making be negatively impacted, but we may also be tempted to take high-risk, financially dangerous decisions, including:

  • Lying or misrepresenting your financial position to employees, banks and other creditors
  • Dipping into personal assets to provide working capital to support the business or asking friends or family to do the same
  • Engaging in illegal phoenix activity.

How to stop the negative financial stress/mental health catch-22

Unfortunately, financial stress and poor mental health can become a vicious circle or catch-22. We can’t improve your mental health without solving your financial problems, and we can’t solve our financial problems (effectively) when our mind lacks focus, and we’re unable to make clear decisions.

Because of this, the best way to view things is with a holistic approach – one that tackles both your mental and financial demons. Here’s how:

Talk to a loved one

When our business is in financial distress, it’s tempting to bottle things up and keep things to ourselves. This is often due to feelings of shame and embarrassment and the perceived social stigma that a failing business is a personal failure.

But, speaking honestly with a friend or loved one about your financial situation can help ease the feeling of isolation and reduce the emotional and mental impact. They may even be able to offer solutions you hadn’t thought of.

There is certainly nothing shameful about your business suffering financial problems, especially in these COVID times when you’re certainly not alone.

Seek professional support

Reach out to Australia-wide organisations, such as the National Debt Helpline or the Small Business Debt Helpline, for free professional advice from financial counsellors. They will listen and give you practical advice to get you back on track.

Beyond Blue also offer mental health support and links to a range of other support, including the MindSpot Clinic, which provides free online and phone assessment and treatment services for Australian adults with anxiety and depression.

In addition, be kind to yourself and your body: eat well, create a routine for your sleep, do regular exercise. These will all boost your body’s feel-good hormones and help you put some perspective on your financial problems.

Speak to an insolvency specialist (us!)

While national helplines can offer some relief, if your business is in significant financial distress, it is best to seek the help of an insolvency and turnaround specialist.

We can help you determine the severity of your company’s financial situation, run through the options available to you and work with you to create a plan so you can take back control and turn things around. This might include restructuring your business, refinancing or even appointing an administrator.

Turning uncertainty into certainty and having a clear path forward with a specialist on your side can provide huge emotional and mental health relief – something we’ve experienced first-hand, time and time again.

A financial problem shared is a problem halved – and managed!

When your business is in financial trouble, it’s not just your livelihood that’s affected. Financial stress can impact your mental and physical health and negatively impact your life and relationships. However, by choosing to take control and seeking help for both, you can have your life and business back.

Is your business currently experiencing significant financial problems or distress? Get in touch with our team of specialists today on 1800 560 557 for professional, non-judgemental support and advice.

Topics: Business Advice, financial stress, mental health, financial problems, depression, stress, advice, anxiety

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