Erstellung eines Finanzierungskonzeptes für eine Unternehmensgründung

Table of contents

1. Introduction
1.1 Subject matter
1.2 Objective

2. Financing Concept
2.1 Capital requirement planning
2.2 Liquidity planning
2.3 Profit projection
2.4 Case study: Financing concept

3. Financing instruments: setting up a business activity
3.1 Equity capital characteristics
3.1.1 Equity financing
3.1.2 Venture Capital
3.2 Debt capital characteristics
3.2.1 House bank loans
3.2.2 Public financial aids
3.2.2.1 KfW- starting money
3.2.2.2 KfW- entrepreneur´s credit
3.2.2.3 KfW- entrepreneur´s capital
3.3 Mezzanine capital

4. Case study financing

5. Conclusion

Literature

List of tables

List of images

1. Introduction

The present project shall deal with the subject "establishment of a financing concept for a business foundation".

In introducing the topic the first part comprises the objective and the problematic of this subject. Further, we shall determine definitions of important terms as well as an illustration of important sections of this area.

For the purpose of this paper, the setting up of self-employed business activities within the legal and economic frame of the Federal Republic of Germany is regarded. Start-ups such as a company take - over, an entry into an already existing business and franchising are excluded.

1.1 Subject matter

A business is supposed to be established. At that very moment the founder is faced with an essential challenge: Who finances corporate foundations, organizational constructions, product developments or a market launch? Which possibility does one possess to support this entrepreneurial decision economically?¹

Business foundations are enjoying a progressively higher status through the creation of new jobs or the increase of economic competitiveness. Especially young and innovative businesses are regarded as the engine and nucleus within a system of economic, technological and social change.

A good business concept is the most important building block for a successful corporate foundation. Yet, in spite of a thought-out and well-developed business project self- employment remains a choice connected to major exertion. Often, most young entrepreneurs lack sufficient starting capital and management-Know-How, in order to transfer the business concept into a workable business plan, and turn over a product or service in reality or make it competitive.

Investigations on the failure of young businesses confirm that mistakes in the area of financing represent one of the most common causes for a commercial fiasco.²

illustration not visible in this excerpt

Image 1: foundation barriers

In this work, especially the area of financing will be examined more closely. For negotiations with banks which are publicly supported by the district or commune and banks, a well- developed financing concept stating the short-term and long-term capital requirement is needed.³ Due to lack of experience of the managing board, a financing concept of small and middle businesses is not sufficiently established. The most common cause for insolvency is poor financial planning.

1.2 Objective

A corporate foundation is successful if it is thought-out and carefully planned.⁴

This project work focuses on the peculiarities in the creation of a financing concept in newly establishment business. On the basis of a practical example of a corporate foundation, both the process of creating such a concept as well as the resulting financing possibilities and public support facilities shall be included.

After determining the capital requirement for the setting up of self-employed business activities, the focus lies on financing instruments resulting from these activities, and public promotion programs suited to cover the capital requirement of young businesses in general and our example in particular.

Finally, a conclusion is drawn in which the results of this work shall be presented and a prospectus is given.

2. Financing concept

One prepares the foundation of a corporation and one important question arises: How do I finance my project? Therefore, financing represents the basis for all further steps, and thus, a financing concept, proposes a perfect overview in replying to the following questions:

How much equity capital shall be invested?

Which securities does one have at his disposal?

What is the entire financing requirement?

How can one procure necessary borrowed capital?

Which public financing aids can one obtain?

The financing concept is an essential component of business planning.

"On the one hand it is the instrument for financial control of the corporation, on the other hand, banks as well demand detailed financial information and future development before engaging into the business".⁵ The objective of a financing concept is to equip the company business, beyond the planning concept, with the necessary financial means in order to overcome even critical financing phases (in business). Especially, banks immediately involved in financing concepts, demand a detailed preparation of the business plan. Only, when a positive continuation prognosis on the basis of a conclusive concept can be foreseen will banks be ready to involve in possible measures.⁶ In the following the finance planning in start-up businesses shall be illustrated. Finance planning can be divided into the following domains: capital requirement planning, liquidity planning and profit projection.

2.1 Capital requirement planning

The first step in finance planning is determining expected capital requirement for due investments and/or the business foundation. Subjects are the initial investments, for example, for machines, store arrangement and office arrangement.

