Three quarters (78%) of SMEs cite the immediate cost-of-living impact to be the biggest threat to their business over the next year.

But a quarter of SMEs are ignoring the financial health of their business, for fear of finding out the true reality of their business’ finances.

That’s despite SME owners who stay on top of their finances having more self-confidence (45%), having savings for the future (42%) and experience less stress (39%).

PayPal’s annual Business of Change report, this year focusing on Wellbeing & Empowerment’, revealed nearly half (47%) fear the next 12 months could prove even more difficult.

Other challenges include maintaining a steady cash flow (29%), managing their own mental health (18%) and coping with the increase in cost of raw materials (17%). Given this perfect storm, more than a quarter of SME owners (27%) say they are not sure that they will even be in business in the next 12 months.


Financial wellbeing

Interestingly, one in five SMEs agree that the last two years have had a positive impact on their ability to manage their financial wellbeing with 56 percent feeling more financially savvy, 27 percent feeling back in control of their business and one in five (21%) feeling more empowered as a business owner since improving their financial knowledge.

The challenges of the last two years have forced many SMEs to get on top of their finances by upskilling themselves using finance apps (31%) and learning from past mistakes (53%).

In fact, small business owners believe that having a financially healthy business will create new opportunities for them personally including being more self-confidence as a leader (45%), having savings for the future (42%) and experiencing less stress (39%).

SMEs also cited some of the most important areas that they would change to achieve financial wellness would be to take more time back for themselves (29%) and growing their business through expansion (24%).


Entrepreneurs’ financial wellbeing

To keep their business afloat, SME owners are working weekends (44%), going six months or more without taking a much-needed holiday (36%) and a third are even working seven-day weeks on a regular basis. The stress and worry of running a business is keeping 62 per cent of SMEs awake at night, leaving a third feeling alone and isolated due to there simply being too much going on in the world for them to process.

Subsequently, higher levels of poor financial wellbeing have been reported. This is evident by the quarter of SMEs ignoring the financial health of their business fearing what the true picture is with nearly half (48%) admitting they do not have an emergency fund set aside to manage any unexpected costs.

Ben Ramsden, Head of Small and Medium Enterprise (SME) at PayPal, said: ““Financial woes and stress can have a negative impact on health and wellness. In tough times, staying on top of their finance wellness is a vital tool for small business owners. It needs to be a priority to minimise the personal impact of running a business, which can be an isolating and challenging experience for entrepreneurs. As a trusted partner, we help to empower small business owners to manage their financial wellness by providing simple tools and technology to ease unnecessary stress by offering them seamless payment solutions, so they can focus on the big picture.”






Amelia Brand is the Editor for HRreview, and host of the HR in Review podcast series. With a Master’s degree in Legal and Political Theory, her particular interests within HR include employment law, DE&I, and wellbeing within the workplace. Prior to working with HRreview, Amelia was Sub-Editor of a magazine, and Editor of the Environmental Justice Project at University College London, writing and overseeing articles into UCL’s weekly newsletter. Her previous academic work has focused on philosophy, politics and law, with a special focus on how artificial intelligence will feature in the future.