You could call it ‘keeping up with the Schmidts’, that sense of neighbour envy and admiration that British business owners have long held for their continental counterparts in Germany.
In a survey by asset finance firm Close Brothers more than a quarter of UK small business owners said that the world economy they most respected was that of Germany, whose prowess at manufacturing and exporting is renowned.
Back in 2010, newly-in-post Chancellor George Osborne advocated that British companies should emulate Germany’s thriving small and mid-market enterprises, and more recently, Business Secretary Vince Cable said that ‘Britain has not been as good as competitors like Germany in turning ideas into wealth creation.’
And it is true that Germany’s SME sector, or ‘mittelstand’, has taken much of credit for the country’s economic performance. The vast majority of German businesses are found within this sector, typified by small, traditional, family owned and run firms, focused on the local market, a robust balance sheet, and surplus cash to invest in further innovation and growth.
So it is hardly surprising that the UK’s SME sector aspires to the mittelstand approach to business as a way of fuelling economic growth, creating new jobs and increasing exports.
But given that the entrepreneurs behind the enterprises in their respective countries are very different in their approach to starting and running businesses, can British start-up founders mirror their German peers as easily as that?
Probably not, as Bonn-based business coach and founder of AC PowerCoaching Agnes Cserhati, who has spent many years working with entrepreneurs across a range of industry sectors in both the UK and Germany, explains.
“Entrepreneurs are individual, and therefore all different, but they do share similarities in things like mindset, decision making and communication. However, it is the way that they use them makes their business styles quite different,” she says.
One of the key differentiators is culture, and in particular, the history of entrepreneurship in both countries.
She says: “In the UK right now there is an entrepreneurial movement sweeping the country, suddenly within the grasp of people who have never considered it before. It is all very new. In Germany, entrepreneurship is not a new thing at all; the mittelstand is the norm.”
And that is an important point of differentiation; Germany’s mittelstand businesses are deeply rooted in the country’s social and economic history and development and have been for centuries.
In terms of business styles and strategies, British entrepreneurs, she says, are often more inclined to go for fast growth and generating quick sales, while German entrepreneurs are more likely to focus on building the organisation, growing with it, and contributing to the economy.
“It is very much a short term business strategy versus a long term one,” she says.
Entrepreneurs in both countries also have very different attitudes to risk that, again, are shaped by cultural factors, and of course the economy.
“In the UK there is this sense of excitement and anticipation around business risk, while the German risk mindset is to say ‘hold on, we know how this works, let’s not get carried away’,” says Cserhati.
Even business coaching, currently very much in in vogue in enterprise circles, enjoys a different reception from UK and German entrepreneurs.
She says: “In my experience, entrepreneurs from the UK recognise the value of business coaching from the start and embrace it readily. In Germany I usually find there is more initial resistance, but once they start to recognise how they and their business can benefit from it, entrepreneurs buy into the idea of coaching completely.”
Then there are cultural differences is the way that entrepreneurs in both countries deploy social media. Germany’s penchant for privacy and security, and reticence over social sharing, has so far prevented it from embracing Twitter as a business marketing channel in anything like the same way that the British start-up community has. But does it need to?
“In Germany, where possible, people shop local from local traders and buy local produce,” explained Cserhati. “This also helps businesses to keep together and use each other’s services…I suppose in the UK the multinationals and larger retail chains make this much more challenging for local businesses.”
To many, Germany’s inherent sense of caution and measured reserve could be perceived as a barrier to starting up and growing a business, but given the country’s position of envy among their European neighbours, it clearly isn’t.
The question is are these cultural traits and ancient traditions something that the new generation of British entrepreneurs can ever adopt? Or are they destined to forever be looking over the continental fence at their mittelstand neighbours with envy?
Follow Alison on Twitter @alisonbcoleman
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