German Business Owners Increasingly Consider Closing Operations
Germany: An increasing number of SME owners are considering shutting down their businesses due to a lack of successors, according to KfW research.
A growing number of German small and medium-sized enterprise (SME) owners are contemplating closing their businesses due to difficulties in finding a successor. A recent analysis by KfW found that approximately 231,000 SME owners plan to cease operations by the end of 2025. This represents an increase of 67,500 compared to the previous year.
The study, based on data from the KfW SME Panel collected between mid-February and mid-June 2024, indicates a record number of businesses considering closure. An additional 310,000 owners are considering shutting down in the medium term, within the next three to five years.
In contrast, 532,000 out of Germany's 3.84 million SMEs intend to transfer their business to a successor by the end of 2028. This suggests that planned successions and considered closures are roughly balanced. The average age of a business owner is 54, with 39% of entrepreneurs being 60 or older.
KfW SME expert Dr. Michael Schwartz noted that the demographic aging of SME owner-managers is advancing rapidly. He emphasized the need for a stronger entrepreneurial drive in Germany, making entrepreneurship an apparent career path alongside salaried employment. Schwartz suggests promoting entrepreneurial mindset development in schools and broadening career advisory services.