Formalization is no panacea for micro-entrepreneurs, a liminal space is necessary for growth

Yesterday, my bank sent back a client’s payment though I’d presented the invoice and other paperwork. I’m a registered micro-business in the highly formal economy of Finland, and the bank I’ve been with since 2009 has upped their internal regulations after a spate of bad publicity surrounding the Panama papers. I’ve been caught in the middle of changing rules though the kind young man sitting with me at the bank did tell me I was neither alone in this nor was it rare among their customers. They’re going through changes.

We talked a little about the work I do among women entrepreneurs in the informal economies of East Africa, and he pointed out that Finland was a very difficult operating environment for startups and entrepreneurs. They recognize this. He observed that my experiences at this formal end of the spectrum could only help me with my work on the other end. I had to agree, though I left the bank empty handed, having been turned down by their corporate banking side as well.

Still, I haven’t come here to moan about my banking troubles so much as to point out that the young man was right. Neither end of the spectrum of formal and informal is healthy for a rapidly evolving newly born business or micro venture. Too little support and growth is slow and painful; too much regulations and you fall off the wagon everytime your business changes or their rules evolve.

What is needed and rarely articulated is a grey area between formal and informal – a liminal space if you will. One that allows for change and acknowledges the experimentation and iteration that is the natural part of the development process. A common cliche is to liken a young or small business (my small business is 12 years old) to a growing child who might sometimes have to burn a finger on a match to learn about fire.

What perhaps is needed is to codify this ambiguous moment or period and discover ways to fit that within the formal structures of a highly developed society, as well as adapt it as a stepping stone in the unstructured informal underdeveloped locale. These bridges need not be identical in details so much as concept – that an entrepreneurial venture’s nature is such that it needs room to move and grow unhampered whilst still receiving the support and facilities that it requires.

There’s hope yet for me, allegedly. The bank has set up a startup unit and I’ll call them today to see if there’s anything that can be done. Else I’ll have to look around for another bank. In the meantime, the taxes still have to be paid and the remittance problem solved. Wish me luck!

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