A recent survey conducted by the Finnish Federation of Entrepreneurs, called the Yrittäjägallup, has revealed that many Finnish businesses have reported a weakening in profitability. The study, which took place between April 18th and April 28th, surveyed 1,041 small and medium-sized business representatives across Finland.
According to the results, expectations for the economic development of businesses over the next year have weakened since March.
The federation’s Chief Economist, Juhana Brotherus, stated that ”the financial situation of companies is still assessed slightly worse than in May of last year.” The easing of the energy crisis seems to alleviate the concerns of small and medium-sized enterprises, but at the same time, rising interest rates are being felt in many businesses.
Approximately 54% of the businesses surveyed assessed their financial situation as either very or fairly good. A further 29% judged it to be ”neither good nor bad”, while 17% felt that it was fairly or very poor. The situation was best for companies employing more than ten people and weakest for single-person businesses.
The inflation rate has also impacted businesses, with many companies raising their prices. However, not all businesses are able to pass on their increased costs to customers, resulting in 44% of businesses reporting a decline in profitability. This trend has been exacerbated by rising interest rates, particularly for small and medium-sized enterprises, as around 40% of them have outstanding debt.
Brotherus notes that delays and cancellations of investments due to inflationary pressures are a concern for the future growth of the Finnish economy. The inflation rate has already led to the cancellation of growth investments in companies with more than ten employees.
In addition, employers who are also entrepreneurs have increased their salaries, which is due to both a general shortage of workers and the current round of collective bargaining in Finland.
Looking to the future, Brotherus states that the needs of small and medium-sized enterprises can be summarized as growth, incentives, and a stable public economy. The upcoming government’s ability to meet these needs will be key to boosting entrepreneurial expectations for desired reforms.
Entrepreneurial risk is constantly on the minds of entrepreneurs, with the fear of making the wrong recruitment decision being a significant concern. Therefore, reducing the risk of hiring is essential to ensure that more small and medium-sized entrepreneurs are confident enough to recruit additional help without the threat of unreasonable harm to their business.
Overall, the Yrittäjägallup survey results highlight the challenges faced by Finnish businesses. The uncertainty surrounding the global economy, coupled with inflationary pressures and rising interest rates, has resulted in weakened business performance. Finnish entrepreneurs are now looking to the government for policies that support growth and incentivize small and medium-sized enterprises to maintain a stable public economy.
HT