According to data released by the World Bank, Germany is the world’s third largest economy, valued at $3852 billion dollars as of 2014 and as such, it is not a stretch to say that there are plenty of business opportunities for entrepreneurs in this economy bustling with spending power. The German economy is strong and healthy and offers a range of business opportunities to those seeking to set up something of their own. It also does not discriminate between natives and foreigners, so if you are a foreign national looking to starting your own business in Germany, rest assured that there’s ample opportunity for that.
See Also: Land a Job in Germany
1. How to Start a New Business
Bureaucratic hurdles exist in all countries and Germany is no exception, however the red tape is not as pronounced in Germany as in many other countries in Europe. Whether a native or a foreigner you are still going to have to go through the same hurdles to set up your business. However if you are a foreigner you’ll need to apply for a German work permit. For more details, go here.
Before you dive into the sea of bureaucratic hurdles, it is advisable to evaluate the opportunities and challenges that your business can face. The best way to do this is by preparing a Germany specific business-plan that can be put into place once you get the permits. Having a business-plan is also compulsory while negotiating with banks for the required finances and for applying to the German authorities for benefits.
The line of business that you choose and its current financial strength will be the deciding factors on whether you will be granted the necessary permits to start a business in Germany.
It doesn’t matter what type of business path you’ll take in terms of the fact that you will still need to deal with bureaucracy. The best thing to do is to contact a financial or tax advisor at the earliest possible stage of planning the business. They are usually very well informed and can guide you through getting your business registered with the appropriate authorities. They will tell you whether to hire a notary and also how to register the business at the local court (amtsgericht). Once the registration is over, and the chamber of commerce has obtained all the necessary details in order to include your business in the commercial register, the chamber of commerce is responsible to contact you.
Once your obligations with the chamber of commerce are over, the next step involves the necessary tax registration. You have to organise two sets of tax registration. One of them will be for commercial tax registration purpose and should be filed with Gewerbesteueramt. The other one should be filed at the local tax office called “finanzamt”. Once registrations with tax authorities are completed you can expect to get a certificate of registration (gewerbeanmeldeschein) and you are all set to launch your own business. For business registrations and licenses check this site.
Although the paperwork and documentation needed for each line of business is different, this is the chronological order you should follow in order to set up your business:
- Prepare a business plan for presenting to banks and German Authorities
- Get expert opinion of a tax or financial advisor
- Obtain the necessary licenses required to run the business
- Arrange for finances from banks or other money lenders
- Finalize the structure and hierarchy of the business
- Register your business with appropriate authorities
- Get in touch withChamber of Commerce
- File Tax Registration with Local Authorities
- Get Certificate of Registration for your business
3. Buy a Business
It is always a lot easier to buy an already established business rather than starting a new one, there are a lot of advantages to consider too, such as: clientele, business set up, necessary legal clearances, tax registrations, finances etc. Most importantly you do not have to run around for documentation, registration and licenses. You already have everything that is required for the business. You can also check the business’ track record by scrutinizing its books and accounts. That will give you a fair idea of the financial viability of the business. All you have to do is keep things going and maybe take it a step further to expand it. However, if you are planning on buying a profitable business, then you need to consider the fact that you might need to pay a premium price since in Germany’s growing economy a business owner would only sell his business if the offer is high enough. For those who want to buy a business, go here and have a look at the available opportunities in Germany.
4. Some Affordable Business Opportunities
Ever thought about having your own English Language School in Germany? Teaching English in Germany is an attractive business opportunity and the scope for the non-Europeans is far greater in Germany, than in some other countries, like Spain for example. You can choose to work as a freelancer or find a Language school where you can teach. In either case you will need a German work permit. The problem with freelance teaching is that getting clients for private lessons can be a bit difficult. You need good contacts for that. Plus you have the added responsibility of paying your own taxes and you are expected to contribute to the Government’s pension scheme. You can also look into opening a franchise of any renowned Language training organizations. Even if you are a teacher with little experience, look for good established chains. “Berlitz is one of the largest language training organizations in the world with franchised locations throughout Europe and the world. The company’s core business is language and cultural training, and teacher vacancies occur most often in Germany and Spain.”
Another affordable business is opening your own restaurant. Germans like meat and American fast food. So if you have experience in this area you could earn a living by opening an eatery that serves American style fast food. Remember, the food has to be cheap to easily attract the natives. People in Germany are very cautious about the price they pay. For essential supplies you can use big supermarkets like Metro or Hamburger. Cookware can easily be ordered online. Hire a few locals to help with the serving and that will also take care of the language barrier. Start small and once you break even, expand.
You can also try your luck in tourism. Tourism is flourishing in Germany, as in other European countries. Every year millions of people from outside the country visit Germany. You can set up your own tourist guide services. You will need to hire a few travel enthusiasts who have experience as guides and know Germany well. This is quite a good line of business if you are a people’s person and like to roam around. If you intend to provide tourism services it would help to network with local language translation agencies or have your own translators.
Like all modern economies, Germany offers an array of incentives to all investors, whether German or foreign. There are multiple incentive programs available. Each package has its own set of rules regarding the definition, criteria and eligibility for funding different investments. These incentives can be broadly categorized under two distinct headings. These are the investment incentive packages and the operational incentive packages.
The Investment Incentives Package – This category of incentives includes different programs and procedures to reimburse the cost of investment. The subcategories under this package are the following:
- Cash Incentive Programs
- Public Loan Programs
- Public Guarantee Programs
The Operational Incentives Package - The operational incentives package includes those programs that are meant to subsidize the costs involved in starting a business once the location-based investment has been realized:
- Labor-related Incentive Programs
- R&D Incentive Programs
For further details on the incentives please go here
Germany does not seem to be very receptive to freelance work and startups. The labour laws are quite complicated and bureaucratic hurdles exist at all stages which can delay the process of setting up a business.
See Also: How to Start a Business in Germany
The German law doesn’t discriminate between natives and foreigners. Plenty of English speaking foreigners from different parts of the world have successfully exploited the available opportunities. There are no restrictions on the profit repatriation which is a huge plus.
I would recommend choosing a line in which you have some prior experience, if not the expertise. Do not choose something for which you have to rely on someone else for every small step that you take. It is easier to end up in trouble that way. Make sure you rely on well-informed professional advisors to guide you about the regulatory framework in place. Wish you all the best in your business endeavour.