Berlin seems to have little shops, stores and boutiques on almost every corner of the city. The German capital is billed as a bastion of self-employed people. But just how brisk is their business really?
Strolling through the streets of Berlin, you can't help noticing the many small stores throughout the city center. Self-employment seems to be the name of the game here, and that's reflected in the figures.
"With a self-employment rate of 16 percent, Berlin leads the table in Germany," says Alexander Kritikos, research director of the German Institute for Economic Research (DIW). But he adds that more and more people throughout the country, and especially in Eastern Germany, are screwing up the courage required to set up shop on their own.
In 2009, the number of self-employed people in eastern Germany was twice what it was in 1991. The Association of German Chambers of Commerce and Industry (DIHK) has registered a marked increase in self-employment among people under 30 years of age, with every fifth new start-up emerging in the retail trade sector nationwide.
From idea to business
Argentinian fashion designer Lucrecia Lovera is one of these young entrepreneurs and has been self-employed in Berlin since 2005. She certainly knows why it was Berlin she ended up in.
"Berlin is lively, full of change and open for all new things," she explains. After almost three and a half years in the city, she's now got a studio of her own where she can present her fashion collections. She says that as yet she's unable to live off that work, but she'll keep on trying. "My collections go down well with the public, and that's why I'll be focusing on getting my own store in 2013," the young woman says in describing her plans for the future.
Two more Berlin entrepreneurs, this time from Chile, Christopher von Kretschmann and Mariana Schwaderer jointly own the "Little Pop Machine" store. The two have lived in Berlin for over five years now, selling antique furniture.
"It's been a long road, but so far our business has been going alright," says von Kretschmann, who's an architect. Nevertheless, the two have to take odd jobs to earn some extra money. "Maybe, Berlin is not the best city to sell your stuff as people have little money, but with Berlin behind you, you can sell everywhere and that's what we're going to do," he explains.
According to the Tagesspiegel newspaper, Berliners on average have 18,220 euros ($24,547) to spend on goods, rents and so on, while people in Munch have about 28,250 euros at their disposal.
Sluggish consumption in Berlin
Margarita Ruby, founder of the Spanish bookstore "La Rayuela", feels the Berliners' limited buying power. "People here simply have less money in their pockets than those in other German cities, but I think that becoming self-employed in Berlin is not a bad idea, because of the capital's low living costs," says the mother of two. Although she has to take odd jobs to make ends meet, she believes he decision to set up her own place was right.
"Berlin is a city that is currently 'in,' and that attracts many people, and that's good for my business," she says. "At the same time, having a store of your own gives you all the freedom to decide for yourself when to be with the children or when to be in the store - and strictly speaking, I think of my store as being my first daughter," she adds with a smile. Over the next couple of months she's planning to move to a better location, into a bigger store.
DIW expert Alexander Kritikos says many people who set up a new business succeed in improving their incomes. His figures show that after only three years, throughout Germany, 38 percent earn more than they did when they were employees.
Rebecca Lina invested a lot of hard work to make her children's fashion label "Elfenkind" ("Elf's Child") profitable. She was once an actress from Guadeloupe, and had to sew clothes for herself and her daughters. Those clothes caught people's eye on the streets of Berlin, and so she sewed a couple more and sold them right away, and that's how her business idea was born. Today, two years on, the Elfenkind label is her main source of income. The existence of other Berlin labels such as Lala Berlin has been a help and daily motivation for her, she says.
Self-employment as a way of making a living
Rebecca Lina is not alone in making her living as a self-employed person. The 2012 DIW survey indicates that the proportion of low-income earners is much smaller among the self-employed than it is among employees. Some 35 percent of employees earned less than 1,100 euros per month in 2010, while among the self-employed the figure was only 27 percent.
"There are of course also low-income earners among the self-employed, but that's not necessarily a result of the decision to become self-employed," Kritikos argues. "It's rather a problem of unsuitable business sectors or low education levels. In Germany, self-employed people with employees earn the most, followed by self-employed people on their own."
Argentinian Lucrecia Lovera is currently touring the north of her home country to learn the textile craftsmanship of people living in the Andes Mountains. She'd like to put her new skills to use in Berlin. "Berlin's got it all, you just have to be willing to accept the place, and I certainly do," she says. What counts in the city is a good deal of motivation, stamina and a strong entrepreneurial will.
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