How do I forecast my startup idea
From the simple business idea to your own successful company [guide]
Self-employment is a dream for many people. It doesn't just mean not being tied to an employer and being solely responsible to yourself. It also means realizing your own visions and being able to implement your own projects. But for that, you first have to have an idea of what you want to do and start your own company. This sounds simple at first, but it means a lot more if you really want to do it successfully. Especially if you act carelessly, your company can be permanently unprofitable from the outset or doomed to failure. In the following guide I will therefore show you what you have to pay attention to and which steps you should take for yourself so that you can avoid a failed start-up during the preparation.
What factors do I have to consider when starting a business?
First, I'll give you a brief overview of the factors that you have to take into account before founding a company in order to be as well prepared as possible for your self-employment. I will explain these in detail in the following sections so that you know exactly what is important.
The idea is the beginning of everything. Of course, you can also be interested and enthusiastic about ideas from others in order to invest in them successfully. But when it comes to your own start-up, it has to be something that you are enthusiastic about and enjoy engaging with. Real passion for your area is essential. This is the only way to have the maximum motivation to position yourself optimally and the absolute willingness to go the "extra mile" in order to bring your company forward as far as possible.
What do you need for your idea in order to be able to implement it as you imagine it? And very important: Are your ideas realistic? Often we get lost in the idea of perfection that we can only offer a product or service when it is perfectly mature. You can do that, but it requires more resources - i.e. money - before you can even go on the market. The following questions are indispensable for this:
- What options do I have to implement my offer?
- Which ideas about my offer can I actually implement by the start, which should I postpone for later optimizations?
- Are my resources sufficient to actually bring my product or service to market?
- Can or do I have to bring in external resources in order to be able to implement my idea, for example grants for founders, corporate loans, involvement of investors?
When it comes to your marketing, two thoughts should always come into play. On the one hand, you have to be able to convey to your potential customers why what you offer is good and important to them. On the other hand, you always have to focus on your competition. In addition to the practical implementation, you should above all clarify the following basic questions for yourself:
- What added value do customers get when they take advantage of your offer?
- Are there reasons why customers should use you instead of your competition - and can you convey your advantages to them?
- Do you have options to weaken a possible competitive situation from the outset or to avoid it entirely?
The business plan
The business plan is basically the result of the previous questions you should have asked yourself by now. It is not a big mystery, but the bottom line is the summary of your answers to the questions:
- What do i want to do
- How do I implement my idea?
- How do I market the product or service?
- What will all of this cost me before the start of sales, at the launch itself and in the time afterwards?
- How do I finance this and how will my revenues be expected?
The business plan is especially important in order to be able to clearly assess how realistically your idea can be implemented. You do not necessarily need a professionally prepared work of 30 pages for this, even if this is absolutely advantageous for the interview with banks and investors. Above all, it is important that you have a clear plan of the numbers that you will go into in the future.
The practical implementation
The previous areas mainly dealt with the question of conception. This is the absolute foundation for you to be successful. Nevertheless, there are a few courses to be done and questions to be answered in order to be able to act legally as a company. Here we mainly deal with the legal establishment and administration of your company.
- How do I set up my company and where do I have to register?
- Which type of company has which advantages and disadvantages?
- Do I have to keep accounts and do I need a tax advisor?
From the idea to implementation - what do you even want to do?
The two most basic questions about starting your business are “What do I want to do?” And “How do I want to do it?” If you can answer these questions in one sentence, you have probably already done something wrong. This is where the substance comes from for what you want to earn money with and also offer other added value. If you cannot fill this with life, you lack the passion or the knowledge for your area - in the worst case even both.
Your company is doomed to failure if, for example, the first thing you think is "I do gastronomy because I like to cook and sleep in at home, and that's why I just sell delicious schnitzel." why a company can be broken before it is even founded. I don't know what I want to do, so I'll just do something that I think is good. Will work out somehow.
Such a statement shows neither competence in one's own area nor passion for one's own actions. A lack of knowledge inevitably affects the quality of one's own offer - unless I have people who bring the necessary competence instead of me. A lack of passion is reflected in the conviction with which I present my offer to my customers - and this conviction is at least as important because customers notice whether I believe in what I am doing. And that's exactly why you have to be ready to bring both your passion and your knowledge to your company in order to be successful. Then the idea and its implementation work all the better on their own.
