‘Only person you have to please is the customer’

In our weekly feature series, The Local looks into a successful entrepreneur's life - the story behind his successes, major challenges and how being an entrepreneur changed him forever. This week, Sparsh Sharma talks to Gene Sobolev, co-founder of inboundli.

'Only person you have to please is the customer'
Gene Sobolev. Private photo.

Gene Sobolev co-created inboundli, a platform that lets marketers improve the way they share and curate content on social media.

How did you come up with this business idea?

My co-founder, Yuri Prezument, and me are friends from high school. He is now based in Tel Aviv (Israel) while I live in Berlin.

We had a previous startup where we were trying to build up our social media presence by working tirelessly on Twitter, Google+, Facebook, etc. Like many small businesses, we had little time to create content and were relying on curation to establish thought leadership and presence.

We tried many popular workflows and tools, some better than others, but none helped us deliver considerably better content, faster. We then built our own solution which had a different logic from anything on the market and delivered far better results than anything we have tried.

This convinced us to pivot and start inboundli in July 2014. Our algorithms match relevant content to companies based on their sector and analyze social media signals to help share the most engaging content with their audience. The content delivered is personalized and prioritized.

What were the initial challenges? How did you overcome them?

The first challenge was to figure out whether we were solving a significant problem and who would benefit the most from our solution.

We started by reaching out to various professionals on Twitter, asking for interviews and received a surprising number of replies. The problem resonated with marketers across most sectors. So, after about 25 interviews, we knew who we were aiming at and what their requirements are. Another problem was funding.

We are bootstrapping and offered our platform for free until recently. As with many startups, our perception was that an investment is crucial for the survival of our company. However, the deals we were offered were not in our best interest and we decided to change our approach.

This meant laying out a clear customer acquisition strategy and starting to monetize quicker. From how things look now, we will be able to support ourselves in four months. This makes us less dependent on external capital and gives us tangible KPIs and traction to show, should we need funding in the future.

How has the journey been so far?

We created two startups in one year. That changed our attitudes towards our concept as well as towards how startups should function and business models should be made.

We spoke to more people and made better market research altogether.

While offering our service for free, we optimized the product to make it into one that our customers get significant benefits from using. We save marketers a lot of time and help them establish a unique and relevant voice across their social media assets.

Our biggest understanding, however, was realizing the importance of a well-defined sales and marketing framework. We had a very clear product development processes but a sloppy approach to commercialization. Changing our attitudes resulted in enormous benefits and an ability to monetize much faster than initially expected.

How has becoming an entrepreneur changed you, personally?

It has taught us to be honest with ourselves. This implies admitting mistakes and looking at things realistically. We were misleading ourselves with our first startup, although all the signals of imminent failure were there, which cost us time and resources. When things don't seem to be working, they are not working.
It has also taught us to get stuff done; if we don't do it, nobody else will. We enjoy programming/ coding, customer research and product development but have learnt to appreciate the equal importance of sales and marketing, too. There are no shortcuts in entrepreneurship and you have to do whatever it takes, so being flexible while maintaining a strategic vision is critical in my opinion.

Any other personal reflections and/ or message to budding entrepreneurs?

Our first startup had a business-to-customer (B2C) model, but one shouldn’t get into B2C unless one has a radical idea. For business-to-business (B2B) startups, I think it is crucial to think about customers first.

Startups measure themselves, and their success, in terms of investment received and funds raised, which distorts reality. Customers, and even better, revenue are concrete ways to measure success in a B2B startup.

But even more important is to have a great co-founder. I have known Yuri for 15 years, which allows us to work transparently and not to have to worry about founder issues. I have personally witnessed extremely unpleasant situations between founders and if the circumstances allow it, I would advise against starting a startup with a complete stranger.

Are you an entrepreneur in Germany? Contact us and we might feature your story

Sparsh Sharma works as a freelance journalist for The Local and blogs about his experiences in Denmark. You can follow him on Twitter at @sparsh_s.

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7 tips for how to survive as a freelancer in Germany

Taking the decision to go it alone and freelance in Germany can be a daunting prospect. But, if you do it right, it can be an exciting and liberating path. Here are some of our top tips on how to survive.

7 tips for how to survive as a freelancer in Germany

1. Get a tax advisor

The German tax system is complicated, even for Germans. All the associated paperwork uses the Amtsprache (authority language) which is more like legalese than ‘normal’ German, and mistakes when filling out tax forms can cause you, at best, a massive headache and, at worst, a costly fine. So it’s best that you employ someone who knows what they’re doing to help you out.

