Fortune favors the bold — Internationalising Balanco

Many Finnish SMEs encountered the difficulty of internationalisation. Companies that have succeeded in the domestic market and are performing well have attempted to spread their wings in foreign markets, but with varying degrees of success.

Success stories like Wolt or Relex have made headlines. However, the truth is that companies that have grown and succeeded in international markets from Finland’s SME sector have historically been rare.

Because the Finnish market is small, almost every company aiming for growth must consider their position with regard to the international markets. Hence, more and more Finnish companies have expanded abroad during and after the 2010s, and according to Statistics Finland, approximately 67,000 domestic companies are currently engaged in international trade.

Expanding abroad, however, is only the first step. The next challenge is to establish a market position and thereby create sustainable international growth. Gaining a foothold in a new area requires not only strong subject area expertise but also an understanding of the local culture and ways of working. Competitive advantage is earned through core competencies, but it is also necessary to adapt operations to fit the local culture.

Doing all of this is demanding, but many companies have succeeded. How do they do it? What sets them apart from the many others who do not succeed?

One summer day, we had a good discussion at Voland’s office, which led to the idea of interviewing Mikko Marttunen, the CEO of our portfolio company Balanco. He has successfully grown Balanco from a small domestic company to a group operating in four countries and employing over 160 people in just under nine years.

Balanco began its internationalization through acquisitions in 2020, realizing that due to the competitive situation in the Finnish market, going abroad was essential for continued growth. The company initially planned to expand into the Baltic countries but quickly turned its attention to Sweden. The reason for this choice was the attractive market, which is more than double the size of the Finnish market. Additionally, due to the cultural similarities between Sweden and Finland, the company thought Sweden would be a good target country for its first acquisition.

Through thorough market research, Balanco found a suitable acquisition target in Sweden, a small accounting firm called Metrics, whose turnover the previous year had been around 2.3 million euros. Balanco’s own turnover was about 2.5 million at the time, so the acquisition doubled the company’s value at once. Such a change required a lot of flexibility and agility from the organization, but above all, it required courage.

According to Marttunen, courage was indeed the key factor behind the deal. Recognizing a good opportunity, Balanco did not hesitate to proceed, even though finalizing the deal required some financial maneuvering: “We built a somewhat risky financial solution to complete the deal. Now that all the installments have been paid off, it no longer seems so risky,” says Marttunen.

After the successful acquisition, the next challenge was the integration process. Marttunen explains that Balanco was somewhat surprised by how different the work culture in Sweden is compared to Finland. According to him, it is much more important in Sweden to actively involve people in decision-making and to build trust before making major decisions: “While Finns are often used to accepting instructions from above, Swedes are not. People in Sweden need to be involved in decisions, and informal off-duty meetings are the cornerstone of trust,” says Marttunen.

Logistical issues also had to be considered when expanding into Sweden. For example, payday in Sweden is consistently on the 25th of the month, whereas in Finland, it varies by company. As an agile accounting firm, Balanco has been able to handle such logistical matters excellently, which has further helped in building trust.

According to Marttunen, the successes achieved in the first acquisition and related integration process were core experiences that gave Balanco confidence when later expanding into other Nordic countries. The key factors have been courage and trust.

Building trust with customers, employees, and partners has required determined effort, and been central to Balanco’s success in the Nordic markets. Marttunen emphasizes that gaining trust takes time, openness, and genuine interaction. “Without trust, we would not be here. It is the foundation of everything we do,” he says.

A fun fact that shows Balanco's dedication and cultural commitment is that CEO Marttunen currently reads his newspapers in four different languages. Such small and concrete examples demonstrate how deeply Balanco is committed to understanding and integrating into the cultures and practices of new market areas. It is often the small things that make a lasting impression when dealing with other people.

Balanco embodies many typical Finnish strengths: honesty, professionalism, and precision are integral parts of the company’s operational culture both in Finland and abroad. However, Marttunen says the most important value behind the Balanco’s internationalization has been courage – a somewhat more uncommon trait for Finns. Perhaps it is precisely because of this that Balanco has succeeded where many others have failed.

Balanco’s story is an example of how a Finnish SME can boldly utilize its strengths, expand into new countries, and achieve sustainable growth in international markets. “I believe we have a lot of skill and expertise in Finland, but too often we lack courage,” concludes Marttunen.

Voland Partners supports Balanco as a co-entrepreneur in every step of the internationalization process and actively participates in updating the company’s strategy.

Balanco Group is a service-oriented pioneer in the accounting industry driven by an uncompromising service attitude and an open-minded approach to developing the accounting industry. In addition to its Finnish company, Balanco Group includes accounting firms in Sweden, Norway, and Denmark. The rapidly growing Balanco Group had a turnover of 10.4 million euros in 2023 and employed about 150 financial management professionals. www.balanco.fi