At times, it is necessary to remember that Estonia is as rich as our foreign trade is successful. And the latter is entirely dependent on ambitious enterprises and the realisation of their plans. There is much reason to give some credit for the many things that have been done right over these years, as we currently have over 120,000 economically active enterprises. I will summarise the situation of entrepreneurship in Estonia in this story. I will begin with some numbers and then move on to an example of a specific company.
What have we achieved in entrepreneurship after the restoration of independence?
We have an enterprise whose annual revenue is over one billion euros – Ericsson. We have an enterprise that employs more than 5,000 people – Eesti Energia. We have an enterprise who pays over 130 million euros for wages every year – Eesti Energia. We have an enterprise whose annual profit exceeds 200 million euros – Swedbank. We have 875 enterprises who have increased their turnover and profit by at least 50% in the last three years – gazelles.
These enterprises are the flagships of Estonian economy and bring a lot of pride to the country. However, economic growth does not only require the biggest and fanciest enterprises, as the entrepreneurship in the country is only as successful as the average cross-section of an Estonian company. I will now bring forth, so to speak, one hundred year results of an average Estonian company. I wonder what the result would be in 2118 when Estonia turns 200?
In the centenary year of the republic, the average Estonian company has a revenue of half a million euros and spends 85,000 euros in labour costs, while earning an annual business profit of 37,000 euros. The enterprise has eight employees. It is, of course, located in Harju county and is engaged in the area of letting immovable property. It is currently impossible to tell what the situation might be like in 100 years. Development has become increasingly rapid. It is illustrated by the fact that half of the ten highest valued enterprises in the world did not even exist ten years ago. We shall wait and see!
When will the next growth leap occur?
Over 15,000 new enterprises are established in Estonia on an annual basis, i.e. entrepreneurship activity is good. It should be added that over 1,500 of those have been created by e-residents, which could not even be dreamed of on the 95th anniversary of the republic. Currently, the founder of every tenth enterprise is the citizen of another country, however, their impact on local economy is not even close to one percent yet. There is still room for improvement – it is definitely a potential that could be realised when summing up achievements upon Estonia’s future anniversaries. Another aspect is the invasion of the sharing economy, which may have turned many people who earn income by offering various services into entrepreneurs without them even realising it.
Estonian enterprises are currently generating 55 billion euros in annual revenue. That is over two and a half times as much as the Estonian gross domestic product. Over seven billion is spent on labour costs and the generated business profit is nearly four billion euros – this is currently the case according to findings. It is important to consider where the next growth leap should come from. I believe that the objective should be to establish more brands that are internationally renowned in their own niche. Why not even the most renowned? We have the prerequisites to achieve this. A relatively strong industry and rapidly developing service economy. It would help get closer to end-users and earn a higher margin per unit. Easier said than done. Luckily, we have many entrepreneurs who are making an effort to this extent on a daily basis.
Example: a success story spanning over one hundred years
I will conclude with an example of a successful Estonian industrial enterprise. Nowadays, it is often the case that successful, so-called new age companies are the main topic of conversation, whereas great traditional enterprises, who have done their own thing for decades and are at least as successful, are often left out of the spotlight.
Since I have discussed the long-term development of the Estonian entrepreneurship, it is purely due to this that I have made the choice to introduce you to an enterprise called PMT OÜ, which is operating in Paide. The story of the enterprise dates back to the period preceding the first Republic of Estonia, i.e. 1911. They are active in the area of production of metal constructions under the Humus brand. The enterprise has undergone rapid development in the last few years and has increased their revenue to 8 million euros, while being an employer to 120 people. The enterprise’s objective for the next five years is to increase their revenue to 19 million euros. These are exactly the type of hotshot enterprises that Estonia needs increasingly more of, as only then can we be sure that there is something to celebrate in 2118.
I wish a venturesome and pleasant anniversary of the republic to all of us!
Director of the Trade Development Agency