Mental health can become a ticking time bomb for entrepreneurs

Starting out in business is a daunting task for anybody in SA today, and anywhere else for that matter, especially in the economic climate of low growth and increasing inflation. The cost of starting and running a business successfully, and accessing finance and customers, are the biggest challenges any budding entrepreneur faces. Global geopolitical events such as the Russia-Ukraine war may seem distant, but their effects are felt on the running costs of businesses through higher fuel costs, rising inflation and disruptions in supply chains.

A variable considered primarily as the manifest impact of this challenge is the state of mental health of entrepreneurs as they navigate this challenge. It cannot be at issue that psychosocial wellbeing is a catalyst that provides any person with the ability to function and overcome any challenges they may face. This is more pronounced in the business environment, where your cognitive abilities are tested daily as you face unrelenting pressure to make sound decisions to cover costs, stay afloat and grow the business.

Studies have shown that most entrepreneurs suffer from some form of mental health issue, especially in the nascent years of their businesses. According to a study done in 2020 at the University of California (Berkeley), 72% of entrepreneurs taking part were found to suffer from mental health issues. These vary from stress to anxiety, depression and many others and contribute to a higher suicide rate among entrepreneurs, mental breakdown and, by extension, business failure. This study also showed that 23% of the entrepreneurs’ families suffered from mental health challenges as well due to the pressures on their loved ones.

In the SA context much has been written about the need to empower our youth to drive entrepreneurial ventures. This is largely in response to the rate of youth unemployment, which sits at 60%, and our failure as a society to create opportunities for employment for our young graduates. With so much hope in youthful ingenuity, creativity and zest, the question is why we have not seen an explosion of start-up businesses in the past few years.

Much blame has been laid at the door of the Covid-19 pandemic, which has disrupted economic activity in the past two years. However, this is not the complete picture. Not enough has been said about the role psychological factors play in preventing young people from achieving success in business ventures.

Youth mental health

A study released in 2020 by Stats SA painted a dark picture about the state of youth mental health, showing that 20% between 13 and 18 years old live with a mental condition. According to the study, by the age of 20 almost 75% of young people are living with mental disorders, including anxiety and obsessive-compulsive disorders; trauma and stress-related disorders; and depressive and bipolar disorders. Of particular concern is that 18% had attempted suicide.

A glaring aspect of these studies is impression management, which manifests in people wanting to project success even when things are not going well. This is a demand many young people, especially aspirant entrepreneurs, place on themselves: “fake it till you make it”. The rise of social media has created the platform, to create a particular image in the eyes of their followers — there is pressure to project success by posting images of a high-flying lifestyle, complete with bling, travel and excessive partying.

While this might fill a void in the short term, in the long term such demonstrations of extravagance can come at the expense of one’s mental health. Research shows that many companies have gone bust in their first year of operation due to uncontrolled spending on the part of the owners. Most of it is recorded as marketing spend, but when you drill deeper much can be considered unnecessary.

While many funding entities such as banks and development finance institutions bemoan that most entrepreneurs find it hard to pay back their loans, it is important that this matter be further interrogated to ensure the state of mental health of their clients does not play a critical role in defaults, and therefore in liquidations and insolvencies. This should be done not only to understand the reasons for such behaviour but as a tool to provide help to entrepreneurs to ensure their success.

Like all patients who approach mental health professionals for assistance, entrepreneurs require special care to give them a chance to succeed.

• Maqetuka is founder of Self Leadership Academy, a nonprofit that provides psychosocial support to entrepreneurs and students.