When it comes to the idea itself, you always have to weigh up a little. It can - but does not have to - be absolutely critical to do something that is currently booming or what everyone is currently doing. Not every trend is permanent, and especially when many people are doing the same thing, the greater the risk that you will do it worse than others. That doesn't mean that every idea for a company should be absolutely innovative and not be represented on the market at all. But the greater the competition and the more competitive the market, the more arguments you need on your side in order to be able to offer added value to your competitors.
How can I highlight my performance in relation to customers and in comparison to the competition?
That brings us to the implementation of your offer. This must be your absolute sanctuary. You can also sell bad products through good marketing. However, if the customers are dissatisfied with the product afterwards, they will no longer buy from you or they will even complain. You burn your potential customers bit by bit. This is where your USP must be, your unique selling point that your customers will only find with you. In this way you generate customer loyalty and have the opportunity to grow. You can stand out on the following points, among others:
Price-conscious customers are a large target group. It's not for nothing that you can now find store brands for all kinds of products at discount prices in the supermarket. Some customers want a certain thing, but absolutely at the lowest possible price. In return, they are usually willing to forego a piece of quality. The main thing is that the product or service fulfills the main purpose associated with it.
Not all customers necessarily want the cheapest price, but rather good service at a reasonable price. Here you don't have to score with the cheapest price, but simply present a product or service with careful and conscientious execution.
Product or service quality
Here the price is hardly the focus, it can be higher. However, the quality must be right for this. Can your product do something special that no other product can? Can you provide a service of higher quality or faster than your competition can? Then you are welcome to be honored. It is only important that you find a price that people willingly (still) pay for your quality, especially without regular customers. You cannot turn this screw up as far as you want.
Service around your offer
Sometimes it is not expensive to make customers happy. It just takes a bit of tact, creativity, and your will to get people for their money. There are enough examples of this.
- In areas such as nail design and body modification, you can give your customers care instructions on how they can keep the result as long as possible, including insider tips and warnings about what not to do under any circumstances.
- As a hairdresser, you can make brochures with styling and care tips to increase the creativity and awareness of your customers.
- As a physiotherapist, you can give your clients tips on which exercises they can quickly perform in between to improve their physical condition or prevent problems.
- Small giveaways can work wonders in almost any area. Ballpoint pens, small amounts of care products, sweets, USB sticks - as long as your customers can do something with them, they will appreciate it.
- Especially in areas in which your customers are not experts or do not know what makes sense for them, competent advice is your greatest weapon in the interests of your customers. If you give customers the feeling that you represent them in their interests, they will come back on their own - even in areas with inflationary acquisitions such as banking products or insurance.
- In the field of digital media, for example, you can give away a digital business card as a small bonus for designing a website.
- Especially at celebrations like Christmas, Easter or - if known - birthdays you should at least court your most important and biggest customers in the form of attentions. In this way you show that your customers are customers, but you don't take it for granted that they regularly use your services.
Overall, you should always keep an eye on the added value of your offer. How you do this is up to you. At least in some form, you have to offer your customers something that they can't get anywhere else. Otherwise you are interchangeable as a company - and that is exactly what you must not be under any circumstances if you want to be successful.
Marketing - your gateway to the world
When it comes to marketing, one can argue about whether one should have an eye on it and plan it so early, directly after the product or service conception. I claim yes. Depending on which marketing measures you consider necessary, different costs arise. As a small company in particular, there are usually enough inexpensive options to place advertisements and show a digital presence. However, the more professional an appearance should be and the wider the audience you present your offer to, the more expensive it will be.
If you do not plan marketing as a factor in your business plan in good time, you may have large expenses afterwards that you did not even have on the slip. The worst case would be that you suddenly find yourself stuck with the first finished product batch or the tools of the trade for your service because you no longer have the money to sell them through the necessary advertising. That is why I see it as essential to think in the middle of the planning phase how you will get rid of your offer afterwards and what it will cost you. This is the only way to get from the first conception to the point where you start earning the first money with your company as quickly and predictably as possible.
The questions for the marketing concept are always relatively similar, regardless of the area in which you work.
Who is my target group and where can I reach them?
