Berlin After a slight recovery in 2021, the number of business start-ups in Germany fell again last year by nine percent to 550,000. This is the result of the new start-up monitor from the KfW development bank.
According to this, there were 108 start-ups for every 10,000 people between the ages of 18 and 64. The value is close to the historical low from the first Corona year 2020 with 104 start-ups per 10,000 employable people. For the start-up monitor, 50,000 randomly selected people in Germany were surveyed from July to December 2021.
“The development of the labor market traditionally has a strong influence on start-up activity in this country,” said KfW Chief Economist Fritzi Köhler-Geib when presenting the results. Because the focus on an employee relationship is great. And in view of the good labor market situation, many prefer dependent employment to self-employment.
Added to this is the economic uncertainty triggered by the war in Ukraine and high inflation. However, the “corona blues” that aroused the desire for a professional reorientation in many workers is apparently still having an effect.
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This is because the number of founders who see self-employment as the best employment alternative has almost doubled year-on-year from 51,000 to 95,000.
What are the consequences of weak start-up activity?
Economist Köhler-Geib is concerned that only around 46,000 people starting up a business have taken over an existing company. Because every year around 140,000 companies are faced with succession. “This is a future challenge for SMEs,” said the KfW chief economist.
She was also “disappointed” that the percentage of women founding a company has fallen sharply from 42 percent to 37 percent and is thus below the long-term average.
With a view to the future viability of the German economy, it is also worrying that only around every tenth start-up is considered innovative and just over every fifth as growth-oriented. More than a third of new business ideas are internet-based.
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Unexpectedly for KfW, the proportion of founders who also create jobs has increased from 21 to 34 percent compared to the previous year. Because the problems in recruiting staff that newly founded companies traditionally have are actually being exacerbated by the good situation on the job market. According to the KfW, part of the increase in the employer quota can therefore be attributed to family members who are hired as employees.
What hurdles stand in the way of founders?
In France you can set up a company within two days, said Köhler-Geib – a value that one can only dream of in Germany. Almost six out of ten respondents who gave up the intention to found a company named bureaucracy as a reason. However, a good half also feared that their own company would not be profitable enough, and 62 percent considered the financial risk to be too great.
seed capital
4000
Euro
or less, 50 percent of German founders used it at the beginning.
Only 14 percent of the successful founders reported problems in financing their business idea. However, almost two out of three self-employed stated that they had set up their company exclusively with their own capital, significantly more than the long-term average.
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Only 18 percent used outside capital. The top ten percent of the most capital-intensive start-ups had seed capital of EUR 50,000 or more. The bottom 50 percent used less than 4,000 euros.
How can interest in founding be reawakened?
KfW’s chief economist Köhler-Geib said that entrepreneurship must be promoted more strongly in schools: “Economic education is a very important topic in Germany that needs to be given more focus.”
The focus on employment as an employee often begins with careers advice. “There is an urgent need for a rethink here,” emphasized the economist. It is also important to reduce bureaucracy and break down gender stereotypes in order to get more women interested in starting a business again.
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