Important prerequisites for establishing a business in Finland
As people migrating to Finland may find it difficult to get employed, many immigrants consider seriously of setting up their own business.
According to the Federation of Finnish Enterprises (Suomen Yrittäjät), there were some 284.000 business enterprises in Finland in 2018, when you do not take the agricultural sector into account. More than 90% out of these 284.000 businesses are companies employing less than 10 employees.
The annual turnover of Finnish enterprises in 2018 was some 380 billion euro of which almost 60% is generated in small and medium size enterprises (SME's), which are those employing less than 250 persons, according to the classification of enterprises in Finland. Altogether, the annual turnover of SME's consists of more than 40% of the GNP of Finland.
Today, most of the new employment opportunities are generated by SME's. The trend in Finland has during the last 20 years been that big companies have invested abroad in order to face the challenges of globalization, and the outcome has been that employment opportunities in big Finnish companies in Finland have steadily decreased. It is predicted that the importance of SME's in generating new employment opportunities is going to stay strong also in the future.
As people migrating to Finland may find it difficult to get employed, many immigrants consider seriously of setting up their own business. The idea of this consideration is often, as a prominent Finnish accountant Pauli Vahtera put it: “Entrepreneurship is the most beautiful way to take responsibility of your own life”. At its best, creating and conducting a business provides a mean to achieve your goals, and maybe to create a future in Finland for your family.
Uncertainties and pains
One must, however, understand that there will be various ups and downs in starting your owns business. Some of these uncertainties should be avoided with careful thinking and planning before taking the first step. The aim of this article is to provide some insight to this pre-consideration of your coming business.
After you have started your business, you should acknowledge that statistically monetary success in running your own business takes in the average about three (3) years of hard work -meaning that, for example, you should not expect any major short term profits. This means that the most painful period of your entrepreneurship is statistically the first three (3) years of entrepreneurship, during which you may have to fight for your survival.
Therefore, the cycle you should critically assess and look carefully into your business operation is at the minimum two (2) years.
The most important is a good idea
It is considered that the most important prerequisites to start a business are the desire and will to conduct business, the readiness and skills to operate business, and the business idea. A good business idea is the most important prerequisite for a successful business operation.
Some considerations you should make before making any final decisions:
1. Are you going to conduct business by yourself, or with a partner, or with a team, or is your business perhaps going to be a family-run business operation?
- This is one of the fundamental considerations you have to think through before deciding entering into the world of business as the nature of your business-operation affects for example to your resources, financing needs, the form of the company more suitable, the management and decision-making processes, and the short and long-term budgeting and calculations of the business.
- We will handle this issue more thoroughly in our coming article about company forms in Finland.
2. What are the objectives you are aiming for in conducting your business? What are the advantages and benefits you are aiming for?
- In order to be an efficient and productive entrepreneur, you will have to make it clear to yourself your goals in establishing your own business. For example, are you setting up your business in order to make livelihood to your family or just for yourself… or are you just aiming to make a lot of money? Or perhaps your aim is to proof yourself in Finland -that you are a productive member of the society, you employ people, you bring more welfare to Finland, and you bear your responsibility in paying your share of the taxes?
- Whatever the reasoning behind your business is you have to understand and admit to yourself that there has to be those selfish motivations to conduct business, which are of your interest, in order to get through the maybe hard first three (3) years of business. There is going to be no future for your business if it is not profitable in the long term.
- We will explain some issues related to this consideration in our coming article about a residence permit to Finland on the basis of a business.
3. Evaluate the challenges, drawbacks, and risks in becoming an entrepreneur and control them.
- It is essential to recognize that there are always challenges and risks in starting up a business. You have to ask yourself at least that are you able to cope with the situation if all risks are realized, are you capable of bearing the economic and cope with the stress of uncertainty there might be especially during the first couple years of your business?
- In addition you have to ask yourself if you are willing and capable to develop, learn and adapt yourself along with your business, as it is widely known that one should also learn and adapt the business to the markets. Rarely it is the customers, markets and/or authorities, who are stupid not to act the way you expect -normally the fault is in your inability to learn and adapt your business operation.
- Starting up a business is always a decision bearing at least some risk, the issue is to be able to predict and control the risks of your decision.
- A well prepared business and following the principle 'not to bite off more than one can chew' helps greatly in avoiding the possible negatives of your startup.
- Creating and networking with other entrepreneurs as well as asking advice from reliable experts rather too early than too late, is an essential part of your business’s risk-management. For example, the authors of this series of articles are available should you ever need consultancy or legal advice related to your business.
- We are planning to deal with creating a business plan and with the pitfalls of starting your business in our coming articles in this series.
4. Concentrate on your business idea!
- Maybe the most important part of your consideration to start up a business is to determine your business idea from the basis of your business concept. Even if your business idea is the plinth of your future business, one must be aware of the possible changes in your business environment and to be ready to adapt your business idea accordingly.
- The business idea tells you: (a) What is the clientele the business is aiming for, (b) What are the products the business is offering to its clients; (c) What is the business-image of the business you are trying to achieve; and (d) How are you going to be able to produce your desired business-image. In addition to these four factors your business idea should answer you, (e) How the business in practice operates, and (f) What are the competitive advantages of your business.
- In order to develop the business idea you should ask from the point of view of the planned business to whom, what, how and why?
- We are going to discuss more thoroughly about the business concept and the business idea later in our article series.
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 article through the email address [email protected]