A tribute in figures
Firms: where prosperity comes from
“Prosperity arises where someone takes a risk.”
Behind each of the roughly 3.2 million firms in Germany are people who took a risk: their own money, their own time and often their livelihood. This page shows in figures what they achieve and how often it goes wrong.
How many of 100 new firms are still there after five years?
37 in 100still active after 5 years
Chart: Dr Benjamin Moritz, benjaminmoritz.de/en/enterprise/
In short
- Entrepreneurs push the new through: a new product, a new way of producing, a new market, a new source of raw materials or a new organisation.
- Close to nine in ten people in work are not employed by the state: in 2025, 5.5 of 46.0 million worked in the public service.
- Of 100 firms founded in 2015, 37 were still active five years later.
- About 90 per cent of firms are family firms. By 2030 about 186,000 are due to be handed over; so far a good half of handovers have stayed in the family.
- Of 100 euros of sales, firms kept on average about 3.50 euros of profit after taxes in 2024.
- Of 100 euros firms work with, 31 are their own; in 1997 it was 20.
- Almost all of the 1.2 million apprentices learn in firms, and firms account for a good two thirds of research.
- VAT and wage tax bring in 58 per cent of all taxes. Firms pay both over to the tax office.
What an entrepreneur does
Five ways to push the new through
In 1911 Joseph Schumpeter described what makes an entrepreneur: he pushes the new through. That can be a new product, a new way of producing, a new market, a new source of raw materials or a new organisation. Whoever starts like this usually has no fortune of his own. He needs credit, so he first becomes a debtor, and whoever lends him the money shares the risk.
A new product
Carl Benz, 1886
On 29 January Benz applies for a patent on his ‘vehicle with gas engine’; the first public drive follows in July. From it comes the car. Timeline: The automobile
A new way of producing
Johannes Gutenberg, Mainz, around 1450
Gutenberg prints with movable metal type: books are no longer copied by hand but set and printed. He sets up his first print shop with a loan. Timeline: Printing
A new market
Robert Bosch, Stuttgart, 1886 to 1902
Bosch opens a workshop for precision mechanics and electrical engineering in 1886, with 10,000 marks from his father's estate. In the crisis of 1892 he has to dismiss all but two of his staff. In 1902 his firm develops a high-voltage magneto ignition for petrol engines; it becomes the starting point of the business abroad, and later the firm supplies above all equipment for cars. Timeline: Bosch and its foundation
A new source of raw materials
Jakob Fugger, Augsburg, from 1494
With the Cracow merchant and engineer Johann Thurzo, Fugger enters mining and the metal trade in Hungary, centred on Neusohl, today's Banská Bystrica. Later he founds the Fuggerei in Augsburg. Timeline: The Fuggerei
A new organisation
Friedrich Wilhelm Raiffeisen, Heddesdorf, 1864
Raiffeisen founds a loan society: the members help themselves, are jointly liable and distribute no profits; it is run by volunteers. From it grow the cooperative banks. Timeline: Cooperative credit
What all five have in common: they put in money, time and their good name before it was clear whether it would pay off.
Where people work
People in work 2025 and people working in firms 2024
On average in 2025, about 46.0 million people worked in Germany. 42.3 million of them were employees; 3.7 million were self-employed or helped in a family business. About 5.5 million people worked in the public service in mid-2025, for example for the federal government, the Länder, the municipalities and social insurance: about 12 per cent of all people in work. The diagram leads step by step from the inhabitants to their employers.
Almost nine in ten people in work are employed not by the state but in firms or as self-employed.
this stepthe step before
Inhabitants 83.6
Aged 15 to 64 53.0besides them 19.0 million aged 65 and over and 11.6 million under 15
In work 46.0of them 2.0 million aged 65 and over; 1.7 million unemployed
In firms or self-employed 40.55.5 million work in the public service
In firms, by size of firm (2024) 39.3
- Micro (fewer than 10 people) 7.1
- Small (10 to 49) 7.9
- Medium (50 to 249) 6.3
- Large (250 and more) 18.1
For comparison: at the 40 DAX groups in Germany (2025) 1.537 per cent of their 4.06 million employees worldwide; groups of all sectors, including banks and insurers
Chart: Dr Benjamin Moritz, benjaminmoritz.de/en/enterprise/
Over time it did not run in one direction. In 1991, 6.7 million people worked in the public service, 17 in 100 people in work. By 2009 the number fell to 4.5 million, above all through privatisations such as those of the railways and the post office: whoever works there no longer counts as public service. Since 2009 the public service has grown again, by 20 per cent to 5.5 million, faster than the number of all people in work (12 per cent); the largest increases recently were at schools, universities and day-care centres.
The public service shrank until 2009 and has since grown faster than employment as a whole.
Public serviceAll others in work: firms, self-employed and others
Chart: Dr Benjamin Moritz, benjaminmoritz.de/en/enterprise/
Of the firms counted for 2024, about 3.2 million were small and medium-sized enterprises (SMEs), 99.3 per cent. 2.7 million of them were micro firms; only about 21,500 firms were large. Even so, almost half of the people work in the large ones: of 39.3 million people working in these firms, 54 per cent worked in SMEs and 46 per cent in large firms.
