Starting a Business in Berlin

62 63 Starting a Business in Berlin A Beginner’s Guide Piquidity plan (in eur) 1st month 2nd month 3rd month 4th month 5th month 6th month A | Liquid resources Cash holding Bank credit balance Surplus from previous month B | Income Proceeds from sales Loans / other income Personal deposits A + B = available resources C | Expenditure Materials used Cost of merchandise Third-party services Gross wages and salaries Ancillary personnel costs Rent/fuel Maint./repair/low-value commods* Vehicle costs Insurance/contributions/fees Tax and legal advice Advertising/travel costs Miscellaneous costs Interest on external loans Loan repayments Taxes Subtotal Deficit from previous month Investments Personal drawings Total expenditure A + B - C = Surplus/deficit Current account balance Liquidity *Low-value commodities can be written off completely in the year of acquisition LIQUIDITY PLANNING Cash flow refers exclusively to the liquidity funds generated by the company; however, the liquidity can also be increased or secured by other means, such as loans, private contribu- tions, interest income or other items. Since the actual opera- ting liquidity available determines the ability to pay and fulfil your company’s payment obligations at any time, it must be planned carefully: short-term insolvency may lead to significant problems with creditors for pre-financing orders, etc., while long-term insolvency results in bankruptcy. This aspect is frequently left to fall by the wayside – particularly when it comes to planning a business start-up. To deter- mine the funding requirements for the start-up phase (i.e. the short-term capital requirements), you need to prepare a liquidity plan that compares the available liquid funds to the expenditures, including the amounts necessary for private lifestyles. In most cases, the available funds cannot cover the expenditure during the start-up phase, which results in a shortfall. This should be offset by an overdraft facility or capital loan from the local bank, which you can request in line with the liquidity plan. Don’t put off asking for this until you actually need it – it’s difficult to negotiate with the bank once you are actually having liquidity issues! In certain cases, alternative financing methods may also be an option to fund the start-up phase. Further information on financing can be found in the next chapter. CHAPTER 5