Micro-enterprises provide security of supply – disruptions in international logistics can open up new opportunities for agile micro-enterprises

Russia’s war of aggression in Ukraine and its consequences put a strain on micro-enterprises. In the construction sector, for example, the rising prices of construction materials and energy are often directly excluded from the micro-entrepreneurs’ margins. In view of this change, few micro-enterprises have savings under their mattress. Many entrepreneurs are flexible with their own salary. Entrepreneurs operating via networks do more themselves instead of buying services from other entrepreneurs. On the other hand, disruptions in international logistics can also open up new opportunities for agile and competent micro-enterprises.
Matti Muhos

For example, substitutes for raw materials and components previously imported from Russia or China are now sought closer by. The aim is to ensure critical products, services and functions also in the event of disruption in global supply chains. For these reasons, new opportunities for scalable business are now opening in Finland as well as in the large European internal market.

Micro-enterprises are agile to respond to the rapidly changing needs: in fast changing situations, it is not possible to play it safe; instead, we need the courage to experiment – with real money and real customers. This is the strength of micro-enterprises.

As a result of the pandemic and the war in Ukraine, significantly more attention will be paid to risk management, preparedness and security of supply in the public debate. Micro-enterprises have rarely been highlighted in these discussions from the perspective of security of supply.

Companies produce a significant part of the activities that are important for the security of supply. In total, 94.3% of Finnish companies are micro-enterprises, and they account for a quarter of all jobs in companies. The most common sectors of micro-enterprises include agriculture, forestry and fisheries, construction, trade and services, logistics and manufacturing.

Without thinking much about it, we eat food produced by micro-entrepreneurs and live in homes built by micro-entrepreneurs.

Outsourcing has been a significant trend in recent decades. Companies use outsourcing to focus on their core business expertise and to transfer activities considered less critical to external actors, as well as to cut costs, such as the costs of labour, equipment and facilities. As a result of this change, too, many services that are essential for the security of supply are practically provided by micro-enterprises. The transport sector is a good example of this.

Micro-enterprises are a group of companies that play a role key in sustainable growth and continuous renewal, and act as a buffer in crises. For example, in the midst of the coronavirus pandemic in 2020:
• according to Statistics Finland, the number of personnel in micro enterprises increased by around two thousand, while the number of staff in small, medium-sized and large enterprises decreased by about forty thousand, for the most part in large companies.
• the percentage of micro-enterprise personnel increased in comparison to all working-age people.
• companies were set up at an increasing frequency and
• more people found employment in micro-enterprises than before.

To put it simply, large companies are excellent at doing things more efficiently, faster and cheaper, but they are slow to change. Micro-enterprises are natural innovators who need to do things in a different way in order to grow.

An active market and a competitive economy are the cornerstones of the security of supply – that is why it is important to keep micro-enterprises involved in developing the security of supply as well as in the related discussions. New opportunities for the future depend on today’s micro-enterprises. It is worth investing in them in the midst of change.

Author: Matti Muhos, DSc (Tech), Director, Professor, University of Oulu Kerttu Saalasti Institute