“I have an idea, desire and determination. Is it enough to start my business? Marta Grañó, professor at OBS Business School and author of Create your own company (Bresca, 2016): “The person who wants to undertake must be aware of what he is getting into before starting,” he says. Although there are many elements that vary depending on the type of business you want to create, there are at least four basic steps that must be followed and taken into account before taking the leap.
Specifically, experts stress, when starting a business, the importance of having a purpose, knowing the data, having advice and being attentive to financing.
1. Have a good idea and better purpose
For Enric Serradell, professor of Economics and Business Studies at the Open University of Catalonia (UOC), the idea is responsible “for 60% or 70% of the success of the business”. “Even so, there are good ideas that have died along the way and there are not so good ideas that have been successful because one of the keys to making them work is adapting to change and, sometimes, moving away from the initial idea.”
It also influences the reason why you decide to undertake. “For example, if a business is created due to financial need or a desire for investment. They have different associated risks”, explains Serradell. To this, Grañó adds two points to take into account: that it be a business that, as far as possible, excites whoever undertakes it and that it has an opportunity to enter. That is, there are people willing to pay for that product or service.
For his part, Antonio Robles, academic director of the Business Area of IMF Business School, assures that more than an idea, what is really essential is to have a purpose. “It is something that answers the questions: why do you start a business? Why is it worth getting up every morning? It is not about money, but what makes you want to do that”, he underlines. “The purpose is like the mast of a ship on which you unfurl the sails when the wind is in your favor and when things go wrong all the sailors can hold on to it and not fall off the ship.”
2. Gather enough data and have advice
After the idea, the next step is to obtain data. “So many that they even overwhelm”, explains Robles, who stresses that having them is what will help to achieve good results. “As long as we have enough data, we will make negative external circumstances less influential.”
For the academic director of the Business Area of IMF Business School, from a small self-employed entrepreneur who opens a bakery to a group of investors who bet on a large start-up technology have to use the information to find the competitive advantage: what we offer to the market that allows us to differentiate ourselves. It is the answer to questions such as why do we pay 18 euros for a hamburger in a restaurant that would cost us six in others?
Grañó adds to the list preparing a business plan, since it forces us to delve into issues such as what expenses are going to be incurred, how it is going to be billed or what the value proposition is. Another key aspect of data, as Serradell conceives it, is prototyping. That is, to test potential clients so that they can give their opinion. For example, in micro-SMEs or physical businesses, location must be taken into account. “If I can’t digitize myself, we have to pay close attention to the location, since it can be the difference between succeeding or not.”
Antonio Robles, from IMF Business School: “It is not necessary for the entrepreneur to know everything, but he does have to have the contact of someone who knows how to do everything”
Experts recommend carrying out all these steps with advice or accompaniment. For Robles, it is not necessary for the person who undertakes to know everything, “but they do have to have the contact of someone who knows how to do everything”. “There are people who can help us with analysis, many accelerators give you tools for it and even chambers of commerce and government agencies have studies that allow us to obtain this data, business schools…”, he explains.
The same happens with the professional advice of an expert such as that of the bank, which can help entrepreneurs at all times to resolve their doubts and make the best decision. Sometimes, says Grañó, because they are not well advised, they spend more money than they should and mistakes are made, such as register as self-employed early.
3. The financing to start and the mattress to stay
For get financing at the time of undertaking experts agree that it is important that at least part of the investment be own funds. “The ideal is to grow by lung, at least at the beginning. This would be undertaking with their own funds or family members who lend that money. But third-party financing such as bank loans, the crowdfundingaid and subsidies”, lists Robles.
This expert explains that it allows growth at the rate that the entrepreneur proposes, looking only at profitability. For his part, Serradell recalls that “it will take time to grow up”. “The personal contribution is important, even if it is minimal. It also depends on whether only capital or exclusive dedication is contributed”, adds the UOC professor.
But what is the ideal initial investment amount? Grañó explains that legally “a minimum of 3,000.06 euros is needed to set up a Limited society (SL)”. “But if the first year you are going to be in losses, it is better to anticipate the amount and have a cushion. Reality shows that income takes time to arrive”, comments the OBS Business School professor.
Robles, from IMF Business School, highlights that the self-employed must calculate about 90 days of salary as capital to start their company
In the event that a freelance service is offered, for Robles it takes “time and around 90 days of salary.” But if it is intended, for example, to create a web page and other resources, the amount increases. “We could talk about considering starting a business if you have a cushion of six months’ salary, although it depends on the business and the need,” says this expert.
4. Take action: the steps to incorporate the company
Once all of the above is done, what Grañó defines as “the little gymkhana” begins. “You have to go to the notary’s office to create the company, register the activity and start, but in Spain these are procedures that can last several weeks while in countries like the United Kingdom you can create a company electronically in one day.” The cost of the process, Grañó points out, varies between 300 euros, if it is carried out directly by the employer, and 600 euros, if the service of an advisor or an agency is hired.
According to the OBS Business School professor, the steps to follow to set up a company are as follows:
- Request the name of the company in the Mercantile Registry
- open a bank account
- Go to the notary to set up the company
- Go to the Treasury to request a tax identification number (NIF)
- Settle the Tax on Property Transfers (ITP) and the Tax on Documented Legal Acts (AJD)
- Register in the Census of entrepreneurs, professionals and withholders at the Tax Agency
- Go to the commercial register to register the company
- Obtain the definitive NIF in the Treasury
- Carry out municipal procedures such as obtaining an activity license or, if necessary, a works license
- If you have employees, carry out labor procedures such as the affiliation of workers in the General Treasury of the Social Security
- Ask the digital signature certificate, mandatory for companies
- Register activity
- Start to work
Once the company has been created and the activity has begun, Robles recommends having advice “to manage taxes, payroll, subsidies and aid”. “The bureaucracy, which is something that has to be done on a day-to-day basis, cannot take up too much time because while you are busy with it, you are not thinking about how to generate value for the business,” says the academic director of the Business Area of IMF Business School.
Entrepreneurship as a freelancer or as a company
Deciding whether it is best to do it as a freelancer or as a company when starting a business will depend on taxes, explains Antonio Robles, academic director of the Business Area at IMF Business School. “There is a turnover in which it will be more worthwhile being a company than being self-employedover 85,000 euros approximately”.
Even so, this expert insists that they are analyzes that must be done in more detail, especially when undertaken alone. “If it is undertaken with another person, the ideal thing is that in a short time it is constituted as a company to be able to distribute the property well.”
Marta Grañó, professor at OBS Business School, considers that it should be established based on the risk that the business has. “If you do not have a very high implicit risk, it is better to do it as a freelancer up to a certain income for the taxes that must be paid, but if you have a specific risk or want to work with other partners, it is better to consider setting up as a company because it will limit the risk. to what is put in that Limited Company (SL) and nothing can be claimed beyond that”. That is, the liability of the partners is limited to the capital contributed.
Grañó emphasizes that many people start as self-employed and when the activity reaches a certain volume of income is when they decide to create a company.