The framework conditions for founders have steadily improved in recent years – yet startups are becoming less common than ever. How does this fit together? A guest article by Dr. Georg Metzger by KfW, published in magazine startUPdate.
The general conditions for founders have steadily improved in recent years – yet startups are becoming less common than ever. How does this fit together? The explanation: One labor market record follows another. Potential founders are spoiled for choice – and prefer to take advantage of job opportunities. However, finances remain the most important reality check for potential founders. Especially in Bavaria, finances continue to play a major role even after the start-up.
In 2016, the number of unemployed fell to its lowest level in 25 years. Job prospects are therefore better than they have been for a long time. This is having a particularly negative impact on start-up activity, as the KfW Start-up Monitor shows: In Germany's largest start-up survey, only 672,000 founders were recorded in 2016. The number of necessity founders is lower than ever. Unfortunately, the number of opportunity founders is also declining. However, we urgently need their business ideas for the constant renewal of the national economy. They are key to maintaining Germany's competitiveness. After all, one in six founders also demonstrates at least one startup criterion: growth orientation. They want their company to become "as big as possible."
High attractiveness of the labor market dampens employment
In Bavaria, too, start-up activity is suffering from the attractiveness of the job market. On average, around 160 out of 10,000 people aged 18 to 64 became self-employed annually over the past three years (2014/2016). In the rankings with other federal states, this places Bavaria at an unusual fifth place. Hamburg secured first place, with around 250 start-ups, ahead of Berlin for the first time in years.
Many start-up planners shy away from financial risk
The hurdles on the way to starting a business in Bavaria are similar and just as high as elsewhere. Most start-up plans are shelved due to financial considerations: Concerns about the excessive financial risk of starting a business and financing difficulties were the two biggest hurdles for potential founders on average over the past three years (2014/2016). Fear of missing out on job opportunities now ranks third. This hurdle has become higher with each passing year of the labor market upswing. Furthermore, the fear of social decline in the event of failure and doubts about the viability of the business idea are significant hurdles on the way to starting one's own business.
Founders in Bavaria are more critical of themselves
While the hurdles on the way to starting a business in Bavaria are no different than in the rest of Germany, there are significant differences after the founding process. Generally speaking, founders in Germany most often abandon their startup projects because they want to take advantage of job opportunities on the job market. Other problems pose relatively minor stumbling blocks in comparison.
The situation is different in Bavaria: Here, founders drop out more often than in other regions because they are worried about the financial risk, because they doubt their professional qualifications or their business idea, because they are concerned about the economic situation, or because they consider the burden on their family or partner too great. Therefore, there are numerous approaches to further support founders in Bavaria.
