Dear Friends,

I have been a silent observer for some time in this forum. But now I feel that I should come up with my recent success story which is very clear and will be a help for everyone who want to be a Business Man in Germany. It was not easy for me due to ignorance and misguidence.

I came out of my company in December 2002. I had problem with my Green Card Visa since my company name was written in my Passport. The arbeitsamt refused to pay me Arbeitlosengeld. They said that my visa indicates that either I work for the company or have to go back. They said that I have to change my Visa status,then only they can pay me. I went to Ausländeramt and got my Visa changed but now Ausländeramt had entered in my passport that I should get my job within 6 months or else should go back . Actually I had worked for more than 2 years and was eligible for Arbeitlosengeld for one year.

I tried to get jobs for 3 months but nothing clicked .Then decided that I should start my own company since I had connections in the market and some Business ideas. I spoke to a lawyer who inturn spoke to Ausländeramt and IHK and said that I can form my company. But it was unfortunate that my Lawyer did not have an idea of company formation for a Green card holder and in the process he totally messed it up and I got a rejection letter from Ausländeramt stating that I am not eligible to start any form of company. My lawyer raised his hands and said that he is not a specialist in these kind of cases and asked me to contact another lawyer.

Everything was going very slow and In the process..I not only lost my mental peace but also good amount of time and naturally money( Time is Money).

After that I got in contact with another lawyer . This lawyer spoke to Ausländeramt and had to speak to high authorities since my case with the higher authorities. They bluntly said "NO" to my lawyer ..but my new Lawyer explained my serious plans and also had enough legal reasons which he could explain. Finally the Ausländeramt asked for the Business Plan . My Business plan was modified by my Lawyer and he removed the entire details of financials and asked me to make the Business plan with a help of Tax-consultant who is the legal authority to make a business plan with Financials.

Finally the Business plan with my Lawyer's covering letter was submitted . They liked the plan and forwarded to IHK. IHK called me for a meeting. I made a PPT and also took recomodation letters, some Business contacts copies , Business plan etc. I had a long presentation which they were quite impressed.

After the meeting , they forwarded my details to Ausländeramt and finally my Visa was changed from Green Card to Business Man Visa.

Now I need to work on my Company formation etc which I am thinking should not be a problem .

I would like to advise the following which could be useful for serious Business Men:

1) Appoint a Good lawyer to work on your Company formation. It could be little expenditure but when u think of Business ,you should be prepared for that.
2) Business Plan should done with the help of Tax-consultant.
3) My Business plan focussed on Software services , foreign Investments, International Buisness , Employment ,Taxes etc.
4) Professional approach with PPT , Lap-top . Take everything , every information under the sun which is linked with your Business. You never know which letter/information will be a Tendulkar's hit.
5) Approach Ausländeramt in time before your case gets complicated.

I guess this is very long mail.. but would be useful for serious enterpenours.

Regards

Mani

Dear Mani,

congratulations! And thanks for posting your story :-)

I am really glad that you came out with it, especially after some demotivating messages. If you agree, I would like to publish your text in our 'Success Stories' section? As soon as you have your business website we can ad a link, and maybe this will help for a new client.

I wish you all the best for the future!
Detlef

Thanx Detlef for your offer. If you feel that my experience could be useful for others .. Then you can put it in the Success Stories section. I will send you my company's link once its formed.

I do not have anything against anyone.. Life is tough abroad for any foreigner due to sheer ignorance .

Thanx and Regards

Mani

Hi Mani,

thanks for your 'Erlaubnis'. Your story is online.

By
Detlef

Hello Mani,

Great work and great post. We need more people like you.

I have some questions though.

What was the language of your communications ? ( e.g. of presentation, talks to arbeitsamt ) I guess the answer but I ask just to make sure.

Secondly where has this all happened ? I mean state and city.

Thanks a lot.

One more question. Maybe a stupid one.

How was the dress code ? Do you think it was important to look serious ?

Dressing is traditionally unimportant in software development, but Germans like seriousity, don't they

My spoken languages during the meetings were a combination of German and English.. I spoke my broken German and changed to English when ever I got struck. Business Plan was made in German.. PPT was made in English.

Well.. its not at all important about the city and state..since the rules are the same everywhere. Except in big cities like Frankfurt,Berlin,Munich etc ,they are more International and have more experience in dealing with foreign Businessmen.

Anywhere in the world ,Business dress is always formal. As a programmer ,jeans would be accepted but you will appreciate that for any client meetings ,the dress is always formal. As far as I know , all business meetings are normally serious ones.

