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October 2003

On Your Own

How to set up your own business

Did you grow up in a single-parent family? Were you a lazy pupil? Did you have a reputation for eccentric, or disruptive behavior during your teens? Congratulations to anyone who answered yes on all three counts: you have an excellent chance of becoming a successful entrepreneur. When, a number of years ago, an international business journal conducted a survey to find out what successful, self-made businessmen and women had in common these were some of the factors that emerged. For anyone who intends to set up their own business, but does not have the good fortune of belonging to the aforementioned group, the information below may be of help.

The key to starting a business is of course to have a good, marketable idea. That this idea needs to be backed up with plenty of research and a well-thought out business plan (Geschäftsplan) is often overlooked by would-be entrepreneurs (Unternehmer). The Business Start-up Office (Büro für Existenzgründungen or BfE), a nonprofit organization based in Munich that offers business start-up advice, has published a brochure outlining the necessary steps for creating such a plan. First, write down an exact description of your service or product (Beschreibung der Produkts/Dienstleistung) and note down any relevant qualifications and experience (Ausbildung und Berufserfahrung) you may have. You should also list potential customers for your product (potenzielle Kundenkreis), calculate the approximate turnover needed to keep your business going (geschätzter Umsatzbedarf) and estimate how many coworkers or employees (Personalbedarf) you will need, if at all. And, finally, create a finance plan (Finanzierungsmodell) and identify long– term goals (Zukunftsperspektiven). Owing to lack of space, the points listed here are very general, so it is advisable to ask the BfE or the Chamber of Commerce (Industrie und Handelskammer) for help with the fine-tuning of such a plan. Financing a new business with one’s own capital (Eigenkapital) is the simplest option, but for most people not a realistic one. Unfortunately, for fledgling companies, loans (Darlehen), grants and subsidies (Fördermittel) are not easy to come by in Germany and often involve extensive research and considerable paperwork. The good news for those who persevere is that more than 90 percent of start-up enterprises financed by government grants are successful in the long term. Would-be entrepreneurs can either go to the BfE for advice on getting financial assistance or contact a bank, such as the DtA (Deutsche Ausgleichsbank), which specializes in credits and loans—though the actual loan is handed out by your own bank, the DtA offers assistance.

Another source of income for those setting up a business is the interim aid (Überbrückungsgeld) paid out by the job center where you are registered unemployed (Arbeitsamt). Anyone eligible for unemployment benefits (Arbeitslosengeld) can apply for (beantragen) this money and it will be paid out for six months from the start-up date of a business. If you are currently receiving unemployment benefits and would like to set up a one-man enterprise, the so-called Ich-AG (literally the I-Company), a program offered by the German government may be of use. For up to three years the state will give you financial help in running your own business, provided that your annual income (jährliches Einkommen) does not exceed € 25,000.

Starting out on your own in a new business, particularly in a foreign country, is an enormous challenge. The BfE offers coaching, workshops, networking days and consultation for individuals, too. So if you think you have a marketable idea, what are you waiting for?

Contact BfE: Tel. (089) 51 54 93 20; Industrie- und Handelskammer: Tel. (089) 51 160.

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