Self-employment: Number of new businesses increased slightly

Self-employment: Number of new businesses increased slightly
Self-employment: Number of new businesses increased slightly

According to the KfW, the entrepreneurial spirit in Germany is currently rather weak, despite a slight increase. There are many reservations about becoming self-employed.

After a decline in 2022, slightly more people in Germany took the leap into self-employment last year. The number of new businesses rose slightly by 3 percent, according to the start-up monitor published by the state development bank KfW. According to the report, 568,000 people took the step into professional self-employment.

KfW is not very optimistic about the current year. According to the information, the proportion of those in the population who are actively planning to start a business has fallen from 4.5 percent in 2022 to 3.6 percent recently. “Start-up activity is stuck at a low,” said KfW chief economist Fritzi Köhler-Geib. Financial aspects in particular are causing start-up plans to fail. “We absolutely have to strengthen financial knowledge.”

Köhler-Geib continues to expect little tailwind from the overall economic environment. “Together with a significant drop in the number of start-up plans last year, this is likely to lead to a decline in start-up activity in 2024.” According to the information, around twice as many start-up plans are abandoned each year as start-ups are realized.

Fewer and fewer people want to become self-employed

Overall, according to the KfW, the entrepreneurial spirit in Germany remains rather weak: only 24 percent of 18- to 67-year-olds would prefer self-employment to employment, regardless of their current situation (previous year: 23 percent). At the beginning of the millennium, the preference for self-employment was twice as high. Macroeconomic trends also played a role, such as the labor market boom from 2006 onwards.

Added to this is the increasing ageing of society. Among those under 30, the preference for owning their own business is 36 percent, while from the age of 30 only one in five would prefer to be self-employed.

According to the KfW, the biggest reservations about self-employment are concerns about excessive financial risks (73 percent), excessive bureaucratic hurdles (69 percent), insufficient income security (64 percent), insufficient social security (62 percent) and worries about financing problems (60 percent). Multiple answers were possible. The data basis for the KfW start-up monitor is representative population surveys. For these, 50,000 randomly selected people living in Germany are interviewed every year.

Source: Stern

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