Polish microfirms are one of the most dynamic segments of a market that is actively seeking new opportunities for growth. As a survey by The Citi Handlowy Leopold Kronenberg Foundation shows, for one out of five of them, this means expansion of activities, not only in Poland, but abroad as well.
The results of our survey clearly show that for microentrepreneurs, expansion is one of the ways leading to growth, and consequently to increased profits. It should be noted that for three-quarters of them, expansion is inextricably linked to the introduction of new solutions and services. This is their way of increasing competitiveness, says Krzysztof Kaczmar, President of The Citi Handlowy Leopold Kronenberg Foundation.
How do microfirms do it?
Surveys indicate that microfirms are preparing themselves well to win new markets. Over two-thirds of them have established cooperation with new business partners and nearly half are expanding their websites and launching online sales of their products. The same number are investing in hiring new employees. One of the primary elements in the process of planning expansion is capital for investment. In the case of microenterprises that until now have not expanded their area of activity, as many as one-third are seeking external financing in the form of EU funds (firms planning expansion) or bank loans (firms already existing on new markets).
What motivates them?
61% of microentrepreneurs mention the desire to increase revenues as the main reason for expansion. It is interesting that as many as 40% of them state that profits from sales last year were lower than in 2012. Why is this so? As Krzysztof Kaczmar stresses, this is because microentrepreneurs have increasingly greater business awareness and knowledge that a fall in revenues can result from saturation of the market with their products and services. Hence, the idea of growth in new markets. Strategies of expansion based only on growth achieved on local markets are going by the wayside - currently the reduction in cash flows into company coffers is the main motivation for seeking solutions to reverse this trend.
Barriers, or what are they complaining about?
Unfortunately, even the most dynamic companies encounter a wide range of obstacles that can seriously delay taking on challenges. What is it that hinders entrepreneurs planning expansion? For half of those surveyed, the problem is competition, while the same number complain about the high cost of labor and ubiquitous bureaucracy. Tax rates make life difficult for 45% of respondents, and nearly as many struggle with lack of knowledge about current legal regulations.
About the survey:
The survey was commissioned by The Citi Handlowy Leopold Kronenberg Foundation and conducted using the CATI technique in April and May 2014. The survey was carried out on a random representative sample of microenterprises in Poland (n=1456), including microfirms after expansion and those planning expansion.
