The Process of Starting up a Company

1. The Process of Starting up a Company Dr. Thomas Kunz

2. The Process of Starting up a Company can be • categorized into 3 phases: • Information phase • Businessplan writing phase • Realisation phase

3. Information Phase • The Information phase covers the following points: • - Information about chances and risks • - Information about consulting support • - Requirements for a successful start • - Information about the different kinds of • entrepreneurship • - Legal types

4. Chances and Risks Chances are: - Independence and responsibility - Higher income - Higher status in society - Exploitation of good opportunities - Avoidance of unemployment (Institut für Mittelstandsforschung)

5. Chances and Risks Risks / Reasons for failure are: - Insufficient financing (86%) - Unpaid costumer bills (68%) - Planning failures (49%) - Lack of qualification (49%) (Deutsche Ausgleichsbank, Several Reasons could be mentioned)

6. Consulting Support Entrepreneurs can be supported by: Public Sector: Universities Chamber of Commerce, Chamber of Craft Regional Development Agencies Private Sector: Business Angels, lawyers, company consultants, tax consultants etc.

7. Requirements for Starting Up a Company - Personal requirements - Experience in the specific branch in which the future company will operate - Economical skills - Legal requirements - Environmental requirements - Requirements of work safety

8. Different kinds of Entrepreneurship - Starting up a new company - Taking over of an existing company - Franchising

9. Legal forms • The legal form should consider: • - Liability • - Management • - Distribution of profit/loss • Self-/external financing • Arrangement of succession • Cost and tax aspects

10. 2. Businessplan Writing Phase Why is a business plan necessary? - For detailed planning and controlling - To win investors

11. Step 1 – Market analysis • Collection of data about the market • (size, potential, market barriers, growth, suppliers, profits etc.) • Consumer analysis • (specific needs of the consumers, consumer behaviour) • Competition analysis • (strength and weakness, market shares)

12. Step 2 – Determination of the company‘s • location • Vicinity to the customer (decisive)? • Vicinity to possible suppliers (decisive)? • Costs of the location • Image of the location and the neighbours

13. Step 3 – Determination of the capital demand • Costs of starting up a company (registration etc.) • Investments (premises, building, machines etc.) • Running costs (material, personnel costs etc.)

14. Step 4 – How to cover the demand of capital • Equity • Loans • Funding • Venture capital

15. Step 4 – Planning of Turnover and Profit • Profit and loss statement • Balance sheet

16. Step 5 – Planning of Liquidity To ensure liquidity, it is important to plan payments and payoffs on a definite time scale (turnover and costs have to be considered on a monthly basis)

17. Step 6 – Marketing Plan • Planning the Marketing: • Product • Price • Place • Promotion

18. Business Plan Structure - Executive Summary - Product Idea - Management Team - Marketing - Business System and Organization - Realization Schedule - Chances and Risks - Financing

19. 3. Realization Phase • Actions and Tasks in the Realisation Phase: • Determination of the legal form of the company • Determination of main bank • Determination of the form of financing • Determination of the location of the company • Negotiation of rent contracts • Realisation of the marketing plan

20. Actions and Tasks in Realisation Phase: • Customer akquisition • Hirement of personnel • Fulfillment of duties to the tax authorities • Insurances • Fulfillment of formalities