Service business update part 3: Finnish Fiasco - The Silent Depression
Small Struggles: The trials of tiny businesses.
Here are my previous ones:
February 2023:
June 2023:
TLDR: More concentration ahead and no financial buffers.
I wanted to write this piece now because a massive shitstorm is brewing. Will we get a shitstorm?
Bankruptcies have increased massively and are now record high here in Finland.
Big construction businesses are in big trouble and have lots of defaults.
→ This will affect the Finnish economy - In a bad way. Daa???
Big customers asked for more time to pay, and a few invoices slipped into debt collection. Due dates are slipping… For me too, could be due to hustle or simply not bothering, still an alarming sign from the arena.
The summer was “ok”, but everybody expected it to be excellent due to the surprisingly busy spring. Despite expectations, many chose to travel abroad this summer, tourism in Finland still struggling.
Why?
It is tough to run a business after COVID-19. Have any “guesses” from big institutions of what will happen to interest rates and inflation been correct? No - they missed everything. They weren’t even slightly off but got it completely wrong.
I have argued in my pieces that the Finnish stock market performs poorly is due to poor management. If our best management teams can’t get it right, how do you expect small construction companies or service business owners to get it right?
Inflation has been a huge problem and a new problem for businesses. Many of us don’t have experience of running business in this kind of environment. Sales are good, but scarcity is everywhere: workers, materials, or resources. Lot of “hustling”, but the bottom line is 0 or even negative…
Wellbeing Services County Almost all regions cite undersized state funding and rising costs as the basic reasons for the deficit 1.2bn. Well, thank god these fuckers can’t go bankrupt.
Larry gained weight from 78kg to 108kg, bad for Larry… Larry gained last month “only” +5kg to 113kg, only 5%. Let’s celebrate Larry! We are fine now! Problem fixed? The damage is done. Even if inflation is slowing down, the damage is done…
More sales and bigger revenue do not matter if the quality of the business is poor. We want more cash and better margins, but it is hard. We try to survive.
On top of it all, money is not suddenly free. This is also something new for small business runners. Small businesses are also more prone to variable interest rates and cannot hoard vast debt with fixed rates during party time. Larger companies took advantage of this. Hence, they are positioned extremely well for this “crazy” environment.
Small businesses can’t raise prices fast - They fear that they will lose work. It has been romanticized to the extreme that we small entrepreneurs are somehow more intelligent than the average human beings - I would argue that we are just crazy and stupid, the ones who love to work…
Positives?
There is still a lot of demand, and consumers don’t seem to care that much. They have already been scared to death from viruses, war, and energy crises, so why bother about a tiny slowdown or a few bankruptcies?
It is always the same: It does not affect me when some pulp&paper is closing down units or some random restaurants go tits up. Or it won’t affect me when some stupid service industry is shut down due to the pandemic? It always comes by surprise.
The service industry's been getting the short end of the stick since COVID rolled in, but most of us are still fighting the good fight. Can other industries scramble also? Everybody expected mass destruction when rate hikes started (Government spending, on the other hand, record high).
We might weather this storm if we dodge a tidal wave of bankruptcies and people can hold onto their paychecks.
The illusion will start to vanish.
Small entrepreneurs are incredibly optimistic and would not run their business if they thought everything would turn to shit. They are the risk takers and ready to work hard.
25% of Finnish households would not survive from unexpected expenses.
Similar stories from around the world. Credit card debt is getting higher, and car repos etc., are on the rise.
COVID created an excess of savings → Assets prices only up (houses too to the extreme 95% of Finnish wealth is tied to walls)
Free money and subsidies → Everything is fine and will be fine forever. Illusion.
Imaginary wealth: I feel rich since my assets are going only up. Even used cars went crazily up in price. Consumers do what they do best: consume beyond their means. There were funny anecdotal pieces during the peak of how some people ordered 4-5 electric cars, since the prices went up only…
Purchasing power went back like 15 years? (It is getting slightly better now, which is good).
