Prepare for exceptional situations in business activities

Make sure that your company remains functional regardless of your absence. Agree beforehand with your potential partners and employees on how your work will be shared within the company. Make sure that nothing depends on the competence and knowledge of one person only. If you are a sole trader, find a trusted person by your side who can take care of at least urgent matters while you are away.

You can draw up a continuing power of attorney for exceptional situations. It allows you to authorise a person of your choice to take care of your business during your absence.

Make sure that your self-employed person's pension insurance or YEL insurance income is up to date. The amount of the entrepreneur's daily sickness allowance and parental allowance is determined on the basis of the YEL income.

Obtain adequate occupational health care services for your company. They may also help you reduce your own absences due to sickness. You may also be given treatment related to your illness or injury and support for returning to work after your sick leave

Issuing a continuing power of attorney to a trustee makes it easier for you to manage your company's affairs when you cannot see to them yourself. For example, you may suddenly become ill, be injured or your health may deteriorate in some other way. Appointing a trustee is particularly useful when you are acting as a sole trader.

When you appoint a trustee in advance, you know that your company's matters will be managed by a reliable person familiar with them. A trustee can, for example, pay bills and sign contracts without unnecessary bureaucracy. 

To appoint a trustee, draw up a continuing power of attorney. You should use an expert, such as a legal aid office, a law firm or a lawyer's office, for drawing up the power of attorney. When you lose your capacity to see to your company's affairs yourself due to the deterioration of your health, the trustee you have appointed can start managing them once the Digital and Population Data Services Agency has confirmed the authorisation.

Insurance policies provide security for both your company and you as an entrepreneur. They allow your business activities to continue as normal as possible, regardless of exceptional circumstances. Therefore, they are an essential part of the prevention of financial difficulties in your company.

As an entrepreneur, you are required take out at least an entrepreneur's pension insurance or YEL insurance. It will secure your livelihood during, for instance, your illness or family leave. Please note that the amount of your YEL income determines the amount of the daily allowance you receive. You should therefore adjust the amount of your income so that you will also receive a sufficient income during your sick leave or family leave.

You can supplement your business’s mandatory insurance arrangements with voluntary insurance. For example, business interruption insurance covers your business operation for losses resulting from sudden interruptions. An accident insurance, on the other hand, provides compensation for medical and rehabilitation expenses resulting from an accident

Prepare a contingency plan for your company, where you specify in advance how your company's operations would be secured in the event of a crisis. Consider also alternative ways to carry out your business activities. Train your staff for facing exceptional situations.

Make sure that your company always has funds for at least three months’ payments. This way, your company will have a buffer fund for unexpected situations.

Acquire a number of important customers for your company. It will prevent your income from collapsing even if one of your customers runs into payment difficulties or you lose one of them totally.

It may not be a good idea to build your business activities relying on one product only. When your company has a broader product range, the sales of other products may fill the gap in the demand for an individual product.

Do not rely on only one supplier. It may stop your entire production if your sole supplier fails to deliver a raw material you need.

If your company has more than one owner, you should draw up a shareholders’ agreement, a partner agreement or a member agreement, depending on the company form. In the agreement, you can agree on the kind of rules for your company that cannot be agreed upon in the articles of association, the articles of partnership or the company rules. These include division of labour, prohibition of competition, secrecy and the practices of selling shares.

With the help of the agreement, you can prepare for your company's business risks and new situations. It helps to prevent disputes between owners and facilitates the settlement of disputes. When the rules have been agreed in advance, conflict or change situations will not paralyse your company's operations.

The partnership agreement of a general partnership or a limited partnership and the member agreement of a cooperative correspond in general to the shareholders’ agreement of a limited company. It is a good idea to draw up the agreement already during the start-up phase of the company. It should be updated if any material changes happen in the company.

At the latest, make the agreement when more owners join the company.

In the event of divorce, the company is usually divided – in the same way as an apartment, for example – even if you were its sole proprietor.

If your company has high financial value, you may have to pay your spouse a lot of money in adjusting payment. To do this, you may need to take a loan, sell part of your company, or even give up your company altogether. If your company shares are used as adjustment, your spouse may become a shareholder.

If you co-own a company, one of you often has to buy the other one out of the company. If you both would like to continue with the company, disputes may arise, which may be reflected in the business.

By making a prenuptial agreement you may leave business operations outside the marital rights to property. It means that the company is not divided between the spouses in divorce. You may also agree that the shares of the company shall not be used as adjustment.

If you are co-owners of the company, you should also conclude a shareholders’, partner or member agreement, depending on the form of the company. Agree on the course of action for you to take regarding the company in the event of divorce.

As an entrepreneur, you should make a last will and testament. With a will, you can influence what happens to your company's assets and ownership when you die.

If you want your business to go on after your death, consider carefully who would be the right person to continue your work. You may will your business assets to him or her as defined by law. If the person is your close relative, prepare for the change of generation well in advance.

While still alive, make the necessary changes to your company's structure so that your will can be carried out. This way you can ensure, for example, that your spouse and children continue to get income from the company even if they are not actively involved in its operations.

Use a legal expert to draw up the will. If your plans change over time, you can always replace your will with a new one.