Chart: Dr Benjamin Moritz, benjaminmoritz.de/en/enterprise/
From founding to handing over
Start-ups, closures, insolvencies and succession
In 2023 about 269,000 firms were newly founded in Germany, 8.4 per cent of all firms. Just over 283,000 firms closed in the same year. Only genuine start-ups and closures of firms that are economically active are counted; a firm that arises from a takeover, a spin-off or as the successor of another does not count. How long do new firms last? The diagram follows the firms founded in 2015 over five years.
- closed by 201622
- closed in 201715
- closed in 201812
- closed in 20197
- closed in 20207
- still active in 202037
Chart: Dr Benjamin Moritz, benjaminmoritz.de/en/enterprise/
More recent cohorts are doing somewhat better: of the firms founded in 2021, 81 in 100 were still active after one year and 58 after three years (founded in 2015: 78 and 51). The differences between sectors are large: five years after founding, 36 per cent of restaurants and bars were still active in 2023, 27 per cent in creative, artistic and entertainment activities, 60 per cent of veterinary practices.
Not every closure is a bankruptcy. In 2023, 17,814 firms applied for insolvency proceedings, a small part of the just over 283,000 closures. In 2025 there were 24,064 business insolvencies, more than in any year since 2014: 69 per 10,000 firms.
At the end of an entrepreneur's working life comes the handover. The Institut für Mittelstandsforschung (IfM) Bonn estimates that from 2026 to 2030 about 186,000 family firms will be handed over because their owners leave the management for reasons of age, illness or death. Only firms that earn enough for a takeover to be worthwhile are counted. Who has taken over so far is shown in the diagram.
Chart: Dr Benjamin Moritz, benjaminmoritz.de/en/enterprise/
Family firms
Estimate of the IfM Bonn for 2019
The Institut für Mittelstandsforschung (IfM) Bonn estimates that in 2019 there were about 3.2 million family firms, about 90 per cent of all firms. They earned about 37 per cent of all turnover, and about 56 per cent of all employees subject to social insurance worked in them. 591,000 of them, 18 per cent, were run by women. The IfM counts a firm as a family firm when ownership and management lie in the hands of one family.
Some family firms have lasted for centuries. Merck in Darmstadt goes back to a pharmacy of 1668 and in 2018 looked back on 350 years as a family-run company. Where no family takes over, a foundation can become the owner: in 1889 Ernst Abbe transferred his shares in Zeiss and Schott to the Carl Zeiss Foundation, in 1964 the Bosch family transferred the majority of Robert Bosch GmbH to a charitable company, and in 1967 the fortune of the last owner of Krupp went to a charitable foundation.
The timeline tells of entrepreneurs and what they founded: the Fuggerei (1521), Merck (1668), Krupp (1811), Siemens & Halske (1847), the Carl Zeiss Foundation (1889), Bosch and its foundation (1964) and SAP (1972).
Where 100 euros of sales go
Costs and profit of firms in 2024
How much of its sales does a firm keep? The Bundesbank extrapolates the annual accounts of about 130,000 firms to almost all firms outside finance. In 2024 their sales came to 8,482 billion euros together. The diagram divides 100 euros of it.
Of 100 euros of sales, 3.53 euros remain as profit after taxes.
- Materials, goods and bought-in services65.51
- Other costs less other income9.15
- For staff, lenders, state and owners25.34
- Wages, salaries, social contributions16.96
- Depreciation2.80
- Interest1.15
- Taxes on profit0.90
- Profit after taxes3.53
Chart: Dr Benjamin Moritz, benjaminmoritz.de/en/enterprise/
About two thirds of sales go to suppliers for materials, goods and bought-in services. Wages, salaries and social contributions cost 16.96 euros, depreciation of machines, buildings and other assets 2.80 euros, interest 1.15 euros. Taxes on profit come to 0.90 euros. The profit is 3.53 euros, 4.43 euros before taxes. From it the firms pay out to their owners or invest.
Because so little is left, small changes have a large effect. An example: if purchase prices rise by 1 per cent and selling prices do not follow, this costs 0.66 euros per 100 euros of sales. Profit before taxes falls from 4.43 to 3.77 euros, by about a seventh.
These are totals over all firms; large firms weigh heavily in them, and from sector to sector the account looks quite different. In sole proprietorships and partnerships the profit also contains the income of the owners, who pay themselves no salary, and their income tax is not among the taxes on profit.
Understanding firms
Break-even, the three statements, ratios, life cycle
Anyone who wants to understand a firm needs four views: from when does the business pay for itself? What does it own, and who financed it? How solid is it? And where does its money flow? The diagrams show it for an invented bakery, for the Bosch group and for the average of all firms in Germany.
When the business pays for itself
Every business has costs that stay whatever it sells: rent, fixed wages, interest. And costs that rise with every piece: flour, power for the oven, bags. What a loaf brings in above its own cost is called its contribution margin. Only when the contributions cover the fixed costs does the bakery earn money: at the break-even point.
From 9,000 loaves a month the bakery pays for itself.