No questions are stupid... You are welcome to ask anything.

Hi Many!

Just to tell you that I am very interested in what you are doing. I have a little question for you:

1) What kind of working Permit do you have? Selfemployed? What kind of company do you have? Can you work in other sectors, other than Computer engineering?

2) Are you entitled to work on projects for other companies? Like an external consultant?

3) How long are you entitled to stay here on that basis?

You can answer on my private mail, if you would (dkdejan@aol.com).

Thanks.

Dejan

Please don't take this discussion to private, I and probably future visitors of this subject are very interested in the procedure.

Ya..lets not get in to private mails . Too many people might have the same questions . So I will answer in the forum.

1)As you know ,When you come here in Germany , you are coming with either work-permit or Green card. This permit is only linked with your working with a specific company and is a combination of Residence Permit and Work-Permit. Now when you want to come out and start your own venture , you visa needs to be changed to a Selbständer Visa. After you get your Selbständiger (Business Man)Visa , you are permitted to form your company. This Selbständiger visa is given purely based on your Business Plan and discussion with IHK.. You cannot make a Business Plan of a Software company and start a Restaurant (for example).. If you make your Business Plan suitable for Software , you will get permission to get in to Software Business.. That would written in the Passport. At the moment I have only the permission but my company is not yet formed.

2) Well ..There is a very thin-line between a Free Lancer(External Consultant) and a ON-SITE project Consultant. When you form a company , the contract will be between the Client and your company . How you execute your project is on mutual understanding with your client. You can do a part of the project in your office and also part at Clients place.

If you intend to be purely a Free Lancer , I guess you might have to make a Business Plan accordingly and get your approvals. I am not sure about this since I never planned to work as a Free Lancer.

3)Normally the Visa is given for one year and gets extended every year. This extension would be linked with your company's situation in one year. If you are in debts etc ,then they might create problems.

Regards

Mani

Hello,

During the early days of the start-up, renting an office space is not necessary, especially if your business is web based and you can easily run it from your home office.

This brings a question to my mind.

Were they expecting a certain company scale ? I mean do they also allow 1-3 person companies or shall your business plan indicate 10-20 person company ?

Well .. I guess you should see Internet and download some Business Plans... In Business , everyone knows that you cannot start your company with few employees. You will have to start alone and depending on the developments , you would employ more people. May be two -three employees in 2004 and probably Five-six employees in 2005.

In your plans , you should indicate the Business forecast , Employee forecast , Financial forecast etc... Depending on your confidence and connections you can give the forecast. Office rent etc also has to be mentioned.

In my case , I was very realistic .. There were not exaggeration about anything. Its easy to explain if you have a realistic Business plan.

Please understand that You are going to have a meeting with experts and also your Business plans would be reviewed by also experts.. So make a good realistic plans which could be explained well ..


Regards
Mani

Hi Mani,

can you give me some information about the start capital that you have to declare for starting a small business (one-man company)?

How much money do you pay to the layer and Tax-consultant ?

I don't need very exact data.

Thanx,
MP

Hi,

I've read your company founding success story and there are a few points I'd like to contribute:

You discussed the terms "on-site project consultant" and "freelancer". There is no such thing as a precise definition for either term. Some people call themselfes freelancer, consultant or contractor but this merely describes the fact that a one man business (proprietor, Einzelunternehmer) predominantly sells his/her own hours. These terms do not have any meaning or implication regarding legal status or tax status.

Basically there are a few "models" regarding legal status and tax status which are important to distinguish: Freiberufler (not to be mixed up with freelancer), Gewerbetreibender Einzelunternehmer, Personengesellschaft (e.g. GbR) and Kapitalgesellschaft (GmbH). Every company founder should understand these terms in order to be able to pick the right legal form for his business.

You wrote "...the contract will be between the Client and your company ...". This is not entirely correct. Unless the company is a Kapitalgesellschaft (GmbH, AG) there is no such thing as legal entity which can contract with clients or suppliers. In these cases the contract will be with the company owner and the client or supplier, i.e. the company owner will be personally liable to fulfill the contract.

Getting back to freelance / contracting / consultant style business (someone asked about this) there are a few specific issues to watch out for:

The market for starting such a business is not very good at the moment average utilisation of IT-contractors is around 60% (throughout Europe) at the moment.

Average hourly rates have come down for two years now and it requires specialist industry and technology specific skills to find clients at all.

It may be difficult to get business plans approved (for issuing VISA) for this kind of business, as authorities often consider small freelance buisiness people as employees in disguise.

