29th March 2019: Small to Medium Enterprises & Wellbeing

Brought to you by NAB.

The day to day stresses of running a small business appear to be rising in Australia. Customer expectations continue to grow and as a result business owners and managers are devoting more of their time in and on their businesses. But, what are the implications for their wellbeing? NAB recently spoke with over 700 SMEs across Australia and asked them how their work life is changing and the impact upon their lives more broadly.

Customer expectations are evolving rapidly as demand for simpler and faster interactions with product and service providers continues to grow. Businesses are being increasingly benchmarked against the demands of the so-called "Uber Generation". Today, consumers' expectation when ordering fast food online or booking a ride share is often not that different to their dealings with other businesses, irrespective of their type and size.

Technology is an enabler of improved customer experiences, but this doesn't mean sacrificing the human factor. In fact, technology can make it easier to put the emphasis on providing human contact when the customer really needs and wants it. Companies who don't adapt risk losing market share or potentially being disrupted.
In order to meet changing expectations and keep abreast of these trends, many SME owners and managers are working longer days and spending less time away from work. In fact, NABs research shows that around 1 in 2 (48%) SMEs are working longer days than 5 years ago and 1 in 3 working more weekends (32%), taking less holiday time (35%) and spending less time with family/friends (30%).

It might be reasonable then to expect that the wellbeing of business owners and managers would be lower than that of Australians in general. To test this, NAB asked around 700 SME owners and managers to look at their personal wellbeing using the methodology behind NAB's Wellbeing Index, which explores life satisfaction, life worth, anxiety and happiness.
What they found was that despite these pressures, the wellbeing of small business owners and managers was significantly higher (72.3 points out of a possible 100), than that of the "average" Australian (64.2).

Business owners and managers scored well above the average for their happiness (76.7 vs. 65.6), their sense of life worth (78.7 vs. 68.0) and life satisfaction (74.3 vs. 64.9). But there was one aspect of wellbeing where they did not outperform – anxiety. Business owners and managers (59.5) scored only slightly better than the average Australian (58.4) when asked how anxious they were.

So why might this be the case?

In order to better understand the impact of owning or running a small business on wellbeing, NAB asked these businesses to explore why they believed their exposure to small business might help or detract from their sense of personal wellbeing.

Some of the most common reasons cited as positives for wellbeing included "work/life balance", "sense of achievement", "independence", "control", "responsibility", "community", "job satisfaction",
"influence", "supporting family", "giving back", and "supporting employees".

But, on the negative side, they spoke of "cash flow uncertainty", never getting a break", "80-90 hours per week", "staff paid more than me", "too much compliance paperwork", rising customer expectations", and a "lack of time".

So it appears that owning or managing a small business can improve your wellbeing. But just like 1 in 4 Australians who identify as being "highly" anxious, running a business comes with added pressures that are hard to avoid.

Dean Pearson
Head of Behavioural & Industry Economics, NAB