It provides an overview over long, middle and short-term capital requirement, the necessary operating material as well as the investment costs for the foundation of the business.⁷ The capital requirement planning needs conscientious and detailed work, and cover must, besides investments and acquisitions, as well cover required financing means for operating material requirement.

Concerning the operating material requirement the following expenses must be considered:

- All regular business expenses (fix costs) such as rents, salaries and wages, management costs, vehicle costs, interest costs, etc.
- The opening advertising for your business, the use of articles and material over a certain period
- exterior stands
- general foundation costs (consultation fee, notarial fee)
- necessary private withdrawals
- sufficient liquidity reserves⁸

The level of financing requirement to finance current business expenditures depends on a realistic view on considering when to receive first payments. The sum of your entire capital requirement results, thus, out of required investments and out of your requirement for operating material.

2.2 Liquidity planning

To be sure on, whether or not, enough liquid assets are at one´s own disposal over the next years, one must generate a liquidity plan. This plan places your expenses vis-à-vis your revenue. As deposit and payment do not occur simultaneously, your cash registers and/or account balance may strongly alternate. If, as a result of liquidity planning it becomes evident, e.g., that your liquid assets will be exhausted three month after the foundation, then immediately before the decision for founding a company, one should provide for sufficient financial assets in order to survive this shortage.⁹

It is not a matter of having revenue from the very beginning or not: Your suppliers and your personnel expect to be rewarded for their supplied service - every month. Moreover, you must provide for your own cost of living, too.¹⁰ Therefore, one should calculate the revenue with a conservative attitude and the expenses rather generously.

2.3 Profit projection

The third building block of a financing plan is the profit projection. What results at the end of the first fiscal year: Profit or loss? An answer on that is given - for the first three years - with the help of the profit projection. "It is constructed like a profit and loss accounting and serves in determining presumable profit. In contrast to liquidity planning, the distinction is not between deposit and payment, but between expenses and profit".¹¹ In this part of the planning calculation, however, there are also positions containing no payment effectiveness and find no consideration in liquidity planning. This is the case in write-offs and reserves. Obviously, it enables no certain prediction, as you work with forecast figures. Your bank will test whether these figures appear realistic. Thus, one needs to forecast rather with a reserved attitude. Losses in the beginning of business are nothing unusual, they should, however, be considered in the entire financing process.

2.4 Case study: Financing concept

The previously described situation to create a financing plan shall now be illustrated with the help of an example to set up a solarium business. For better clarity, we make use of simplified forecast figures, that do not correspond to reality not to certain standards. Moreover, not all taxes, expenses and profits will be described into smallest details.

In order to calculate future sales, we presume guidelines of distant solariums. These are calculate for 15 minutes below the Solarium Turbo 3.50€ (14€ per hour), in the Model

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¹ vgl. Carstensen 2004, S. 69

² vgl. http://www.gruenderbrief.info/gruenderbriefe/gruenderbrief_071004b.pdf, S. 1

³ vgl. Egger/Gronemeier 1999, S. 27

⁴ vgl. http://www.existenzgruender.de/imperia/md/content/pdf/publikationen/broschueren/starthilfe.pdf

⁵ http://www.erfolgreicher-gruenden.de/finanzierungs-konzepte.html

⁶ vgl. http://www.tpwkg.com/veroeffentlichungen/vortraege-aufsaetze/positive- unternehmensfortfuehrungsprognose/

⁷ vgl. http://www.kfw-mittelstandsbank.de/DE_Home/Dokumente/PDF-

Dokumente/6000000435_Brosch_Gruendungsberater.pdf

⁸ vgl. Steegmann 2006, S. 30 f.

⁹ vgl. Opoczynski/Fausten, 2004, S. 190 f.

¹⁰ vgl. http://www.kfw-mittelstandsbank.de/DE_Home/Dokumente/PDF Dokumente/6000000435_Brosch_Gruendungsberater.pdf

¹¹ http://www.ihk- lueneburg.de/produktmarken/unternehmensfoerderung_und_start/unternehmensfuehrung_bwl/Unternehmensfina nzierung/grundlagen_unternehmensfinanzierung/Finanzierungsplanung.jsp