I would not recommend to start a freelancing business right now unless you know exactly what your're doing and your're 100% certain there is genuine and substantial demand in the market for your specific skills.

Finally I noticed there is a certain level of excitement expressed in this thread, although (yet) there is little to celebrate. I understand convincing German authorities is difficult and it takes time to setup the fundamental formal legal framework for starting a company. The really difficult part is actually making money through selling goods or services. This requires customers, clients, contracts and sometimes sourcing funding to be able to invest into the business while it's not profitable.

A high proportion of busineses fail in the first couple of years and there is nobody there to advise you when things start to go wrong, especially not tax advisors, lawyers and other professional consultants you may hire. These people see _you_ as their paying customer and are eager to _make_ money from you rather than stopping you loosing money.

Mani - good luck in your career as a business owner. Please keep us up to date how your company is developing.

Regards

Marc

Thanx Marc .. and your valued practical points. You are absolutely right . This company formation is not a success at all... I have just come from one Onion ring to another.

I had previous experinece in German market and I know its really difficult to get in to the market. As rightly said that mobilising the basic financials for business is also not easy. Anyway nothing is easy in life . Hope the mile stones are achieved in time.

The focus should be more on getting business and not on Company formation etc. If you have business,other things are automatically set.

There were some points which were raised by you . I guess its difficult for me to explain what I actually meant over messages. I hope I did not misguide anyone. May be you are right.. I still need to know many other legal aspects. But ofcourse some things will be learnt in the Business Process and requirements.

This is also a non-ending topic and thanx for your good luck.

Mani

Dear Mani,

grt work! preparations, plan, infrastructure, paperwork are part of your hard work and now u stand in to fight for making ur business success. I wish you a big success :-)

marc said:
"A high proportion of busineses fail in the first couple of years and there is nobody there to advise you when things start to go wrong, especially not tax advisors, lawyers and other professional consultants you may hire. These people see _you_ as their paying customer and are eager to _make_ money from you rather than stopping you loosing money."

definitely there is something worth listening to your words and you are talking reality. And your words are no new for the starters and also your words will fit proportionaly to employers like Mani because he is not a German citizen. But what I can tell is if everyone starts thinking like you then who can do business? Please don't disappoint poor Mani like that. Try giving him some positive tips because you once said that you are an employer so that will pay him a grt support and honour as you being a German citizen. what do you think?

Nitin

Hi Nitin,

certainly I didn't want to disencourage anyone. It's important to be aware though that setting up a business means high risk and high reward. Business means accepting risk and uncertainty and loosing some stability in return for potential independence and financial reward. The losses and risks are certain, while the rewards are uncertain!

Personally I believe the rewards justify taking the risks, otherwise I would be working as an employee with a 'secure' income and a boss who told me what to do.

There is an interesting survey on the income distribution of self-employed IT specialists in the latest issue CT magazine. It's also online at www.heise.de

Regards

Marc

I am definitely not happy here in Germany in terms of working conditions. I have recently made a good design and implementation for a customer of my company. They liked what they have received and presented their appreciation. However as their incapabilities in software management appears, I am the one who re-implements stuff again and again. While this may sound like a typical software engineering problem which can happen anywhere on the world, the difference is that my German collegues never listen to my suggestions ( they want to invent everything themselves ), but approx. after 3 months they will come and ask me to realize my suggestion. Of course too late because the software design has been already realized by then.

I believe here in Germany people believe "they must suffer" to do good work. Engineers are seen as high tech slaves and not really behaved much different from regular "handarbeiter".

For this reason, I plan either to work as an employer or leave Germany. Sorry for this harsh statement, but I see that German businessmen and managers are terribly afraid of a good engineer around. This may cause easier comparison of what they do and what the other engineer does and therefore they may need to take less holidays.

Maybe I am wrong, this has been my experience and this can also be a domain issue.

Atreides,

Thats very typical, i know many GCers who are looking like low level-skilled time to time and not showing to others their real skillsets. The reason they do behave in this direction is for just not disturbing locals in the 'work area' environment.

I know it sounds strange, but thats sometimes how it works.

Dear Friends,

What Mani is telling is completely true. I am a new user to this forum and I felt me responsible to tell my story.

I won't tell the process again since it is same like Mani's whit one difference: I have a German partner who has 50% of the company shares. It really works. On the first of May we start to work for hardware and software development with two projects from the German companies. Currently we are buying neccessary software and hardware. Our office is ready. But still a little bit of formalities which will finish in several weeks.

I wish you big hope. Otherwise it doesn't happen.

Regards,

Ersin