Aspects of Entrepreneurship in Germany

Germany is a country with a developed economy, which is included in the list of countries with the highest standard of living in the world. German law does not provide for restrictions on the registration of commercial legal entities by foreigners in Germany. Thus, any individual can act as a founder of registered legal entities. When starting a business, it is necessary to consider the peculiarities and legislation of this country.

Turning Germany into a colonial power was merely a matter of practical policy for the Germans only from the beginning of the 1880s. After the formation of the German Empire in 1871, its ruling politics did not show much interest in the issue of acquiring colonies (Yildiz, 2020). They believed that the internally weak German state would not be able to provide them with the necessary protection and also feared complications in relations with Great Britain, France, and Russia.

The German legal system is a two-level legal system that has a federal legal system, which is defined as the right of the federation to establish and regulate its powers and the rule of national law. It is executed through constitutional innovations and regional legal strategies at the level of such federal subjects as the lands. One of the specific features of the German legal system is the development of legislation based on high legal technologies, covering various social spheres of life.

The current German legislation is the product of a long-term joint historical development of several German states. The foundations of the legal system of the Federal Republic of Germany were laid after the unification of the states into the North German Union, which became the German Empire (Yildiz, 2020). For a long time, legislative acts and legal customs of the principalities and cities that entered it were in force in the Empire.

Business in Germany attracts both residents and foreigners by the simplicity of company registration and the minimum number of restrictions on foreign investments. Beginning private entrepreneurs in Germany can be based on the most simplified business system since the opening of a company takes a few minutes. However, the market analysis process may take some time to ensure the success of the organization. First, when choosing a niche, it is worth knowing that the business is mainly divided into three spheres – production, trade, and services. After choosing a niche for starting a business, individuals can start working on a business plan. It is also vital to study product development and conduct a study of the main competitors. In addition, the entrepreneur must conduct a SWOT analysis to determine how the service product will be sold on the market. In general, it is necessary to study the niche and identify aspects for improvement carefully.

Export is the first step towards integration into international markets. The company produces goods in its own country and then sells them abroad. The advantages of this method are associated with the absence of operational risks abroad and with the lowest costs of entering the foreign market. Companies can start exporting their products to test the market of another country. The disadvantages of this method are the company’s lack of control over the promotion of goods in another country. To reduce this risk, companies can hire agents who promote the product abroad; these agents can exist in the form of exclusive distributors.

The other method is to open a franchise to penetrate the international market. A company that is a franchisor can sell the right to conduct business or a franchise to another company or entrepreneur, that is, a franchisee. A franchise allows another company to use the company name, product, or service in exchange for an initial payment and a specific commission or royalty (Yildiz, 2020). Franchising is a direct and relatively simple way to enter international markets and provides the franchise owner with the opportunity to control the quality and promotion of their product or service. If the franchisee does not comply with the procedures defined by the franchise, the owner has the right to revoke the franchise. However, the main drawback is that the franchisor must share the profit with the franchisee.

Licensing is similar to franchising, which is more widely used in the service sector, for example, in fast-food chains, car rental companies, etc. Licensing implies that the license buyer can produce the goods of the license holder using his brand, design, know-how, and patents. This method is convenient because goods do not need to cross borders between countries physically. The company does not need to finance production abroad. However, success in the international market will depend on the licensed buyer.

To implement the selected sustainable product in Germany, it is vital to take into account that the country is striving to improve technologies and promote green energy. In addition, knowing that Germany is a country with a rich historical and cultural past, it is necessary to observe certain ethics. For example, since Germany cares about the environment, it would be practical to cooperate with major brands to promote a new sustainable product. Meanwhile, the production of goods and the presence of an inexhaustible energy production plant as an investor can be inefficient.

When doing business, it is essential to consider the key features and legal compliance with the legislation of this country. First, the activities of small businesses must be regulated by the norms of the Trade Code (TC) and tax legislation (Yildiz, 2020). According to their standards, individual entrepreneurs keep reports that they then provide to these bodies within limits established by law. Secondly, anyone who intends to engage in entrepreneurial activity must register in the German Commercial Register with the status of a merchant. This mainly concerns the purchase and sale of goods, processing, and processing of products for other persons, insurance, banking operations, transportation of passengers and goods, or different similar types of commercial activities. An individual entrepreneur registered as a seller is obliged to keep accounting records, provide information in the form of an accounting balance sheet and conduct an inventory. (Yildiz, 2020). Finally, it is impossible to register a company in Germany if it does not have a legal address. To do this, you need to rent or purchase a physical office for the company.

Germany is a member of the European Union, which attaches particular importance to protecting intellectual property. Therefore, it is recommended to issue patents for products to avoid theft. In addition, it is prohibited to distribute information containing incorrect information about the consumer properties, nature, method, and place of manufacture of the goods. Ultimately, transparency of business transactions is encouraged because the country wants to fight corruption.

Reference

Yildiz, O. (2020). Choosing the right business strategies for foreign companies in Germany. GRIN Verlag.

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