Pathways to busi­ness

An intro­duc­tion to three begin­ner-friendly busi­ness mod­els in Finland

There are many reas­ons why one might want to become an entre­pren­eur. Sometimes it is hard to find stable work in a field. Sometimes you just want the free­dom of being your own boss. Sometimes the busi­ness concept is so novel that entre­pren­eur­ship is the only way to make it mani­fest.  

Every case is unique, but it all has to start with pick­ing the right busi­ness model that best serves your interests. The best part about entre­pren­eur­ship is the end­less sea of pos­sib­il­it­ies that comes with it. You can start small and work your way up into some­thing big, or you can put your skills to use to cre­ate a humble but no-less viable side busi­ness.  

Let us go over some of the busi­ness mod­els that are suited for first-timers look­ing to enter the busi­ness world as entre­pren­eurs: light entre­pren­eur­ship, private trade and co-ops.  

Light Entrepreneurship 

Light entre­pren­eur­ship is a busi­ness model that allows you to be self-employed without a tra­di­tional enter­prise or a busi­ness ID. Light entre­pren­eurs sell their work through billing ser­vices that handle things such as book­keep­ing, taxes, col­lec­tion and insur­ances on the entrepreneur’s behalf in exchange for ser­vice fees.  

Starting as a light entre­pren­eur is simple. You sign up with a billing ser­vice online. Signing up with a ser­vice is typ­ic­ally free and non-bind­ing, and quit­ting is just as easy. You do not need start­ing cap­itol or even a busi­ness ID. Instead, you oper­ate on the billing service’s busi­ness ID. Once you start work­ing and billing cli­ents, the billing ser­vice sub­tracts ser­vice fees. Depending on the ser­vice you use, you may also author­ise the ser­vice to take care of things such as your YEL insur­ance (pen­sion insur­ance for the self-employed – see the list of resources below), if you are oblig­ated to take it. Despite all this, you are still your own boss. You decide your own hours, take care of your own mar­ket­ing and cli­ent acquis­i­tion, and you nego­ti­ate with your cli­ents on your own. 

Light entre­pren­eur­ship through a billing ser­vice can be a good fit for someone who is only just start­ing out and wants to try out a busi­ness concept or see if entre­pren­eur­ship is the right choice for them. It is a viable option for a mul­ti­tude of people, includ­ing stu­dents and hob­by­ists as well as people look­ing for full-time employ­ment. Billing ser­vices can free up a con­sid­er­able amount of time you would oth­er­wise spend with bur­eau­cracy. So long as the busi­ness remains reas­on­ably small, you can enjoy a mod­est but tidy profit with rel­at­ively little work – depend­ing on your line of busi­ness.  

Of course, light entre­pren­eur­ship is not neces­sar­ily for every­one. For one, although some of the mar­ket­ing can sug­gest oth­er­wise, light entre­pren­eurs are not a dis­tinct cat­egory in legal terms when it comes to tax­a­tion and insur­ance, for example, and this can lead to some con­fu­sion. It is best to take your time before regis­ter­ing to know what you get into. Light entre­pren­eur­ship may also affect the bene­fits you may receive. You may also not be eli­gible for some tax deduc­tions, and may not work in fields that require a license.  

Private Trade

Like light entre­pren­eur­ship, the private trade is a model best suited for a small, solo busi­ness. A private trader is a self-employed nat­ural per­son who sells their work or expert­ise as a registered busi­ness. The private trade, like light entre­pren­eur­ship (note that it is some­times mar­keted by the same name as well), is best suited for a busi­ness with small or mod­er­ate rev­enue.  

Setting up a private trade has a few more steps than light entre­pren­eur­ship. In short, to work as a private trader, you need busi­ness ID, and you need to register with the Business Information System, which can be done online for 60 euros or in paper for 115 euros. You may also need to register with the Trade Registry, if for example you wish to secure a trade name or have a ded­ic­ated space for your busi­ness out­side your home. For a more detailed walk­through, check out the list of resources at the end of the art­icle.  

A private trade serves partly the same pur­pose as light entre­pren­eur­ship. It is best suited for small busi­nesses with small or mod­er­ate rev­en­ues, and can work both for a side gig and for full-time self-employ­ment. Since as a private trader you are unlikely to need heavy invest­ments, set­ting up a private trade is rel­at­ively cheap as well. Furthermore, as a private trader you are eli­gible for more tax deduc­tions when it comes to pur­chas­ing equip­ment and tools for your trade and, provided your profits are mod­est enough, you will also be eli­gible for a VAT deduc­tion you would not get as a light entre­pren­eur. 

