More business owners in Germany are considering closing their operations due to difficulties in finding successors. According to a special analysis by the KfW SME Panel conducted between February and June 2024, around 231,000 small and medium-sized enterprise (SME) owners have plans to close by the end of 2025. This is an increase of 67,500 from the previous year.
The study reveals that a record number of SMEs are contemplating closure since KfW Research began monitoring business succession. Additionally, another 310,000 owners plan to step down within three to five years and are considering shutting down.
In contrast, approximately 532,000 out of Germany's 3.84 million SMEs aim to transfer ownership by the end of 2028. The figures for intended successions and planned closures by this date appear balanced.
Age is often cited as the primary reason for these decisions. The average age of SME owners is 54 years, with nearly 39% aged 60 or older—a higher rate compared to the overall German population.
"The demographic ageing of SME owner-managers is advancing even faster than within Germany’s overall population," said Dr Michael Schwartz, an SME expert at KfW Research. "Wide gaps are opening up on the executive floors of small and medium-sized enterprises."
Many business owners who plan short-term successions by the end of 2025 have not yet begun searching for successors or are in early stages, facing time constraints. Approximately 43,000 enterprises may not achieve their short-term succession goals.
A shortage of young prospective business founders hinders succession efforts, with fewer annual takeovers compared to SMEs seeking new leadership.
"It is foreseeable that the problem of insufficient business successions in the SME sector will worsen," said Dr Michael Schwartz. "We need a consistently stronger entrepreneurial drive in Germany."
He emphasized that self-employment should become more visible through initiatives like promoting entrepreneurship in schools and broadening career advice perspectives.
KfW offers various promotional programs supporting SMEs on behalf of the Federal Government.