A recent report by PwC Polska reveals that nearly half of the successors of Polish family businesses, known as NextGen, prioritize expanding into new sectors and markets (49%) over the next two years, while 47% aim for overall growth. The study highlights a growing interest in generative artificial intelligence (AI) among these successors, with 75% expressing personal interest in the technology. However, over 40% of family businesses in Poland have yet to explore AI, and only 7% have implemented it.

According to the report, titled “Polish Successor: On the Path of Growth and Expansion,” 53% of family businesses in Poland are currently owned by the first generation, compared to 32% globally, while 47% are managed by second or subsequent generations, in stark contrast to the global figure of 68%. Many current business owners are aged between 60 and 70, indicating that a significant transition in leadership is on the horizon as the NextGen prepares to step into management roles.

The survey indicates that 58% of successors perceive retirement as a major challenge for their parents or current leaders, while 67% feel apprehensive about proving themselves as new leaders. Despite these challenges, 60% of NextGen members are aware of their family’s succession plan, although some were not involved in its creation, and 5% remain uncertain about its existence.

PwC Polska partner and succession planning team leader, Piotr Woźniakiewicz, emphasized the unique position of Polish family businesses as many entrepreneurs contemplate their future over the next two decades. “NextGen, usually in their early adulthood to early 40s, is poised to take on management roles, marking a significant shift in leadership,” Woźniakiewicz stated.

The report further reveals that while successors generally view their career prospects positively, they face technological challenges. Notably, more than 40% of family businesses have not yet addressed the potential of generative AI, and only 7% have successfully integrated it into their operations. Krzysztof Sieczkowski, partner and leader of the Polish private companies practice at PwC, noted that only 12% of these businesses have designated personnel responsible for AI initiatives.

Although 74% of successors acknowledge the rapid evolution of AI technology, making it difficult to keep pace, only 14% believe that generative AI will enhance their company’s profitability within the next year. Furthermore, 53% of successors express concern that AI could increase cybersecurity risks.

Trust issues are also apparent, with only 21% of NextGen members feeling a high level of trust exists between family members and non-family employees, while 44% trust the current founders. Alarmingly, 40% believe consumers have low trust in companies regarding the responsible use of new technologies, a sentiment that stands in contrast to the 21% global average.

Despite these concerns, a majority of successors are committed to their family businesses, with 42% aspiring to assume managerial roles within the next five years. The NextGen survey, conducted globally by PwC with the support of Family Business Network International, involved 889 interviews worldwide, including 57 conducted specifically in Poland.

Source: PwC and ISBnews

The Forward Looking Indicator (WWK), which tracks trends in the economy, increased by 1 point in September 2024 compared to the previous month. Despite the modest rise, the indicator remains below its last local peak recorded in January of this year.

Domestic demand continues to serve as the primary driver of the economy, compensating for the marked weakening of foreign demand. According to the latest report, this trend is expected to persist, and may even strengthen, as wage growth continues to outpace inflation. Additionally, flood relief efforts are likely to boost household, business, and public sector spending in the medium term.

However, a shift in the structure of economic growth is not anticipated until late 2024 or beyond, when funds from the National Investment Programme (NIP) are set to be deployed to support investment.

The WWK consists of eight components, three of which improved slightly in September, four remained mostly unchanged, and one deteriorated. The factors driving this month’s increase include a slight improvement in the financial situation of manufacturing companies, a reduction in product inventories, and a rise in consumer interest in bank credit.

While the financial situation of companies has shown signs of improvement, a majority of businesses surveyed by the Central Statistical Office (CSO) still report financial difficulties. Some firms appear to have weathered the initial impact of increased costs associated with the minimum wage hike, compensating by raising prices.

Household borrowing saw a 0.5% month-on-month increase, with a nearly 2% rise over the past year. Consumers predominantly opted for cash credit, installment credit, and mortgages, although mortgage lending slowed in August due to pending government decisions on a first-home financing scheme.

Manufacturing companies also significantly reduced their inventories of finished goods in September. This move was aimed at adjusting inventory levels to meet reduced demand, while simultaneously allowing firms to maintain production levels in the coming months, even if demand continues to fall.

However, no significant uptick in new orders was reported, with foreign demand continuing to decline. The largest reductions in orders were noted among companies producing capital and intermediate goods.

In addition, labour productivity in the manufacturing sector has been on a steady decline throughout 2024, falling by a further 3% in August compared to July. This decline underscores the challenges faced by the sector as demand weakens both domestically and internationally.

Source: BIEC