To start a business in Germany you simply have to be over 18 years old! It makes absolutely no difference whether you have experience or not, or whether you are a foreigner or a German citizen. Whether you want to work as a freelance or start a company you only need a pinch of braveness and a great idea!
One of the first steps to start is to register your company, nevertheless a proper planning is a must for the success of your business project.
From the Businness Plan to the financing, from an impactful marketing to the necessary authorisations: in this article we will show you the important steps and useful tips for a successful start-up.
10 steps towards opening a company: what do you need to know?
⦁ Developing the business idea
The business idea is the starting point when one wants to start a business. You can start by answering a few questions, such as: What am I good at? What motivates me? To whom do I want to turn?
It is therefore absolutely necessary to understand if your idea is valid. First of all, it must satisfy a real need or want of your audience (or target) or at least be perceived as such. Otherwise, if there is no demand, the product or service will not sell!
The target market must also be wide enough to guarantee profitability for the entrepreneur. Therefore, market analysis (addressed in the Business Plan) is one of the key aspects of a good business model.
Once the business idea has been identified, the next step is the development of the business model – the preliminary stage of the Business Plan.
This is usually where it becomes clear if the idea is really effective and will be successful.
⦁ The development of the Business Plan
The Business Plan is the most suitable tool to check the feasibility of your business idea, whether you are a novice or already experienced. Calculating prices correctly, analysing the competition and discovering your strengths and weaknesses are all essential information for excelling in the business world. The business plan is also really useful in case you want to involve possible investors in your project, and to convince them you have to show them numbers.
What is exactly a Business Plan?
A business plan (or business project plan) is a document divided into sections that aims to present the business project and explain how an idea can be transformed – within a certain period of time and following certain ways – into a real business project. The plan has two functions: an internal function, that is to inform and guide the management in its decision-making processes, and an external function, by proposing a business project to third parties, trying to convince in particular economic operators outside the company, on the credibility of a certain business (lenders, suppliers, banking institutions… etc.).
In your business plan it is a good idea to include a ‘SWOT’ analysis, wich is an analysis containing all the strengths, weaknesses, opportunities and threats that characterise your business plan.
⦁ Choose the legal form and obtain the necessary licences
Depending on the activity or sector in which you decide to operate, permits, business licences or certificates are needed. Let’s consider a frequent entrepreneurial project such as opening a restaurant: to start a restaurant business, one of the certificates you would definitely need is a health certificate released by the health department of the area/city where you decide to start your businnss.
The suggest is to take care of this type of things i advance, as these certificates must be available when you register your company.
You need to inform yourself very precisely over which type of licences you willl need so that you can request them in advance, otherwise it could appen that you have to postpone the opening of your business.
This wait can also become very long, risking spending money without earning it; just think of the renting costs of the facility.
As for the legal form of your business, it have to be decided on the basis of your availability and certain characteristics of the company. It is not easy to work out which corporate form is best suited to your business idea: elements such as the sector in which you will operate, legal liability and start-up capital are absolutely important for the choice.
⦁ Finding a name and a logo
Now it’s the moment for being creative! In order for you and your product to stand out from the competition, you need a recognisable, impactful and catchy name and a logo that reminds of your business or the ‘personality’ of your company.
Generally, you rely on a communications agency or a professionist in the field, who will also follow you afterwards for the set up of the website, for the graphics of advertising material and for the communication with your future customers.
⦁ The registration
After the planning, the economic forecast and marketing assumptions, the time has come for the big step: the foundation of the company. A mixture of formality, bureaucracy and confusion.
Not particularly exciting for a citizen of the federal republic. A nightmare instead for someone who, as an expat, is unfamiliar with the local language, laws and culture. But it is the basis for starting a business in Germany.
Depending on the legal form you have decided to adopt and the product, commercial or service sector, your business can only take off if you are really prepared to put everything you have previously studied, regarding the company form, into practice.
The difficulties in registering a company increase if the company form requires the submit of goals, which must be contained in a document called the ‘articles of association’. But now, everything is ready to start. Good luck!
⦁ Starting a marketing campaign
For customers to discover you and become interested in you, you will have to advertise yourself and your products. In order to achieve your goal, it is necessary to apply and/or improve the marketing strategy that you had planned when drafting your business plan. So, ask yourself the right questions:
What is the target group and how can I reach it?
Which goals do I want to achieve through marketing?
How can I achieve these goals?
Which are the proper marketing channels for my company?
What is my budget?
Only once you have reviewed all the necessary aspects you will be ready to apply the right marketing strategy. In addition, you will be able to see whether the budget you had thought of at the preliminary stage will be sufficient to realise your advertising campaigns.
For those who do not have a large advertising budget, online marketing is the most effective solution: low cost for a great result! It will be very useful for your business to be involved in social media, making sure that the information about the products and/or services you advertise is useful to satisfy your customers’ frequently asked questions.
The basic information (which will help you get customers who will be willing to use your products/services and pay for them) is the description of your products/services , the price and how to buy it.
Selling is the main purpose of your company. It is important that you understand that this point in your company cannot be ignored, but, in order to be able to sell, you have to commit an important part of your working time to the marketing strategy.
⦁ Opening a business account
Make sure to separate professional and private finances by opening a business account: no matter whether you start your career as a freelancer or found a large company, it is important to have a clear management of business income and outgoings.
A complete overview of your finances will help you a lot in simplifying your accounting management. Not only is having an account dedicated to the company essential for keeping track of business performance, but it is especially necessary on three occasions:
– in the case of an inspection by the Revenue Agency, which verifies every single entry of your expenditure;
– in the case of an accountant keeping your accounts;
– in the case of an application for funding/help.
Research the right bank for you on the Internet. In most cases, banks promote the opening of a corporate account at very affordable rates.
⦁ Drawing up invoices and managing accounting
Every entrepreneur has to deal with accounting after setting up the business. This includes various aspects, including:
tax returns, drafting invoices, payroll accounting (if you decide to hire staff), etc.
As a founder, this topic will accompany you on a daily basis throughout the life of your company.
If you do not have a background in business administration and are not a tax expert, accounting can quickly become overwhelming. One solution could be to use accounting programmes, which will help you simplify the work of billing, verifying accounts and registering payments.
⦁ Checking insurances
Insurance is often forgotten by entrepreneurs. The latter should carefully inform themselves about the appropriate insurance depending on the sector or activity in which they operate. For example, online shops require different insurance than a physical shop.
Please note: founders should always be insured in the event of accidents or disability at work through an occupational disability insurance company (Berufsunfähigkeitsversicherung).
Has the business been started? Here’s how to continue!
After all the tips we have come up with for you, you will surely have successfully started your business. Now you have to manage it and make it grow.
It is important to be able to spot problems and/or difficulties right from the start.
If you do not have the necessary know-how in some areas, you could also outsource them, or you could seek advice from experts, or if you are even more curious and want to learn more, you could sign up for specific courses in business management.
Some courses are even free of charge: if you are unemployed, you could agree with the employment agency on a study voucher, otherwise there are courses that are provided by associations or non-profit companies that have obtained funding to train new entrepreneurs.
Starting a business can seem really complicated, and in some ways it is, but if the business idea is the right one and meets your passions, desires and pockets, then you are on the right track!
We wish you great success!