The KfW Start-up Monitor is a representative survey of start-up activity in Germany, conducted annually since 2000. The latest results show a three percent increase in start-ups in 2023 compared to the previous year. Developments for full-time and part-time start-ups varied. While the number of full-time start-ups declined again by eight percent to 205,000, part-time start-ups increased by eleven percent to 363,000.
The planning rate, i.e., the proportion of 18- to 64-year-olds planning to start a business, has plummeted from 4.5 percent in 2022 to 3.6 percent recently. The entire start-up process takes several months on average, and only a fraction of start-up plans are actually realized. The rate of start-up plans for which implementation is likely within the next year is only 2.2 percent (previous year: 2.5 percent).
"Overall, there was little stimulus for business start-ups in 2023. Both the economy and the labor market stagnated and neither particularly promoted nor burdened start-up activity. The bottom line is a small increase in the number of start-ups,"
says Fritzi Köhler-Geib, Chief Economist of KfW, and adds:
"The macroeconomic environment is expected to provide little further tailwind this year. Combined with a significant decline in the number of start-up plans last year, this is likely to lead to another decline in start-up activity in 2024. Each year, about twice as many start-up plans are abandoned as new businesses are created. If we manage to reduce this abandonment rate, a great deal would already be done for start-up activity. One key to this is financial literacy, which reduces many barriers to starting a business."
Increase also in female start-ups
According to the KfW Start-up Monitor, the share of female founders 44 percent in 2023. This is slightly above the previous high of 43 percent from 2013 to 2015. On average, 39 percent of start-up activity is women. Although this figure was exceeded last year, it remains within the long-term fluctuation range of ± five percentage points.
Overall, the entrepreneurial spirit in Germany is rather weak. Only 24 percent of 18- to 67-year-olds would prefer self-employment to employment, regardless of their current situation. At the beginning of the millennium, the preference for self-employment in Germany was twice as high. Among those under 30, the preference for owning their own business is 36 percent. From the age of 30, only one in five would prefer self-employment.
KfW Start-up Monitor: Start-up preference by region
The sometimes significantly different population structure within Germany depending on the region therefore also affects the preference for self-employment. In 2023, it will be highest in Hamburg (29 percent), followed by North Rhine-Westphalia, Bavaria, Rhineland-Palatinate, Saarland, and Hesse (each 25 percent). People in Saxony-Anhalt are least likely to prefer self-employment to employment (18 percent).
Regardless of their preference for or against self-employment, many people fundamentally cannot imagine starting a business. This is primarily due to the need for security, bureaucracy, and lack of capital. For example, the biggest reservation against self-employment (73 percent) is the fear of excessive financial risks. 69 percent of respondents cite excessive bureaucratic hurdles as a barrier. Other top five concerns include insufficient income security (64 percent), insufficient social security (62 percent), and financing problems (60 percent).
