Small and perfectly formed
Zbigniew Wódz, walking through the vast greenhouses he manages at plant-producing company Tomaszewski, understands that there is much more to the flower business than agriculture these days. The propagation of exotic tropical species or the more European begonias and cyclamens is just the beginning. Of the 150 employees at Tomaszewski, more than half provide client services, as sales managers or display advisors for stands in supermarkets. They work to sell four million plants yearly in cooperation with over a dozen supermarket chains. Wódz claims they are one of the few on the market to offer such complete post-delivery assistance.
Small and medium enterprises (SMEs), such as Wódz's, account for 50 percent of Poland's GDP and hire a massive 70 percent of all employed - more than the EU average of 66 percent. The 3.5 million-strong throng of Polish SMEs would probably remain in the background, quietly keeping the economy ticking over, if not for their latest results. Companies reported a record zł.60.7 billion in net profit, while a Polish Confederation of Private Employers (PKPP) survey reveals some 81 percent of SMEs declared profitability, four percent higher than in 2003.
Doubling exports
"The [richest people] lists are a red herring," says PKPP president, Dr Henryka Boch- niarz, arguing that a top entrepreneurs' appearance on the front page does not reflect their somewhat smaller importance to the economy.
Thanks in large part to EU accession, the number of SMEs exporting almost doubled to 15 percent of the sector, and another eight percent plan to start selling abroad before the end of this year. This would add up to almost a quarter of all small and medium companies, but some are concerned about Polish SMEs' ability to compete within the enlarged EU.
"We must be competitive in comparison to the 'old' 15, but most of all in the race with the 'new' 10," claims Adam Szejnfeld, the chairman of the Economy Commission in Parliament's lower chamber.
To do that, business owners will have a few issues to consider. More than half of them did not start any investment actions over the last 12 months. Although last week's data (available only for medium and large entities) shows a nine percent growth in investment in 2004, the rise is modest compared to the 200 percent increase in net gains.
Conservative investors
Some chalk up the weak inves- tment figures to difficulties in obtaining bank loans. "After carrying out 50 percent of our new investment, we still do not have a credit agreement signed," says Henryk Orfinger, president of the supervisory board at cosmetics company Dr Irena Eris. "The banks didn't say no," but negotiations are dragging out. The PKPP survey, however, says that almost 70 percent of businessmen claim to have easy access to credit offers, but more than half simply don't plan to use them.
"In the first run, companies will invest from their own assets," says PKPP analyst Małgorzata Krzysztoszek, "The question is: how long will they wait?" Some entrepreneurs claim they are waiting for a better economic situation, but this could be futile as few now believe GDP growth this year could reach 2004's strong levels. Even worse, some 6.5 percent say they do not invest because their company lacks a development strategy.
For those with an investment plan looking for funds, such as Tomaszewski's director Zbigniew Wódz, structural funds from Brussels might be the answer. His firm plans on developing a network of branch shops, starting off in Poznań.
Finding funds
"The average Western European buys about 20 times more plants each year than a Pole. The market [here] is very promising," says Wódz. But so far Tomaszewski has not applied for EU funds, because, as a plant producer and distributor, no one knows if it's an agriculture or trade business and thus what the application should include. Throughout the SME sector, 22 percent claim EU funds would be the best source for development, but just four percent actually took advantage of the opportunity in 2004.
Sowing the seeds
However, once small and medium businesses invest, rarely are the funds directed to increase competitiveness. Roughly three quarters of the money is used to simply increase production, improve quality or introduce new products or services. Areas such as systems management and research and development (R&D) are virtually non-existent in spending plans, the former reaching 0.1 percent, the latter oscillating around zero.
"Our future without innovation will be difficult," says Piotr Stefaniuk of Acus Consulting, whose company assists in applying for EU funds. Out of some 100 applications that Acus processed, not one addressed R&D issues, which usually bring lot of attention and approval in Brussels.
Many firms, in particular micro-companies employing up to nine workers, lack the necessary knowledge and experience to increase their attractiveness in the European market. Current prices work to Poles' advantage, and are the principal means of increasing market share, but many say that building a long-term position on low costs of production is impossible.
Growing pains
"We will never beat China," says Krzysztoszek. The solution would be to innovate, but only one percent of companies believe that having innovative products will give them the edge in the marketplace.
Polish businesspeople may not be aware of where the growth prospects lie, but they are clear on what is holding them back. Zbigniew Wódz from Tomaszewski lists VAT tax, ZUS benefits and other costs as evidence that the state shows no support to entrepreneurship. "A businessman is more often regarded as a probable felon than as a job creator or someone propelling the economy," he complains.
Tax squeeze
The government remains unmoved, however. "Our tax levels are below European standards," says Jarosław Neneman, the Ministry of Finance's undersecretary of state. In his opinion, the additional costs of labor apart from taxes, such as social benefits, should be the place to seek cuts.
"We can't say that taxes are now OK; let's compare ourselves to our neighbors, not the old EU," retorts Wojciech Morawski, president of underwear manufacturer Atlantic.
