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The business climate index for the self-employed has deteriorated again in July 2023, and there are signs that there is an urgent need for action on the part of policymakers. The ifo Institute released the latest figures, which indicate that the business climate among the self-employed has continued to decline. Both the current business situation and future expectations were assessed more negatively by respondents. The index for solo and micro entrepreneurs fell by 3.8 to -16.4, while for the economy as a whole it fell by 2.8 to -9.1.
The current trend is reminiscent of the lowest points in recent years. Compared to the low point in October 2022, the assessment of the business situation for solo and micro entrepreneurs has hardly improved. This could be an alarm signal for policymakers, who now need to see themselves in an active role.
Andreas Lutz, chairman of the board of the Association of Founders and Self-Employed People Germany (VGSD), stressed the urgency of positive measures to revive the business climate. The idea of a government commissioner for solo self-employed was discussed as a way to promote the interests of this group and take immediate relief measures.
A positive turnaround is evident in the services sector, which has performed relatively positively in the index since February 2022. However, this sector has also lost ground in recent months. Index scores for the services sector have fallen sharply, and pessimism about future business prospects has increased. This pattern is also evident in various industries within the services sector.
The VGSD, whose members are mostly active in the service sector, emphasizes the diversity of industries in this sector. The different developments in the individual industries highlight the need to pay closer attention to the specific trends and challenges in each sector.
The latest German Startup Monitor report for 2023 shows a declining sentiment in the German startup ecosystem. With a value of 38.1 points, the startup business climate is 14.1 points below the value of 2021 and close to the second lowest level since the pandemic shock of 2020. This negative development is confirmed by 65% of the founders:inside, who have difficulties in assessing the future situation.
The willingness of business angels and VC funds to invest in startups is rated as good by only 15% of the Gründer:innen.As a result, 23% of startups have postponed planned financing rounds.A trend toward profitability is also evident.
Despite the many challenges, only 15% of startups have laid off employees in the past year. The Berlin ecosystem in particular has been hit harder, with 24% of Berlin startups cutting jobs.
The business situation is described as difficult to assess by 65% of the startups surveyed. Assessments of the current business situation are at their lowest point since the start of the Corona pandemic in 2020, and while business expectations are rising slightly, they are still well below the level of 2021.
Investment activity in German startups has declined noticeably compared to the records set in 2021 and the first half of 2022. Nevertheless, it is above pre-Corona levels. Larger financing rounds above €250 million have become rare, indicating continued uncertainty in the investment environment.
The respondents show a skeptical attitude towards the investment readiness of business angels and VC funds, with only 15% rating it as good.Nevertheless, 38% of the founders expect better investment conditions in the coming six months.
Despite the challenges, most startups did not lay off any employees last year and are focusing on further growth. Especially in Berlin, a more late-stage and funding-dependent ecosystem, job cuts and adjustments are more common.
The report makes clear that startups remain important engines for the German economy despite the difficult situation. The findings are based on a broad database of 1,825 startups surveyed between May and July 2023. This report is a preview of the German Startup Monitor 2023, which will be published on Sept. 25, 2023. The study was prepared in collaboration with the Startup Association, PwC Germany and Prof. Dr. Tobias Kollmann from the University of Duisburg-Essen (netSTART)
The tech landscape in Germany has changed rapidly in recent years, and technologies such as artificial intelligence (AI) and data analytics play a central role. According to a recent survey of 203 tech startups commissioned by the digital association Bitkom, these technologies have proven to be indispensable for the success of startups. The results impressively show that startups that rely on AI and data analytics are not only ahead of the game, but are also the ones shaping the innovations of the future.
The current status quo: AI and data analytics dominate
A look at the statistics makes it clear just how entrenched AI and data analytics now are in the startup world. More than half of the startups surveyed (53 percent) are already using Big Data and data analytics to optimize their business processes and gain deep insights into their target groups. Even more impressive is the prevalence of AI, which is being used by 49 percent of startups to develop smart solutions and products.
It gets even more exciting when you look at the startups' future plans. Almost 40 percent of the companies surveyed are planning to introduce AI in the near future. The situation is similar for Big Data and Data Analytics, where 31 percent of the startups are discussing or planning their use. These figures underscore not only the current importance of these technologies, but also their future relevance for the startup landscape.
Startups leading the way: AI and data analytics in the overall economy
Comparing the use of AI and data analytics in startups with the overall economy, the pioneering role of young companies becomes particularly clear. While only 15 percent of companies in the overall economy use AI, 49 percent of startups already rely on this technology. Similar proportions are also evident in data analysis: In the overall economy, 37 percent use these technologies, while the figure for startups is 53 percent.
Bitkom President Dr. Ralf Wintergerst highlights the importance of this development, saying, "The fact that so many innovative founders are using AI and Big Data to develop new products and services is a positive sign. Startups will play an important role in making these technologies more accessible to smaller companies and SMEs."
The symbiosis of AI and data analytics
One notable aspect of this development is the close relationship between AI and data analytics. AI requires data to learn and make intelligent decisions. At the same time, AI enables more efficient analysis of big data, which in turn enables deeper insights and better business decisions. This interaction highlights the need for an integrated approach to implementing AI and data analytics.
Emerging technologies and their relevance to startups
The survey also provides insights into emerging technologies that could become more important in the coming years. The Internet of Things (IoT) is already being used by a quarter of startups, while nearly 30 percent are discussing or planning integration. 5G technologies have also piqued the interest of startups, with 17 percent in the planning or discussion phase.
