The mass shutdown of sole proprietorships in Poland has become a pressing issue. These businesses, which have long been the backbone of the Polish economy, are now facing significant challenges. Despite a slight decrease in the number of business closure requests in the first three quarters of the year, the overall outlook is far from optimistic. The number of businesses being suspended is rising sharply, and more entrepreneurs are opting for temporary freezes rather than permanent shutdowns. Experts warn that this trend could be the calm before the storm, with more closures expected in the coming months.
Table of Contents
- Sole Proprietorship Closures: 142,000 Businesses Shut Down in 2024
- Business Suspensions: An Alarming Signal
- Industries Most at Risk
- What to Expect by Year-End
Sole Proprietorship Closures: 142,000 Businesses Shut Down in 2024
According to data from the Ministry of Development and Technology, 142,000 applications for the closure of sole proprietorships were submitted to the Central Register and Information on Economic Activity (CEIDG) in the first three quarters of 2024. This figure is 2.2% lower than the same period last year, when over 145,000 businesses closed. However, experts caution that this decrease should not be seen as a sign of market stabilization. Instead, it could be the result of temporary relief, which might fade once business owners realize that anticipated changes in regulations and support are progressing too slowly.
Business Suspensions: An Alarming Signal
The number of applications for suspending business operations has increased by 4.6% year-on-year, reaching 282,400. This is up from 270,000 during the same period in 2023. Many entrepreneurs see suspension as a way to temporarily reduce costs, particularly those related to mandatory social security contributions, which are a heavy financial burden. Unfortunately, experts note that suspending a business often serves as a precursor to permanent closure.
„Entrepreneurs are looking for ways to cut costs, but if they don’t see any real prospects for improvement, they eventually opt for complete shutdown,” says Grzegorz Kostrzewa from ProPrawni Restructuring Law Firm.
Despite some improvement in economic conditions compared to previous years, many business owners remain uncertain. High inflation, though somewhat slowed, remains a major issue, and there is growing frustration over delayed government reforms aimed at supporting businesses. „Entrepreneurs have extended a credit of trust to the new government, but that credit is running out,” warns legal expert Łukasz Goszczyński from GKPG Law Firm.
Industries Most at Risk
According to industry reports, the sectors hardest hit by business closures in the first three quarters of 2024 are manufacturing, wholesale and retail trade, and construction. These industries are particularly vulnerable to rising costs. However, they are not alone in facing these challenges.
As Grzegorz Kostrzewa points out, the final months of the year could see an increase in closures in sectors such as transport, hospitality, small retail, personal services (e.g., hairdressers and beauticians), as well as education and training services.
The rising costs of doing business, combined with the absence of funds from the National Recovery Plan (KPO), which were supposed to stimulate the economy, are pushing many companies to the brink of bankruptcy. „There is a noticeable lack of money in the market. It has disappeared somewhere, yet the costs of running a business remain high,” comments Adrian Parol, an expert from ProPrawni Law Firm.
What to Expect by Year-End
Entrepreneurs are waiting for the promised legislative changes that could improve their situation. However, time is running out, and the reforms are still in the planning stages. Experts fear that if nothing changes, the number of sole proprietorship closures could worsen dramatically in the first quarter of 2025.
„The government needs to act quickly, because entrepreneurs are losing patience,” says Adrian Parol.
In summary, while the current decline in business closures might offer a false sense of hope, the reality remains bleak. Rising suspensions, a lack of real government action, and increasing operational costs suggest that many businesses may soon opt for permanent closure. Trust in the new government is dwindling, and if the anticipated changes do not materialize, the mass shutdown of sole proprietorships may become an alarming reality.
Central Europe Reports [ MNN, Source: Agencja Informacyjna] 30.10.2024
