Steps To Take Before Setting Up a New Business

In order to weigh the opportunities and risks of starting a new business, it is important to get an overview of your expected costs and potential revenues. It might be a good idea to record these considerations in writing so you can make use of them during the initial start-up phase. 

Investment costs = one-time expenses such as

  • Office/ studio supplies
  • Basic operating resources (such as utilized materials, etc.)
  • Office technology
  • Cars or transportation vehicles
  • Reconstruction measures

You should also consider where you might get the money for necessary investments.  Do you have any savings, are there grants for your start-up investments, should you apply for loans, or do you have relatives and acquaintances who could lend you money.

The list of investment costs and funding options are also called capital requirements plan and financing plan.

Running costs such as

  • Living costs (entrepreneur’s salary)
  • Personnel costs
  • Facility costs (rent, electricity, water and heating costs)
  • Resources
  • Office supplies
  • Hospitality costs
  • taxes and contributions
  • Professional insurances
  • ongoing car costs / travel expenses
  • Postage and telephone
  • Advertising costs
  • Consulting fees
  • Repayment and interest rates for loans

The expected running costs should be checked against the expected revenues. This is called „sales and profitability forecast“

Make sure to write all the ideas, expectations and plans down because small details that are often overlooked become clearer this way. This is referred to as a „business concept“or a „business plan“.

It is important not to remain tied to a vague generality but to define concrete and realistic objectives. There are no fixed formal requirements for this. The basic structure could take the following form:

Basic information about the start-up plan (only key information):

  • Name, subject, legal form of the project
  • Personal details pertaining to the founder and their professional qualifications
  • Anticipated personnel structure
  • Short description of the workplace (home office, rental of premises, shared office, etc.)

Service range (in as much detail as possible):

  • Which services will you be offering? Which specialization do you strive towards?  
  • What is your target group? Who can make use of your services?  
  • What sets your offer apart from competitors?
  • How will you present you offer? Which marketing strategies will you employ to reach potential customers?  
  • How can you make use of your existing contacts, which new contacts would be beneficial and how can you establish them?

Economic forecast

  • Who will your principal clients be?
  • Which concrete orders are you expecting and how much revenue can you expect?
  • Which new clients should you win and how?
  • How are the expected revenues distributed across the different sectors?
  • How would you assess the situation in your industry and at your location?
  • How do you evaluate your competitiveness? What are your opportunities? What are your risks?

Market launch (detailed)

  • Which assignments are you expecting?
  • Do you have beneficial contacts that you can make use of? How can you establish new connections?
  • How are you planning to showcase your services?
  • Which pricing policy do you pursue?
  • Which advertising measures and customer acquisition paths are planned?

More detailed suggestions can be found on the Internet. You will also need a business plan, a capital requirements plan, a financing plan and a profitability forecast if you are applying for grants or loans. Since the approval or rejection of applications largely depends on the quality of the information you provided, you should take these calculations very seriously. Specialized counseling centers can help you with these business basics.

Source: Hubatscheck, Bernd: „Existenzgründung„, , retrieved December 2018.