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Number of new startups plunge
to record low in Germany

kfw%20photo"This is bad news for franchisors from abroad who want to enter the Germany market", explains Franz-Josef Ebel, Founder and Managing Director of Master Franchise Germany. "It does not mean franchise expansion is impossible in Germany, but franchisors have to lower their expectations of entry prices and lengthen their timelines", he adds.
 

The evaluations of the representative KfW surveys show that low startup activity mainly translates into fewer full-time business founders (315,000 against 381,000 in 2011). This also affects employment creation. In 2012 startup businesses created a total of 383,000 full-time equivalent jobs – 212,000 jobs for the full-time business founders themselves and 117,000 for their employees. This is a 15% decline against 2011. The number of jobs created dropped to the lowest level since the start of the time series in 2005.

In a good job market it can be difficult for startup entrepreneurs to hire staff. "Startups compete with established enterprises for qualified staff and, obviously, their new businesses are not yet market tested. However, they can advertise their flexibility and opportunities for employees to shape business decisions to showcase their attractiveness as employers", said Dr Jörg Zeuner, Chief Economist of KfW Bankengruppe.
 

The city states of Berlin, Hamburg and Bremen have the highest startup activity. In these conurbations, individuals who decide to set up a business benefit from agglomeration effects such as short distances and low transport costs in large local sales markets. They are followed by the western German states (excluding the Saarland) as a group, then the eastern German states. The Saarland and Brandenburg record the lowest activity.
 

"We are not expecting a startup boom in 2013 either. However, if the job market proves to be less stable than expected, this could stimulate startup activity somewhat", Dr Jörg Zeuner commented on the expectations for the year.



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