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Entrepreneurial Stress and its Causes

written by: William Busse•edited by: Ronda Bowen•updated: 7/6/2010

Stress related to business ownership is very real and can be quite damaging to the entrepreneur’s health and personal relationships. This article identifies the most common causes of business anxiety and explores techniques to effectively manage stressful conditions.

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    Stress and the Entrepreneur

    Stress in the workplace is a common complaint of employees in almost any job or profession. The demands of instantaneous results creates an environment of constant pressure to perform flawlessly with ever tightening deadlines.

    For the entrepreneur, these demands are amplified by the relative isolation and unique responsibilities associated with owning a business. Entrepreneurs are especially driven, which leads to long hours and frequent apprehension related to potential threats to their company. Combining these characteristics with the inherent pressure associated with business ownership creates a perfect environment for stress and anxiety. If left unaddressed, these conditions can ultimately lead to occupational burn out.

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    The Real Causes of Stress and Its Effects

    The typical analysis of entrepreneurial stress tends to confuse causes and effects. Poor eating habits, lack of exercise and reduced interaction with one’s family are certainly manifestations of the condition, but they tend to be the consequences of underlying issues.

    The true causes of business related stress tend to fall into the following categories:stress and anxiety 

    Financial matters: The primary source of anxiety for business owners is typically financial in nature. Omnipresent and sometimes overwhelming, it is inescapable to some degree. The most serious cause of financial misery revolves around delinquent receivables or its subsequent cousin past due payables. Perhaps even more distressing and in some cases terrifying is an inability to cover payroll. New businesses that are underfunded or growing businesses that underestimated cash flow requirements often find themselves in a desperate struggle between collecting money and paying creditors.

    Sales Issues: Problems with top end revenue are always a source of pressure for the entrepreneur. This would include the loss of a significant customer, an economic downturn, or the loss of an important product line. Whatever the cause, both the employees and the infrastructure of the business itself will be affected. In a gross revenue crisis, the business owner must accurately determine the extent of the problem and what path the company must take to mitigate the damage.

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    Overwork and Loss of Control

    Role Overload: Many entrepreneurs fall prey to the need to exert their influence over every facet of the company. It is a common failing of owners to believe that no one can execute a task as thoroughly and efficiently as they can. Control issues are common, and this often leads to a multitude of projects that remain uncompleted within an environment where the workload always exceeds the available hours.

    Employees: A key employee leaving the company can prove to be extremely unsettling especially if it is unexpected. Questions as to the employee’s motivations, whether their new employer will be a competitor, or how their departure will affect sales will all weigh heavily on the business owner. Employees have the luxury of leaving and finding new employment, while the owner of the company remains to try and minimize the impact.

    Nearly as unpleasant is the need to layoff a long time employee because of economics. Small businesses in particular tend to have a “family oriented" feel to them and the knowledge that the life of the terminated employee will be affected negatively is often very painful to the business owner.

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    Reducing Stress through Better Practices

    picture Conventional methods for addressing stress such as exercise, improved diet and breaks from the daily routine are all helpful, but do not deal with the underlying causes of the problem.

    Instead, the focus should be directed at improving the fundamentals of the business to insure bona fide receivable and positive cash flow. Growth should only occur when it can be paid for through profits or a manageable debt service.

    The entrepreneur should also work to broaden the client base so that no single customer accounts for more than 10% of the total sales. When the sales base is diversified, the loss of any individual customer will not prove to be catastrophic.

    The business owner should also work to delegate responsibility despite reservations. Not only will scaling back personal tasks contribute to better stress management, it will usually lead to more overall productivity by the company as a whole.

    Since employees play such a pivotal role in the success and smooth operation of a business, particular care should be given to key personnel. Competitive compensation packages as well as incentives should all be crafted to insure that the employee has a strong motivation to stay with the company.

    Ultimately, stress reduction is most acute when the fundamentals of the business are strong, sales are robust and the staff is happy and productive. These are the best methods for reducing or eliminating stress and anxiety for the entrepreneur.