The driving force for many small business owners when they choose to start their own business is to improve their lifestyle, but what does small business owner prosperity actually look like?
That’s what we set out to find out in our new report published today: The global state of small business owner well-being.
Wellness gets a lot of attention, with no shortage of articles and reports telling us how to balance our lives. Specialists in this field have also improved the measurement of well-being. For example, the annual World Happiness Report uses a consistent methodology in 137 countries to rank people’s “happiness,” from Finland to Afghanistan. However, most of these measures focus on the population as a whole and try to understand how happy everyone is.
While there has been a lot of research on overall well-being and happiness, not much work has been done to measure the well-being of small business owners.
To fill this gap, Xero commissioned research in seven countries – Australia, Canada, New Zealand, Singapore, South Africa, the United Kingdom and the United States – gathering the experiences of more than 4,600 small business owners.
The resulting report, The global state of small business owner well-being, Highlights the challenges small business owners face.
Small business owners have lower life satisfaction than the general population
In five of the seven countries we studied, small business owners had lower life satisfaction than the general population. The two exceptions were Singapore and South Africa; According to Xero’s research focused on small business owners, these two countries take the top two places. In contrast, both of these countries rank outside the top 20 in overall population happiness, as measured by the Gallup World Poll.
The wellness challenges facing small business owners can be broken down into five themes:
- Macroeconomic and business-related financial problems: The state of the national and global economy tends to affect the well-being of the small business owner, as does the frequency of financial problems faced by small businesses.
- Stress management and thinking: A cheerful, calm, and active mindset tends to contribute significantly to the well-being of small business owners, while stress on personal life caused by business problems appears to have some effect on life satisfaction.
- Recovery priority: When small business owners feel relaxed and free to take time off when needed, their broader well-being generally benefits.
- Job performance: While most small business owners get some level of exercise from work, those who find their daily activities interesting or mentally stimulating may have better overall well-being.
- Access support: Affordable advice and support is relatively unavailable to small business owners – which can exacerbate the risks to well-being in times of macroeconomic distress and personal crisis.
What can be done to support the well-being of the small business owner?
Based on the research findings, we have made several recommendations for small business owners, advisors, governments and industry bodies that are outlined in the report:
- Invest in policies that support small business innovation and learning. We observed significant connections between small business owners who found their day-to-day activities interesting and their overall well-being—probably more so than any other topic we looked at. There also appears to be a link between a sense of accomplishment at work and higher levels of well-being. This suggests that policies that support learning, upskilling and innovation among small business owners, such as digitalization, can help improve their overall well-being.
- Address the root causes of employee mental health issues. Employee mental health issues have emerged as a constant stressor for small business owners. It is clear that when employees suffer, so do their employers. Policies that help employers address the root causes of employee stress are likely to have long-term benefits for the well-being of small business owners—especially those under 30.
- Consulting for small businesses or networks for peer support. Countries with less access to welfare support also suffer on other welfare metrics. We recommend increased investment and/or policy support for advisory services that address the unique positions and pressures of small business ownership, particularly as this is likely to benefit employees.
- Explore ways to get more rest. Our survey found that even if small business owners say they can take time off easily, that doesn’t automatically translate to higher levels of time off. Small business owners would do well to develop a leisure mindset where they intentionally postpone business matters, not just because of vacations or other external distractions.
What’s Next for Small Business Owners?
This report highlights that while owning a small business can be incredibly rewarding, it can also come with more challenges than the general population.
If you are a small business owner, I encourage you to read the report and use it as an opportunity to reflect on your own well-being and how you can improve it. If you’re a small business advisor, consider how you can help your clients achieve better balance in their lives with these insights in mind.