How to start a company in the Nordic countries: A step-by-step guide on the critical steps involved in starting a company in the Nordic countries.
The Nordic countries are a group of five countries in Northern Europe: Denmark, Finland, Iceland, Norway, and Sweden. They are known for their strong economies, high standards of living, and commitment to social welfare.
The Nordic economies are among the strongest in the world. In 2022, Norway had the highest GDP per capita in the Nordic countries, followed by Denmark, Sweden, Finland, and Iceland. All five Nordic countries have a GDP per capita that is significantly higher than the EU average.
The Nordic economies are all based on a mixed market model, strongly emphasizing social welfare. This means that the government plays a significant role in the economy, providing healthcare, education, and childcare services. This makes it an ideal region for a startup company plan.
Keep on reading to learn the essential checklist for starting a company in Nordic countries!
Think of a Business Idea
To start a business, you must have a great idea. There are already numerous companies working on different things, so, it’s possible that someone else has also thought of your idea. Rather than attempting to create something entirely new, concentrate on how you can do something better than others.
Influential companies excel at solving specific issues. People want to get rid of their problems and have fun. So, question people directly about their difficulties. You can search and find out what problems individuals are having in your sector by joining online communities.
You should also know that people with good business ideas start by having a lot of poor ones. No one starts out with perfection. Write down your horrible ideas, including the company’s name and who it would serve. Even if you know the idea is terrible, strive to turn it into a viable plan. Continue to experiment with different concepts until you find one that works.
Looking at everyday objects in a new light can sometimes lead to fantastic business ideas. Take something ordinary and present it unusually, or something unusual and present it unusually. You can also simplify and make complex solutions understandable.
Decide Your Prime Location in Nordic Countries
The Nordic countries are known for their high quality of life, strong economies, and favorable business environments. However, knowing where you’d like to market your products/services in Nordic Countries is essential. When choosing the best country among the Nordics for business, there are a few key factors to consider:
GDP per capita: This is a measure of the average income of a country’s citizens. The higher the GDP per capita, the more prosperous the country is likely to be. In 2022, the GDP per capita of the Nordic countries ranged from $59,142 in Norway to $47,297 in Finland.
Ease of doing business: This refers to a country’s regulatory environment and overall business climate. The World Bank’s Ease of Doing Business 2023 report ranked Denmark as the most accessible country in the world to do business, followed by Finland, Sweden, and Norway. Denmark ranks 4th out of 190 countries in the report, making it one of the easiest places in the world to do business. Denmark scores particularly well in areas such as starting a business, getting credit, and protecting investors.
Taxes: The level of taxes in a country can significantly impact businesses. The Nordic countries have relatively high taxes, but they also offer a number of tax breaks and incentives to businesses. Following are the tax rates of Nordic countries:
- Denmark: 22%
- Finland: 20%
- Iceland: 15%
- Norway: 22%
- Sweden: 21.4%
Education and skills: The quality of education and skills of the workforce is another essential factor to consider. The Nordic countries have some of the best education systems in the world, and their workforces are highly skilled.
Innovation: The Nordic countries are known for their innovative cultures. They are home to a number of successful tech companies, such as Spotify and Skype. Finland is often considered the most business-friendly Nordic country due to its exceptional innovation ecosystem and conducive economic environment.
Ultimately, the best country for business in the Nordics will depend on the business’s specific needs. However, all of the Nordic countries offer many advantages that make them attractive destinations for businesses.
Do a Thorough Market Analysis According to the Preferred Country
Once you’ve developed a business idea and decided to take it to market, it’s time to start planning and preparing. Conducting market research before launching a new company idea is a vital step in ensuring the success of your new venture. Market research enables you to discover critical information about your target audience to reach, engage, and finally convert your ideal clients into purchasers.
Here’s how you can conduct market analysis for your desired products/services:
Understanding the Market
Look into reports for various industries. Even if your idea is unique, like a new toy, you can find info on toy market trends and pricing. There are many reports online that will show you current and expected trends, helping you understand your product’s potential.
Knowing Your Customers
Gather info about your future customers, like age, education, location, and buying habits. Use resources like the Small Business Administration’s site. Figure out who’s likely to buy and why by comparing similar products to customers.
