The psychological toll of being a business owner

Robin Nicholson
Director: Corporate-911

Before I started my career as a business rescue practitioner, I held top positions in major corporate companies.

One of the biggest problems that I came across during my interactions with my corporate peers was that the pressure of having a top position takes a significant psychological toll. This is something that I have since encountered during my time as a BRP.

What role does mental health play as a root cause of distress?

Becoming financially distressed, and going into business rescue, is a stressful and emotional process. It is important that we, as BRPs, take note of this and discuss this with our clients. I recently read an article on the Forbes website which discusses this silent killer in more detail.

Hard to quantify
The article points out that it can be difficult to imagine that entrepreneurship takes a psychological toll, thanks in large part to the media’s tendency to show the luxurious and exciting lifestyles of high-profile, successful entrepreneurs.

However, those entrepreneurs are a very small percentage. Most successful entrepreneurs don’t have private jets or islands. Most don’t rub shoulders with diplomats or well-known celebrities. Most of us entrepreneurs live well, but not extravagantly by any means.

The article adds that that is not to say these wealthy entrepreneurs have it made. Just like all entrepreneurs, achieving goals and maintaining success is quite challenging and can come with a psychological price. This is the nature of our chosen path.

Sure, idolization of the Richard Bransons and Jeff Bezoses of the world still exists. But that idolization may not be so attractive when the true cost of entrepreneurship is revealed. Depression and anxiety are often lurking in the shadows for us entrepreneurs. Not all experience it, but I believe that many of us have moments when mental health becomes a concern.

The article points out that research doctor Michael A. Freeman from the University of California San Francisco found disheartening results after studying the psychological price of entrepreneurship in 2015. The objective of the study was, to investigate the prevalence and characteristics of mental health conditions among entrepreneurs and their first-degree family members.

Entrepreneurship an be a lonely profession
Photo By: Supplied

Dr. Freeman and co-authors of the study uncovered that mental health was a concern for 72% of the participating entrepreneurs. It was concluded that, the findings of this study are important because they suggest an underlying relationship between entrepreneurship and many of the affective, cognitive, and behavioural differences associated with mental health conditions.

Why is such a large percentage of entrepreneurs concerned or experiencing mental health issues? To understand this better, let’s look at some common entrepreneur obstacles that may be factors in the psychological price.

Entrepreneurs are often alone: by choice
The article points out that being an entrepreneur is in many ways pretty lonely. Sure, you have friends, family and your team with you for the ride, but being transparent about the state of your business endeavour is left on your shoulders. For instance, entrepreneurs often need to put up a front in order to keep the confidence of investors, the team energized and family and friends unworried.

This can create a pretty lonely space for entrepreneurs. Since your front is up, you bear the brunt of all worries and anxiety alone. This is, of course, unhealthy and can contribute to the psychological price of entrepreneurship.

The entrepreneur spirit is very difficult to turn off
The article adds that most entrepreneurs are passionate, committed, determined and all-in every waking hour of every day. This includes weekends.

When growing a business, it can be very difficult to turn off work and enjoy life. This is due to the investments made and what is ultimately at stake if you fail.

The article points out that many newbie entrepreneurs don’t fully understand that being an entrepreneur and business owner is not a 9-to-5 job. A study by BGF Ventures and Streetbees found that nearly 20% of UK founders are working 60-79 hours per week. And 53% of entrepreneurs never turn off.

It is certainly a calling. But that being said, there needs to be a balance to ensure that your personal life is intact even if your business fails. And any successful entrepreneur can tell you;  failure is most certainly an option.

Failure is part of the entrepreneurial process
Let’s dive a bit deeper into the topic of failure as an entrepreneur. Failure is indeed part of the process, and the sooner you accept that, the easier it gets. But even though failure is part of the entrepreneurial process, it is difficult to reframe and shed your fear of failure.

The article points out that Mark Cuban, American businessman and investor, has reframed failure in a very positive way: it doesn’t matter how many times you have failed, you only have to be right once.

The article adds that feelings of failure can be a contributor to the psychological cost of entrepreneurship. It can derail your business and destroy relationships due to the anxiety and depression that bleeds into your personal life. Instead of focusing on failure, or “not failing at all costs,” focus on the accomplishments you have made in the past, no matter how small.

Entrepreneurs struggle with work/life balance
Photo By: Supplied

Are you paying the psychological price of entrepreneurship?
The article points out that identifying if you are at high risk for mental health issues due to your entrepreneurial endeavours can be hard. Most entrepreneurs are heads down on growing their business with little attention paid to the signs that you are not simply overwhelmed.

These signs include a hopelessness in changing negative issues in your personal and professional life, decline in relationships, poor sleep and eating habits and change in emotions.

The role of BRPs
One of the challenges of being a financial advisor is that you often have to wear multiple hats. This is challenging because, while they are not trained psychologists, they need to be the empathetic ear when their clients tell them about their problems.

I feel that the multiple hat malady is one that is all too common in our industry.

The psychological toll of entrepreneurship is most definitely a root cause of distress. Any psychologist tells you that when you are dealing with significant trauma, the worst thing you can do is make decisions. You have to actively surrender control to somebody else while you address your mental health. This is something that can often be found in the business world, particularly today. South African companies have to deal with a fragile economy under normal circumstances, add to this the disruption caused by a global pandemic and we have a perfect storm for a company going into a downward spiral.

Now, if the business owner is not mentally tough, experiencing this downward spiral will lead to one poor decision after another. As BRPs, we need to cauterise the wound and try to stop the bleed. Be the help that these distressed owners need when they need to surrender control of making decisions.

Not only do we have to draw up plans on how to save the business, we also have to be psychologists and trauma councillors trying to assure our clients that this too shall pass and that everything will be ok.

Businesses can be saved, value can be salvaged. It is not easy, but it can be done. This challenge becomes exponentially more problematic if the owner of the business that is under rescue cant make the wood from the trees.

Robin Nicholson is a Director at Corporate-911 a is a Senior Business Rescue Practitioner.