How do you start a B2B company
Finding a (market) niche: 10 steps to successfully founding a B2B start-up
While startups in the B2C area, i.e. those that focus on private customers, are sprouting like mushrooms, the B2B area is relatively underrepresented. Correspondingly, there are many opportunities here for smart start-ups. But what do you have to consider when founding a B2B start-up?
The following article explains the reasons for the startup project, shows selected business models and explains how a successful start-up can be set up in ten steps.
Recognizing potential: Selected business models for B2B startups
Most startups are founded in the B2C sector, not least because founders are always consumers and B2C is very close to their own environment. The economic relevance of the B2B sector is therefore often underestimated, as is the possibilities of founding a startup specializing in B2B. But there are also numerous interesting business models in the business-to-business area, we will take a closer look at three here:
Potential 1: Take over the marketing of large companies
Automation plays a major role in marketing, as it allows many things to be designed more efficiently. For many companies it is more profitable if they outsource certain areas of marketing and have them taken over by a specialized agency instead of burdening all-round workers on site. SEO, SEM, lead management and the programming of apps are classic examples in which an agency is more involved than a department of the company. Many medium-sized companies in particular are dependent on professional help from agencies because they do not have the necessary know-how themselves. In this respect, there should be no lack of demand for this potential business model.
An example: the startup Emolyzr from Berlin has developed a very special marketing tool. They read the emotions of users, whether from websites, films or products. The three neuropsychologists are revolutionizing the advertising industry with their product Emolyzr based on neuropsychological measurement of emotions. You can find out more in this Emolyzr founding story.
Potential 2: Nobody likes to do bookkeeping, so offer business tools
Business tools that outsource classic office work to the cloud are a business model that can be scaled particularly well. Tasks that were previously done with stationary software, for example, are then processed using web tools, which saves the company significant time and money. These can be tools for accounting or the like, for example.
Examples: Bookkeeping tools and offers that are available online are a huge market. However, it is not exactly without a player. Here you will find an overview of online accounting tools. But maybe you have a special idea and can learn from these providers.
Potential 3: Daily help with office work
Numerous classic office work can be outsourced to external service providers. Regardless of whether it is a law firm, a PR agency or a publishing house - very similar office work often occurs in very different sectors. Be it entering numbers and data in Excel tables, answering mail inquiries or acquiring new customers. Many of these classic office tasks, which are normally carried out by local employees such as secretaries or assistants, can also be outsourced. An external service provider specializes, for example, in an area such as acquisition and offers companies to relieve them of certain office work. These are of course not done on site at the customer's company, but within the startup or by external employees of the startup founder.
Examples: Sometimes it's not the caretaker service and the ironing fairy or the print agency at all. Sometimes it is also a meta-service, i.e. the combination of many offers into one. That is the idea of Mila, a startup from Switzerland.
Ten steps to a B2B startup
Anyone who founds a startup in Germany cannot expect to earn millions within a very short period of time, as is sometimes possible in Silicon Valley. The market conditions in Germany are simply completely different from those in the USA. German founders should therefore concentrate primarily on medium-sized companies, as these have a very strong impact on the German economy. So if you say goodbye to the idea of creating a global corporation within a very short time and instead draw up a realistic business plan, you can also be successful with your startup in Germany. The steps that are necessary for this are explained below.
Step 1: the business plan
No company founding without a mature business plan: Anyone who wants to found a startup usually already has a good idea and a more or less precise idea of how it should be implemented. Unfortunately, the best idea alone is not enough to successfully raise a company. The most important thing here is a realistic business plan.
The planning phase lasts an average of seven months, but it can also be completed in three months. The central point is the creation of the business plan. In this you work out the business idea and describe, among other things,
- who the addressed target group will be,
- what income can be expected
- and where there are opportunities but also risks.
However, the business plan not only serves to show the founder whether his idea can be realistically implemented and, above all, economically, the business plan is also an important decision-making factor for banks, potential business partners or investors when it comes to whether the founder receives financial support. Here is an overview of the most important points that every business plan should contain:
Most of the terms used should be self-explanatory, but a few selected ones should now be briefly discussed. One of them is the SWOT analysis. This means that the business plan should contain a list of the strengths and weaknesses as well as the opportunities and risks of the business idea. You can find out more about SWOT analysis and how to use it in this specialist article.
The term “Executive Summary” in turn means that at the end of the business plan there should be a kind of two-page summary of the core elements. This summary provides potential business partners or investors with an overview. Without having to study the entire business plan directly, you can decide whether you want to address the concept and whether it is worthwhile for you to take a look at the details. Industry-standard business plans can serve as a rough guide.
Step 2: the team
Anyone who founds a startup has to think about whether they want to do it alone or create a team. Teamwork offers several advantages, but always also risks. On the one hand, colleagues in a team motivate each other and brainstorming is easier with two brains than with one. On the other hand, investors prefer to invest in groups rather than in individuals, which is why teams often have better chances when looking for investors.
On the other hand, too many cooks can also spoil the broth. There can always be disagreements and arguments in teams. An article in the Hochschulanzeiger der Frankfurter Allgemeine therefore recommends that start-up teams ideally only consist of two to three people. It is also advisable that these people already know each other well and are on the same wavelength as one another.
