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Ten steps to starting a business

Starting your own business takes courage, passion and good preparation. You will save a great deal of time and hassle if you firstly get to grips with key questions such as ‘What kind of company founder am I?’, ‘Which legal form best suits my plans?’ and ‘Where do I find the right expert to speak to?’

Those who plan their start-up well will reach their goal more quickly. Here is a ten-step guide to show you what really matters when starting a business:

1. Entrepreneurial personality

Before you start your own business, you should be clear in your mind about what kind of company founder you are and why you are starting the business. Is it just a hobby alongside your full-time job or would you like to earn money with your idea? Are you opening a bar or would you like to form a company with a digital business model? A new business can demand a great deal from you, so carefully consider your plans before you jump into the process with both feet. The Chamber of Commerce and Industry (IHK), the Chamber of Crafts (HWK) and the Federal Ministry for Economic Affairs also offer you the opportunity to take tests for entrepreneurs and company founders so that you can find out where your strengths and weaknesses lie.

For every approach to starting a business there are various contact points, specialist institutions, advisory centres and experienced professionals in all regions of Bavaria to offer you the right support for your plans.

2. Business idea

Has your business idea got what it takes to be a success? Your idea forms the basis for your business plan and thus for a functioning company. Always stay focused on the principle that your product or service provides a benefit for potential customers. Having said that, your idea doesn’t always have to be completely new. Enhancing ideas or transferring them to a new market can also be a good concept. Ask yourself the following questions beforehand:

Is my business idea viable?

Who is my target group and how do I reach the people in it?

Do I need other partners to help me turn my idea into reality?

3. The right information and advice

As someone forming a new business, you have to answer many questions. How can you tell the difference between important and unimportant information? It isn’t possible without help. You need the right information and expert advice on the way to starting a successful business. That is precisely why you will find a number of useful contact points in Bavaria that can offer you support. Our contact points and networks are there for you and give you the right help, guidance and support. For example, they can supply you with location and structural data, market studies and industry directories. They can also develop your business idea and compare your business plan with reality.

If you would like to learn more about the advisory services in Gründerland Bayern, you can find further information here.

4. The business plan

A good business plan attests to the potential of your idea. Banks and investors should immediately be able to understand it.

Your business plan should include the following:

  • A clear structure
  • Information about you, the company founder or founding team
  • Details on the benefits of the product or service for the customer
  • Market analysis
  • Competitor analysis
  • Target group analysis

You will find templates and structural examples as well as help with your business plan at the Chamber of Commerce and Industry (IHK), the Chamber of Crafts (HWK), the Institute für Freie Berufe (IFB) and at BayStartUP. By entering one of the business plan competitions organised by BayStartUP, you can get your idea checked by experts and attract the attention of investors.

5. The right legal form

One important question for company founders relates to the right legal form. This determines the legal framework in which the company operates and has a number of legal, financial, structural and personal consequences – in terms of liability, share capital and tax, for example.

There are essentially three types of company, which also differ in terms of legal liability. Here is the most important information on each of them:
•    As an Einzelunternehmen (or ‘sole trader’), you are the exclusive owner of the business and you need no minimum capital, for example. However, you are also solely liable for the company’s debts with your personal assets.
•    In a Personengesellschaft (or ‘partnership’) such as a GbR (Gesellschaft bürgerlichen Rechts, or ‘civil law partnership’) or OHG (Offene Handelsgesellschaft, or ‘general partnership’) you can form a company with one or more partners. No minimum capital is required here either. You run the company together with the other partners, but you and your partners are also personally liable for the company.
•    You can form a Kapitalgesellschaft (or ‘corporation’) alone or with other partners, such as a GmbH (Gesellschaft mit beschränkter Haftung, or ‘private limited company’) or an AG (Aktiengesellschaft, or ‘stock corporation’). The formalities are more complex here – for example, you need a notarially certified memorandum of association and a certain amount of minimum capital. As a partner, however, you are not liable to pay any debts with your private assets; the liability is limited to your capital contribution, i.e. your share of company assets. A corporation is the preferred legal form if there are plans to involve other parties (business angels, venture capital companies) in the shareholder group in the future.

There are of course other legal forms for companies. The specific legal form that best suits your plans depends on various factors and must be carefully considered. You should therefore seek further information from the Chamber of Commerce and Industry (IHK) or the Chamber of Crafts (HWK)in your region, or contact the head office of the Institute für Freie Berufe (IFB). The Bavarian Chamber of Notaries and the Federal Ministry for Economic Affairs (BMWi) have produced further information on this subject.

You can also get comprehensive advice from an accountant, notary or lawyer and other useful contacts who are familiar with the process of starting a business.

