10 focal areas in the ministry's SME policy
Start-ups and company hand-overs are of immense importance for the German economy. More than 300,000 new businesses are set up in Germany every year. The businesses create additional economic drive and new jobs. Today's innovative startups will one day form part of our Mittelstand. And whenever a company is successfully passed on from one generation to the next, this helps safeguard tried-and-tested business models, retain expertise, and secure jobs.
The overarching 'New Age for Entrepreneurship' initiative seeks to kindle a spirit of entrepreneurship in Germany, especially among groups that have so far been underrepresented in the startup scene, such as women (through an initiative for women entrepreneurs) and potential entrepreneurs with a migrant background (through a mentoring programme).
Anyone interested in setting up a business in Germany can find all the information they need on the www.existenzgruender.de and www.existenzgruenderinnen.de websites. Our 'nexxt' corporate succession exchange brings together company owners who want to hand over their business with potential takers. The EXIST programme, which was made even more attractive last year, seeks to promote entrepreneurship at university, not least by providing scholarships for young startups in science. The ministry also has operates accelerators that support young startups as they go international and help them gain a foothold on the US market. The German Accelerator Life Sciences was opened in Boston in 2015, becoming the third German accelerator to be set up after the ones in Palo Alto and New York. Find out more.
Strengthening the financing of start-ups and growth
Access to suitable financing is a key requirement for SMEs to be able to invest and remain innovative, which in turn allows them to remain competitive.
Germany has a strong culture of loan-based SME financing. For this reason, the ministry closely looks at the impact of financial regulation on SME financing for SMEs, its availability, and the exact conditions. Our goal is to ensure that large listed companies do not receive preferential treatment over SMEs; the interests of SMEs must be taken into account.
The ministry has deployed several instruments allowing it to add some 2 billion euros of venture capital to the market. These instruments include the new ERP/EIF Growth Facility, which is worth 500 million euros, a new co-investment fund called coparion, which is worth 225 million euros, and the ERP/EIF Fund of Fund whose volume has been increased to 1.7 billion euros (including funding from the European Angels Fund). We are also working to improve the fiscal environment for venture capital and to facilitate the listing of young, fast-growing companies on the stock exchange.
Securing skilled labour, bringing refugees into vocational training and work
One of the most important challenges for German companies today is to ensure that they have the skilled labour they need. Firstly, Germany as a whole is facing tougher international competition to attract the brightest minds; secondly, SMEs have to compete with large companies as they seek to recruit skilled workers. This means that a modern SME policy must be designed to better harness the potential that exists within our country, and to also attract skilled professionals from abroad.
The Federal Ministry for Economic Affairs and Energy has joined forces with the Federal Employment Agency, businesses, unions, and the German states to strengthen the attractiveness of dual vocational training and boost public acceptance for it. Under the 'Perfect Match' programme, SMEs are given advice as to how they can find apprentices that fit in well in the relevant profession and in their company. Employers' and employees' organisations are closely involved in the regular work to update training regulations so that they prepare apprentices for new challenges waiting for them in the job, including the need for digital skills. There is also a programme that seeks to raise intercultural awareness amongst apprentices. This programme is called 'vocational training without borders'. Find out more.
There are several programmes designed to attract skilled professionals and students from abroad and to provide information about living and working in Germany (www.make-it-in-germany.com website, the 'Living and working in Germany' hotline). Find out more.
The ministry has teamed up with several partners, including the 'firms for the integration of refugees' network, to provide information and advice that will help place refugees in work and vocational training. Around 150 refugee recruitment advisors based within the regional business chambers and organisations support SMEs that are offering work experience, vocational training and jobs to refugees. Find out more.
Pressing ahead with efforts for better regulation and less red tape
Any economy that wants to be competitive needs to ensure that its governed by modern, effective regulation and that its administration is working efficiently. This is to ensure that companies, startups, and those who have recently taken over an established firms can focus on their core business and spend as little time as possible dealing with administrative work and bureaucratic procedure.
By implementing a break on bureaucracy, which follows the principle of 'one-in, one-out', drafting legislation for two Cutting Bureaucracy Acts, and by modernising public procurement, the ministry has drastically reduced the cost of compliance for companies (by some 2 billion euros in total). Similarly, SMEs will find it easier to secure public contracts. Furthermore, an SMEs test has been introduced to ensure that the financial impact of new regulation and legislation on SMEs is assessed before any such measures are taken. Find out more.
Harnessing and shaping digitisation
The digital transformation is transforming our society and our economy, and is doing so at break-neck speed. Smart products and services are being combined, producing entirely new value chains. This allows companies to develop new business models, but also creates new challenges.
