Total Entrepreneurial Activity for 2004 = 2.8%

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World Average TEA 9.6
European Average TEA 5.4

Entrepreneurship in Germany

According to a 2005 report from the Global Entrepreneurship Monitor, Germany has a total entrepreneurship activity of 5.1%, ranking the country 24th in the world. The report also ranks Germany 10th in factors for location, while 1st in public spending on entrepreneurs. However, the study found that tertiary education provides insufficient preparation for German entrepreneurs.

Almost one in twelve entrepreneurs in Germany is foreign born. Furthermore, one in ten foreigners starts a company. Within the last decade, German companies have grown by 14.5% while foreign companies increased 75%. Foreigners from outside of the European Union must take their business ideas to the Aliens’ Office, where the nationality of the applicant plays a role. Foreign citizens are generally not as well educated as their German born counterparts, have less equity, and thus have to provide additional licenses. The figures for foreign startups are significant given the deterrent posed by the German bureaucracy.

The entrepreneurial mindset in Germany is hindered by cultural disapproval of individual enterprise and economic deterrents of exorbitant corporate taxes and high social security standards. Corporations, on average, reach a net profit margin of only 2% of revenue, while an unemployed man may receive up to 60% of his salary for as long as three years. Germany ranks first in corporate bankruptcies though it is a leader in social security benefits.

Germany may be noted for its government programs targeted specifically at women entrepreneurs. The Federal Ministry for Family Affairs, Senior Citizens, Women and Youth has established the Female Entrepreneurs Network pilot Project, creating a learning center for women entrepreneurs. Another goal of the project is the formation of a European Union network for the advancement of entrepreneurship among women. In addition, the funding bank of the German Federal Government, the Deutsche Ausgleichbank, established a loan for women entrepreneurs in May of 1999. Women are allowed to loan a maximum of DM 98,000 for a maximum of 10 years. The loan is ideal for small business startups since 80% of the risk be may be shouldered by the Deutsche Ausgleichbank and the European Investment Fund.

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Germany 2004 GEM National Report
Germany 2003 GEM National Report (in German)
Germany 2001 GEM National Report

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