Talking to Potential Customers
Connect with potential buyers online to ask about their needs. Polls or surveys on social media work well. For instance, if your customers are moms, share links where they hang out online. Understand what they want and how your product can be improved.
Understanding Competitors
Explore other companies in your industry to understand the business landscape. Compare similar products to gauge success. Even small firms or startups offer insights. Talk to potential customers to know what they like or need from competitors.
Testing Your Idea
Offer services or products to gather feedback. For services, get opinions from a few customers. Create product prototypes to understand usefulness and pricing. Adapt your idea based on what you learn.
Choose Your Business Structure
Selecting a company name and legal form in Nordic countries is crucial for a successful business launch. When choosing a name, make sure it’s unique, easy to remember, and relevant to your business. Check with the local business registry to confirm its availability and legality.
Here’s a simplified guide to all existing legal forms in the Nordic Countries to help you make an informed decision:
Sole Proprietorship:
Ideal for small ventures and freelancers. You’re the boss but also personally liable for debts. Easy setup, fewer regulations, and direct control are perks.
Limited Liability Company (LLC):
A common choice for medium to large businesses. Owners’ liability is limited to their investment. It requires more paperwork and capital but offers credibility and protection.
Partnership:
A great choice for shared ventures. General Partnerships mean shared liability, while Limited Partnerships offer a mix of limited and general partners. Sharing tasks and risks is critical.
Joint Stock Company (JSC):
Suitable for larger enterprises with multiple shareholders. Capital is divided into shares. Transparency and access to capital markets are advantages.
Branch Office:
You can establish a branch in a Nordic country if you have an existing company elsewhere. It’s going to be an extension of your primary business, often with less administrative hassle.
Representative Office:
Mainly for market research and promotion. It can’t engage in profit-generating activities but helps you understand the market before committing fully.
Always consider factors like liability, taxation, complexity, and plans. Consulting legal experts and local authorities is wise for a smooth business launch.
Write Your Business Plan
The next step is to take your ideas and analysis to documented form, known as a Business plan. A business plan is a formal, written document describing your business, its goals, and how you plan to achieve them. It is a roadmap for your business and can help you in many ways, such as:
Getting funding: A business plan can help you get funding from investors or lenders.
Attracting customers: A business plan can help attract customers by showing them you have a well-thought-out plan for your business.
Managing your business: A business plan can help you manage your business by providing a framework to track your progress and make necessary adjustments.
The contents of a business plan can vary depending on the specific business you have, but typically include the following sections:
Executive summary: This is a brief overview of your business plan.
Company description: This section provides information about your business, such as its products or services, target market, and competitive landscape.
Marketing plan: This section describes how you plan to reach your target market and sell your products or services.
Financial plan: This section provides financial projections for your business, such as revenue, expenses, and cash flow.
Management team: This section provides information about the people running your business.
Start the Registration Process
Now that you’re done selecting your company name and legal structure, it’s time to start the registration process. The comprehensive registration process may vary from different Nordic country to another. However, this is what the generalized version of the registration process looks like:
Draft Articles of Association:
Prepare the company’s Articles of Association, outlining its purpose, activities, ownership structure, and governing rules.
Appoint Directors and Shareholders:
Assign directors and shareholders, specifying their roles and responsibilities. Some countries require local directors or legal representatives.
Obtain Necessary Permits and Licenses:
You might need specific permits or licenses to operate legally depending on your business type. Research and obtain them before proceeding.
Register with the Business Authority:
Submit your company registration documents to the relevant national business authority or registry. This usually includes the Articles of Association, identification documents of directors/shareholders, and other required forms.
Pay Registration Fees:
Pay the applicable registration fees as determined by the authorities. These fees cover the processing and approval of your company’s registration.
Obtain VAT Registration (if applicable):
If your business is subject to Value Added Tax (VAT), register for a VAT number with the local tax authorities.
Register for Social Security and Employee Taxes:
Register your company for social security contributions and employee taxes if you plan to hire employees. Compliance is crucial to avoid legal issues.
Open a Bank Account:
Open a business bank account to manage your company’s finances. Local banks offer a range of services tailored to business needs.
Register for Taxation:
Register your company for corporate income tax, withholding tax, and other relevant taxes with the local tax authority.
Follow Employment Laws:
Familiarize yourself with local labor laws and regulations, including employment contracts, working conditions, and employee rights.
