Anxiety and depression rife as calls to business debt hotline soar

With some small business owners owing more than £100,000, money worries have a huge personal cost. Getting expert help is crucial.

Businesses have long taken on debt in order to expand and grow. Yet what happens if things don’t go as planned? Trying to deal with unmanageable debt can have an immense personal as well as a professional cost.

The Money Advice Trust has been running the Business Debtline for 10 years, giving it a strong insight into the debt challenges small businesses face. New figures suggest that the number of people contacting the debtline for advice has increased this year. In the first six months of 2015 it provided advice to 29,244people, compared to 42,352 for the whole of 2014. The trust says this is partly due to the huge growth of self-employment since the recession. Many small businesses struggle, especially in the early years, and the debtline is increasingly being contacted by self-employed people early on in the life-cycle of their businesses.

The amount businesses owe can be significant. Some 7% of the businesses that contacted the debtline in 2014 owed more than £100,000, while 12% owed £50,000-£100,000.

Read the full article: Anxiety and depression rife as calls to business debt hotline soar

Self employment can be very precarious, particularly in an industry that requires someone to be physically able. Particularly in the early days when people are inexperienced, probably undercharging, not much capital built up or large investments in equipment.

I wonder how many would cope breaking their leg at the height of the season and endure a two month lay-off for example. Having injury insurance is one thing but what would happen to the client base?

The low cost of credit also doesn't help. Many banks are offering below 3% rates on loans of 10k + which when you consider the total cost of the borrowing it does become tempting to maybe push yourself to grow quicker than you might do ordinarily through organic capital accumulation and investment.

Replies

PRO

Phil Voice October 4, 2015 at 12:55pm

These two paragraphs will resonate with many:

These difficulties come at a human cost. Last year, more than 80% of the helpline’s callers said they had suffered from stress, anxiety or depression. Around half were losing sleep due to their debts, and around a quarter were suffering relationship problems. Callers reported having suicidal thoughts, suffering stress-induced vertigo and experiencing significant weight loss.

Loneliness is a common part of that mix. While the media talks of an economy that has returned to growth and of dynamic, thriving entrepreneurs, those that aren’t doing so well are often making great personal sacrifices without a good support network.
Colin Hunt October 4, 2015 at 1:00pm

I'm wondering how relevant this is to 'our' business. Maybe I'm wrong, but the unpredictability of the weather etc., holds most back from running up too much debt. We have always worked 'in credit' and bought new equipment when we could afford it. There have been a few around here that begin big, but within two or three years are gone.
- PRO
  
  Phil Voice > Colin Hunt October 4, 2015 at 3:33pm
  
  I cannot go in to detail Colin but I know for sure that debt (both personal & business) is a serious issue for many working in the landscape industry.
  
  I think, collectively, LJN has done much good in helping practitioners understand costs and how to work for profit, so I think many more are selling themselves properly. But there are still too many undervaluing their sales.
  
  However, it's not always possible to meet targets - take the weather as you mention, for example. It doesn't take long to use up savings (profits) to stand still - especially when employing staff.
  
  It is so easy to run up borrowing on a credit card, or put extra expenditure onto an overdraft.
PRO

James McKay October 4, 2015 at 8:12pm

Self employment can be very precarious, particularly in an industry that requires someone to be physically able. Particularly in the early days when people are inexperienced, probably undercharging, not much capital built up or large investments in equipment.

I wonder how many would cope breaking their leg at the height of the season and endure a two month lay-off for example. Having injury insurance is one thing but what would happen to the client base?

The low cost of credit also doesn't help. Many banks are offering below 3% rates on loans of 10k + which when you consider the total cost of the borrowing it does become tempting to maybe push yourself to grow quicker than you might do ordinarily through organic capital accumulation and investment.
PRO

Gary RK October 4, 2015 at 8:27pm

You only have to review some of the LJN threads, including within the BOG, to see it can and does affect the industry.

One-man-band thru to Ltd businesses, it can be lonely struggle when starting up and can even continue once established. The beginning and end of season especially shows the vulnerbility.

I think we forget just what LJN has provided (from one-to-one & group support) over the last few years.
- Mitchel ingham > Gary RK October 4, 2015 at 11:56pm
  
  that sound paragraph says alot especially the last sentence alot of people like to fool themselves.
PRO

Phil Voice October 5, 2015 at 7:05am

One of the biggest hurdles is getting people - those who need help but won't look for it - to talk. There's so much stigma attached to debt and depression (although the atmosphere seems to be changing).
Graham Wright October 5, 2015 at 10:43am

I have suffered with anxiety and depression for most of my life, and strangely enough, getting into this industry has really helped me with all but the worst of episodes. I have to be really careful not to take on too much work all at once, as through experience I know that I just burn out. Building up slowly is key for me, and so far so good. I try not to take on any debt if I can help it, just in case everything goes to pieces.

I was heading for life as a software developer before this, and I realised in the end that sitting in front of a pc screen all day was making things worse for me. Working outside keeps me sane :)