SalesCostsFixed costs
With 10,000 loaves: €2,500 profit a month. One tenth more loaves sold: 100% more profit.
Chart: Dr Benjamin Moritz, benjaminmoritz.de/en/enterprise/
Three statements: income, balance sheet, cash flow
Over a whole year every firm keeps three statements. The income statement shows what the year brought in and what it cost. The balance sheet shows on one day what the firm owns and who paid for it. The cash flow statement shows where the money came from and where it went. The diagram takes you through the three statements of the same bakery in twelve steps.
The bakery earns 21,000 euros, and yet at the end of the year it has 16,000 euros less in the till.
1. Sales
The bakery from the diagram above sells 10,000 loaves a month at 4 euros, 480,000 euros in the year. That is its sales, the first line of the income statement. The income statement shows what a year brought in and what it cost.
Income st. Sales: 120,000 loaves at €4 480
2. Costs
Flour, power and bags cost 1.50 euros a loaf, 180,000 euros in the year: these costs rise with every loaf. Wages, rent and insurance are due however much the bakery sells. They are the fixed costs from the diagram above.
Income st. Flour, power, packaging −180Income st. Wages and salaries −168Income st. Rent and other costs −60
3. Depreciation
Oven, shop fittings and van last many years. Their price is therefore spread over the years in which they are used: as depreciation, here 36,000 euros. By this amount their value in the balance sheet falls before anything new is added.
Income st. Depreciation −36Balance sheet Oven, shop fittings, van 200 → 204
4. Operating result
After all the costs of the business 36,000 euros remain: the operating result, often called EBIT (earnings before interest and taxes). Of 100 euros of sales that is 7.50 euros, the EBIT margin.
Income st. Operating result (EBIT) 36
5. Interest and taxes
For its bank loan the bakery pays 6,000 euros of interest, then 9,000 euros of tax on the profit. Interest depends on how a firm is financed, not on how well the business runs; that is why the income statement keeps the two apart.
Income st. Interest −6Income st. Taxes on profit −9Balance sheet Bank loan 160 → 140
6. Profit and equity
21,000 euros are left. This profit belongs to the owners. They have 10,000 euros paid out; 11,000 euros stay in the firm and raise the equity from 90,000 to 101,000 euros. Here the income statement and the balance sheet meet.
Income st. Profit for the year 21Balance sheet Equity: the owners' money 90 → 101Cash flow Paid out to the owners −10
7. Balance sheet
The balance sheet shows on one day on the left what the bakery owns (assets: fixed assets that stay, current assets that turn over) and on the right who paid for it (equity and liabilities). Both sides are always the same size: every euro in the firm comes from the owners (equity) or from creditors such as the bank and suppliers (debt). On 31 December it is 264,000 euros.
Balance sheet Total assets 270 → 264Balance sheet Total equity and liabilities 270 → 264
8. Profit is not cash
The cash flow statement turns the profit into money. It starts from the profit for the year and adds the depreciation back: it lowered the profit but cost no money this year, because the oven was paid for when it was bought.
Cash flow Profit for the year 21Cash flow Depreciation added back 36
9. Money tied up
More flour in store (2,000 euros) and customers who pay later (4,000 euros) tie up money; paying its own suppliers later (3,000 euros) spares the till. On balance 3,000 euros are missing; experts call this working capital. So 54,000 euros flow in from the running business, more than the profit.
Cash flow More stocks and receivables, more owed to suppliers −3Cash flow Money from the business 54Balance sheet Stocks: flour, packaging 10 → 12Balance sheet Receivables from customers 20 → 24Balance sheet Owed to suppliers 20 → 23
10. Investments
A new oven costs 40,000 euros. The money is gone at once; in the income statement the oven appears only bit by bit as depreciation. Plant rises from 200,000 to 204,000 euros (plus 40, less 36). What remains of the money from the business after investing is called free cash flow: 14,000 euros.
Cash flow New oven −40Cash flow Free cash flow 14Balance sheet Oven, shop fittings, van 200 → 204
11. Providers of capital
The bank receives 20,000 euros of repayment, and the loan falls to 140,000 euros. The owners receive 10,000 euros. Together that is 30,000 euros, more than the 14,000 euros of free cash flow.
Cash flow Loan repaid to the bank −20Cash flow Paid out to the owners −10Balance sheet Bank loan 160 → 140
12. Cash
So the cash falls by 16,000 euros, from 40,000 to 24,000, although the bakery made 21,000 euros of profit. Exactly this amount is in the balance sheet at the end of the year: here all three statements meet.
