“The younger generation must see value in family businesses”: Family businesses from the perspective of their founders

Based on the statements of the founders of family businesses, we look at how the conditions of doing business have changed, what challenges companies face and how they adapt to the changing world.

The condition of family businesses – comparison with the past

Founders of family businesses who started their businesses in the early 1990s often recall how different economic conditions have been over the years. Jarosław Zieliński, owner of Polkorn (bakeries and confectioneries), describes the 1990s as a period of dynamic development, but also of “noble dilettantism”, when many entrepreneurs acted intuitively. He mentions that: “business started with business trips in a Fiat 126p or 125p with or without a trailer – or with some other German passenger car from the GDR or FRG“. Compared to those times, the current conditions of running a company require much greater knowledge of technology and specialized knowledge. What has not changed is the importance of the owner as a leader – a visionary who is able to read the market and diagnose the changing needs of a wide range of stakeholders (customers, employees, contractors).

People who started a business in the 1990s or early 2000s emphasize that, paradoxically, it was easier back then. “Starting the business 25 years ago posed fewer threats and allowed for the company’s dynamic development” emphasizes Krzysztof Urbański from Alan (furniture industry).

Marzena Szczotkowska-Topić from Renex (automation and robotics) emphasizes that the current situation is more difficult and the conditions for running a business have changed to their disadvantage, which significantly hinders the development. In her opinion, the main problems are the increase in labor costs, legislative instability and changing fiscal regulations. This instability forces entrepreneurs to make more conservative decisions, which often inhibits dynamic development.

Magdalena Czyż from the Smakosz chain (food industry) adds that in response to these changes, enterprises must invest in modern technologies and digitalization: “Family businesses have undergone a huge transformation, benefiting from the experience of tax and financial advisors. We introduce digitization, automation and process visualization to meet market requirements.

These opinions are supported by the data. In 2017, Poland was ranked 27th in the Doing Business ranking. In 2019, it dropped to 40th place. The situation is not improving – according to the GBCI report from 2024, among all EU countries, Poland is the seventh country in the EU where it is most difficult to do business.

Challenges facing family businesses in Poland

The current market situation poses numerous challenges. One of the most frequently mentioned problems is the need to compete with large corporations that have much greater financial and technological resources. “Family businesses face the challenge of competing with corporations with financial and human capital and with entities located in countries with cheap labor and liberal environmental policies.” – emphasizes Maria Karbowska from PAK (production of foil packaging).

Dariusz Borecki from CTI (gas network construction) draws attention to the lack of qualified staff: “The lack of qualified labor, which is a consequence of the demographic decline and employee emigration, turns out to be a huge challenge.” Dariusz Borecki also points to difficulties related to the inadequate education system that does not respond to the needs of the labor market.

State policy is also not favorable to family businesses. Too high labor costs, including a sharp increase in the minimum wage, force entrepreneurs to move production abroad. Marzena Szczotkowska-Topić from Renex emphasizes: Due to the increased minimum wage, many larger family businesses are looking for cheaper markets and transferring their investments from Poland to other countries. The pace of wage growth is not followed by state policy serving the actual development of entrepreneurship. And this has consequences for returning to the gray zone, especially in industries that are particularly susceptible to it (e.g. construction, catering). The increase in wages is disproportionately high to the rate of revenue growth in family businesses.

“Owners are looking for different ways to stay on the market. One of them is less involvement in financing new investments. However, this is a short-sighted policy” – adds Bogumił Zach from Ronet (spring production).

The challenges faced by the family business environment are summarized by Dariusz Jasiński from Darpol (production of parts for rail vehicles) – “the main challenge for companies: succession, overcoming the mental limits of inability to act, entering foreign markets, ability to navigate unstable Polish law, relations with employees“.

The above statements show how important dialogue with the family business community is. They can indicate in which areas the state’s economic policy is harmful in the long term and what should be changed. This results from the long-term perspective of family businesses, which by definition goes beyond the standard 4-year political perspective.

Adapting to changes – an opportunity for family businesses

The strength of family businesses is the speed of decision-making and the personal involvement of family members in building the company. “There is a chance that respect for people running family businesses will return.” – Dorota Szcześniewska from Arkas (wholesale trade) expresses hope.

