OTS: KfW / KfW Research: Why small and medium-sized companies don’t invest

KfW Research: Why small and medium-sized companies don’t invest

Frankfurt am Main (ots) –

– Corona crisis intensifies structural investment weakness further: SMEs

becomes less important

– Business expectations and the amount of own funds influence the propensity to invest

– Investments strongly linked to the owner: High

Average age expresses willingness to invest

Germany’s companies have not invested enough for years, this is the case in

Especially for medium-sized companies. The corona crisis has been around for a long time

visible trend of a structural weak investment of the small and

medium-sized companies now reinforced again: their new investments went

2020 by approx. EUR 14 billion or 7% to a total of EUR 173 billion, like that

representative KfW SME panel shows. In parallel, they have

medium-sized investments continuously gaining importance for the whole

Investment activity in the German corporate sector lost. Did they come in

In 2008, it still accounted for 49% of all corporate investments,

7 percentage points have been lost since then. In 2020, the share of SMEs was only

still 42%. What reasons do medium-sized companies choose for their

In a new study, KfW Research stated reluctance to invest

analyzed. The willingness to invest falls more than expected when the

Sales and profit expectations are pessimistic and the company is over

has low own funds. But the willingness to invest in medium-sized companies

is also heavily tied to the person of the business owner.

If one looks in detail at the order of the framework conditions for

Investment decisions in medium-sized companies, that’s what happens in the company

existing financial cushions for 54% of all medium-sized companies

Role. In second place are the owners’ experience

(36%). As a result, SMEs are often less willing to invest

strongly characterized by the embedding in a strategic overall concept,

but generally linked to the person of the company owner.

Demographic change has a serious impact here, with measurable negative effects

Consequences for investment activity: The propensity to invest decreases with the

Age of the owner significant. Many investments are owned by old age

From the owner’s point of view, the payback period is simply too long – the financial one

Obligation is then rather avoided. This is especially true for

extensive but competitive investments. In numbers it looks like

follows from: While the long-term mean (2004-2020) around 57% of the younger

If owners under 40 make investments, this percentage will decrease for the

older owners (over 60 years old) to only 36%. In addition, younger people invest

Holders a larger share of their total volume in capacity expansions

(50% versus 20%), more often show positive net investments (38% versus

22%) as well as a significantly higher investment intensity (investment volume

per employee averaging EUR 9,200 compared to EUR 7,600).

If you look at the rapid aging process that the

Ownership in medium-sized companies shows the increasing relevance

this aspect. The average age of an owner is currently in

Middle class at 52.8 years. In the past ten years this value has been around three

Years grown, since 2002 even by eight years. At the time they were

just 20% of the owners are 55 years or older. Currently it is with

every second with a share of 50%.

“The tendency to invest decreases massively with increasing age of the owner –

both the investment volume as well as the slope, capacity expansions

to implement. Along with the rapid increase in the average age of

For business owners, this pattern prevents huge investments, “says Dr.

Fritzi Köhler-Geib, Chief Economist at KfW. “It has been since 2002

Average age of owners in medium-sized businesses around eight years

gone up. In addition, there is often an imminent corporate succession that

the propensity to invest is also a burden. “

In the pairing with a comparatively old age the owner blocked the

When it comes to corporate succession, the willingness to invest is downright. The nearer

the time the planned handover or sale approaches, the less frequently

investment projects are implemented. There would be a follower in the coming

five years, the willingness to invest averages around

41%. However, if the planned successor is more than five years in the future,

willingness to invest is still at an average of 56% – that is

significantly higher. A look at the shows how strong this is

Succession figures: In 2020 alone, around 260,000 medium-sized companies planned to

to hand over or sell the company within two years.

Last but not least, limited growth ambitions also work as a

Investment barrier (43% of companies). Lots of small and medium-sized

Companies have functioning, often locally anchored business models and

weight the continued existence of the company higher than expansion. Generate

Your own income from self-employment comes first.

Capacity-expanding strategies that involve additional investments

(e.g. moving abroad, hiring employees)

in these cases rather seldom.

The current study is available at:

The data basis:

The current analysis by KfW Research is based on an evaluation of the

KfW SME Panel 2021 and various waves from previous years. That

KfW SME Panel is an annual survey among the small and medium-sized enterprises

Medium-sized companies in Germany with an annual turnover of max. 500 million

EUR. With a database of up to 15,000 companies per year, that represents

KfW SME Panel the only representative survey in Germany

Medium-sized companies and thus the most important data source for medium-sized companies

Questions. In the current wave of surveys, between

Around 11,400 medium-sized companies are involved in February and June 2021.

Press contact:

KfW, Palmengartenstr. 5 – 9, 60325 Frankfurt

Communication (COM), Christine Volk

Phone. +49 (0) 69 7431 3867, Fax: +49 (0) 69 7431 3266,

Email: mailto: [email protected], Internet:

Further material:


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