Cash flow Change in cash −16Balance sheet Cash and bank 40 → 24
Income statement 1 January to 31 December
| Year | |
|---|---|
| Sales: 120,000 loaves at €4 | 480 |
| Flour, power, packaging | −180 |
| Wages and salaries | −168 |
| Rent and other costs | −60 |
| Depreciation | −36 |
| Operating result (EBIT) | 36 |
| Interest | −6 |
| Taxes on profit | −9 |
| Profit for the year | 21 |
Cash flow statement money in and out in the year
| Year | |
|---|---|
| Business | |
| Profit for the year | 21 |
| Depreciation added back | 36 |
| More stocks and receivables, more owed to suppliers | −3 |
| Money from the business | 54 |
| Investments | |
| New oven | −40 |
| Free cash flow | 14 |
| Providers of capital | |
| Loan repaid to the bank | −20 |
| Paid out to the owners | −10 |
| Change in cash | −16 |
Balance sheet on 1 January and on 31 December
| 1 Jan | 31 Dec | |
|---|---|---|
| Fixed assets | ||
| Oven, shop fittings, van | 200 | 204 |
| Current assets | ||
| Stocks: flour, packaging | 10 | 12 |
| Receivables from customers | 20 | 24 |
| Cash and bank | 40 | 24 |
| Total assets | 270 | 264 |
| 1 Jan | 31 Dec | |
|---|---|---|
| Equity | ||
| Equity: the owners' money | 90 | 101 |
| Debt | ||
| Bank loan | 160 | 140 |
| Owed to suppliers | 20 | 23 |
| Total equity and liabilities | 270 | 264 |
Chart: Dr Benjamin Moritz, benjaminmoritz.de/en/enterprise/
What does this look like at a large firm? The Bosch group belongs mostly to the charitable Robert Bosch Stiftung and is not listed on a stock exchange; its figures are in its annual report. How the foundation came about is told in the timeline: Bosch and its foundation.
The same three statements on a large scale: 91 billion euros of sales, 413,000 employees.
Income statement
| 2025 | |
|---|---|
| Sales | 91.0 |
| Cost of the products sold | −63.3 |
| Distribution and administration | −18.9 |
| Research and development | −7.9 |
| Other income and expenses | 0.5 |
| Operating result (EBIT) | 1.4 |
| Financial result | −0.9 |
| Taxes | −0.9 |
| Profit after tax | −0.4 |
Cash flow statement
| 2025 | |
|---|---|
| Money from the business | 5.5 |
| Investments | −8.5 |
| of which purchase of a heating and air-conditioning business | −7.2 |
| Providers of capital | 2.6 |
| of which new bonds and loans | 5.3 |
| of which repayments and leases | −2.2 |
| of which dividends | −0.5 |
| Change in cash | −0.4 |
Balance sheet
| end 2024 | end 2025 | |
|---|---|---|
| Long-term: plant, buildings, stakes and more | 58.7 | 65.7 |
| Short-term: stocks, receivables, liquidity | 54.1 | 50.6 |
| of which liquidity | 26.9 | 23.7 |
| Total | 112.8 | 116.3 |
| end 2024 | end 2025 | |
|---|---|---|
| Equity | 50.0 | 48.4 |
| Long-term debts: bonds, pensions and more | 29.7 | 33.5 |
| Short-term debts | 33.1 | 34.5 |
| Total | 112.8 | 116.3 |
Chart: Dr Benjamin Moritz, benjaminmoritz.de/en/enterprise/
Bosch sorts its costs by task (making, selling and administration, research) rather than by kind (material, wages) as the bakery does; the result is the same. In 2025 provisions for cutting jobs above all weighed on the result; without such special items Bosch reports an operating EBIT of 1.8 billion euros, 2.0 per cent of sales.
In the cash flow statement one item stands out: Bosch bought a heating and air-conditioning business for 7.2 billion euros and paid for it partly with new bonds. That is why the three flows show the signs of a growing firm this year (plus, minus, plus; more on this in the life cycle below). A single year can deceive.
Ratios
From the three statements one can form ratios. They make firms of any size comparable, because they set amounts in proportion: to sales, to the balance sheet total or to equity. The table works them out for the bakery and puts the real figures of the Bosch group beside them.
| Ratio | Bakery | Bosch 2025 |
|---|---|---|
| Return on sales before taxesprofit before taxes per 100 euros of sales | 6.3%30 : 480 | 0.6%0.5 : 91.0 |
| EBIT marginoperating result per 100 euros of sales | 7.5%36 : 480 | 1.5%1.4 : 91.0 |
| Equity ratioequity per 100 euros of balance sheet total: the cushion for losses | 38.3%101 : 264 | 41.6%48.4 : 116.3 |
| Return on equityprofit after tax per 100 euros of equity at the start of the year: what the owners earn on their money | 23.3%21 : 90 | −0.7%−0.4 : 50.0 |
| Cash flow marginmoney from the business per 100 euros of sales | 11.3%54 : 480 | 6.0%5.5 : 91.0 |
| Free cash flowwhat remains after investing, per 100 euros of sales (Bosch: as Bosch defines it) | 2.9%14 : 480 | 0.3%0.3 : 91.0 |
| Fixed-asset coverlong-term money (equity and long-term debts) per 100 euros of fixed assets; above 100, what stays long is financed long (Bosch: long-term assets) | 118.1%241 : 204 | 124.6%81.9 : 65.7 |
| Investment to depreciationabove 1, the stock of plant grows (Bosch: property, plant and equipment) | 1.140 : 36 | 1.14.1 : 3.7 |
Bakery invented, figures in thousand euros; Bosch in billion euros, from the annual report 2025. For comparison, the average of all firms in Germany in 2024: return on sales before taxes 4.4 per cent, equity ratio 31.0 per cent (Deutsche Bundesbank, below).