6. Financial planning

Good financial planning provides the basis for your business idea. When doing your financial planning, you calculate how much money you need for your business idea (start-up capital) and how you will finance your business concept until it is profitable. These calculations include expenses for the office equipment, rent deposit, living costs, development costs, investment costs for machinery and taxes. You compare the planned costs against the expected income.

When making your calculations, it is important to make sure that your capital requirements are met while also building in a buffer for unforeseen events. More short-term liquidity planning with incoming and outgoing payments is also part of the financial planning. Furthermore, you must determine the relevant finance sources  (own capital, outside capital) for your plans. For high-tech start-ups, secure access to investors at the right time is also an important step.

Watch the following video to find out everything you need to know about financing your start-up plans:

Would you like personal advice? You can learn how to produce a solid finance plan and manage all the associated aspects from the start-up experts at various contact points throughout Bavaria.

There are various ways of getting your business idea funded, depending on the plans, background and the stage the company is at.

Find out which forms of finance may be of interest to you and get an overview of the various possibilities by reading about finance and funding.

 

7. The formalities of starting a business

You cannot avoid dealing with the different official authorities when starting a business. Whether the tax offices, register of craftsmen (Handwerksrolle), business register or trade office, find out where you need to register to make your start-up legally recognised. Some tradespeople and liberal professionals must also prove their professional qualifications or accreditation. Matters relating to protection of trademarks or patents may also be important to you. Perhaps you need special permission to carry out certain activities, such as a licence for running a bar or restaurant (known in Germany as a Gaststättenerlaubnis).

You can find out which formalities are important for your start-up by contacting the IHK (Chamber of Commerce and Industry), the HWK (Chamber of Crafts), the IFB (Institut für Freie Berufe) or the Chambers of the Liberal Professions.

An overview of the most important registration obligations or permit obligations can be found on the Bavaria Service Portal (Dienstleistungsportal Bayern). You will also find further general information there on the necessary administrative procedures or application processes, together with contact details.

8. The right location

Choosing a location is a long-term decision. That is why it is important to conduct a detailed location analysis. Among other things, the choice of location depends on the target group, the customer potential, the competitive situation, the infrastructure, the availability of staff, the rent price and the tax-related aspects. 

On the SME portal of the Bavarian Ministry of Economic Affairs you will find further information on choosing a location. Other useful contacts are also listed.

Whatever your plans, you are in the right place in Gründerland Bayern. Here you can find out more about the Gründerland and the state of Bavaria as a place to do business. Discover and use the potential of Bavaria for your start-up.

9. Personal and business insurance

As someone who is starting their own business, you are generally responsible for your insurance, both on a personal and business level. It is therefore important for you to check what insurance you need. For you personally, you may need cover for healthcare and long-term care as well as income protection insurance, accident insurance and a pension, which is hugely important. Essential business cover includes professional and public liability insurance, which covers you in the event of any costs arising from damage to the business or third-party claims.

Get an overview and find out about the different kinds of insurance available. There are various useful contact points in Gründerland Bayern that can help you in this regard. BayStartUP also runs workshops and coaching sessions on the subject for innovative company founders. It is important for you, however, to seek advice from (insurance) experts on the different types of cover available.

You will find a good overview on the website of the Federal Ministry for Economic Affairs and in its accompanying publication. The Bavaria Service Portal (Dienstleistungsportal Bayern) has also put together the most important information on insurance on its website.

10. A successful start … and what next?

Has the launch of your business been a success? Are you slowly finding your feet? That’s really great! As a company founder you are now your own boss – but you are also responsible for managing the company. As such, you not only have the important business-related aspects to think about. Running a company also includes:

  • Bookkeeping/controlling
  • Marketing
  • Drawing up contracts with customers; drafting general terms and conditions
  • Personnel management
  • Expansion financing
  • Developing markets; internationalisation
  • Tax matters
  • Contingency plans
  • etc.

You are not alone here either. Gründerland Bayern is on hand to offer advice and coaching not just before, but also after you have taken your first steps to help you master future challenges. The assistance provided by the Chamber of Commerce and Industry (IHK) and Chamber of Crafts (HWK), for example, goes way beyond the initial founding of the company.

Under ‘finance and funding’ you can find out about the many different options available in Bavaria for financing your current or future plans, including expansion financing.

If you would like to position your business on the global stage, we have put together a package of support measures for you in the ‘internationalisation’ section.

Find out more about the vital start-up community, where we feature news, events and interesting success stories. The technology-oriented and digital start-up centres in particular will actively put you in touch with other company founders and experts.