The proportion of individuals starting businesses due to lack of employment alternatives has reached 36 percent, the highest figure in eleven years. At the same time, IHK advisors observe an increasing number of business concepts with deficiencies, particularly in financing and financial planning. The crisis-ridden economic location Germany urgently needs a wave of flagship start-ups.

© DIHK / Werner Schuering

DIHK President Peter Adrian stated: "Our report shows growing interest in entrepreneurship but no broad entrepreneurial resurgence. Unfortunately, this aligns with the stagnating economic development."

Almost four out of ten prospective entrepreneurs aim to start a business primarily due to concerns about job security amidst the economic downturn and transformation across multiple sectors. "In such cases, the planned start-up often represents a fallback strategy rather than a firm desire to seize new market opportunities as entrepreneurs," Adrian observed.

This long-standing trend persists. In economically challenging times, entrepreneurship becomes more prevalent in Germany, whereas during prosperous periods, dependent employment is favored. Particularly in industrialized regions, the IHKs note an increase in start-ups resulting from transformative processes. Employees are transitioning from industrial value chains to often smaller-scale service offerings.

New Opportunities for Founders

Many entrepreneurs, however, are seizing targeted market opportunities, particularly in artificial intelligence (AI), digitalization, and security technologies. "AI not only facilitates pathways to self-employment but also unlocks entirely new business models," Adrian said. "This includes robotics, communication, and space exploration, as well as security technology sectors arising from the current geopolitical situation." He emphasized, "Germany has the potential to foster a new generation of technology-driven businesses, providing significant innovation in multiple areas of the economy. However, this requires significantly better framework conditions."

The Federal Government's Startup and Scaleup Strategy sets important initiatives, particularly in increasing private capital, enhancing growth financing, and attracting specialists. These address central concerns raised by entrepreneurs in IHK consultations. However, it is crucial now to ensure these improvements are implemented. Start-ups must be easier to establish with better growth conditions. Furthermore, such measures shouldn't solely benefit the tech sector; trade, services, and hospitality also require significant relief to sustain Germany's economic diversity.

One positive development is the rising interest in entrepreneurship among women. Nowadays, just as many women as men attend IHK entrepreneurial consultations. Two decades ago, women accounted for only about one-third of attendees. This long-term growth indicates that entrepreneurship has become a more natural choice for women over the last twenty years.

Bureaucracy Remains the Largest Hurdle

Entrepreneurs do not view Germany as an ideal location. Bureaucracy, taxation, and financing are cited as the top challenges. Seventy-five percent of respondents see faster and simpler procedures, as well as a more efficient administration, as essential prerequisites for a more attractive entrepreneurship environment. Nearly two-thirds advocate for simplified tax laws. The third major obstacle includes difficulties in accessing public funding. Other critical barriers are a lack of understanding and appreciation for entrepreneurship in society and high energy costs.

DIHK President Adrian comments: "Entrepreneurs clearly state what needs to be done to make the location more attractive. While politics has reacted and initiated significant changes, a true paradigm shift is necessary to make starting a business in Germany a matter of hours, rather than days." Adrian sees seamless integrated procedures, rather than isolated processes, and the consistent use of the once-only principle as crucial steps. Data should be entered once and automatically shared between the responsible authorities. Additionally, tax identification numbers should be issued more quickly. The IHK organization offers its support for implementation, backed by the experience gained from 200,000 annual consultations on starting businesses.

"The future of Germany as an economic location significantly depends on whether we can offer favorable conditions to people who are genuinely proactive. Reduction of bureaucracy, simplification of taxation, better access to finance, and greater societal appreciation for entrepreneurial courage are major building blocks for this," Adrian concluded.

Download

The survey results are available for download here: