Startup companies – 3 important Beginning tips for founders

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A start-up translates as “approach or commissioning” and is a symbol for the establishment of a new company. Companies that are in their first business phase, have creative, new or unusual ideas that they want to realize first on a small scale and later on a large scale are to be identified as start-ups. The growth potential is significant, because once the company has “made it” it can expand, sell part of it or even set up branches. The number of start-ups has increased rapidly, especially due to the Internet age, and enriches the corporate landscape with many creative ideas and innovations. The factor of the new idea is important for a functioning business model. The German Start-up Monitor defines three characteristics:


  • Age: Startups are younger than 10 years
  • The innovation: Startups are highly innovative with their technology / and or their business model
  • The growth: Startups have a significant increase in employees and / or sales


USA the founding country


In 2013, according to the Start-Up Monitor, there were 406,000 start-ups in the USA without an explicit business idea and 462,000 other start-ups, but the USA only ranks 22nd out of 26 innovation-based economies. The experts see a need for action here because there is a lack of growth capital. The trend is clearly towards technology, apps and the still booming internet.


The reasons for the decreased interest in founding start-ups are, on the one hand, a relatively satisfactory situation on the labor market and, on the other hand, the lack of financial resources. However, in recent years the reasons for doing business have outweighed the lack of employment alternatives. With a basic business plan and sustainable funding, a start-up can become a huge success.


Tip 1: the right idea


There are many ideas, sometimes good, sometimes not so good, but most can usually be capitalized on. A large number of German start-ups arise from a release from existing companies, a kind of “offshoot” with new ideas. However, some starters also deal with completely unknown innovations and they should prepare themselves very well for the development phase. There are a few ways and methods of getting an idea:




Problem – solution


Finding solutions to the existing problems of many people is still one of the most successful concepts for a start-up. Whoever knows what people need or what makes their life easier, can enrich it and pay attention to a current look or mood, cannot do so much wrong.  


Developing ideas


The improvement of existing products, services or services should not be underestimated, because many customers and users give their feedback regularly and want changes that they often do not receive. Anyone who recognizes the potential for improvement can develop their own idea from it. Examples from Seth Nicolson, he created the basic tool Facebook video downloader online. And he is having a lot today.


Tip 2: financing



Over the past ten years, crowdfunding has become an important institution for generating start-up capital for young companies. Whether Startnext, VisionBakery, Betterplace or Kickstarter – the platforms for artists, tinkerers, socially committed people and young entrepreneurs are on the advance. In most cases, crowdfunding means that a product or service is offered which, with the help of the “crowd”, either gets the realization or gets the start-up capital for the production. The deposit of certain amounts of money on “prepayment” enables some bonus gifts, such as receiving the finished product first and getting additional features before everyone else. Successful projects at Startnext are, for example, the “Original Unverpackt” supermarkt in Berlin Kreuzberg or the financing of the Internet TV station “Störsender”, which deliberately wants to avoid advertising. Tips for financing:


  • See other projects
  • Become a supporter yourself
  • Define clear messages
  • Shoot your own video for the performance


Business angel


Business angels are private investors who invest money in the new company in the early start-up phase and who support the founders with their own knowledge and advice. They receive shares in the company and are co-owners, who leave the reins to the young founders. The angels usually invest four to seven years and then sell the stake, ideally of course at a profit. There are 3,000 active business angels in Germany, most of whom have come together in networks such as Germany’s Business Angels Network .


Ventures capitalists


Venture capitalists are investors who invest in a company at high risk. They often promote several business ideas at the same time, knowing that they may lose the money. However, since they hold large stakes in the startups, the profits can add up significantly.


Corporate loan


The banking crisis has made it difficult for many start-ups to get a bank loan. Development banks like KfW offer some options with terms of up to five years and low interest rates. An application can be submitted by freelancers, founders and existing start-ups with up to three years of business activity. Tips under .


Tip 3: Find the right type of company


Many self-employed people choose the sole proprietorship because there is no liability capital, nor are formation formalities necessary. However, profits are taxable at the personal tax rate and the freelancer is liable with his private company.


The civil law society (GbR) is often chosen, which consists of two or more people who want to work together. The establishment is necessary without formalities and entry in the commercial register and with an annual profit of 50,000 euros only an income statement has to be submitted.


For a GmbH, a capital contribution of 25,000 euros must be available as liability capital and it is subject to the accounting rules of the Commercial Code. This blog entry gives helpful tips when founding a GmbH, including taxation and tips for the right time to set up.

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