This article was July 2025's Topic of the Week in the newsletter of week 31.

Germany's economy is facing dramatic changes: Never before have so many entrepreneurs wanted to transfer their business – yet successors are scarce. The statistics are alarming: Nationwide, around 9,600 businesses ready for transfer are seeking approximately only 4,000 potential buyers, according to the German Chambers of Commerce and Industry (IHKs).

The result: More than a quarter of current owners are already considering closing their businesses completely. Experts fear that up to 250,000 businesses could disappear over the next ten years – including thousands of economically viable enterprises.

Hospitality and Retail Particularly Affected

The crisis does not impact all sectors equally. In the hospitality, retail, and transportation industries, there is an acute shortage of successors: three to four businesses are for sale for every potential buyer. Even in the booming IT sector, two companies face one successor.

The effects are already visible in town centers: empty shops, declining urban vitality, and collapsing supply structures. When a country inn closes, the village loses not only an economic entity but also its social hub.

The Crisis Not Explained by Demographics Alone

While the number of entrepreneurs reaching retirement age has increased, demographic changes alone cannot explain the growing gap between supply and demand, which has nearly doubled since 2019. Feedback from over 50,000 IHK consultations highlights the real reasons: ongoing recession, rising energy and personnel costs, shortage of qualified staff, and excessive bureaucracy discouraging potential successors.

Even skilled workers opt against self-employment – in times of staff shortages, they can often agree to better terms as employees.

IHKs Fight Against the Trend

Despite adverse circumstances, IHK efforts show initial signs of success: consultations increased in 2024, and more potential buyers emerged. Particularly in the industrial sector, interest in takeovers is growing – sometimes as a way to escape struggling industries.

However, intensive consultations alone will not suffice. Policymakers must improve the framework for entrepreneurship.

Five Steps Out of the Crisis

Drawing from consultation experiences, the DIHK has identified specific solutions:

Implement One-Stop-Shop Businesses should be able to register the entire succession process with just one governmental agency.

Reduce Bureaucratic Complexity Restaurateurs must contend with dozens of regulations – from fire safety to heritage protection. These need to be streamlined, eliminating disproportionate requirements.

Accelerate Approvals Modernizations and renovations require quicker, bureaucratic approvals through stipulations, set deadlines, and shortened processing times.

Simplify Data Transfer Continuation of customer and supplier data must be facilitated and carried out in compliance with data protection regulations.

Promote Entrepreneurship Embedding entrepreneurship in education systems can inspire more young people toward self-employment.

Time is running out: Without swift political reforms, German SMEs face a historical upheaval.