Present conflicts aside, in a country where one in 10 owns a company, entrepreneurs might need special attention. Otherwise the aforementioned competition race might be lost before the starting gun goes off and, as often happens in business, those not acquainted with modern entrepreneurship will be left to watch the bigger competitors scoop up all the prizes.
Small and medium enterprises (SMEs), such as Wódz's, account for 50 percent of Poland's GDP and hire a massive 70 percent of all employed - more than the EU average of 66 percent. The 3.5 million-strong throng of Polish SMEs would probably remain in the background, quietly keeping the economy ticking over, if not for their latest results. Companies reported a record zł.60.7 billion in net profit, while a Polish Confederation of Private Employers (PKPP) survey reveals some 81 percent of SMEs declared profitability, four percent higher than in 2003.
Doubling exports
"The [richest people] lists are a red herring," says PKPP president, Dr Henryka Boch- niarz, arguing that a top entrepreneurs' appearance on the front page does not reflect their somewhat smaller importance to the economy.
Thanks in large part to EU accession, the number of SMEs exporting almost doubled to 15 percent of the sector, and another eight percent plan to start selling abroad before the end of this year. This would add up to almost a quarter of all small and medium companies, but some are concerned about Polish SMEs' ability to compete within the enlarged EU.
"We must be competitive in comparison to the 'old' 15, but most of all in the race with the 'new' 10," claims Adam Szejnfeld, the chairman of the Economy Commission in Parliament's lower chamber.
To do that, business owners will have a few issues to consider. More than half of them did not start any investment actions over the last 12 months. Although last week's data (available only for medium and large entities) shows a nine percent growth in investment in 2004, the rise is modest compared to the 200 percent increase in net gains.
Conservative investors
Some chalk up the weak inves- tment figures to difficulties in obtaining bank loans. "After carrying out 50 percent of our new investment, we still do not have a credit agreement signed," says Henryk Orfinger, president of the supervisory board at cosmetics company Dr Irena Eris. "The banks didn't say no," but negotiations are dragging out. The PKPP survey, however, says that almost 70 percent of businessmen claim to have easy access to credit offers, but more than half simply don't plan to use them.
"In the first run, companies will invest from their own assets," says PKPP analyst Małgorzata Krzysztoszek, "The question is: how long will they wait?" Some entrepreneurs claim they are waiting for a better economic situation, but this could be futile as few now believe GDP growth this year could reach 2004's strong levels. Even worse, some 6.5 percent say they do not invest because their company lacks a development strategy.
For those with an investment plan looking for funds, such as Tomaszewski's director Zbigniew Wódz, structural funds from Brussels might be the answer. His firm plans on developing a network of branch shops, starting off in Poznań.
Finding funds
"The average Western European buys about 20 times more plants each year than a Pole. The market [here] is very promising," says Wódz. But so far Tomaszewski has not applied for EU funds, because, as a plant producer and distributor, no one knows if it's an agriculture or trade business and thus what the application should include. Throughout the SME sector, 22 percent claim EU funds would be the best source for development, but just four percent actually took advantage of the opportunity in 2004.
Sowing the seeds
However, once small and medium businesses invest, rarely are the funds directed to increase competitiveness. Roughly three quarters of the money is used to simply increase production, improve quality or introduce new products or services. Areas such as systems management and research and development (R&D) are virtually non-existent in spending plans, the former reaching 0.1 percent, the latter oscillating around zero.
"Our future without innovation will be difficult," says Piotr Stefaniuk of Acus Consulting, whose company assists in applying for EU funds. Out of some 100 applications that Acus processed, not one addressed R&D issues, which usually bring lot of attention and approval in Brussels.
Many firms, in particular micro-companies employing up to nine workers, lack the necessary knowledge and experience to increase their attractiveness in the European market. Current prices work to Poles' advantage, and are the principal means of increasing market share, but many say that building a long-term position on low costs of production is impossible.
Growing pains
"We will never beat China," says Krzysztoszek. The solution would be to innovate, but only one percent of companies believe that having innovative products will give them the edge in the marketplace.
Polish businesspeople may not be aware of where the growth prospects lie, but they are clear on what is holding them back. Zbigniew Wódz from Tomaszewski lists VAT tax, ZUS benefits and other costs as evidence that the state shows no support to entrepreneurship. "A businessman is more often regarded as a probable felon than as a job creator or someone propelling the economy," he complains.
Tax squeeze
The government remains unmoved, however. "Our tax levels are below European standards," says Jarosław Neneman, the Ministry of Finance's undersecretary of state. In his opinion, the additional costs of labor apart from taxes, such as social benefits, should be the place to seek cuts.
"We can't say that taxes are now OK; let's compare ourselves to our neighbors, not the old EU," retorts Wojciech Morawski, president of underwear manufacturer Atlantic.
Present conflicts aside, in a country where one in 10 owns a company, entrepreneurs might need special attention. Otherwise the aforementioned competition race might be lost before the starting gun goes off and, as often happens in business, those not acquainted with modern entrepreneurship will be left to watch the bigger competitors scoop up all the prizes.