Table: Dr Benjamin Moritz, benjaminmoritz.de/en/enterprise/
Ratios do not stand alone; they hang together like the branches of a tree. At the top is the return on total capital: what the business earns per 100 euros that are tied up in it. It is the product of two numbers: how much of each euro of sales remains (EBIT margin) and how often the capital turns over in sales in a year. Chemicals maker DuPont used such a tree a hundred years ago; it is still the basis of many analyses. Try out where the bakery can pull.
Selling 10 per cent more raises the return from 13.6 to 25 per cent: the fixed costs stay the same.
- Sales 480
- − Flour, power, packaging 180
- − Wages 168
- − Rent and other 60
- − Depreciation 36
- Plant 204
- + Stocks 12
- + Receivables 24
- + Cash 24
Chart: Dr Benjamin Moritz, benjaminmoritz.de/en/enterprise/
And on average? Per 100 euros of balance sheet, firms in Germany in 2024 owned on average 23.8 euros in machines, buildings and other fixed assets, 17.5 euros in stocks, 31.4 euros in receivables, above all from customers and their own subsidiaries, 17.5 euros in stakes in other firms and 9.8 euros in cash, bank deposits and securities.
Of 100 euros firms work with, 31 are their own.
Assets What firms own
Total 100
Equity and liabilities Who paid for it
Total 100
Chart: Dr Benjamin Moritz, benjaminmoritz.de/en/enterprise/
Firms have built up their cushion: in 1997 just under 20 of 100 euros came from their own funds, in 2024 it was 31. Profit on sales, by contrast, has hardly changed and moves around 4 per cent.
31.0%equity ratio: the cushion for losses
4.4%return on sales before taxes: what is left of 100 euros of sales
5.9%return on total capital: profit and interest per 100 euros of balance sheet
8 yearsto repay all debts from cash flow (debts less cash)
Equity ratioReturn on sales before taxes
Chart: Dr Benjamin Moritz, benjaminmoritz.de/en/enterprise/
The life of a firm
Firms have a life of their own. Between founding and handing over or closing, described above, most go through stages: at the start they earn nothing yet and invest a lot; in growth the first profits come, but they need more money than they earn; in maturity they earn well and need little new capital; in a shake-out growth and prices fall; in decline they shrink and sell parts. It is not a one-way street: a mature firm can grow again with a new product.
Where does a firm stand in its life? Its cash flow statement tells. It splits the money of a year into three flows: from the running business, for investments, and from or to those who provide capital. The accounting researcher Victoria Dickinson showed in 2011 that the signs of the three flows alone reveal the stage. The diagram takes a firm through its phases: pick a phase, or go from phase to phase with „Next“.
Start-up
- Revenue growth
- hardly any revenue
- Operating margin
- strongly negative
- Free cash flow
- strongly negative
Example: SSI (opens in a new tab). Safe Superintelligence Inc. was founded in the USA in 2024, among others by Ilya Sutskever, a co-founder of OpenAI. It wants to build a safe superintelligence, has no product and no revenue yet and lives on the money of its investors: a start-up in pure form.
Leadership
the visionary, who convinces others of an idea
The test
Product test: can the idea become something that works and that someone wants? Debt does not fit yet; owners carry the risk.
Money in (+) and out (−) in a year
- −money outBusiness: the running business costs more than it brings in
- −money outInvestments: money goes into machines, software and expansion
- +money inProviders of capital: owners and lenders put in new money
Who gives money (tap a name)
· · ·
From the timeline: 1847: Werner Siemens and Johann Georg Halske start a telegraph works in Berlin; a cousin lends 6,000 thalers for six years' share of profit. Siemens & Halske
Founders, family, friends
The first money usually comes from the founders themselves and from people who trust them, in return for a share or a promise to pay it back, often without fixed rules.
Business angels
Experienced entrepreneurs or managers who put their own money into young firms early, often 50,000 to 500,000 euros. They also bring advice and contacts and receive a share in return.
Venture capital
Venture capital: funds that put the money of many investors into young, fast-growing firms, round by round, in return for shares. Many of these firms fail; a few great successes are meant to make up for them.
Growth, minority stakes
Growth capital for firms that already have sales and want to grow faster. The fund buys a minority stake; the founders keep running the firm.
Stock exchange: shares
With a stock market listing a firm sells shares to many investors. Whoever holds a share is a part-owner, receives part of the profit as a dividend and can sell the share on the exchange any day.
Buyout: private equity
Private equity funds buy mature firms, usually wholly or by a majority, often with a good part paid by loans. They improve the business over some years and then sell again.
Distressed investors
They buy the loans or bonds of firms in trouble cheaply and bet that the firm is rescued, or that winding it up brings more than they paid.
Subordinated loans, convertibles
Hybrids between equity and debt. A subordinated loan is repaid only after the other loans and pays more interest for that. A convertible bond is a bond the lender can later swap for shares.