Also exciting is the growing discussion about technologies such as virtual reality (VR), augmented reality (AR) and blockchain. Currently, 8 percent of startups are using VR/AR, while an impressive 22 percent are discussing its use. Similarly, while 5 percent of startups are already using blockchain, 22 percent are planning to use the technology.
In summary, the survey highlights the changing nature of the German startup scene. AI and data analytics have evolved from emerging trends to indispensable tools that determine the course of business development. With their agile approach and willingness to integrate new technologies, startups are at the forefront of this movement that will undoubtedly shape the future of business.
The startup world is an exciting but risky journey. Everyone who starts a business dreams of great success and breakthrough, but unfortunately many startups end in failure. Statistics show that around 90% of startups fail to survive and have to close their doors. In this article, we take a look at some of the main reasons why startups fail, and emphasize the importance of PR and press releases to drive success and overcome these obstacles.
Failure to meet market demand and target audience validation
One of the most common causes of startup failure is misunderstanding or ignoring market demand. Many founders are so in love with their idea that they forget to conduct a thorough market analysis and understand the real needs of their potential customers. Without a clear validation of their target audience, startups have a hard time building a solid customer base and getting their product or service out there.
Failure to differentiate from the competition
Another pitfall that many startups fall victim to is a lack of differentiation from their competitors. Simply copying an idea or offering a similar product rarely leads to success. Successful startups must highlight their uniqueness and offer added value that others cannot.
Inadequate team and leadership
A strong team is the engine of a successful startup. If the founders don't have the right skills, experience, and commitment, it can be difficult to overcome the many challenges that arise in building a business. A lack of leadership can lead to inefficient decisions and cause the startup to falter.
Financial Bottlenecks
Funding is a critical factor in the success of a startup. If financial resources are insufficient to move the business forward and scale the company, the startup faces an uncertain future. Poor financial management and failure to attract investors can mean that promising ideas never see the light of day.
Why PR and press releases are essential to success
Public relations (PR) and press releases play a critical role in the lifecycle of a startup and can be instrumental in overcoming the challenges mentioned above. Here are some reasons why PR is key:
1. Build awareness and credibility: Through PR and press releases, startups can increase their visibility and gain the trust of potential customers, investors and partners. Positive coverage in reputable media gives the startup credibility and signals that it may have a promising future.
2. Targeting and retaining customers: Skillfully placed press releases allow startups to target their audience and inform them about their products or services. This promotes customer loyalty and increases the chances that people will try out the startup's solutions.
3. Investor attraction and partnerships: a successful PR campaign can draw the attention of investors and potential business partners to the startup. This opens up opportunities for financial support and strategic partnerships that can accelerate growth.
4. Crisis management: PR is not only important for good times, but also for dealing with crises. When a startup faces negative coverage or a problem, an effective PR strategy can help limit the damage and restore stakeholder trust.
Conclusion
Startup failure is unfortunately common, but not inevitable. Avoiding common mistakes such as lack of target group validation, lack of differentiation, poor team management and financial constraints can significantly increase the chance of success. In addition, a strategic PR and press release strategy is critical to increase awareness, build trust, attract potential customers and investors, and drive the startup's success.
Business optimism among self-employed and small business owners deteriorated for the third straight month in June 2023, the latest Jimdo Ifo Index shows. The results of this monthly survey leave no room for doubt: sentiment in the sector has continued to deteriorate, which should prompt a call for government action.
According to Katrin Demmelhuber, an expert at the Ifo Institute, the business climate among the self-employed deteriorated worryingly in June. This was characterized by two main factors: On the one hand, the respondents assessed the current situation increasingly negatively compared to the previous months. On the other hand, expectations regarding future business development were even more pessimistic than they had been in the current year. This deterioration follows a period of recovery that began after the energy crisis bottomed out in October 2022. Hopes that the fall in April was only temporary were finally dashed. The negative trend continued in May and is now continuing.
The Jimdo Ifo Index shows that the business climate for the self-employed fell a further 4.0 points in June and is now at minus 12.6 points. In the economy as a whole, the value has fallen even more significantly, namely by 5.5 points, and is now minus 6.6 points. Demmelhuber notes that the indicators for climate and expectations in the overall economy have also fallen significantly. However, the business situation in this sector was still rated as favourable.
One alarming aspect is the declining mood among the solo self-employed and micro-entrepreneurs. In June they rated their business situation clearly negative for the first time this year. The corresponding value is minus 2.6 points, compared to minus 0.4 points in the previous month. This is in sharp contrast to the overall economy, which is still in positive territory at 13.5 but down 2.5 points from May's 16.0.
A possible reason for this development could be the slowly decreasing inflation, which leads to a decreasing pressure on prices. Price expectations have been falling for months. Among the self-employed, 15.6 percent of respondents say they are considering price increases, compared to 16.3 percent for the economy as a whole. In spring 2022, these values still reached peak values of 61.4 (overall economy) and 54.7 (self-employed).
It is important to view the ongoing negative sentiment in the context of the declining number of founders and the self-employed. The number of start-ups in Germany has fallen by two-thirds since 2002, and the proportion of self-employed people in the workforce has fallen by more than 30 percent since 2012. Andreas Lutz, Chairman of the Association of Founders and Self-Employed Germany (VGSD), comments on this development and emphasizes the need for measures on the part of the federal government to reverse this trend. Lutz calls for the establishment of contact persons in parties and ministries who are specifically dedicated to the concerns of the solo self-employed and who can build up the necessary expertise to make well-founded decisions.