13 Ways to Start Recovering from Personal and Business Financial Stress

Few types of stress are worse than financial stress. It takes a toll on both individuals and entire companies. 

A 2019 study by John Hancock revealed that 69% of workers worry about their personal finances and 72% are distracted by that worry at work. Worry over repaying college loans, paying the rent, and building emergency savings head the list of stressors. 

A 2010 Harvard Business Review study of how US companies dealt with three major financial crisis came up with devastating numbers: 17% of businesses didn’t survive, 40% took more than 3 years to return to their pre-recession level of sales and profits, and only 6% improved on their previous level. The strongest survivors had found a perfect balance between aggressive moves like investing in new products or acquisitions and defensive moves like layoffs.

Finding that balance between aggressive and defensive responses is key whether you are dealing with your personal or company finances. The following SMaRT strategies help.

Personal Finances

The leading causes of individual financial problems are the loss of a job, divorce, health and medical expenses, education expenses, and lack of money management skills. However, even what might seem a minor issue like the loss of a car or a house repair may hurl someone into a financial crisis. The first step in dealing with any of these problems is to stop blaming yourself: many of them are out of your control and blame is self-defeating.

To begin to turn around financial problems:

• Make sure you understand the situation. You may need help in analyzing your financial situation; however, you are the only one with access to your true financial state. How much do you earn, your assets, how much do you spend, what do you owe, what is your credit score? Every fact that helps you clearly understand and describe your situation brings you closer to finding a solution.
• Talk to specialists. One study identified several characteristics of intervention that helps. It makes use of specialized knowledge; it is problem focused and time limited; and it provides simple feedback and changes that are easy to maintain. Whether you seek help from a financial planner, a resume writer, a counselor who deals with financial stress, or an expert in SMaRT financial strategies, you will gain a new perspective and support in finding options.
• Accept all the possibilities. Most people find it difficult to accept personal bankruptcy, for example, yet more than 740,000 people go bankrupt annually. Bankruptcy is not the only or even first option available to you: paying down debt, qualifying for a better paying job, changing your buying patterns, simplifying your life, tearing up your credit cards, asking for debt reduction, or getting a second mortgage are among the options for surviving a financial crisis. 

Talk to family, friends, and even your boss. If you try to hide the situation, you place a considerable burden not only on yourself but also on the people around you who realize something is wrong and would prefer to help, at least by listening. Children, if old enough to understand, may be able to help by finding a job or cheaper ways to clothe and entertain themselves. You might want to consult your boss if you work in an environment of trust and support, particularly if you are dealing with a situation that might affect your attention and productivity at work. The company might make some accommodation (for example, time off to consult with financial experts or assignment to less critical work) while you are dealing with financial difficulties.

• Recognize the stress. Unfortunately, any stress, including financial stress, is notorious for interfering with relationships, the ability to concentrate and problem solve, and functioning at home and work. SMaRT strategies for dealing with stress are just as important as strategies for dealing with the financial problems that prompted the stress. Talk to a professional counselor, especially if you find yourself sliding into depression—it is less expensive than the loss of your job or the medical bills to cover the physical consequences of stress.

TIP: Consider your goals when you make a plan to recover from financial problems. Do you want to eventually buy your first house, send yourself or your children to college, or afford a vacation? Having a goal makes it easier to stick to a financial recovery plan.

Business Finances

For small businesses, financial problems may be traced back to a lack of cash flow, a poor budget, a lack of capital, and unforeseen expenses. As one expert put it, “a small business is not a little big business”—it has its own specific financial stressors. 

As a leader in a big business, you may be responsible for keeping a project or team budget on task. You may also need to provide a business case for new ideas or initiatives or in support of an ongoing project. The inability to handle these financial tasks will limit your advancement.

If you own or are a leader in a business of any size, you will face financial stress at some time; there are just too many risk factors to eliminate them all. To handle current or potential financial setbacks:

• Objectively analyze the figures. Your gut instinct may make the financial problem loom larger than it is or your need to feel in control may cause you to minimize the damage. You need reliable facts before you can correctly identify root causes and make a course correction.
• Seek partnerships. When companies band together in a Shop Local campaign, they have more success than when they individually seek customers. When teams and leaders form partnerships, they also expand their reach.
• Take advantage of missed opportunities. Often, recovering from financial setbacks is less a matter of adding bells and whistles but instead leveraging what is already available and taking advantage of missed opportunities. For example, during the pandemic many companies found their financial future was linked to the speed at which they added online shopping or converted their equipment to manufacture facemasks and medical devices.
• Get educated. You may be an excellent leader in all respects and yet lack the financial training and background you need to understand a business budget or interpret a profit-and-loss statement. You may also need to clarify for your team the relationship between their hard work, the health of the company, and their financial rewards. Financial stress that stems from ignorance is very common in business and one of the most straight-forward problems to cure.
• Talk to your customers. Your relationship to your customers, both internal and external, is critical to your revenue flow. Customers may emphasize cost but they are also interested in receiving value for the money spent. Find out where your customers fall on that spectrum and revise your sales pitch accordingly. Customers may also provide information on gaps in related products or services that you could fill to create more sources of revenue. Look for customer reviews of your product or service online to find clues to retention and upselling; and seek customer testimonials and success stories to back up your marketing. 
• Communicate with your team. In a volatile financial atmosphere, a panicked team only adds to your problems. They may neglect customers and deadlines as they try to find reliable answers and anticipate financial problems; your best talent may abandon ship; and the rumors may spread from your team to dissuade others from helping you overcome your setback. The better your team understands the situation, no matter how dire, the less financial stress they will suffer and the more likely they will give you the support you need—and ask for.
• Consider outside funding. As a business owner, you may qualify for a load, microloan, line of credit, financing, or a change in vendor net terms. Your personal financial situation may play a part in whether or how an outside funding source decides to loan you money.
• Seek professional help. In the midst of financial stress, the time and cost to consult with a specialist may seem too great. But the cost of financial stress on you, your business, and your team is even greater. Moreover, objective professionals have the experience and resources to provide insights and options that you may have overlooked or never realized existed.

TIP: A budget is easier to control if you understand the risks to your company or project in the case of failure—or success. Many a company or team has failed from expanding, diversifying, or taking on too much because previous success is never enough.