Register a sideline business or immediately go full-time? Government grants or crowdfunding? The road to owning your own business is full of challenges and decisions. This article gives you the basics for a successful business start-up.
Business idea and business plan
It’s logical: First you need a business idea. This should not only be exciting and innovative, but also feasible. With a business plan, you prove to potential investors and yourself that your idea is viable and that your entrepreneurial plans for the future are sound. A business plan contains explanations of your business idea (a helpful pivotal point here is the question of your USP), analyses of the market environment, and sales forecasts for the first three to five years. Working on the business plan will make you realize the commitment and resources needed to make your vision a reality. It’s an excellent tool to ask yourself the question: Do I really want to do this – and can I?
Is your personality compatible with starting a company?
Founding a company is not just a business venture – it’s also a question of personality. Psychological studies show that certain character traits and attitudes can influence the success of a start-up. Important personality traits are courage, discipline, and perseverance. In addition, founders should have initiative and a strong business sense. Knowledge in the sense of expertise and industry insight is also essential, because without sound know-how it will be difficult to hold one’s own against the competition.
Choose legal form
When founding a company, deciding on the appropriate legal form is essential. It is the legal garb of your business and largely determines how you are liable, pay taxes, and more. These are the most common legal forms in Germany:
1. Sole proprietorship (Einzelunternehmen): Here, you are the sole owner and are also liable with your private assets. This legal form is ideal for solo self-employed persons such as consultants or service providers without a high liability risk.
2. Company constituted under civil law (GbR (Gesellschaft bürgerlichen Rechts)): The simplest form for a partnership. Suitable for short-term projects or collaborations, such as two freelancers working on a joint project.
3. Limited liability company (GmbH (Gesellschaft mit beschränkter Haftung)): Liability is limited to the company’s assets. It is a popular choice for medium-sized companies. Examples: IT agencies, production companies.
4. Registered merchant (eingetragener Kaufmann/eingetragene Kauffrau (e.K.)): Basically a sole proprietorship, but registered in the commercial register. Suitable for individuals working in the trade sector. This designation indicates that your company – “Teeboutique Müller e.K.”, for example – is registered in the commercial register and must therefore fulfill certain commercial obligations, such as double-entry bookkeeping.
5. Limited partnership (KG (Kommanditgesellschaft)): There are two different roles in this legal form. The general partners are those who have unlimited liability with their private assets and usually hold the management. Limited partners, on the other hand, invest capital in the company and are only liable up to the amount of their contribution, but usually do not actively participate in the business operations. This model is well suited for family businesses or special financing models.
6. Limited liability company & limited partnership (GmbH & Co KG): A combination of a limited liability company and limited partnership. The liability of the limited liability company is limited, while one or more natural persons act as general partners. Often chosen when you want to take advantage of both legal forms.
7. Joint-stock company (AG (Aktiengesellschaft)): Ideal for large companies that want to issue shares – not initially relevant for most start-up projects.
In addition, there are the freelancers: They are not registered in any commercial register and follow their own tax regulations. Typical examples are artists, journalists, or lawyers.
Because the choice of legal form lays the foundation for the future of your business, you should definitely seek advice here.
Funding and promotion
When starting a new business, it is crucial to secure the financial foundation. Only with sufficient start-up capital and a stable cash flow will you be able to get off the ground and handle the costs and investments that arise. Exactly how much capital you need is an essential part of your business plan. To set up this financial plan, you need to choose selected options from the following:
There are numerous funding options for prospective founders. For example, there is the start-up grant from the German Federal Employment Agency, which specifically supports those who take the leap into self-employment from unemployment. In addition to this grant, there are loan offers, such as those from KfW-Mittelstandsbank or guarantee banks, which assist in getting business concepts financially on their feet. Many federal states also have their own programs that provide support not only financially but also in the form of advice. In addition, various government and commercial foundations promote innovative ideas without demanding company shares in return. Another option is crowdfunding, which uses platforms to raise funds from the community. Or you can consider private investors who invest in promising start-ups. With all these options, however, you should always keep in mind: Raising capital always involves risks, which is why comprehensive research and advice are indispensable here.
Main business or sideline business? The optimal start into self-employment
At the beginning of your self-employment lies one of the first big decisions: Are you starting as a primary or sideline business? Both options have their advantages, and depending on your situation and goals, one may suit you better than the other.
Sideline business – initially retain collateral as an employee
• Test phase: You can test your business idea and see how the market reacts without going all-in right away. A good example of this is someone who sells handmade jewelry. It’s easy to start on the side and expand as demand dictates.
• Less pressure: There is less financial pressure because you don’t have to make a living from your business from the start. This gives you the freedom to try things out and optimize your business model.
Main business – fully dedicate yourself to your new company
• Total concentration: If you want to focus 100% on your business, the main business route is the way to go. This is especially useful for business models that require a lot of time and commitment from the start, such as a café or an online store with a large assortment.
• Faster growth: With the full energy and time you put into your business, you may be able to grow and expand faster.
Think carefully about which model is better for you.
Location and external impact
Choosing the right location is also crucial to the success of a business startup. If you want to achieve a professional image without having to pay high rental costs, Office Club offers you a top solution: Rent a business address with us and use our prime locations flexibly according to your needs – in the location itself, fully equipped offices, meeting rooms, conference rooms, and flexible workstations are also available.
Registration of your company
For the official recognition and operation of your business, registrations with various offices are required. The choice of office depends on the legal form and type of self-employment. One of the most important steps is to register at the trade licensing office (Gewerbeamt), whereupon you will receive a trade license and a sales tax identification number. The trade licensing office then informs the tax office and other institutions, if necessary. For certain types of companies, such as limited liability companies or joint-stock companies, registration in the commercial register is required. Creative professionals and publicists should also consider the Künstlersozialkasse, which provides them with social security benefits similar to those of salaried employees.
Targeted marketing
When starting a business, marketing plays a central role in generating awareness and trust. The company name should be concise and memorable so that it sticks in the minds of potential customers. A professionally designed logo conveys seriousness and recognizability and should reflect the values and character of the company. A clear web presence is also essential, as it is often the first point of contact for prospective customers. An efficient interaction of all these aspects forms the basis for a successful market entry.
The path to building a successful business involves many decisions – every detail counts. It is essential to be well informed, to plan carefully, and to use professional advice. These guardrails can help you initially get oriented.