Stress robs Canadian small firms of 31 workdays a year

Canadian small business owners lose an average of 31 working days a year to stress, according to new research from Xero, highlighting a growing productivity and wellbeing issue across the sector.

Xero's Emotional Tax Return report found owners spend about nine hours a week feeling stressed, concerned, or worried about their business. The strain is also shaping business-continuity decisions, with two in five owners considering closing or giving up their businesses.

The findings come as small firms face higher operating costs, uneven demand, and broader uncertainty. Small businesses account for about 98% of all Canadian businesses, according to figures cited in the report, making owner wellbeing an economic issue as well as a personal one.

The study found "Emotional Tax" made the year more stressful for 78% of Canadian small businesses. It also identified a smaller group under intense pressure, with 16% reporting very or extremely severe stress levels.

Always on

Many owners say they struggle to step away from work. Nearly half of respondents said they can never switch off and unplug, reflecting the constant demands of running a small operation where owners often fill multiple roles.

Sleep loss was a common consequence. More than half said they get less sleep since starting their business, and nearly a quarter reported losing five or more hours a night.

Owners also reported cutting back on activities linked to wellbeing. About a third said they had given up exercise, and almost as many said they travel less. Others said stress has reduced quality time with partners.

Missed personal events were common as well. Respondents cited missing family dinners, birthday parties, and weddings. The survey also pointed to knock-on effects on relationships: two in five said they had kept business stress from their family or partner, while more than a third said they become more short-tempered with others when stressed.

Cost pressures

Economic factors remain a major source of concern. The study found 30% of owners were very or extremely concerned about how economic pressures will affect their business in the upcoming fiscal year.

Rising costs topped the list of specific worries, cited by half of owners. Tariffs were mentioned by 20%, and political uncertainty by 18%. Just over a fifth said conditions had not changed compared with previous years.

External factors have left most owners worried about the year ahead, with 90% reporting concern about the upcoming fiscal year.

Business impact

Stress is affecting the quality and speed of management decisions. One-third of owners reported slower decision-making, close to three in 10 said they had missed opportunities, and just over one in five linked stress to slower business growth.

A similar share reported avoidable mistakes, including financial errors. The report also linked stress and worry to procrastination around paperwork and tax administration, increasing the risk of shocks when bills fall due.

Financial management stood out as a key pressure point: more than three-quarters of respondents said it causes stress. The report links this to owners questioning whether to remain in business.

Advisor gap

The research identified what it calls an "advisor gap." Only 10% of owners seek advice from an advisor when they feel financial pressure, despite widespread anxiety about bookkeeping, reporting, and tax outcomes.

More than half of respondents said they had been surprised by a tax outcome. The report also suggests stress can prompt owners to delay financial management, citing paperwork chasing and fear of making a mistake as reasons for inaction.

In one measure of avoidance, one in 10 owners said they would prefer a root canal to tackling their taxes.

Most owners said they are taking steps to manage stress. More than half cited self-care approaches, while others pointed to exercise and spending time with friends and family.

In a statement accompanying the findings, Xero's Head of Canada GTM, Ashalee Mohamed, linked the personal toll to business performance and said owners should not deal with the pressure alone.

"The Emotional Tax small business owners pay clearly takes a heavy personal toll, and when it consumes nearly a month of productivity, it also becomes a bottom-line crisis. Unfortunately, too many owners are trying to navigate this pressure in isolation," said Ashalee Mohamed, Head of Canada GTM, Xero.

Mohamed said digital tools and professional advice could reduce administrative burden and boost confidence in financial accuracy, which the report frames as a path to lowering stress among owners.