These two factors like to be related to one another to some extent, but not always. However, the more specifically you can determine your (main) customer group, the more specifically you can address them. Are they customers who are younger, tend to be of a certain gender, are often on the Internet, or are they more likely to be in the city center? Are there specialist or question forums in which you can find them, or existing offers from other companies that you can link to yourself through targeted advertising or a corporate partnership?
How and with what do I address my target group?
When you know where to find your target audience and what they look like, you can start thinking about how to address them with what. Basically, you have numerous options in which way you want to advertise your offer.
- Flyers and brochures are particularly suitable for regional offers. With a little sensitivity, you can even set them up in shops so that potential buyers can easily help themselves. The larger your potential customer group, the more useful it can be to distribute flyers via mailboxes.
- Newspaper advertising can be ideal for an older target group or for addressing business customers in appropriate specialist magazines.
- Online advertising goes very well with online business of any kind.
- If companies from certain industries come into question as customers, send them direct mail. Gladly with a mixture of useful information, giveaways and your possibilities of what you can offer the company.
- You achieve customer loyalty primarily through being present with the customer. This process is shifting further and further into the Internet, so that a website, a blog or a company page on Facebook are ideally suited to get feedback, to retain customers and to keep improving.
The better you know your target group, the better you can assess what your target group's problems are and why they need what you can offer them. Regardless of the type of promotion you are doing, you need to be able to get your USP across. With the conception you have already determined why you are better than others. Now you are responsible for conveying this to your potential customers in a credible way. Try to keep the message as simple as possible, but it has to be right.
In a context like this, I like to think a bit of classic toothpaste TV ads. As a potential customer, am I really interested in how many bacterial strains the product can kill, which ingredients have been added to harden the tooth enamel, how many hours the mouth is kept fresh or whether it now tastes completely innovative like strawberry chamomile? These can certainly all be very exciting facts and I cannot at all rule out that this will certainly have its usefulness. But nobody explains to me why I'm interested in it, and that's why I really don't care at all. I don't run to the shelf and say, "I can't put anything in my shopping cart, except those with triple fluoride!"
And that is exactly what your job is. Explain to me why what you have is important to me - and if possible before I've switched off again after the first few sentences. Admittedly, not an easy task - but unfortunately it is not always enough if your offer alone is right. Ultimately, we are overwhelmed with information and have to quickly and easily filter out what is important to us.
What options do I have to acquire customers as cost-effectively as possible?
Marketing always comes at a cost - if it's just about the time you invest in attracting potential customers. Even time is money, after all, you don't want to work for free, you want to make a certain profit from your work. This is why it is important that you factor in the cost of your marketing time that your employees and you spend tailoring or executing the marketing. You know the hourly rate for your employees, for you you should apply the hourly rate that you have calculated for yourself.In this way, the costs that are not directly tangible become a calculation factor and your calculation becomes more realistic.
Cost-efficient still does not mean that you should target your marketing as cheaply as possible. If in the end there is no foreseeable turnover for you, even the cheapest marketing is still too expensive. Conversely, the most expensive marketing can be worth it if you achieve massive customer gains and suddenly cannot save yourself from orders - provided that you can also cope with the emerging order volume.
You should define, answer and review the following goals and questions to find out whether your marketing is working and cost-effective:
- What costs - including converted working hours - arise from a marketing measure?
- How many potential customers do I address through the measure?
- How high is the proportion of my target group among the customers I address?
- How many customers do I expect to gain from the marketing measure?
- What sales are the customers you have won likely to generate?
From this you derive a comparison of the costs of your marketing measure and compare them to your goals and your expectations of the marketing measure.
After the marketing measure has been completed, you can use the acquisition of new customers to determine whether your goal was achieved, exceeded or missed. In addition, you can put in relation what your marketing measure cost and what sales or profit it actually brought you. This in turn tells you whether the marketing measure was profitable or not.
The business plan - the atlas of your foundation
You have subconsciously already worked out a significant part of your business plan if you have taken the previous chapters to heart. The following factors are essential components of the plan:
- How are the market and competition structured in my industry?
- What are my goals and what strategies do I follow to achieve them?
- Which marketing strategies do I use to make my offer accessible?
