You’ve made up your mind: you want to be independent and start your own business.
But how can you take your first steps towards self-employment? In today’s article, you’ll find tips on how to transform your idea into a business.
Start with a plan
If you want to be your own boss and launch your idea as a freelancer, it’s essential to plan carefully and to develop a framework. A well thought-out road map will help you to stay on track and maintain an overview.
Your first step should be to translate your idea into a business model. It’s a good idea to create a business plan.
You’ll need to describe your business concept and define the product or service you want to sell. To get a clear idea of your business prospects, you’ll need to identify and analyze both your target groups and your competitors. It’s also helpful to include some initial ideas about marketing and potential growth.
Financial security is key
Financial security is a particularly significant aspect of your business plan. It’s essential to build up financial reserves before you start your company: you will first need to establish a reputation, develop your business, and attract customers. Starting a business often involves investments, such as buying new equipment, creating a website, or renting premises. As a result, you may not earn as much when you start out as in subsequent months. With good financial reserves or an investor, you will be more secure and will be able to focus your attention on establishing your business.
There are many other sources of funding in addition to your own savings; these include online or conventional loans, funding programs, grants, and business angels. If you’re planning to set up a larger business, it may be worth consulting a financial advisor.
Be prepared for paperwork
Once you have developed your concept and secured your finances, it’s time to set up your company. There are a range of possible company types depending on the type of work you plan to do and these will involve contacting different authorities and organizations, such as the Trade Licensing Office (Gewerbeamt), tax office (Finanzamt), chamber of industry and commerce (IHK), trade register (Handelsregister), and professional associations (Berufsgenossenschaften).
You should also make sure that you deal with the following issues in good time: changing your employment status with your health insurance provider, opening a business bank account, establishing contract conditions, and drawing up your general terms and conditions for customer and sales contracts.
If you are an artist or journalist, you will also need to register with the artists’ social insurance fund (Künstlersozialkasse) to ensure that your artists’ social insurance is included in your statutory social insurance.
If you are concerned that you’ve missed something, you might find this free online business start-up tool helpful: Gründungscockpit (fuer-Gruender.de, in German only). This takes you through the process of setting up a company step by step. You can also find extensive information and advice in English about starting a business in Germany on the Make it in Germany website.
Transforming your idea into a business or service should involve careful planning and creating a business plan which can serve as a guide and help you stay focused. It’s also essential to think about your financial security and your available funds when you go it alone. The process of founding a company and the associated paperwork are particularly important aspects to consider when starting your own business.
Working as a freelancer: how to turn your idea into a product and when to start your own company – Part 2
Registering a business is a bureaucratic obstacle race. Which authorities and departments do you need to contact when you start out as a freelancer or set up a company? Our next article in the ‘Working as a freelancer’ series on Friday, July 26th 2019 will look at different company types in Germany, as well as how and where to register your business according to your sector and your company’s legal form.