Step 3: the market analysis
The market analysis is part of the business plan and should always be carried out conscientiously before investing money in your own business idea. There is often simply no market for very creative and innovative ideas and they may therefore be doomed to failure from the start. So it is not enough to present your business idea to a few good friends and see their opinion as representative. This requires a conscientious analysis of the market. According to onpluson.de, this goes through five different stages:
Step 4: the location question
In the IT sector in particular, many start-ups set up their startups within their own four walls. At the latest, however, when employees are hired and the company expands, office space is needed. When looking for suitable office space, founders should always keep in mind what they are actually offering and who they want to address with it. If, for example, potential customers and business partners from all over Germany are to be invited to the company frequently, an office near a motorway exit is recommended. This must also appear representative, i.e. it must look appealing from the inside as well as from the outside and match the image of the company.
When making this decision, founders should not be guided by personal reasons and should keep an eye on their business. The proximity to the competition and the costs for the preferred premises should also be taken into account. If you want to hire long-term employees, you should also ask yourself how attractive the location is for applicants. The following can help with the location search:
- Real estate agent
- Business incubators and technology centers
- Flexible office concepts such as the "temporary office"
- Co-working spaces as the first point of contact
- university incubators
Property rights can be registered for products, inventions, but also your own logo, for example in the form of a patent, a trademark, a registered design or a utility model. Helpful portals on the subject of industrial property rights are, for example, the DPMA database and the website of the European Patent Office. Various methods are available to assert these industrial property rights, including:
- Industrial property rights on patents for inventions
- Industrial property rights on trademarks
- Industrial property rights to a design
- Industrial property rights on utility models for inventions
- The protection of the company name and business name
You can find out how to secure your trademark rights in this specialist article: "How to: What to look out for when registering a trademark".
Step 6: corporate finance
Very few start-up founders have enough financial resources to grow their company without any outside financing. The amount of financial resources required decides which sources come into question, just like the business idea. This number can be found in the previously prepared financial plan. Financial injections of up to a few hundred thousand euros can often be achieved through crowdfunding. An overview of the various crowdfunding platforms can be found here. As the following statistics show, the total volume of capital raised through crowdfunding in Germany has been rising steadily for several years:
Financing in the millions is more likely to come from the classic venture capital providers, who also only pick out those founders who appear particularly promising to them and from whom large sales can be expected. Banks, on the other hand, tend to finance manageable companies, such as a small bakery or the like, and less often in B2B startups. In addition, bank loans have to be repaid. If the idea doesn't work and the startup doesn't make any money, this will be difficult. It is also useful to find out whether certain funds can be applied for. This mostly depends on the chosen business model.
This specialist article shows which financing makes sense for whom: “Comparison of financing types: crowd investing, bank, business angel, venture capital or crowdlending”.
Step 7: Company form, contracts, registrations and approvals
Business start-ups can choose between different types of company, which are associated with very different requirements. The time it takes to set up a company also plays a role.
- Sole proprietorships or partnerships such as the GbR are set up relatively quickly, while it takes significantly longer for the GmbH and the UG, i.e. corporations.
- Depending on the chosen legal form, certain contracts are necessary, such as a partnership agreement. But not only these contracts play a role for start-ups, but also customer contracts, for example.
- If you want to hire employees, you must also think about the design of the employment contracts at an early stage.
- In addition, there are various registrations that no entrepreneur can avoid. Anyone who does not complete the necessary registrations on time must expect fines.
- Also important: registering with the tax office, because not a single invoice can be written without a tax number.
- The key is the business registration and for all those who set up a corporation, the entry in the commercial register.
- Depending on the selected legal form, however, very different registrations are required and other permits must be obtained. In some cases, certain qualifications have to be proven in order to be allowed to start a company.
It is therefore essential to deal intensively with these points in advance and to contact the responsible contact person. The BMWi authority guide of the Federal Ministry for Economic Affairs and Energy provides orientation aid.
Step 8: the necessary insurance
Anyone who founds their own startup naturally also takes certain risks. In order to minimize these risks, it is important to choose the right insurance. Above all, there is health insurance. Business start-ups have the option of opting for statutory or private health insurance in the first three months of their self-employment. Liability, pension insurance and occupational disability insurance are also more than recommended.
The other insurances must be tailored to the respective business model. A wide variety of insurance policies can make sense here in order to minimize operational risks. The most important insurances for young traders and freelancers can be found in this specialist article.
Step 9: The successful external effect
There is no second chance for a first impression. This also applies to the external image of a company. Anyone who founds a startup should therefore carefully ensure that everything is right from the start. This can be used to summarize very different aspects, such as a successful company logo, a well thought-out website that also takes into account all legal aspects, such as the imprint, but also a convincing appearance at the first customer contact.
However, they have to learn how to sell well during the planning phase, for example when it comes to convincing potential investors. This can be practiced, for example, at the Karlsruhe Venture Day or at the Venture Lounge, which is organized in various major German locations.
Step 10: Acquisition and customer acquisition
The last point is acquisition, because no company can establish itself in the market without customers who are willing to pay. However, acquisition and customer acquisition are very extensive areas, which is why only a few aspects can be discussed here.
Depending on the selected target group, the type of customer acquisition can be very different from one another.In the B2B area, the number of customers addressed is usually significantly lower than in the B2C area, but the sales per customer are of course much higher. When acquiring customers in the B2B area, special attention should be paid to the quality of advice and service. A distinction is made here between offline and online acquisition:
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