“Family businesses look at the long term, so they are often able to wait out the crisis to some extent and invest the business in difficult times with private capital” – emphasizes Marzena Szczotkowska – Topić from Renex.

Family businesses are ready for dynamic changes and a flexible approach to business. As emphasized by Zenon and Mariola Polińscy from Transpol (aggregate mines) “in smaller companies, decisiveness and flexibility are at a much better level, contact with employees is also better, which allows for faster response to possible problems“. Family businesses are creative in their approach to various solutions. They look for non-standard solutions and often risk more than corporations. They are implementing new technologies more and more dynamically and are starting to define their place in the world of AI.

“I see the strengths of family businesses in narrow specialization, production of unique products or services in a given industry and speed of response to emerging trends” – emphasizes Maria Karbowska from PAK.

The challenge of modern family businesses is undoubtedly globalization and digitalization of business processes. There is a need to adapt to new market conditions. You often have to work under pressure and at the same time be open to change and innovation. The introduction of new technologies, the reorganization of management structures and access to global markets may become a way for Polish family businesses to escape to the front.

Succession process – key challenges and tips

Succession in family businesses is a topic that raises both hope and uncertainty. Many owners are concerned about whether the younger generation will want to take over the company and whether they will be ready for it. Over recent years, there has been a fundamental change in the understanding of what succession means for a family business. The owners point to succession as a condition for the company’s survival, as the greatest challenge they face, but also as an opportunity to build a business not for years, but for generations.

Bogumił Zach from Ronet talks about his succession story: “The succession ensured continuity of operations and leadership in the company and secured the future of the company. The biggest surprise was the situation when my children (3) and their other halves gave up their current jobs and work in a truly family company. Thus, contributing their previous experience, which in turn translated into the development of the company. Through succession, financing was secured for seniors.

However, words of fear and uncertainty are equally often heard (will the children want to take over the company in conditions that are unfavorable for entrepreneurship in Poland, will I know how to introduce them to the business, how to carry out the ownership change process so that it is effective and safe). Those who prepared for or implemented an ownership change emphasize that it is a process. And if so, there can be no question of any hasty and ill-considered action.

“It is good to spend time choosing the best partner. Succession is not a quick matter and the process is not short. Is it worth it? Definitely yes, because I feel at peace about my finances and my assets are professionally secured” – Piotr Kciuk from PK Components (trade in raw materials for the production of dietary supplements) shares his experience.

In turn, Jarosław Zieliński from Polkorn believes that succession requires action in many fields in parallel:

“In some cases, you should probably start by working with a psychologist or therapist and a soft skills specialist in order to gather knowledge about family members and their preparation to take on ownership and management challenges. This may make it easier for the senior to make rational decisions aimed at consolidating the company’s assets – on the one hand, and – on the other – fair distribution of benefits for all members of the family nest. – he emphasizes.

A professionally conducted succession process is in the interest not only of the business family itself, but definitely of the entire economy. Educational programs aimed at the generation of potential legal successors are needed. As Marzena Szczotkowska – Topić from Renex emphasizes ““young people must see the value in engaging in family businesses and should see clear support from state authorities that support and promote entrepreneurship and appreciate the contribution of family businesses to building the economy.”

Succession also requires support from the legislator. The introduction of the institution of a family foundation into the Polish legal system is a long-awaited solution. The family business community calls for the stability of regulations, especially those aimed at ensuring the sustainability of businesses for generations. There are examples of regulations in the field of family foundations around the world that have not changed for 100 years (e.g. Liechtenstein). It is worth reaching for proven patterns in the field of law-making culture.

Authors: Material developed by experts in the field of family businesses:

Ph.D. Małgorzata Rejmerexpert in family businesses and succession, founder of the family company of the Lex Financial Office, President of the Management Board of the LEX Financial Office and Chairwoman of the BCC Family and Partner Companies Committee.

Ph.D. David Rejmerlegal advisor and financier, Managing Partner of the LEX Financial Office.

Małgorzata and Dawid Rejmer were the first in Poland to submit an application for registration of a family foundation

www.kf-lex.pl