- Who is responsible for implementing my ideas? Do I do this alone or do I build a competent team around me?
- What are my costs, what revenues do I expect against it?
The financial plan in particular is at the heart of the business plan. Unfortunately, entrepreneurship cannot function without numbers. Therefore, you must not avoid preparing a detailed list of all the relevant financial factors before founding the company. Basically, it sums up all the essential purchases and costs of your company and compares them with what you earn from your job. This can go on for one, three, five or even more years. Just keep in mind: the longer you plan, the more the subsequent results depend on the previous forecasts. This means that the prognosis becomes more and more vague the further it is in the future.
How to create a business plan in great detail, I cannot tell you in this guide. This is a topic of its own and would go beyond the scope. Above all, it is important that you take the costs into account, derive what your product has to cost so that you can earn money with it, and forecast how your sales are likely to develop. This in turn allows you to see which capital your idea needs and whether your own funds are actually sufficient for its implementation. Otherwise, you will need investors or loans to ensure your liquidity - and they will want to see a business plan as detailed as possible in order to decide whether your project is worth investing or not.
In addition, you are not allowed to think one-dimensionally. A business plan is always a target forecast. This may be true, but in practice you will usually find deviations from your forecast. It doesn't have to be negative if you exceed your forecast. However, if you do not reach the target values, it makes sense to already have a plan B in the drawer on how you can react to it.
- Can you make savings in product manufacturing to get a lower selling price?
- Can you omit certain services to save time and money?
- Is it possible to make your offer fundamentally more attractive through simple measures?
- Do you have alternative marketing concepts to attract more customers if your advertising doesn't work as you would like?
- Can you push other sales channels that you haven't planned?
- Can you leave out certain sales channels that are not lucrative in order to focus more on the lucrative sales channels?
- Are you financially strong enough to be able to bridge an unexpected bottleneck?
Basically, these are all possible considerations in order to be able to react if the reality should not correspond to your plan. The better you are prepared for such imponderables, the better you will of course be able to cope with them.
And how do I finally found my company now?
Once you have completed the planning and conception with all the important factors, you can start your company. For this you have to make a few registrations, but you can still choose which option is best for you with regard to the type of business. If you would like detailed advice on this, you should take advantage of this from your trusted tax advisor or a specialist lawyer for commercial and tax law. Depending on the chosen legal form, the profit of your company is taxed differently and the scope of liability varies. But also the question of whether you are required to keep accounts and whether you calculate your profit by means of an income and surplus account or have to draw up a balance sheet for the annual financial statements also depends on the type of company.
Overall, a distinction can be made between three possible basic types of entrepreneurship:
- Sole proprietorship
Sole proprietorships are solely responsible in their company, but they also have unlimited financial liability up to and including bankruptcy. Sole proprietorships can be registered merchants, small businesses, freelancers, self-employed persons within the meaning of the Income Tax Act or simple tradespeople who are not merchants within the meaning of the Commercial Code. The accounting obligation also depends on the legal classification as a businessman. However, you always have to report your income and costs to the tax office in order to be able to determine the profit, even if you are not required to keep accounts.
Partnerships are the civil law company (GbR), the open trading company (OHG) and the limited partnership (KG). Here, too, liability is usually unlimited - with the exception of the limited partners in the KG, who are only liable within the framework of their contractual obligations. OHG and KG are legally always considered to be merchants, which is why they are always required to keep accounts.
In the case of corporations, it mainly concerns the limited liability company (UG), the limited liability company (GmbH) and the stock corporation (AG). Here the entrepreneur is not liable as long as he does not violate his legal obligations in such a way that he is taken into personal liability. The corporations are independent legal persons who are liable for themselves and legally stand as separate persons. In the case of the GmbH, liability is limited to 25,000 euros or a contractually higher fixed capital contribution. The UG - the small GmbH - has a minimum liability of one euro. However, the trunk can be chosen arbitrarily. Due to the lack of personal liability on the part of the partner, however, one must accept that the creditworthiness of the corporations is relatively low, especially at the beginning.
Depending on the type of company, different registrations are required at different positions.
The business registration can be done at the local trade office. Freelancers (e.g. lawyers, doctors, artists) do not have to register a business, all other entrepreneurs are obliged to do so. It's usually quick and cheap. However, it may take a little longer to register with companies that require approval.
