Financal concepts, a calculator showing zero with magnifying glass

Business owners who experienced bankruptcy tell stories in new book

A new book from Taina Ahtela tells the story of ten business owner’s struggles through bankruptcy.

10 tapaa tehdä konkurssi — ja selvitä sitä (“10 ways to go bankrupt — and survive”), published by Gummerus in August, tells the story of what business owners went through before and after their companies went bankrupt.

The author, Taina Ahtela, once ran a communications practice of her own. At times, the writing process made her think about what running a business means.

“There were moments were I wondered whether running a business is appreciated enough. Not all businesses become success stories, but without the courage to take risks, there wouldn’t be any success stories at all.”

“My employees asked me what they should do now. I said I didn’t know. I hadn’t a clue” (Tommi Juntikka, Paakkola Conveyors engineering company, bankruptcy in 2014).

For her book, Ahtela interviewed business owners, from start-up entrepreneurs to a long-standing family business and other established companies. Some companies entered debt restructuring, which did not, however, salvage all participating businesses as expected.

In spite of their experiences, almost all of the business owners in the book have overcome their difficult years.

“One business owner said that what they considered a failure was not the bankruptcy itself but their failure to seek help in time. In many of the cases, time has provided perspective.”

Ahtela’s goal was to find a diversity of entrepreneurial stories from different parts of Finland. Some businesspeople said no, but most wanted to share their lessons with others and offer peer support for other business owners in the same situation.

“The message they all had in common was that a bankruptcy is nothing to be ashamed of. In many of the stories, shame raises its head in some form,” Ahtela says.

Restaurant business felt too easy

One of the business owners in the book is Jani Asunmaa of the company BigBoat Oy, which declared bankruptcy in 2010. Asunmaa entered the restaurant business on a whim.

“My partners and I reckoned that we’d pay off our investments of around €150,000 quickly. Unfortunately, the investment was stunningly good. The restaurant was in a fantastic location, and we had very good summers at the start. Our sales were absolutely incredible, €10,000 a day,” Asunmaa remembers in the book.

“I thought oh my God, I’ve been in the wrong business until now. This restaurant business is so easy: I should open more restaurants. But I didn’t know the business at all.”

Asunmaa’s excitement saw him opening several more restaurants, which were not as successful. Every new restaurant yielded less than the last. They lacked a common concept. The company had borrowed a lot of money for repairs.

“If only someone had come to me and said Jani, you’ll do people a favour by closing your restaurants,” Asunmaa says.

In the end, Asunmaa’s pension provider sought bankruptcy for his company because of unpaid occupational pension contributions. In difficult times, Asunmaa turned to drink.

“Maybe it was the last straw when I had to tell ten reliable employees that I couldn’t pay my debts. I never thought seriously about suicide — I had the bottle by my side to comfort me.”

“I hope I’m offering peer support”

Many of the business owners in the book decided to keep going as entrepreneurs after bankruptcy. Ahtela says that all of them have achieved closure and seem to be at peace with their bankruptcies.

In many of the cases, time has provided perspective.

“One business owner in the book said that what they considered a failure was not the bankruptcy itself but their failure to seek help in time,” Ahtela says.

The book is particularly timely now, as the bankruptcy numbers are rising. We previously reported on the concerning rise in bankruptcies.

“It’s true that the book is regrettably timely. I hope that through my book I’m offering peer support and information.”

“And then I just realized that it (the bankruptcy) was all the same to other people. Just like when a hockey player screws up: no one remembers it the next day. No one remembers today that a rose farm went bankrupt” (Markku Suutari, Suutari rose farm, bankruptcy in 2012).

Ahtela says that the more financial success that precedes a bankruptcy, the bitterer the experience is. Not all business owners featured in the book have suffered personal bankruptcy.

When a business goes bankrupt or enters corporate reorganization, a record is made in the public insolvency register. The record of a bankruptcy is removed three years after the bankruptcy lapses or the final settlement has been accepted.

The 2022 amendment to the Credit Information Act means that a payment default record can be erased one month after the debt has been paid and the information about the payment has been provided to the controller of the credit information register.

“The business owner’s exhaustion can sometimes be worse than the bankruptcy itself. That’s when family and friends are even more important. The business has been running on high intensity, but suddenly everything grinds to a halt. It’s a very sudden stop,” Ahtela says.

The book points out that a significant proportion of bankruptcies lapse. According to Statistics Finland, of the 2,450 applications for bankruptcy in 2021, only about one in five end proceed to a stage where a disbursement list is certified. When a bankruptcy lapses, it means that the company stops operating, but bankruptcy proceedings are not continued. Two out of three bankruptcies lapse because of a lack of funds.

Procrastination usually not worth it

Tiina Toivonen, Legal Affairs Manager at Suomen Yrittäjät, the Finnish SME association, predicts that the number of collection letters threatening bankruptcy, bankruptcy applications and bankruptcy will increase during the coming year.

“The Tax Administration and pension providers are the biggest applicants for companies’ bankruptcies. In their assessment, bankruptcy applications in August will be 20–25% higher than a year ago,” Toivonen says.

Businesses distress has been seen in calls and emails to the Suomen Yrittäjät counselling service and the Yrittäjän talousapu financial counselling service. Business owners seeking help include construction subcontractors, specialist renovation construction businesses and several small businesses in the service sector. Toivonen says that many businesses seek help too late.

“In those situations, the best solution for the owner is to wind down operations in controlled a fashion as possible. Then, they don’t need to fear being trapped in debt forever after bankruptcy.”

Toivonen is referring here to the legislative amendments passed last year, and lobbied for by Suomen Yrittäjät. They help business owners who have filed for bankruptcy free themselves from their old business debts and make a fresh start in a reasonable period.

Toivonen points out that financial difficulties do not always lead to bankruptcy. Creditors may be flexible and in the best case be favourable towards different kinds of payment programmes. If a business is facing temporary financial difficulties, it can increase its financial health through steps such as a sole trader’s debt restructuring or a corporate reorganization. A court always decides on corporate reorganization or access to debt restructuring.

Businesses primarily cease trading through other avenues than bankruptcy. Every year, almost 30,000 businesses stop operating.

“The easiest was the debt collection agency’s invoices. They contained steep interest, but at least no business owner made heart-breaking calls to say all the money’s gone, could you pay the bill, or at least part of it” (Jani Asunmaa, BigBoat Oy, bankruptcy in 2010).

The quotations are from the book.

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Pauli Reinikainen