How German Industrial SMEs Can Turn Available Capacity into New Business

For many years, German manufacturers benefited from strong inbound demand. Highly capable, well trained and experienced Sales teams primarily focused on responding to requests and maintaining customer relationships rather than generating new opportunities through active market engagement. As market conditions have changed, these strengths should now be complemented by a second focus: actively approaching new customers, applications and industries.

German industrial companies have been experiencing a significant market shift lately. German industrial capacity utilisation stood at only 77.5% at the beginning of the year, below its long-term average of 83.2% (Source). German industrial production also declined by 1.3% in 2025, with machinery and equipment production falling by 2.6%. In July 2026, production was 1.6% below the previous year’s level (Source).

Previously, German SMEs faced the challenge of efficiently integrating constantly growing volumes into their existing capacities, sometimes through ingenious productivity improvements.

This was clearly visible during stronger industrial cycles. In 2018, for example, capacity utilisation in German manufacturing reached 87.1%. In early 2022, despite supply-chain constraints, manufacturing capacity utilisation still stood at 85.6%.

The situation is not locally isolated. The international market is under pressure from increasing competition, geopolitical uncertainty and trade-policy burdens. Higher energy costs and supply-chain and material pressures add further challenges for European companies. As these market conditions are unlikely to simply disappear, German SMEs need to react and bring new business models and partnerships into play that can address these new challenges.

When does an external business development partner make sense?

In a more complex and internationally competitive market, choosing the right business development partner can be a wise move. Existing market knowledge, international sales experience, established connections and the ability to identify realistic opportunities can help companies approach new markets and customers more systematically.

This does not mean replacing internal sales capabilities. An experienced external partner can complement them by bringing additional market access, resources and perspectives while working closely with the company’s own organisation.

In our recent experience, manufacturers have turned to PBS Sales after initially trying to develop new business using only internal resources. In these situations, starting earlier with additional business development expertise could have reduced the effort required to build market access and momentum.

When should you expect to see results with your sales outsourcing?

New business development requires perseverance and determination. Getting a first RFQ and bringing the right new customer on board both take time and discipline.

Germany’s economy is strongly shaped by both SMEs and family businesses. According to Destatis, 99.3% of German companies were SMEs in 2024, while a 2025 ZEW study found that 88% of private companies are family-controlled (Source).

Many of these SMEs are family businesses that have themselves been “business-developed” over several generations – in all fairness, in a considerably less complex environment.

Therefore, expectations for a business development partnership should be realistic and reflect today’s market conditions.

New business cannot necessarily be developed within a matter of months. Longer timeframes and the associated costs should be planned for and considered from the beginning.

Consider a company willing to invest €250,000 in a new production system with an amortisation period of more than 10 years. Why should an investment of €100,000 in business development, with the potential to pay for itself within two years through additional contribution margin, be evaluated with a fundamentally shorter time horizon?

It is also worth remembering that, as a new supplier, obtaining an RFQ requires considerable effort from sales and business development professionals.

How can you recognise progress before the first order?

There are signs that indicate when the mission is progressing well. Have you received a first RFQ, perhaps faster than in comparable projects, and from a company that represents significant potential in the market? That is significant progress.

In our experience, the side entrance through development and application engineering, which was frequently used by salespeople in the past, is now largely closed even to existing approved suppliers. For non-approved suppliers without a supplier number, this route effectively no longer exists.

Large industrial companies increasingly have formal supplier-selection processes. Purchasing alone may not decide whether a new supplier is considered. Purchasing, engineering, quality, supply chain, production and other departments may all participate in the decision.

Therefore, getting a qualified RFQ in 2026 is not simply “getting an inquiry.” It can be evidence that the business development process has successfully moved a new supplier through important internal barriers at the target customer.

Business development in today’s industrial markets is a little like pearl diving. The most valuable customers are not found on the surface. Reaching them takes patience, expertise and persistence and a qualified RFQ from the right company is one of the rare pearls that make the dive worthwhile.

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