5 steps to take in order to set up and start your business in Finland
In order to have a profitable business, you should do your planning and background work properly. With attending to these 5 issues, you should be able to control and avoid at least some of the risks and pitfalls of establishing a company.
In previous chapters you have learned about the basics of the business environment in Finland, the high scope of digitalization and the main prerequisites that must be taken into account before establishing a company. Now it is time to explain which are the steps that anyone must take in order to set up and start a business.
It is important to remark that these are specific measures you should take before establishing your business. In our previous article we stressed the importance of the business idea. Now, these steps are based on that business idea you have created. Each one of them is a subject for a later article in our Entrepreneurs Guide, but it is worth listing them as soon as possible to be clear about where to start.
In order to have a profitable business in Finland, you should do your planning and background work properly, and as only having a profitable business ensures you achieving the goals you have set for your business and your future as a businessman, these steps should be carefully attended to. With attending to the issues described in these 5 steps, you should be able to control and avoid at least some of the risks and pitfalls of establishing a business.
Finland is considered to be one of the happiest countries in the world. This happiness is to a large extent based on the idea of a welfare state in which all members of the society divide and distribute some of the income to the state, which uses the income it receives to provide welfare-services to less-fortunate and/or -able. As this concept of distributing welfare concerns also companies and enterprises there is some regulation setting obligations and responsibilities to companies, their owners and their managers.
The ruling about Incomes Registers was enforced on the 1st of January 2019, and is from the point of view of an entrepreneur a major leap towards more digital economy. This highlights the importance of careful planning and calculation, and starting your business taking into consideration all the requirements set in law.
1. Crystallize and write down your business plan
- You should plan your business and make the business plan based on your business idea.
- At its toughest writing down your business plan is a laborious operation in which you plan the sales and marketing for your business, the pricing of your products, the resources needed in your production and operation, the need for personnel, and your IPR-protection plan as well as conduct various risk-analyses. The higher objectives you set for your business, the more thoroughly you should do your business plan.
- If you are planning to set up a micro-company, the requirements for your business plan are not quite as high. For example, banks and other financial institutes as well as immigration officials are mainly interested in that your business to be established has enough demand and clients for its products or services. You should, however, do your possible striped business plan carefully as nearly everybody reading it are very familiar with business plans and understand that the better your business plan is the more realistic it is that the business meets its planned sales targets.
- One of the most important cornerstones of a business plan is that it is mainly for you and for your needs. You have to convince yourself with your business plan that you get a sufficient income from your business to meet your goals.
- If you feel uncertain of making your business plan, you should consider consulting an expert.
2. Crunch the numbers
- At the end of the day, it is all about numbers. If you do not make any profit, it is not a business.
- Crunching the numbers before establishing or purchasing a business, helps you read and understand the reports you get from your bookkeeping or accountant after you have started. And when you can read and understand what the numbers from your business tell you, you can make the possible amendatory and adaptive measures needed in order stay in the market.
- Crunching the numbers mean, for example, that you do your budgeting, you prepare your cash flow statement and your funds statement, and that you do your profitability calculation and sales calculation.
- When doing these calculations, you should take appropriately into account VAT as it is not your turnover, but something you have to pay to the state of Finland after periodical VAT calculations.
- As there is a lot of country-specific information, you should take into account you might want to consider consulting an expert when preparing your business-related calculations.
3. Plan realistically your finances
- When considering starting a business, realistic financial planning is a must.
- In your financial planning you should take into account your investments to the business, the need for working capital at least for 1-3 months, floating assets and financial assets, which summed up together amount the capital you need to collect to start up your business. The amount of the capital is to be covered with your own equity investment and borrowing, and possible public aids and subsidies.
- In order to prepare your business also to the unexpected, it is worthwhile also to add some kind of buffer to your financial calculation.
4. Do your investigation and research
- Depending somewhat about the nature and volume of the business you are planning to start, there are some investigation and/or research you should at least consider conducting.
- Examples of businesses investigation and research are: market research, competitor analysis, more through assessment of the competitors, determination and assessment of your clients and client groups, recognizing the criteria and reasoning behind purchase decisions of your clients, SWOT-analysis, etc.
- Some of the needed data, like the financial statements of your competitors, for your investigation and research in Finland is easily available from public and other records.
- Depending on the nature of you business you should also check the legal environment and regulation of the business -related to, for example, customs if you are considering export or import. There are also certain businesses and professions which are subject to license and/or a specific degree.
- Networking is also a very important task. In the internet and also in social media you can find platforms for networking your business. By networking you do not only get to know about Finland's business reality and practices, you can also find out new business opportunities and unexpected risks.
- The rule of thumb is that the bigger the business and its investments are, the more thorough investigation and research one should conduct.
5. Make the decisions in order to start your business
- There are quite few decisions you have to make, when you put up your business in Finland. For example:
- Do you establish a company or purchase an existing one?
- If you decide to purchase an existing company, you should always consult a lawyer or public accountant in order to be safe in purchasing.
- What is the company form best suitable for your business?
- What is the line of business of your enterprise?
- The definition may, for example, effect the chances of being targeted with a tax-inspection.
- What is the name of the company?
- Who are the signatories for the business?
- Who are the members of the board? Who is the managing director?
- Who are the owners of the company, and how is the ownership divided between the owners?
- What is the amount of capital the owners are ready to invest to the company?
- What are the compulsory investments and acquisitions in order to start?
- What is the location of the business?
- Do you establish a company or purchase an existing one?
In the next article of our Entrepreneurs Guide we will go into other measures you should take after you have decided to enter the Finnish business world.
These steps are important to cope with as the degree of digitalization is high in Finland, and they include points that Finnish authorities digitally follow up-to-date. By understanding and ensuring that these steps are followed properly you should be able to minimize the risks of, for example, unexpected and surprising actions by authorities.
Where to contact?
If you are facing an inquiry or some action from any authority and you do not feel comfortable dealing with the matter yourself, or you seek any other advice related to your business, please feel free to contact the authors of this series of articles through the email address [email protected]