Survey: Entrepreneurs are not scared of bankruptcy but majority of entrepreneurs is alarmingly stressed
Even though the COVID-19 pandemic has decreased the sales and profitability of companies as expected, only a few entrepreneurs are worried about the threat of bankruptcy. Alarmingly, many entrepreneurs assessed their work ability to be at a critically low level, and a large share of entrepreneurs experiences long-term harmful stress. These results were discovered in the Menesty yrittäjänä (“Successful Entrepreneurship”) survey conducted by Elo and Suomen Yrittäjät.
The survey mapped entrepreneurs’ resilience and factors affecting their success as well as the state of entrepreneurs’ coping and work ability. The survey also looked at factors that have helped entrepreneurs survive the exceptional circumstances brought on by COVID-19.
The COVID-19 pandemic has clearly affected more than half of the companies that responded to the survey. Half of all entrepreneurs (50%) assess that their sales will decrease in comparison to the previous financial year, and almost half (47%) think that their profitability will decrease in comparison to the previous financial year.
However, up to 72% of entrepreneurs do not consider bankruptcy a significant threat for their company. Only a few entrepreneurs (4%) think that their company is at significant risk of going bankrupt.
“We expected significantly gloomier prospects from entrepreneurs since the past year has been extremely rough on many operational fields. However, the results indicate that entrepreneurs have been able to react to this sudden and unexpected situation extremely well. At the same time, we should take note that some entrepreneurs’ estimate on the company’s liquidity may be more positive than it actually is in reality because of different payment arrangements and financial support,” says Katja Ekman, Development Manager at Elo.
The work ability of one in three entrepreneurs is at an alarming level, majority of entrepreneurs are extremely stressed
Up to 34% of respondents say that their work ability has decreased.
Elo has tracked the development of entrepreneurs’ work ability since 2014. With every survey, entrepreneurs’ own estimates of their work ability have been at an increasingly alarming level.
“In 2014, work ability was on average 8.4 on a scale of 0–10, whereas this time it was 7.6. From an entrepreneur’s perspective, it is crucial to take care of your work ability by doing things that give you energy. An entrepreneur who looks after their own work ability also invests in the well-being of their personnel, which creates a positive cycle. In addition, it’s important to ensure sufficient recovery by making sure you have enough free time and get plenty of rest, among other things,” says Ekman.
In addition, entrepreneurs’ stress levels are alarming. Of all entrepreneurs, 40% experience long-term harmful stress quite extensively or very much.
“In the results, the amount of experienced stress was strongly linked to the work ability assessment and work engagement. Work engagement protects us from stress and safeguards our work ability. Of those who reported an excellent work ability, only 20% said they experience stress quite extensively or very much. On the other hand, of those suffering from a decreased work ability, 77% said they experience stress quite extensively or very much,” says Ekman.
“However, entrepreneurs are very committed, enthusiastic and inspired regardless of the size of their company. Almost 80% of entrepreneurs are enthusiastic about their work on a daily basis or a few times a week, and almost half of entrepreneurs are inspired by their work every day. This is a positive thing, since this also guarantees the ability to get through tough times. In all, entrepreneurs are fairly satisfied with their career choices,” says Mika Kuismanen, Chief Economist at Suomen Yrittäjät.
Good reputation, flexibility and an open corporate culture have carried companies through COVID-19
The majority (79%) of entrepreneurs say that the recognition and good reputation of their company have been rather or very significant in surviving COVID-19. Almost one in four (73%) says that rapid and flexible response to the COVID-19 situation has been a crucial factor. Of all entrepreneurs, 65% think that an interactive and open culture of trust in the company has been a rather or very significant factor.
“According to entrepreneurs’ estimate, surviving COVID-19 has been mostly affected by factors built slowly over time and already before the COVID-19 pandemic started. Resilience and an open internal culture are important mainstays on which the company can lean on when the times are rough. In addition, recognition and a good reputation help hold onto customers,” Ekman says.
Financial matters were regarded as less significant factors. A little over half of entrepreneurs (58%) considered the use of financial buffers, such as cash reserve, a significant factor that has helped them survive COVID-19. Approximately half (51%) considered safeguarding the company’s liquidity significant.
“It seems that as the size of the company grows, their chance of surviving the COVID-19 crisis is improved when measured in profitability and sales, for instance. There must be many reasons for this, but the survey indicates that as the company size grows, reorganising work in a new way has been possible more so than with the smaller employer companies, not to mention sole entrepreneurs,” says Kuismanen from Suomen Yrittäjät.
The use of digitalisation and new technologies is also more common as the company size grows.
“From the perspective of coping and financial survival, it is especially important to target sole entrepreneurs and small employer companies because their significance to society is greater than their size,” says Kuismanen.
Katja Ekman, Development Manager, Elo, tel. +358 (0)40 750 7868
Mika Kuismanen, Chief Economist, Suomen Yrittäjät, tel. +358 (0)50 356 0705
Kristiina Nieminen, Communications Manager, Elo, tel. +358 (0)40 586 8778
Information about the Menesty yrittäjänä (“Successful Entrepreneurship”) survey
The Menesty yrittäjänä (“Successful Entrepreneurship”) survey was conducted as an online survey on 17 November 2020–15 December 2020. In all, 1,367 corporate decision-makers and entrepreneurs responded to the survey. The respondents represent several different operational fields across Finland. Of the respondents, 20% was sole entrepreneurs. The survey was conducted by Aula Research Oy commissioned by employment pension company Elo and the Suomen Yrittäjät.