The ministry is supporting digitisation within the skilled crafts sector, not least by running ten 'Mittelstand 4.0 Centres of Excellence' that are based all across Germany, a Digital Skilled Crafts Centre of Excellence, and another four 'Mittelstand 4.0' agencies. In the 'Mittelstand 4.0 Centres of Excellence' funded by the ministry, companies can test their own technical developments and interfaces with products and clients before they invest in customised systems. Within its funding activities, the ministry has made it a focus to support SMEs as they introduce modern information and communications technologies, digitise and network their processes, and become part of Industrie 4.0. These funding activities are subsumed under the heading of 'SMEs going digital – strategies to promote the digital transformation of corporate processes'. There are also dedicated programmes to raise awareness of issues including data protection and data security. Find out more.
A company's future competitiveness depends on its present ability to innovate. As we address societal changes and global challenges including climate change, the digitalisation of all parts of our lives, and demographic change, we need to develop innovative responses and sustainable solutions – something that our SMEs are extremely good at.
The ministry is working to support businesses' capacity to innovate by creating a pro-innovation environment and market-driven funding programmes. Furthermore, the ministry makes use of its Central Innovation Programme (ZIM) to provide grants for market-driven research and development programmes in the field of technology. The ministry also uses this programme, as well as the 'go cluster' programme, to foster the formation of innovation networks, which bring SMEs and research institutes together .Find out more.
Using the opportunities afforded by globalisation
The German Mittelstand is internationally strong. Some 44 per cent of German companies export their goods or intermediate goods to other markets, thereby contributing to the success of the German economy. Even small companies benefit from venturing onto foreign markets. As a whole, they generate a significant share of their revenue from exports. Experience also shows that SMEs which export do better on the domestic market than their rivals.
The ministry has put a whole range of flexible and demand-driven instruments at SMEs' disposal. This toolbox, which is called 'Mittelstand going global' helps SMEs go international. The programme caters to forward-looking industries such as energy, environmental technology, healthcare and civil security, but also to other industries. Under the programme, the ministry provides information about foreign markets via Germany Trade Invest (GTAI), financing for Germany's bilateral chambers of commerce and industry, for German stands at international trade fairs, and for export credit guarantees. It also runs export initiatives, which see companies go abroad on fact-finding missions. The ministry is also additionally working to facilitate trade and conclude bilateral and multilateral free trade agreements. Find out more.
Playing an active role in defining European SME policy
With more than 93 per cent of exporting SMEs catering to the European market, the single European market has become hugely important for the German Mittelstand.
At European level, the ministry is a strong voice for SMEs and their interests. It is working to ensure that the single market works in SMEs' favour, that gaining access to EU funding programmes is as straightforward as possible, and that unjustified barriers to trade are removed. At the same time, however, the ministry also advocates that structures that have proven to work must be retained. This includes the private sector's ability to exercise self-governance, a concept that includes the fundamental principles of dual vocational training, the requirement for owners of crafts businesses to have a master craftsman's certificate, the system of mandatory membership in certain professional chambers, and the notion that employers and employees must act in a spirit of partnership. The ministry takes care to notify German SMEs of any relevant EU initiatives that may affect them (e.g. by means of the EU SME monitor), and encourages them to make use of EU funding programmes (including COSME) and to participate in procurement procedures. Find out more.
Strengthening SMEs in less-favoured areas
There is something quite unusual about the way SMEs are spread across Germany. Unlike in most other countries in the world, SMEs can be found everywhere in Germany, including in small towns, and not just in the capital. The ministry wants to keep it that way, which is why it is using its targeted regional policy to improve the business environment in less-favoured areas.
Funding provided under the Joint Federal/Länder Scheme for the Improvement of Regional Economic Structures (GRW) is used to support investments by trade and industry, investments in local commerce-related infrastructure, measures designed to encourage networking and cooperation between local players, and measures designed to improve SMEs’ competitiveness. In addition to the GRW scheme, there are also other programmes that promote the formation of networks between SMEs and between SMEs and non-for-profit industrial research facilities that have been set up in less-favoured areas (e.g. Cleantech Initiative for Eastern Germany, INNO-KOM-Ost). Find out more.
Supporting the development of new fields of business deriving from the energy transition
Germany’s energy transition offers major opportunities to small SMEs in particular to expand into new markets, like energy services or improving the energy performance of buildings creating local jobs, e.g. in construction and the skilled crafts. The ministry is providing advisory services and financing opportunities for SMEs to enable them to break into these new markets. Furthermore, the ministry supports SMEs as they undertake efforts to make their production processes more energy-efficient and introduce energy-efficient technology. Find out more.
For more details and information on specific policy actions across the 10 fields of action, please consult the 'Future of SMEs' Action Programme.