Policy for small and medium-sized businesses

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Small and medium-sized enterprises (SMEs) form the heart of Germany's social market economy and serve as the key engine of growth and employment. One of the primary tasks of SME policy is therefore to shape the policy framework for small and medium-sized businesses in a way that enables them to unleash their full potential for growth and innovation.

Small and medium-sized businesses: the backbone of the German economy
One of the main hallmarks of Germany's economy is the roughly 3.7 million small and medium-sized businesses and self-employed professionals active in the skilled crafts, industry, retail, tourism, and general and professional services. Because of the prominence of Germany's SME sector, the government's SME policy affects the interests of the majority of people involved in economic activity.

Small and medium-sized companies in Germany

• represent 99.7% of all businesses,
• produce 38% of taxable turnover,
• account for nearly 49% of total net value added by companies, and
• provide roughly 60% of all jobs requiring social insurance contributions.

What counts as an SME?
In quantitative terms, businesses with an annual turnover of less than 50 million euros and with fewer than 500 employees are classified as SMEs in Germany. Qualitative criteria include the unity of ownership and management rights within the person of the entrepreneur (or his or her family).

Source: IfM Bonn (Institute for SME Research)

Priorities of Germany's SME policy
Small and medium-sized companies are of major significance when it comes to tapping new growth markets, developing new technologies, boosting German industry's presence on international markets, and taking advantage of opportunities for joint business ventures with foreign partners. At the same time, SMEs face growing pressure to adapt to increasingly intense international competition. As a result, it is crucial for SME policy to place a top priority on shaping and fine-tuning a policy framework that enables small and medium-sized businesses to tap their full potential for growth and innovation. SME policy is a multi-stakeholder task that can be designed and implemented only through dialogue and cooperation between the various relevant partners. For this reason, the Federal Ministry of Economics and Technology engages in constant dialogue with the private sector in order to provide practical and efficient support to small and medium-sized companies.

SME initiative "Building on SMEs: greater responsibility, greater freedom"
The Federal Ministry of Economics and Technology has launched a new SME initiative called "Building on SMEs: greater responsibility, greater freedom" which targets seven priority areas that are crucial for the commercial success of SMEs. These are:

• innovation
• skilled workers
• business start-ups and business succession
• market opportunities abroad
• financing
• raw materials, energy, and materials efficiency
• bureaucracy reduction

In these fields, and in close dialogue with the SME sector, the Federal Government is improving the conditions for entrepreneurship, creating greater freedom and flexibility for SMEs, and providing additional stimuli for growth and jobs in Germany.

Detailed information on the ministry's SME initiative can be found in the publication "Building on SMEs: greater responsibility, greater freedom". Simply click on the link in the right-hand column of this page.