Unlike in light entre­pren­eur­ship, you have to take care of your own book­keep­ing or buy ser­vices from an account­ing ser­vice. In addi­tion, since the private trader is a nat­ural per­son, they are leg­ally liable for any com­mit­ments they make, mean­ing they put their own assets on the line.  

Whether the trade-off is a good fit for you depends on your goals as well. If you are hop­ing to grow your busi­ness or require more invest­ments, it might be more bene­fi­cial to con­sider a stock com­pany instead. 

Co-oper­at­ives 

The co-oper­at­ive, or co-op for short, is a busi­ness model for col­lect­ive enter­prises. Co-ops are busi­nesses that straddle the line between tra­di­tional busi­ness and asso­ci­ations. They are gen­er­ally less profit-ori­ented and instead seek to bene­fit their entire mem­ber­ship in some way through the co-op’s eco­nomic activ­it­ies. 

Co-oper­at­ives can be foun­ded by a single per­son or mul­tiple per­sons. They may also be star­ted by soci­et­ies, found­a­tions and other legal per­sons. Members of a co-op have an equal own­er­ship and stand­ing in the co-op, although co-ops have a board of rep­res­ent­at­ives that takes care of the day-to-day man­age­ment. Co-oper­at­ives may take in new mem­bers against a mem­ber­ship fee.  

The main strength of co-ops is flex­ib­il­ity. Co-ops across the coun­try include everything from agri­cul­tural co-ops to ser­vice co-ops. They can be used to mar­ket their mem­bers’ ser­vices, to enable mem­bers to act as a col­lect­ive in nego­ti­ations, and to man­age risks involved in busi­ness, among many other things. Co-ops may even act as employ­ers for their mem­bers, allow­ing them to work as employ­ees in an entre­pren­eur-like fash­ion.  

Co-ops can bring together a like­minded com­munity that can oper­ate in a busi­ness-like fash­ion to more eas­ily bene­fit all its mem­bers. Although co-ops must have a board of rep­res­ent­at­ives to man­age it, each mem­ber of the co-op has a vote and thus has a say in the run­ning of the co-op. You typ­ic­ally only invest your mem­ber­ship fee to get access to the bene­fits of the co-op, and unless it is decided oth­er­wise, that is also the extent of your fin­an­cial liab­il­ity over the co-op. 

On the other hand, co-ops may suf­fer from a prestige prob­lem. Members are not always con­sidered true entre­pren­eurs, although that may partly depend on the field in which the co-op oper­at­ive oper­ates and the ser­vices it provides. It may even be war­ran­ted, if the co-op acts in an employer-like fash­ion. Another major issue is man­age­ment. With a large num­ber of mem­bers and rep­res­ent­at­ives, decision-mak­ing can become cum­ber­some. Likewise, the longev­ity of a co-op is depend­ent on the act­ive­ness of its mem­bers. 

Resources 

Here is a short list of use­ful resources, should you want to look into these and other busi­ness mod­els and tips on get­ting star­ted. Whatever busi­ness model you end up con­sid­er­ing, make sure you con­sider mat­ters such as per­mits and tax­a­tion before you com­mit to the plan.  

Business Joensuu – Grow innov­at­ive ideas, busi­ness activ­it­ies and cap­ital in the Joensuu region! Business Joensuu offers ser­vices for busi­nesses, entre­pren­eurs and investors. You can access solid expert­ise and know­ledge about net­works, local con­di­tions, and oppor­tun­it­ies.

Entrepreneur Lounge – Every Friday you can visit Luotsi Joensuu and receive expert advice on how to start a busi­ness in Joensuu.

Ukko.fi, Eezy.fi and more – some of the biggest billing ser­vices for light entre­pren­eurs in Finland. Note that there are more ser­vices out there, but these sites can provide you with some basic inform­a­tion. Some com­pan­ies, such as OP Financial Group provide a sim­ilar line of ser­vices for private traders. 

Pellervo Coop Centre – a ser­vice for co-ops across Finland with tips on cre­at­ing a co-op and its bene­fits. 

Suomen Yrittäjät – an interest and ser­vice organ­isa­tion for small and medium-sized busi­nesses and the largest busi­ness asso­ci­ation in Finland. A good place to start for a bal­anced look into dif­fer­ent busi­ness mod­els. 

The Tax Administration – The Tax Administration has its own guide for set­ting up a busi­ness, and inform­a­tion about the tax­a­tion of dif­fer­ent busi­nesses.  

The Entreprise Agencies – An organ­isa­tion devoted to the pro­mo­tion of sus­tain­able entre­pren­eur­ship with free spar­ring and coach­ing ser­vices across the coun­try. 

Text: Lauri Vuori