What percentage of Finnish small companies can survive unexpected expenses? Or from a slowdown? I would guess that percentage is extremely low due to all the craziness from 2020 onwards, and there aren’t many financial buffers left. Hopefully, I am wrong. Businesses are incredibly fragile right now. Businesses are teetering on the brink of vulnerability. While entrepreneurs can and do put in the long hours, there's only so much magic left to pull from the hat.
It is part of the cycle in which bankruptcies happen and credit losses occur, but what worries me the most is that there are few “legendary” companies, +50y old ones, who have seen it all from the ’70s oil crisis to the collapse of the Soviet Union, GFC 08 and now they are failing… Why?
Hopium of talking heads
AI will revolutionize how we do business and increase our productivity, but maybe, just maybe, it won’t come as fast as we hope.
Transition to green energy won’t happen overnight.
Why does nobody invest in Finland? We will get more investments soon! Finland will benefit significantly from AI and green energy! Well, where in the fuck are the investments? Why does nobody invest here? These policymakers, institutions, and bankers have to be overly optimistic. “Oh, zero growth will be fine for one year; then it will improve.” You beg and dream that your alcoholistic father would give up smoking, just smoking, you hope, dream and prey but it is always a letdown.
If this is considered “fine” I seriously get shivers thinking about what kind of nightmare bad times are. I certainly hope this is the bottom.
I am in the arena and can tell you it does not look fine. Walk around the city and ask restaurant owners how it is going. Ask plumbers? Construction guys, taxi drivers, accountants? Who the fuck is doing more than fine at the moment? Oh, our talking heads are doing just fine, aren’t they, and some fucking bankers.
Do you understand why they are doing just fine? You are the product.
How many people have your actions employed? How many small businesses have to shut their doors before you realize the gravity of the situation? Do you even remember the last time you had to worry about paying your bills on time? Are you prepared for the day when the bubble bursts and the illusion of prosperity shatters? When the tide turns, and it's your turn to face financial hardship, who will bail you out? Do you have balls?
See, I get to be pessimistic and annoying as fuck.
Lube your ass and get ready to be fucked, oh, and don’t dare to cry for the bailout. We need everybody to get humbled and build back better.
This is an alarming development for the long term. Everything concentrates even more. Big ones get bigger and bigger, and smaller ones will die.
Small entrepreneurs are the backbone of any economy, the risk-takers and the most optimistic ones who push through adversity. If a recession hits, I worry this breed will be on the brink of extinction. It is becoming tough for small businesses to survive in Finland. We have not fixed anything from 08 here in Finland, and problems will get only more severe if we slip into recession.
Why bother?
For example, an entrepreneur could deliver newspapers early in the morning, then transport nearby residents to the store and children to school, and act as a taxi in the evening. - Anne Berner ex, Minister Finland.
Today's political landscape doesn't inspire much confidence either. Figures like Sanna Marin seem to be playing their own game, with personal agendas taking center stage. Kudos to her achievements, but what kind of example does that set? I have no other issues, but she was bullshitting and lying.
Even our state-owned companies are not investing here. And then there's the new wave of "hustle" entrepreneurs. While their tenacity is admirable, their focus on tax loopholes and personal gains doesn't exactly scream community spirit. If our own institutions are hesitant to invest here, what message does that send to individual entrepreneurs, especially those without deep pockets?
There was a time when Finland stood united. Leaders inspired confidence, and businesses, big and small, aimed to uplift their communities. Grow the pie - It benefits everybody! This is dead, let us kill freedom and make everybody equal. The entrepreneurial spirit is stifled, replaced by a growing reliance on a government that seems more interested in interference than genuine support.
I’m just so tired, I hope it is just me getting older and more tired of this shit. Hopefully, it is just me who is getting older and more cynical about running a business here. Maybe I should try new things. Perhaps I am the problem.
