Last year, slightly more people in Germany took the step into self-employment. However, start-up activity is still at a low point, according to the development bank KfW.
Last year, around 568,000 people in Germany took the leap into self-employment. That was three percent more than in 2022, according to the start-up monitor of the state development bank KfW. This means that the years-long downward trend in business start-ups has at least weakened in recent years.
However, KfW is not very optimistic about the current year. The proportion of people in the population who are actively planning to start a business fell to 3.6 percent in 2023 – after 4.5 percent in 2022. “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.”
There is also little tailwind from the overall economic environment, says Köhler-Geib. “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 again in 2024.”
While the number of full-time start-ups fell again by eight percent, a total of 363,000 people decided to become self-employed as a part-time job – eleven percent more than in the previous year. According to KfW data, around twice as many start-up plans are abandoned each year as start-ups are realized.
Little inclination to independence
Overall, the entrepreneurial spirit in Germany remains rather weak, according to the development bank. Only 24 percent of 18- to 67-year-olds prefer self-employment to employment, regardless of their current situation. 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 that began in 2006. Added to this is the increasing ageing of society. According to the development bank, the biggest reservations about self-employment are concerns about excessive financial risks (73 percent), bureaucratic hurdles (69 percent) and insufficient income security (64 percent).
For the KfW Start-up Monitor, 50,000 randomly selected people living in Germany are surveyed each year.