Development loans, guarantees
Loans from the development banks of the federal government and the states, often at low interest; guarantee banks take on part of the risk of default so that the house bank lends at all.
Venture debt
Loans for young firms that already have venture capital. They stretch the time until the next round; in return there is high interest and often a small right to shares.
House bank
The bank where a firm keeps its accounts. It lends for machines, buildings or the running business, usually against collateral.
Private debt
Loans that funds and insurers give to firms directly, without a bank and without the stock exchange, often to medium-sized firms or for a buyout.
Promissory notes (Schuldschein)
A loan common in Germany that a bank spreads among several investors such as savings banks and insurers. Simpler than a bond, but not traded on an exchange.
Corporate bonds
A large firm borrows from many investors at once. A bond has a fixed interest rate and a fixed repayment date and can be traded on the exchange.
High yield, leveraged loans
Bonds and loans of firms with a lot of debt or weaker credit, for instance after a buyout. The risk of default is higher, and so is the interest.
Restructuring
When a firm can no longer carry its debts, lenders and owners negotiate anew: claims are cut, deferred or swapped for shares.
Chart: Dr Benjamin Moritz, benjaminmoritz.de/en/enterprise/
How a crisis unfolds
Earnings and finances depend on each other: only a firm that earns enough for long enough stays financed, and only a firm that is soundly financed has the time to earn. If one slips, the other follows. A crisis therefore usually starts long before it shows in the figures.
The first stage is in none of the three statements, and each stage follows the last faster.
1Strategic crisis
seen in no statement
A supermarket with an in-store bakery opens across the street. The bakery still sells 10,000 loaves a month; its statements show nothing, the profit is 21,000 euros. Now there is time: its own range, deliveries to canteens, a second location.
Noticed first by staff, suppliers and regular customers.
2Crisis of profitability
seen in the income statement
A year later it sells 8,000 loaves. The fixed costs stay: the income statement shows a loss of 30,000 euros. Because depreciation costs no money, 6,000 euros still flow in from the business, but the repayment of 20,000 euros drains the cash from 24,000 to 10,000 euros.
3Crisis of liquidity
seen in the cash flow and the till
The year after, the money no longer covers the repayment: 4,000 euros are missing. Without new money from the bank or the owners the bakery is unable to pay; a limited company then has to file for insolvency.
Chart: Dr Benjamin Moritz, benjaminmoritz.de/en/enterprise/
The economist Hyman Minsky calls this the way from hedged to speculative financing: in the good year the money from the business covers interest and repayment (60,000 against 26,000 euros), in the crisis only the interest (12,000 against 6,000 euros), and without a bank that rolls the loan over it cannot go on. If it does not even cover the interest, he speaks of Ponzi financing.
Many managements act only when the crisis shows, not while it is still latent. Then there is little time left. The early stage is the one that can be changed most cheaply; it is also the one no ratio shows. That is why owners and lenders also ask about customers, competitors and plans, not only about the last balance sheet.
The first stage is easily missed by anyone who only checks the budget. That is why two loops belong together:
Whoever only checks the budget does not see whether the strategy still holds.
Flour gets dearer: bread 10 cents more.
The budget tests the strategy
Supermarket across the street: supply canteens?
Chart: Dr Benjamin Moritz, benjaminmoritz.de/en/enterprise/
Family wealth can be run the same way: every month income and spending, once a year the balance sheet of wealth and the strategy. Month and year
How the new comes about
Something new also begins before it shows in the figures. The organisation researcher James March distinguishes two ways of learning: exploring (trying out the new) and exploiting (refining what works). Exploiting brings certain returns soon, exploring uncertain returns later.
With something new the statements first show only the costs; the benefit comes later.
1Trying out
in the income statement only as costs
So far the bakery earns 30,000 euros before taxes. Supplying three canteens on trial costs 12,000 euros and brings in 3,000: the profit falls to 21,000 euros.
2Pushing through
in the income statement as sales and profit
Two canteens order for good, 3,000 loaves a month at 3 euros. After all costs that is 30,000 euros more: the profit rises from 30,000 to 60,000 euros.
3Refining
in the balance sheet and the till
Fixed routes, flour 10 cents cheaper: nearly 16,000 euros more, the profit rises to just over 75,000 euros. Time to explore the next thing.
Chart: Dr Benjamin Moritz, benjaminmoritz.de/en/enterprise/
Because exploiting pays at once, it easily crowds out exploring; March calls this effective in the short run and self-destructive in the long run. Exploring is cheapest while the old business still carries the firm.
What firms must disclose
Size classes, what becomes public, the stock exchange, real examples
Every GmbH, AG and GmbH & Co. KG has to publish its annual accounts, at the latest twelve months after the balance sheet date. Since August 2022 they go to the company register (Unternehmensregister), where anyone can read them free of charge. How much a firm has to show depends on its size. Three features count; a firm belongs to a class if it stays within two of its three limits on two balance sheet dates in a row.
