What do I do?

Company’s financial difficulties and their prevention

To get the best help for your situation, first answer the questions on the Preliminary questions page.

Prepare for risks

Prepare for unexpected situations and absences

Prepare a contingency planfor your company, in which you define how you can secure your company's operations in unexpected situations.

You should also:

consider alternative ways to carry out your business activities
make sure that your company always has funds for at least three months’ payments.

Sometimes the company's financial difficulties are caused by reasons other than the company itself.

Have a sufficient buffer fund to prepare for the general deterioration of the development prospects in your industry.
Try to find multiple significant customers so that your income does not plummet if one of your customers has payment difficulties or if you lose one of your customers altogether.
Do not rely on just one supplier or have a list of back-up suppliers.
Have enough savings for three months' expenditure so that you are prepared if your own household’s costs increase.

Think about how you could keep your company operational despite your absence.

Agree beforehand with your potential partners and employees on how your work will be shared within the company if you fall ill or take parental leave. 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 should also prepare your own finances for a possibility that you do not receive income from your company as a private entrepreneur during illness.

Arrange occupational health care services that meet your and your employees’ needs.

Remember that an entrepreneur is entitled to Kela's sickness allowance and partial sickness allowance as well as possibly rehabilitation allowance or disability pension. If health care costs begin to burden your finances, you may be able to negotiate the costs.

Read the instructions:

If you suddenly fall ill, have an accident or your health deteriorates in some other way, the power of attorney ensures that your personal affairs are handled. Appointing a trustee is particularly useful when you are 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 on your behalf.

For instructions on how to make a power of attorney, see the guide Guardianship or continuing power of attorney.

Updated: 27/10/2022

Personnel planning

If the number of staff and tasks do not support the achievement of the company's objectives, this may be one cause for financial difficulties. In terms of performance, it is important that the organisational structure and the organisation of work are consistent. In addition, the atmosphere in your work community, staff turnover, your own coping and your entire company's operations are influenced by the way in which you lead your employees.

The organisation of work is carried out for a number of reasons, such as the changing market and economic situation. Organisation should also be carried out proactively and as part of continuous development so that the company knows what kind of resources can be used to achieve the objectives and how to prepare for unexpected situations. If the company has at least 20 employees, a statutory personnel and training plan must be drawn up each year.

Updated: 27/10/2022

Preparing with contracts

If your company has several owners, you can conclude a contract to agree on rules for your company that cannot be agreed upon in the Articles of Association.

The contract helps to prevent disagreements between owners and facilitates the settlement of disputes. It can settle your company's rules, such as division of labour, prohibitions of competition, confidentiality and the sale of shares. When the rules have been agreed in advance, conflict or change situations will not paralyse your company's operations.

If the company has more than one owner, depending on the company form you should draw up a

shareholders’ agreement (limited liability company)
partner agreement (general partnership or limited liability partnership)
member agreement (cooperative).

The contents of all three different contracts are essentially the same as those of a shareholders’ agreement in a limited liability company.

Updated: 27/10/2022

Keep insurances in order

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.

You can supplement your business’ mandatory insurance arrangements with voluntary insurance policies. 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.

Updated: 27/10/2022

Consider a prenuptial agreement if you are married

In divorce, the company is divided equally as all other assets, even if it is only owned by you. If your company has high financial value, you may have to pay your spouse a lot of money in adjusting payment or give them shares.

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. See instructions on how to make a prenuptial agreement.

Updated: 27/10/2022

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Be prepared to give up the company

If you want your business to continue operating after you, consider carefully who would be the right person to continue your work. Prepare for a generational transfer for example by training your successor in their tasks for several years.

Business services in your region can provide support for generational changes.

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.
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.
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.

Updated: 27/10/2022

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