6 Tips for Doing Successful Business in Germany

Long-term focus, patience, detailed preparation, and high-quality products are key factors of success when doing business with the German Mittelstand.

Ten years ago, I started my own business in Germany. Before I moved to the US in 2013, I worked on average 10 days a month, making as much as my husband who worked as a senior manager in a big consulting company. It hadn’t been that hard to start the business. First, former employers or companies I had worked with as an employee hired me as a consultant. Following contracts followed the first one, etc. After one year, I moved my home office to a beautiful updated old house in Wiesbaden, sharing the space with a graphic designer and a copywriter. I would say that I ran a successful small business.

When I got my first clients in the US, I started working exactly as I had in Germany. It didn’t work.

I would open doors, make appointments, but then nothing would happen. Even when I got a contract, no one would follow-up. It didn’t take long to figure out why: I was simply too German: blunt and over-prepared. The reasons for my success in Germany were the source of my failure in the United States.

What do you need to be successful in business in Germany?

Recognize the importance of academic titles

If you have a PhD, an MBA, or any other degree, print it on your business card, insert it in your presentation slides, and mention it during small talk. Academic titles are important in Germany as proof of your “smartness.” If your counterpart’s name is preceded by “Dr.”, never forget to address the person with “doctor” followed by the last name. (One notable exception is German Chancellor Angela Merkel, who has a PhD in quantum chemistry.)

In the US in 2014, 42% of adults (ages 26-64) had completed a college education, but only 28% of Germans had done the same. Instead, Germany has the “most skill-intensive labor force in the world” thanks to its apprenticeship program, a dual education system. The system dates back to the Middle Ages and involves pragmatic, skills-oriented training. During their apprenticeship, students split time between school and practical experience in companies. They even get paid for their efforts!

Don’t get fool by a “Meister” degree! A “Meister” is a professional degree and requires completion of extensive training before being licensed.

Be extremely well prepared

Last week, I wrote about the German aversion to risks. Foreigners sometimes think that Germans are detail-obsessed. Once, I overheard a businessman complaining about a German business partner, describing his love for details as an obsessive-compulsive disorder!

In fact, being very well prepared is key to a successful collaboration with Germans. You want to be taken seriously? Then be overprepared. Have answers to everything. There is never too many details to have as backups if you meet with Germans. In other words, be an expert in your domain!

Be patient

The German love for details is often frustrating for Americans, who prefer a move-forward mentality. Nothing has changed since I wrote this article (in French) for an online magazine: American companies are results-driven, and “time is money” is ubiquitous. Say your company project is a boat: the deadline will be honored even if the boat is only 70% operational. The last 30% will be achieved on the water.

Not so in Germany. Adhering to schedules is equally important for Germans, but projects take longer because all eventualities should be addressed. A procedure is set up when everybody has been included in the decision-making process and all bases have been covered. This process takes time and involves a lot of resources. Once a decision is made, there is little room for change because any changes mean reviewing the whole process from the beginning.

Deliver high-quality products

Offering unique goods of perfect quality is one of the key factors of success in Germany. “Made in Germany” stands for high-quality standards and value. Although not all German products can stand up to this promise, often German brands represent higher quality in comparison with other national brands.

At the same time, Germans are price-sensitive and therefore attracted to good value for money. If the product doesn’t fulfill the promise, they are very critical and won’t give the brand a second chance. Worse, a bad report in Stiftung Warentest, the German equivalent to Consumer Reports, equals certain death for most products.

Be ready to deal with SMEs, the backbone of the German economy

Since his election campaign, President Trump has often complained about the imbalance of trade surplus between Germany (and other nations) and the US. It’s true: “Germany’s trade surplus with the United States … declined last year but nonetheless remained at around $55.37 billion” (Source: Reuters).

Whatever you read on the subject, you won’t find a lot of thoughts about a possible structural reason for this discrepancy. The sheer size of the US and its 325 million inhabitants make it less vital for businesses to find new markets. This isn’t the case in Germany, even though it’s the largest country in Europe with about 82 million people. Economy of scale is achieved with exports, and Germans are very good at it. According to the World Bank, the share of exports from the US in American GDP was about 12% (2016) compared to 47% in Germany (2017).

The German Mittelstand is not exactly comparable to the American definition of SME. Mainly, Mittelstand regroups mid-sized companies with annual revenues up to 50 million Euros and with fewer than 500 employees. As the term is not official, it applies to mid-sized firms as opposed to larger listed companies; most importantly, Mittelstand companies are characterized by a common set of values and management practices (Source: Best of German Mittelstand).

Since 98% of all German SMEs export, chances are you will work with many of them. Be aware of a different management style, or as the Financial Times puts it, “Germany’s Mittelstand puts happy workers over profits” (see details here).

Commit to long-term involvement

Many Mittelstand companies are family-owned and run. Promotion happens within the company. The younger generation starts as interns during high school, work in the factory during the summer break, and get a low-management appointment soon after college.

With several generations working together, the business is directly connected to family matters: they are cautious and have a long-term outlook. Establishing a lasting relationship will be the challenge if you come from a business culture with shorter-term goals.

How did I overcome my German-ness?

The hardest part was to get rid of my over-preparation. To be honest, it still is hard.

Then, I had to learn to sell my achievements. In Germany, the key is to show that you are an expert in your field. You don’t do it with promising the moon but with showing facts, a lot of facts, and a lot of detailed facts. In the US, the packaging is more important than the real content. I worked hard on my packaging, believe me.

Finally (this was the easy part) I quickly adapted to the just-do-it mentality. That’s something I really like in the US: failure is not a stigma, just part of the learning curve.