Enhanced Quantity of New Businesses Emerging in Germany
Following a setback in 2022, there was a slight increase in the number of Germans taking the plunge into self-employment in the previous year. The data from KfW's latest startup monitor shows a 3% rise, with 568,000 individuals embarking on the journey of professional self-employment.
However, KfW is not overly optimistic for this year. The percentage of the population planning to start a business has allegedly dropped from 4.5% in 2022 to the current 3.6%. As reported by KfW's chief economist, Fritzi Köhler-Geib, "entrepreneurial spirit is stuck in a rut." Financial factors were reportedly the primary reasons for failed business plans. Köhler-Geib emphasized the need to enhance financial literacy.
From the overall economic climate, Köhler-Geib expects little encouragement. "Unfortunately, this could result in a decline in business founding activity in 2024," she warned. Annually, according to the data, twice as many business plans are scrapped as are successfully launched.
In terms of entrepreneurial spirit in Germany, according to KfW, it is relatively low: Only 24% of adults aged 18-67 would prefer self-employment over an employment contract, which is similar to the previous year's figure (23%). At the turn of the century, the preference for self-employment was reportedly twice as high. Factors such as economic trends, like the labor market boom from 2006 onwards, were taken into account.
Furthermore, the aging of society is a factor. Among those under 30, the preference for self-employment is still at 36%, but only 20% of individuals aged 30 or older would prefer self-employment.
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The survey conducted by KfW revealed that only a representative 23% of adults in Germany prefer self-employment over an employment contract. Despite the small increase in business start-ups in 2023, KfW's chief economist, Fritzi Köhler-Geib, expressed concerns about the number of business plans being abandoned, as indicated by the data, which shows that twice as many plans are scrapped as are successfully launched.