Micro
- Balance sheet totalup to 450,000 euros
- Salesup to 900,000 euros
- Employeesup to 10
- Balance sheet only deposited: yes
- Income statement: no
- Management report: no
- Audited: no
For example
- The invented bakery from above: 480,000 euros of sales, 264,000 euros of balance sheet total
Small
- Balance sheet totalup to 7.5 million euros
- Salesup to 15 million euros
- Employeesup to 50
- Balance sheet: yes
- Income statement: no
- Management report: no
- Audited: no
For example
- The same bakery with five shops: 2.4 million euros of sales (invented)
Medium-sized
- Balance sheet totalup to 25 million euros
- Salesup to 50 million euros
- Employeesup to 250
- Balance sheet: yes
- Income statement sales may stay hidden: yes
- Management report: yes
- Audited: yes
For example
- Ecosia GmbH, search engine, Berlin: 40.9 million euros of sales in 2024, about 100 employees
Large
- Balance sheet totalmore than 25 million euros
- Salesmore than 50 million euros
- Employeesmore than 250
- Balance sheet: yes
- Income statement: yes
- Management report: yes
- Audited: yes
For example
- URSAPHARM group, eye medicines, Saarbrücken: 379 million euros of sales in 2024, about 1,200 employees
- dm-drogerie markt GmbH + Co. KG: 13.3 billion euros of sales in Germany in 2024/25, more than 63,600 employees there
- Bosch group: 91 billion euros of sales in 2025, 413,000 employees
Listed
Always large: the annual financial report with all parts, audited, at the latest four months after the financial year. On top come:
- Half-year half-year financial report, at the latest after three months
- Quarter statements on the first and third quarter, in German and English, in the Prime Standard of the Frankfurt Stock Exchange; only shares listed there can enter DAX, MDAX, SDAX and TecDAX
- Ad hoc news that can move the share price considerably, as soon as possible
For example
- Siemens AG (DAX): 78.9 billion euros of sales in the financial year to September 2025, about 318,000 employees
- Hugo Boss AG (SDAX): 4.3 billion euros of sales in 2025, more than 17,500 employees (full-time equivalents)
Chart: Dr Benjamin Moritz, benjaminmoritz.de/en/enterprise/
That is why little is known about many medium-sized companies: a medium-sized firm may begin its income statement with the gross result and so hide its sales, a small one shows none at all. Mittelstand does not mean medium-sized: URSAPHARM calls itself a medium-sized group in its own management report and is large in the eyes of the law.
A general partnership, a limited partnership with a person as fully liable partner or a sole trader only has to publish once it is very large: under the Disclosure Act (Publizitätsgesetz) when it exceeds two of three limits, 65 million euros of balance sheet total, 130 million euros of sales and 5,000 employees, three years in a row. Whoever publishes too late is fined 2,500 to 25,000 euros by the Federal Office of Justice, again and again until the accounts are there.
What firms also do
Training, research, exports
1.21 millionapprentices in dual vocational training at the end of 2025
€92.5 bnspent by firms on their own research and development in 2024
€1,563 bngoods exported from Germany in 2025
Training: at the end of 2025 about 1,207,900 young people were in dual vocational training, in the firm and at vocational school; 461,800 had started in 2025. 40,700 of all apprentices were trained by the public service, all others by industry, trade, the crafts, the liberal professions, agriculture and home economics.
Research: in 2024 firms spent 92.5 billion euros on their own research and development, 2.14 per cent of economic output. All research in Germany together came to 3.17 per cent; firms thus account for a good two thirds. The equivalent of 554,101 full-time staff worked in their research.
Exports: in 2025 goods worth 1,563 billion euros were exported from Germany, 0.9 per cent more than in 2024. The largest buyer was the United States with 146.2 billion euros.
How taxes reach the public purse
Tax revenue 2025
In 2025 the federal government, the Länder and the municipalities together took in 989.8 billion euros in taxes. The largest items were VAT with 310.2 and wage tax with 262.7 billion euros, together 58 per cent.
Chart: Dr Benjamin Moritz, benjaminmoritz.de/en/enterprise/
Firms pay both over to the tax office. The employer withholds wage tax from pay before paying it out, and is liable for it. VAT is added to the price; the firm owes it and pays it over, less the VAT it has itself paid to suppliers (input tax). The money comes from employees' pay and from customers; the firms do the work.
Trade tax is paid by businesses to their municipality; it is based mainly on profit. With 76.4 billion euros it was the largest municipal tax in 2025. The largest purely federal tax was the energy tax on motor and heating fuels with 37.6 billion euros. The remaining 302.9 billion include the tax on the profits of corporations (corporation tax), the income tax that the self-employed, partnerships and many others pay after their tax return, and the taxes on interest and dividends.
Whoever pays a tax over does not necessarily bear it. Who bears it in the end depends on how easily customers, employees and firms can avoid it; public finance calls this tax incidence.
Chambers and associations
Who speaks for business
Trade businesses belong by law to one of the 79 chambers of industry and commerce (IHK), craft businesses to one of the 53 chambers of crafts. Chambers are public-law bodies. They represent the overall interest of their members and carry out public tasks, such as the examinations in vocational training. Their umbrella is the Deutsche Industrie- und Handelskammer (DIHK), which by its own account speaks for more than three million firms; for the chambers of crafts it is the Deutscher Handwerkskammertag. In 2025 the crafts counted just over one million businesses with 346,388 apprentices.
