Two in five (40%) small business owners expect the emotional recovery from the pandemic will take much longer than the financial disruption it caused.
However, those firms which invested in mental health support for themselves and their staff were rewarded with improved business performance.
The study from Xero conducted with the Centre for Economics and Business Research (Cebr) and Opinium, surveyed 1,000 UK based SMEs and sole-traders and found nine in 10 (92%) experienced symptoms of poor mental health over the last two years.
Professional responsibilities played a significant part, with more than half (52%) claiming that running their business had contributed to those symptoms.
Perhaps unsurprisingly, the pandemic was the greatest cause of poor mental health for over a third (37%) of respondents, but issues such as cash flow (24%) and the cost of living (24%) also had an emotional impact.
Three quarters of respondents (75%) failed to take a single sick day or did not feel they had the option to, with those that did taking an average of just one day each. Of those who suffered poor mental health, only one in five (21%) took any leave.
Just over half of business owners (55%) knew where to turn for mental health support, but while the government provided financial assistance, only 15% believed it was doing enough to help them with their mental health and wellbeing.
The study also found that just half (53%) of respondents implemented mental health initiatives for their staff during the pandemic.
The average total investment in mental health initiatives by small firms during the last two years was just £939, with one in five (21%) spending less than £100.
However, those investing more in wellbeing initiatives enjoyed better economic outcomes. More than half (53%) saw increased productivity following the introduction of mental health support.
On average, investment in employee wellbeing exceeding £1,000 was linked with revenue growth of 50.3% over the last two years, as well as a 47.3% growth in employee numbers.
Alex von Schirmeister, UK managing director at Xero, said: “With so much focus on fixing the post-pandemic economy, the longer, hidden tail for business owners might well be the mental health toll.
“Keeping a business afloat in a period of financial distress can come at the expense of their wellbeing. It’s crucial that owners prioritise the mental health of themselves and their workforce.
“Getting the right support will lead to a healthier business that’s more resilient to the economic challenge ahead.”