Hartz-IV subsidy mentality poses threat to entrepreneurship

Only one third of company founders are driven by entrepreneurial objectives. This is the finding of the DIHK-report on company founders 2006 entitled “Company foundation in times of Hartz IV”, by which the Association of German Chambers of Commerce (DIHK) this year again present their assessment of the situation in business founding in the sectors of industry, trade and services. This time the survey is based on more than 380.000 contacts by IHK business starter consultants with founders to be.

Sad finding: 68 percent of the 70.902 participants of IHK counselling on business foundation stated the search for an escape from unemployment as their main┬áreason for wishing to set up a company. Not even one third said that the implementation of a business idea was the driving force behind their founding activities. This way entrepreneurial spirit becomes a minor matter. Although the requirements on business starter sponsorship have been heigthened, the access to state subsidies is becoming increasingly important for people interested in setting up their own businesses. According to the Chambers of Commerce and Trade the concept of the “Ich-AG” has planted kind of subsidy mentality into the minds of business starters.

Furthermore, most business starters are not well-prepared at all for their founding activities. In the year 2005 about 63 percent of all participants in foundation counselling by the IHK lacked basic knowledge of price calculation, costing or managerial planning. Many founders are not even able to sufficiently describe neither their business idea, target group nor their competitive edge.

For this reason the IHK demand the following from German politicians: Reform of company founding sponsorship for unemployed people, installation of a sustained and suitable business starter climate within the educational system as well as the reduction of bureaucracy for business starters and SMEs. The DIHK report 2006 is available free of charge. GERMAN