Associations, by contrast, are voluntary, mostly registered societies. Business associations represent a sector towards politics and the public; employers' associations negotiate collective agreements with the trade unions. Four umbrella organisations often appear together: the Federation of German Industries (BDI), the Confederation of German Employers' Associations (BDA), the DIHK and the Central Association of German Crafts (ZDH), the umbrella of 53 chambers of crafts and 48 trade associations of the crafts.
How large associations are can best be read in the lobby register of the Bundestag: there they report members, membership fees and what they spend on representing interests. The table shows large federal associations of important sectors and the associations of funds, private equity investors and business angels. The highest membership fees are reported by the savings banks association DSGV, the most members by the SME association BVMW; the insurers' association GDV spends most on representing interests.
| Association | Members | Membership fees, € m | Spending on representing interests, € m |
|---|---|---|---|
| DSGV (opens in a new tab)Deutscher Sparkassen- und Giroverband · savings banks and Landesbanken | 43 | 248.9 | 2.9 |
| VDMA (opens in a new tab)machinery and plant engineering | 3,659 | 81.3 | 4.3 |
| GDV (opens in a new tab)Gesamtverband der Deutschen Versicherungswirtschaft · insurers | 458 | 69.0 | 15.8 |
| BVR (opens in a new tab)Bundesverband der Deutschen Volksbanken und Raiffeisenbanken · cooperative banks | 689 | 58.0 | 2.7 |
| VCI (opens in a new tab)Verband der Chemischen Industrie · chemical and pharmaceutical firms | 2,110 | 47.3 | 9.4 |
| BDEW (opens in a new tab)Bundesverband der Energie- und Wasserwirtschaft · energy and water utilities | 2,137 | 37.0 | 9.9 |
| Bankenverband (opens in a new tab)Bundesverband deutscher Banken · private banks | 183 | 30.7 | 5.2 |
| ZVEI (opens in a new tab)electrical and digital industry | 1,087 | 27.4 | 5.7 |
| vfa (opens in a new tab)Verband Forschender Arzneimittelhersteller · research-based pharmaceutical firms | 48 | 26.8 | 5.7 |
| VKU (opens in a new tab)Verband kommunaler Unternehmen · municipal utilities and other municipal firms | 1,605 | 26.4 | 8.9 |
| BDI (opens in a new tab)Bundesverband der Deutschen Industrie · industry, through its sector associations | 32 | 25.2 | 9.6 |
| BVMW (opens in a new tab)Der Mittelstand, BVMW · small and medium-sized firms | 28,090 | 20.6 | 1.3 |
| Bitkom (opens in a new tab)digital economy | 2,218 | 15.8 | 5.2 |
| VDA (opens in a new tab)Verband der Automobilindustrie · carmakers and suppliers | 620 | 15.2 | 10.3 |
| BVI (opens in a new tab)BVI Bundesverband Investment und Asset Management · investment funds and asset managers | 113 | 11.9 | 2.7 |
| Bauindustrie (opens in a new tab)Hauptverband der Deutschen Bauindustrie · construction firms, through regional associations | 18 | 10.4 | 2.1 |
| Die Familienunternehmer (opens in a new tab)Die Familienunternehmer – Die Jungen Unternehmer · owners of family firms | 6,400 | 8.4 | 2.1 |
| HDE (opens in a new tab)Handelsverband Deutschland · retail | 66 | 7.8 | 1.2 |
| Bauernverband (opens in a new tab)Deutscher Bauernverband · farmers, through regional associations | 20 | 7.1 | 4.5 |
| ZDH (opens in a new tab)Zentralverband des Deutschen Handwerks · crafts: chambers and trade associations | 114 | 6.1 | 1.6 |
| DEHOGA (opens in a new tab)Deutscher Hotellerie- und Gastronomieverband · hotels and restaurants | 25 | 3.0 | 1.0 |
| BGA (opens in a new tab)Bundesverband Großhandel, Außenhandel, Dienstleistungen · wholesale and foreign trade | 58 | 2.4 | 0.7 |
| BVK (opens in a new tab)Bundesverband Beteiligungskapital · private equity and venture capital investors | 306 | 2.0 | 0.2 |
| BAND (opens in a new tab)Business Angels Deutschland · business angels, that is private people who put their own money into young firms, and their networks | 538 | 0.2 | < 0.1 |
Own entries of the associations in the lobby register of the German Bundestag for the last completed financial year, retrieved on 6 and 7 November 2026; the register gives amounts in bands of 10,000 euros, shown is the upper end. Depending on the association, members are firms, regional and sector associations or people, and what an association pays for out of its fees differs; the figures are therefore only roughly comparable. Influence of employers' associations and trade unions on working and economic conditions is exempt from the duty to register; the BDA, Gesamtmetall and the DIHK were not in the register. Selection: umbrella organisations, one large federal association per important sector and the associations of those who give firms capital, sorted by membership fees.
Table: Dr Benjamin Moritz, benjaminmoritz.de/en/enterprise/
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