Is It Worth Being an Entrepreneur? The Market for Small and Medium-Sized Enterprises in Poland

Key information:

• In Poland, the majority of enterprises are microenterprises employing up to 10 people, who are eager to start businesses despite the risk of bankruptcy.
• Polish SMEs mainly operate in the service sector, and the pandemic has particularly affected this area, causing many companies to deteriorate.
• In response to the crisis, the Anti-Crisis Shield was introduced, allocating PLN 75 billion to support micro, small and medium-sized enterprises.
• Companies have shown great flexibility, quickly adapting to new conditions, such as introducing delivery or online sales
• Despite the uncertain market situation, the crisis has also created new opportunities, with financial support and changes in customer behavior fostering entrepreneurship.

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What makes up an SME?

Enterprises in Poland are divided into micro (96.7% of all registered companies), small (2.4%), medium (0.7%) and large (0.2%).

Microenterprises are businesses employing up to 10 people, and are mostly family-owned. In Poland, the number of people working in microenterprises is 9.9 million people and in recent years there has been a steady increase in the number of entrepreneurs. These people are not afraid to start their own business, despite the fact that as many as 32.4% of newly established companies do not survive the first year.

Sectors of activity

Polish SMEs operate primarily in the services sector (52.0%). Nearly half as many operate in trade (23.6%), and in construction only (10.3%). The remaining companies operate in industry (13.3%). The government and the Polish Agency for Enterprise Development have decided to support companies negatively affected by the pandemic.

COVID-19 a SME

A survey of SME entrepreneurs showed that almost 50% of those surveyed admit that their company's current economic situation has deteriorated. The services sector suffered the most, mainly due to the temporary cessation of operations. Most of the companies involved in manufacturing had no problems sourcing the components they needed for production, so they were able to operate uninterruptedly. However, as many as 18.5% manufacturers were unable to import the components they needed, causing them to decide to suspend business altogether.

The Anti-Crisis Shield

The PFR Financial Shield is PLN 100 billion of support for Polish companies. Of this pool, PLN 75 billion has been transferred to help SMEs. The aid earmarked for microenterprises is PLN 25 billion, for small and medium-sized companies - PLN 50 billion, and the remaining PLN 25 billion is to go to large companies.

"The assistance is aimed at companies that, without the PFR injection, would have had to cease business operations or severely curtail them. It also applies to companies that have already benefited
from aid programs available on the market, but nevertheless failed to break out of the crisis caused by the pandemic." - says Andrzej Kopyrski, managing director of PFR.

The activation of the Crisis Shield, according to a June 1 news release, preserved 1 million jobs. To receive such support, companies had to meet a number of requirements, including confirmation of the cessation of operations. Applications were submitted until April 23, and nearly 1.9 million have already been submitted. In the main, micro-enterprises and SMEs asked for assistance.

Flexibility the basis for survival during coronavirus

After the outbreak of the pandemic, many industries began to operate very flexibly. Restaurants that served food only on site decided to take advantage of food delivery. Companies that had been planning for months to introduce online sales began doing so within a month. Protective measures against coronavirus have been put in place in almost every establishment. Many service businesses have been keeping censuses of customers to track the spread of outbreaks. It is noteworthy that these changes were implemented over the course of several weeks.

Is it worth it to be an entrepreneur now?

Ways to grow are plentiful - grants and various supports and subsidies partially protect entrepreneurs from unforeseen financial problems and open a path to foreign markets. Many companies established in previous years did not survive until 2019. Some 11.3% companies established in 2014 did not survive to 2019. This number rose to 32.4% for those created in 2018. Whether it is profitable to open a business now is not clear. The market situation is unstable and competition remains high. However, the crisis has created unique opportunities. Many new niches have been created, and customers have more and more new needs. Sudden changes have forced the evolution and digitization of companies that have long stood still, which is a positive development. The future may lie in companies seizing these opportunities and responding even more quickly to customer needs than they did before the crisis.