SME Policy

Woman in a sewing factory symbolizes SME policy; Source: iStock.com/stevecoleimages
© iStock.com/stevecoleimages

Over the past few years, the German economy has experienced dynamic growth. The managers and employees of SMEs have played a leading role in this. Due to their success, German SMEs - known collectively as the "German Mittelstand" - are also attracting a lot of attention from abroad.

The German Mittelstand is characterised by its diversity: whether it's young female entrepreneurs, family businesses steeped in tradition, migrants with entrepreneurial spirit, reliable service providers, visionary gadgeteers, or nimble craftsmen - the forgesmiths of German growth take on many different faces and ideas.

In order to strengthen these developments, the Federal Ministry for Economic Affairs and Energy is using a variety of different levers to improve the policy environment for small and medium-sized enterprises.

The German Mittelstand: Facts and figures

Around 3.7 million small and medium-sized companies, as well as self-employed professionals in industry, trade, tourism, the crafts, the services sector, and the liberal professions, all contribute to the diversity and success of the German Mittelstand.

What is the German Mittelstand?

In order to conduct a statistical assessment of the German Mittelstand and to define which companies qualify for funding, Germany has established a formal definition for small and medium-sized enterprises (SMEs). According to this definition produced by the Institute for SME Research (IfM Bonn), SMEs are businesses with an annual turnover of less than 50 million euros and with fewer than 500 employees.

In a European context, an SME has been defined by the European Commission as being a company with fewer than 250 employees and an annual turnover of less than 50 million euros (or total assets of less than 43 million euros).

But facts and figures alone cannot provide an adequate representation of the phenomenon that is the German Mittelstand. Many companies still consider themselves part of the Mittelstand and stay true to its business culture even if they are larger than the classic SME. This business culture is characterised by an understanding that actions must go hand-in-hand with responsibility and liability, that there should be a business strategy that focuses on the long-term success of the company, and that a company should be guided by the principle of efficiency. It is this mindset that really makes a company part of the Mittlstand, irrespective of its size.

The German Mittelstand: SMEs as drivers of success

Small and medium-sized companies (SMEs) make a key contribution to economic growth, innovation, and employment.

SMEs in Germany

  • employ more than 15 million staff
  • provide training for 4 in 5 apprentices in Germany
  • together generate a much higher turnover than the 30 companies listed on the DAX combined
  • are among the most innovative SMEs in Europe

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