Founder with benefits
How entrepreneurship supports mental health and wellbeing
The number of people hanging up their employee boots and launching a business has skyrocketed. Australia recently witnessed a ~30% year-on-year increase in new business registrations¹. The entrepreneurial appetite at universities is no different, with the University of Melbourne launching a $115m fund dedicated to supporting student and staff ventures. Despite recent global uncertainty, people are reassessing priorities, letting go of fear, and spreading their entrepreneurial wings.
What psychological price will these courageous entrepreneurs pay?
We often hear that launching a business is a minefield of stress, anxiety, broken relationships and burnout. While there is undoubtedly some truth in this rhetoric, a truth I’ve experienced first-hand, there is a parallel thread to this mental health story that frequently remains untold.
The positive mental health outcomes of entrepreneurship tend to trump the negative outcomes.
Psychologists have found that poor mental health symptoms in founders can co-occur with positive psychological outcomes². For example, despite potentially detrimental levels of anxiety and stress, the feeling of autonomy, independence and ownership gained from running a business tend to have a net benefit on the founder’s mental wellbeing. These positive elements of entrepreneurship appear to protect the founder against feeling the full impact of the high stress, uncertainty and pressure that come with the territory³. That’s awesome. Being a founder gives you a mental health shield!
Entrepreneurs x Employees
A study which reviewed hundreds of research results from millions of participants found that entrepreneurs tend to have higher wellbeing when compared to employees⁴. Another study found that entrepreneurs' lifetime prevalence of diagnosed mental health disorders was lower than that found in employees⁵. It appears that founders benefit from the positive psychological elements softening the adverse, and have a more developed coping mechanism to deal with the stresses and pressures that are present in all walks of life.
But hang on. Is my line of work — entrepreneur or employee — causing the mental health and wellbeing outcomes, or is there merely some relationship between the two?
It’s the classic causation vs correlation question. As is often the case with psychological relationships, causation is unclear as several factors likely influence the outcome. For example, we know that your personality traits impact your wellbeing⁶. We also know that entrepreneurs tend to score higher on personality traits such as openness to experience, extraversion and conscientiousness. So while being an entrepreneur may indeed lead to a greater chance of happiness when compared to being an employee, because of the various factors at play, it ain’t no guarantee!
Why do we care about happy entrepreneurs?
A happy entrepreneur often equals better business. The mental wellbeing of founders can impact innovation, productivity and even the firm’s quality of customer service⁷. This has a substantial society-level impact on economic output and job creation. Moreover, by demonstrating a link between entrepreneurial activity and happiness, government policymakers have further incentive to invest in the country’s innovation ecosystem, such as through startup grants and angel investor tax breaks. So, could a happy society be an entrepreneurial society? Surely that’s worth exploring.
How to be a happy entrepreneur
As a founder, your mental wellbeing is a work in progress. Whether the research suggests that being an entrepreneur gives you a leg-up, it still requires effort, self-awareness and support. The demand for mental health support is on the rise, with people recognising that getting help does not mean you are broken. Instead, it means you have taken action to live better in whatever capacity matters most to you.
Beyond professional support, co-founders are another vital area of support if managed correctly. After my first startup went under, I wrote this piece about actionable tactics for a healthy and effective co-founder relationship — How our startup died but relationship survived.
Decades of research into entrepreneurs' mental health and wellbeing show us that the goal is not to remove the anxieties and stresses that come with founding a business; they are inevitable. Instead, the goal is to recognise the beneficial psychological outcomes of being an entrepreneur and reframe our relationship with the less-positive elements. In this way, we can find an internal balance that gives our business the best chance of flourishing while keeping our mind in a good place.
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Sources:
- https://www.xero.com/content/dam/xero/pdfs/behind-small-business/where-opportunity-lies-report.pdf
- Freeman, M.A., Staudenmaier, P.J., Zisser, M.R. et al. The prevalence and co-occurrence of psychiatric conditions among entrepreneurs and their families. Small Bus Econ 53, 323–342 (2019). https://doi.org/10.1007/s11187-018-0059-8
- Lewin-Epstein, N., & Yuchtman-Yaar, E. (1991). Health risks of self-employment. Work and Occupations, 18(3), 291–312. https://doi.org/10.1177/0730888491018003003
- Stephan, U., Rauch, A., & Hatak, I. (2022). Happy entrepreneurs? Everywhere? A meta-analysis of entrepreneurship and wellbeing. Entrepreneurship Theory and Practice, https://doi.org/10.1177/10422587211072799
- Stephan, U., & Roesler, U. (2010). Health of entrepreneurs versus employees in a national representative sample. Journal of Occupational and Organizational Psychology, 83(3), 717–738. https://doi.org/10.1348/096317909x472067
- Article about how personality traits can impact your wellbeing.
- Stephan, U. (2018). Entrepreneurs’ mental health and wellbeing: A review and research agenda. Academy of Management Perspectives, 32(3), 290–322. https://doi.org/10.5465/amp.2017.0001