Finland is still home, but something's changed. And I sincerely hope it's just a phase. The speed at which social decay is accelerating is mind-blowing.
A crisis is also an opportunity.
The 90-recession was extremely bad. I was just a kid back then, but my mum and dad were both entrepreneurs, and it was a bad time. They did all they could to survive. It is a lonely place. The quilt is still present. We lost a tremendous amount of entrepreneurs in the 90’s crisis. Many got forgotten and outcasted from society, let’s not make this mistake again.
In response to the crisis, Finland underwent transformative structural changes. There were company tax incentives, a renewed focus on exports, and a collective drive toward national success. Political affiliations took a backseat as everyone, from the left to right, rallied for Finland's prosperity. Fast forward to today, and we're more divided than ever.
Let’s work together hard and make Finland the best country in the world again. Or do we continue to increase debt, hoping for short-term relief? The GFC in 2008 was a wake-up call, but instead of implementing structural changes, we opted for the easy way out: more debt. The silent depression continues…
I once thought a recession might be the jolt we needed to break free from our over-reliance on the government. But post-COVID, I fear this dependency has only deepened. It's time for the pendulum to swing back to empower the people once more. There's a noticeable fragility in our society today—men, businesses, our public services, weakness everywhere. The 90s were tough, but they instilled resilience. Instead of looking to the government for solutions, people took charge. We need to rediscover that spirit.
The construction industry is already crying that there should be more government-supported buildings. How about tax cuts? That would benefit everybody, not just those who suck from the tit (biggest companies). Let’s add incentives to own a house. Not just tax everything more.
Tips for small entrepreneurs
You've probably heard it all before: diversify your revenue streams, build emergency funds, hustle on social media, invest in marketing, network... But let's cut through the noise and get to the heart of what truly matters when shit starts to hit the fan.
- Stop the business if it is not profitable and cut the losses. Don’t fucking take debt and put any collateral from your own and family assets. Nobody fucking cares about you, not our government, not big institutions, and certainly not your big suppliers. They want to suck more out of you and take everything you have.
→ Similar to the shark tank analogy, why do you have to go to TV to ridicule yourself that your idea/business is shit. If your friend is doing something similar, please help them. Hit them with a sucker punch straight to the nose and tell them to think what the fuck are you about to do?
- Ensure the optimal outcome for you and your loved ones or the least shitty one. Your employees don’t give a fuck about you in the end, your customers don’t give a fuck about you in the end, officials don’t give a fuck about you in the end, the taxman doesn’t give a fuck about you, your landlord doesn’t give a fuck about you. You don’t get any badges of honor for going the extra mile for everybody else. It is an incredibly lonely place.
→ Don’t try to save them - save yourself. Be honest with stakeholders, but don’t mask that everything is fine when it’s not. You end up sobbing through nights and in tears anyway when you have to fire people “out of the blue.” It's not about being selfish; it's about self-preservation. Be transparent with your stakeholders.
Conclusion
We are coming to a crossroads, but does it matter what path they choose anymore? Fucked anyway. Let the silent depression continue, and the destruction of middle-class, low-income, and small businesses continue slowly? Governments take more and more debt to keep the illusion that everything is okay. Erosion is everywhere.
Or a severe recession? Who gets fucked the most in a severe recession? Small businesses, low-income, middle-class…
Don’t worry; the stock market will go up forever.
I won’t let myself and my family succumb to depression. I will continue to develop myself and raise my family to the best of my ability. The future might look messy, but what legacy are we leaving for our children? The prevailing mentality seems to be to save the economy and environment by spending and consuming more. But in the long run, what are we truly achieving? It's time to opt out of this mess and seek a path that offers genuine value and sustainability.
The true victory lies in attaining freedom and not getting lost in the chaos of the madhouse.
Resources and good reads:
https://www.doria.fi/bitstream/handle/10024/148629/j27-5.pdf?sequence=1