Notarial entry in the commercial register
Small entrepreneurs and entrepreneurs who are not considered to be merchants in the legal sense do not have to be entered in the commercial register. All other entrepreneurs and corporations must be registered by a notary and entered in the commercial register.
Tax number at the tax office
A written information to the tax office about the start of the activity makes sense. If you have not already done so, a tax number will be issued by the tax office, which is important for all correspondence with the tax office. In the case of corporations, a separate tax number is always assigned, since the company is legally an independent person.
Social security must also be made aware of this when you start your business. Depending on whether this is your main occupation, you will be responsible for paying the contributions yourself in the future. In the case of artistically active companies that are not a corporation, contact with the artists' social insurance fund is also required - the pension insurance for artists. If you have your own employees, they must also be registered with you via their health insurance company. In this context, the company number that you will receive is important. This is practically your company ID, under which all your employees can be registered with the health insurance company.
In any case, you must report to the employers' liability insurance association that you have started your business activity. This is accident insurance. This report must be made even if you are working alone. As an entrepreneur, you do not have to take out accident insurance through the employers' liability insurance association, but you can do so voluntarily if you want to. If not, a mandatory zero report must still be submitted.
In addition, when you start a business, you will receive mail from the Chamber of Commerce and Industry. Membership here is compulsory.
Do i need a tax advisor?
As you can already see in this chapter, the legal bases and obligations that come with starting a business are very comprehensive. We also do not claim to provide you with absolute expert knowledge down to the last detail with regard to legislation relevant to your company. Whole books could be filled with it.
Detailed advice and comprehensive support make sense here - and for entrepreneurs this is exactly the tax advisor. Right from the start, he can assist you as an expert in tax and commercial law and explain to you which legal form offers you which legal options, individually tailored to your company. There is also the possibility of having the one-time and regular (registration) reports to the social security, the city and the tax office dealt with directly in the office by the employees. Of course it costs you money, but on the other hand you don't have to deal with it either and you have more time for your actual business.
You can also theoretically handle bookkeeping, income-surplus accounts and annual financial statements without a tax advisor. But as long as you are not a trained tax expert, the employees at the tax advisor know more about the facts per se than you do, since they deal with such matters all day. Even as a trained tax clerk and employed accountant, I use the services of a tax advisor for my own small business. This has the following advantages for me:
- I do not have to monitor my obligations, reports and deadlines to social security, the city, the tax office and other relevant bodies myself. The tax advisor does this for me or at least reminds me when I have something left to do.
- I experience relevant new tax regulations at first hand at all times.
- The tax advisor is jointly liable for gross errors with regard to advice, bookkeeping and the annual financial statements.
- A tax advisor knows the relevant advantages, possible uses of the tax law and possible gray areas with case law very well - and will ensure that you can get the maximum benefit from them.
- The support in this area leaves more time to go about the actual business activity.
Accordingly, I recommend that you pay particular attention to your legal situation as an entrepreneur and look for a tax advisor you trust. Comparing several tax advisors makes sense, as not every tax adviser is automatically good just because he is allowed to call himself that. But you should choose some kind of care. So you have a competent contact person right from the start for the correct tax handling of your company, many due (registration) reports and the optimal corporate form for your company. Because if you are making gross mistakes here that put you in a liability that you do not want, or that lead to financial (additional) claims from the tax office, the city, etc., then a “I didn't know” or “I did thought that it would be regulated differently “not the smallest bit further. Accordingly, my advice: Even before founding the company, take the opportunity to get correct and detailed advice and to be looked after afterwards. The topic of small business regulation is also interesting - with §19 UStG you don't pay sales tax, in the article you will find the necessary requirements.
In principle, setting up a company is relatively easy. However, if you want to do it properly and professionally, you have to focus primarily on a few core areas such as the implementation of your idea, marketing and proper legal processing - and that before you actually start your company. A blind flight in these areas often ends with your concept not working. Accordingly, you absolutely have to deal with it, even if one or the other of them should not suit you. In case of doubt, however, there are experts for all of the areas mentioned who can help you to follow the right path. Through them, you too will learn, develop further and be prepared for what actually awaits you as an entrepreneur. I wish you every success in realizing your own vision!
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