One in four small businesses say cost of living has impacted their wellbeing

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Small business owners are feeling the brunt of the rising cost of living on their mental health as well as their bottom lines, according to research from HSBC UK.

One in four (26 per cent) small business owners are reporting that cost of living pressures are causing a decline in their wellbeing.Businesses reported rising inflation was the main threat to their company (41 per cent), followed by the decline in consumer spend (38%), rising energy costs (36 per cent), wage inflation (22 per cent) and cash flow management issues (19 per cent).

What’s more, HSBC UK identified a reluctance to talk about such threats, with over half (55 per cent) not disclosing to anyone not even friends or family about the impact on their business.

Two in three (73 per cent) said they had not talked to their bank about needing financial support and a third (29 per cent) reported 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 instead of speak to someone.

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.”

Despite under half (43 per cent) of small business owners being worried about the impact of the next six months on their business, nearly two thirds (65 per cent) 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).

HSBC UK’s early warning signs team are specially trained to identify customers that could be experiencing financial difficulty and have been proactively contacting them to discuss how they can help. Possible triggers can include repayments falling into arrears and insufficient funds available to make commercial card payments when due. HSBC UK customers who are showing early signs of financial difficulty and said this is impacting their wellbeing, have reported experiencing sleepless nights and increased anxiety.

The response to HSBC UK reaching out has been positive with the majority of affected customers (68 per cent) avoiding defaulting on payments for at least six months after.

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.”

By Mark Adair, Correspondent, Bdaily

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