Productivity will play a key role in the business sustainability of SMEs

Business sustainability took center stage in the section supporting small and medium-sized enterprises (SMEs) at the Connect Conference held on April 11. The professional event also addressed topics such as digitalization, generational change, business building, and the increasingly significant role of ESG.

At the Connect Conference's SME Zone By OTP Bank section, host Attila Semperger, Founder of ValuTeam, drew attention to the fact that alongside the established networking of previous years, there are several organizational players in the market equally interested in supporting and developing SMEs, which businesses might not even consider. Participants at the event got to know several such professional speakers, organizations, and programs.

In her presentation, Bernadett Dancsné Engler, Director of Micro and Small Business Area at OTP Bank, recalled the significant changes affecting businesses in the past 5-6 years, such as the pandemic, energy crises, or the impacts of war.

"The most important lesson of recent years was that we had to learn that we cannot avoid risks, it's very difficult to prepare for every contingency," said Bernadett Dancsné Engler. "The solution is to know our own business so that we have the necessary immediate responses at any given moment. And for this, almost continuous analysis is necessary, in which our bank also helps businesses. So, there is a need for business and financial sustainability plans!" she emphasized.

During one panel discussion - moderated by Nóra Szeles, Managing Director of Tőkeportál Zrt. - Ádám Balog, Vice President of the Budapest Chamber of Commerce and Industry (BKIK), emphasized the importance of financial literacy in the lives of SMEs. He stated that the chamber network supports businesses as partners through education, counseling, and mentoring. He also spoke separately about ESG: "We must acknowledge that this expectation is difficult to interpret for SMEs, but even if we don't see it coming, it will come, so it's worth learning and applying!"

Dr. Péter Oszkó, CEO of OXO Technologies Holding, reminded us that the significant changes in recent years were surprising and sometimes shocking because the economic sector had been in constant development for almost 10 years. He added that during the economic boom of the 2010s, it was easier to make mistakes because there was a lot of money in the market, but this has completely changed now, and according to the laws of economic cycles, the next seven years are likely to be tight, with the period of economic uncertainties continuing. "Productivity will be more important than anything else," he predicted. "I think investors will be much more cautious, they will want to see results much sooner, and the growth of company value will have to be demonstrated much more quickly!" Ádám Balog, chamber vice president, confirmed this, stating, "It's not enough to be productive; you also have to appear to be."

Business owners present at the conference also received valuable information about changes in the economic environment and forecasts. In his presentation, Gergely Tardos, Director of the OTP Bank's Analysis Center, pointed out, among other things, that real wage growth has already started in 2024, while retail sales have not yet followed suit. "The consumption-driven GDP growth for this year could be around 2% by the end of the year, while in 2025, balanced growth is expected, according to our research, with a GDP of 3.5%," said Gergely Tardos. He also added that the state of public finances is poor enough that there may be another adjustment after the elections in the summer of 2024, but in the second half of 2025, stimulus measures could start, potentially with a larger quantity of supported SME loans on the market.

The Budapest Chamber of Commerce and Industry has been running its Bridge To Benefits program for four years now. At this year's Connect Conference's SME Zone panel discussion, Mónika Harsányi, Head of International Projects at the Budapest Chamber of Commerce and Industry, said that one of the project's main goals is to involve small and medium-sized enterprises. "We would like to see as many projects related to social innovation emerge as possible, strengthening cooperation between for-profit and nonprofit organizations," she said. The aim of the BKIK is for effective knowledge sharing and mindset shaping to take place on this platform. "Positive, value-based cooperation undoubtedly provides a competitive advantage for organizations, which can also generate revenue," she added.

The panel discussion on family generational change raised very instructive and human-oriented topics. The young entrepreneurs involved unanimously spoke about how the transition between generations cannot be achieved with strong will alone. As András Cserkúthy, CEO of GLT Delta Ltd., put it, "The process often falters because the founding generation strongly desires the change and has explicit or implicit expectations that family businesses should function the same way as they started back then." Referring to a personal experience in Belgium, András Cserkúthy added, "Respect and humility are needed in this process, but not towards the parent, but from the parent." According to Brigitta Deák, timing is also important in the transition. The communication manager of Biofilter Zrt. believes that it can take months or even years for a child or parent to reach the point where they decide to initiate the process of generational change.

These experiences are necessary for Hungarian family businesses because, as the discussion leader, Dr. Hajnalka Csorbai, Strategic Director of Opten Kft., cited from a study, "While 30% of first-generation family businesses in Hungary successfully complete the transition, only 3% of second-generation ones do."

The event's professional partner also presented another program specifically related to the sustainability of small and medium-sized enterprises. Ildikó Földi-Tamás, program manager at Generali Biztosító, along with three previous winners, discussed the main goals and results of the EnterPrize competition. They also mentioned this year's competition, where SMEs can apply until May 13 for individual financial support of 7 million forints each, as well as professional mentoring.

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