The German Mittelstand

Germany full speed ahead with SME start-ups

The number of start ups in Germany in 2014 continued its upward trend and shows no sign of levelling off. The news appeared a few weeks ago in a report on new enterprises that KfW – Kreditanstaltfür Wiederaufbau (KfW) publishes every year at the end of May. A total of 915,000 start-ups were registered in 2014, an increase of 5.4 percent. SMEs offering full-time employment rose by 28 percent, and those run on a part-time basis as a second job dipped by 7 percent. In 2013 the average increase was 12 percent. By contrast to the most recent figures, the growth rate then was weighted by an increase in part-time SMEs.

Setting up a company as a second means of income is typical when the economic climate is difficult. The employment market follows suit to a sluggish economy and the prospects of getting a good job are slim. This is why the figures for 2014 are doubly encouraging; the percentage is higher and the actual start-ups are of better quality. By and large, starting a company as a primary source of income leads to the setup of a new organization and hiring staff – creating a job for oneself and others. Jörg Zeuner, head economist at KfW, is very satisfied with these numbers. An increase in the number of start-ups is good news for the German economy.

There is, however, one small point worth pondering. There are fewer new enterprises in commerce and industry and more in the professions. Perfectly logical in the light of an increased demand for services in education and training. Start-ups in commerce and industry, though, have a more immediate knock-on effect which is more far-reaching on the country’s economy, often leading to the birth of companies.

That said, the direction followed is the right one and the German economy is making the most of all this new SME activity, especially when the start-up is sufficient to make a living. It is with their innovating ideas that entrepreneurs throw down the gauntlet before bigger consolidated companies pushing them to work ever more efficiently and innovatively. And then, there’s always the chance that the small start-up evolves into a large successful company, Either way, it’s all to the favour of Germany dot com.