Mental Health and Entrepreneurship: The Good, The Bad, and The Ugly

Photo by Nataliya Vaitkevich

Forbes has called depression an epidemic among entrepreneurs and creatives (Lee, 2021). A study by UC Berkeley found that 72% of the entrepreneurs that participated self-reported mental health concerns (Lee, 2021). Similarly, in the UK, Michael Freeman has found that entrepreneurs are 50% more likely to report having a mental health condition (Nergrutzi, 2021).

Is this to say that entrepreneurship somehow causes mental illness or distress?

The short answer is no. In fact, ¾ of mental health issues in adults start before 24 years of age (Kessler et al., 2015) and 60% of entrepreneurs are between the ages of 40 and 60 (NBCS). Mental illness is a multi-pronged issue being influenced by biopsychosocial elements.

However, can mental health issues arise or worsen for founders and employees working in startups? 100%.

Here’s why:

Entrepreneurship is no walk in the park. It’s exhilarating, fun, and holds the possibility of freedom and economic and professional success. However, it is not easy. In fact, according to the US Bureau of Labor Statistics, about 20% of US small-business fail in their first year. Only half of the ones that manage to survive the first year will still be open in five (5) years (Gustafson, 2020). Founders and employees working in startups experience a myriad of circumstances that can affect their mental health – if not safeguarded, of course. Too much work, poorly defined responsibilities, lack of organizational support (because everybody is busy!), lack of control over the speed of the work or growth, irregular hours, and achievement mentality are just some of the stressors that might lead to mental health problems at work.

It’s not only the nature of the work that makes entrepreneurship challenging. It’s how the founders’ personality traits interact with the nature of the work. Founders are inherently different from those who work in the corporate world. They are extremely passionate, high achieving, task-oriented, disciplined, and creative. The things that make them great as entrepreneurs also have the potential to work against them. Freeman states that traits like energetic, motivated, and creative are more likely to describe entrepreneurs. These traits are also more likely to describe people who have strong emotional states like hopelessness, loss of motivation, and depression (Negrutzi, 2021). These personality traits are both amazing to possess as entrepreneurs and risk factors that can predict mental health issues if not kept in check. And that’s my point: it’s all about balance.

Let’s promote healthy and balanced organizations from inception and all the way towards scaling. Here are a few questions to consider:

• How can accelerators and incubators become advocates for the development of businesses that promote healthy and safe workplaces?

• How can masterminds and founder support programs prioritize mental health both for founders and their teams?

• How can we destigmatize the topic so that we can support each other more effectively?

• How can we create businesses that safeguard health and safety whether or not they are growing at the pace they promised their investors they would?

First – we have to talk about it!

Mental health affects entrepreneurs just as it affects employees in big corporations. In fact, 19% of adults are experiencing a mental illness in the US, which means that 1 in every 5 adults is experiencing a mental illness (Mental Health America, 2021). Odds are that entrepreneurs are part of that 19%. Therefore, we need to talk about HOW entrepreneurs can set their businesses up for success to take care of themselves and their team members.

The biggest obstacle for founders in creating entrepreneurial safety and health (ESH, for short) is that it is just not a priority until it’s too late. It makes sense, right? Entrepreneurship is, by definition, a risk that we take to make something out of nothing. Therefore, the person who is in the best position to ensure entrepreneurial safety and health, aka the founder, is usually ALSO the CEO, COO, CPO, and CFO. This means that founders have great demands in the shape of work tasks, long hours, and people to report to or please like clients or VCs. What I see the most? A difficulty balancing work and life. Therefore, the person who is best suited to ensure ESH is also the less able to.

And why is it so important to ensure entrepreneurial health and safety?

Because healthy workplaces are productive and effective workplaces. When founders are overwhelmed, they are less effective in their leadership. When team members are stressed, burnt out, and on the brink of breakdown, they are not able to focus on their work. Quality is the first to go, after it, productivity and engagement. After that: loss of talent. When we take care of the humans working in startups, we take care of the dream. And isn’t that why all entrepreneurs start their businesses? Because they have a dream or vision or an ideal world where X can be better.

Apart from that, it costs money not to ensure entrepreneurial health and safety. In 2019, the US spent $225 billion on mental health between private insurance and public programs – this accounted for all mental illness diagnoses (Kelly Yeo, 2021). In 2015, a study by the NIH found that mental health problems resulted in a $193 billion loss of income (Kessler et al., 2015). I imagine this number has gone up significantly. And we are not in the business of losing money, are we?

Now, from the I/O perspective, we are taught that it is the organization’s responsibility to take care of the employee (even CEOs). However, what happens when there is no HR rep or a Chief People Officer? We are left with a HUGE truth: we have to empower founders and the executive team to take matters into their own hands.