That person is called a Steuerberater (tax advisor) in Germany. They will help you register with the tax office, correspond with them and submit your tax declarations.

Be aware that, in Germany, different deadlines apply for tax returns depending on whether you employ an official tax advisor or not. If you are doing the tax return on your own, the deadline for submitting your annual tax return is earlier than if you use a tax advisor’s services. 

READ ALSO: What NOT to do when you’re freelancing in Germany

When looking for a tax advisor, a top tip is to use your network to get recommendations. Ideally, you want someone who will do more than just fill in the forms for you, but who will actually advise you on how best to manage your business finances so that you can make tax savings.

2. Keep your accounting in order

The better you keep your own accounts in order, the easier it will be for your tax advisor to compile your tax declarations and therefore the cheaper their services will be.

As a freelancer, there are a lot of costs you can deduct from your taxes – from train tickets, working materials, to meals out – so it’s best to keep hold of all your receipts and to keep them in good order.

2 euros and 50 cents lie on a receipt in a beer garden. Photo: picture alliance/dpa | Peter Kneffel

In Germany, you’re obliged to keep hold of receipts for two years, in case of a tax inspection, so it’s a good idea to photocopy the type of machine-printed receipts you get from restaurants so that they stay legible for a long time.

There are also a few things to be aware of when writing your own invoices. Firstly, make sure that you include your tax number. This isn’t the 11-digit Steueridentifikationsnummer that everyone gets when registering in Germany, but the 10-digit Steuernummer you get from the Finanzamt after registering yourself as a freelancer. 

Most companies won’t pay you if you don’t have this on your invoices so make sure you include it.

You should also make sure that you number your invoices properly – ideally in ascending order so that you can easily keep track of them. You are not allowed to issue two invoices with the same number and if you do so and the finance office notices, you could face an inspection of your whole accounting system.

There are numerous great accounting software programmes you can use to help you, such as Lexoffice and Sevdesk and, even if you have to pay for them, the costs will be tax deductible!

3. Find out if you’re eligible for financial support

In Germany, there are several opportunities for freelancers to gain financial support and to cut their outgoings, and its worth finding out if you’re eligible for them.

If you’re claiming unemployment benefits under ALG 1 and are thinking about becoming a freelancer, the employment office offers a special type of financial support to help you to get your freelance business off the ground.

Called the Grundungszuschuss (“foundation grant”) the payment is a six-month grant equalling your monthly entitlement under ALG 1 plus €300 towards your insurance costs can be applied for those in receipt of this unemployment benefit.

READ ALSO: Will freelancers benefit from Germany’s €300 energy allowance?

If you are engaged in some form of artistic profession in Germany – which can include journalism to pottery – you may be entitled to membership to the Kunstlersozialkasse (artists’ social insurance).

Being a member of the KSK means you only have to pay half of your health insurance and pension contributions, and the KSK will pay the rest.

4. Work out how much you think you will earn

As with starting any business, you need to have some idea of your expected earnings from the outset.

If you’re just starting out as a freelancer, or have some freelance gigs on the side of an employment position, then it might be worth considering registering yourself as a Kleinunternehmer (“small business”).

As a Kleinunternehmer, you can currently earn up to €22.000 per year without having to charge VAT and having to submit only yearly tax declarations. 

An income tax declaration form lies on a table. Photo: picture alliance/dpa/dpa-Zentralbild | Hans-Jürgen Wiedl

Be aware that if you are registered as this kind of freelancer, you must include the following sentence in your invoices: ‘Gemäß § 19 UStG wird keine Umsatzsteuer berechnet’ which means ‘In accordance with Paragrah19 of the German VAT law, no VAT has been added to this invoice.’

READ ALSO: Everything you need to know about your German tax return in 2022

If you think you will earn more than €22.000 per year, you will need to pay Umsatzsteuer (VAT) and will have to submit tax declarations in advance and more often. Depending on how much you earn, this could be every month or every quarter. 

5. Get your insurance in order

In Germany, it’s a legal requirement to have health insurance.

If you’ve just made the move from employment to being a freelancer and want to keep the same health insurer, you should get in contact with your health insurance provider straight away to tell them about your change of circumstances. They will ask you to re-register and to tell them your projected freelance earnings for the year, so they can amend your monthly fees.

If you don’t keep your health insurer provider updated, you could continue to be charged the higher rate that you had from your previous salary.

The insurance cards of the health insurance companies DAK, AOK, Barmer and Techniker-Krankenkasse TK lie with euro notes under a stethoscope. Photo: picture alliance / dpa | Daniel Karmann

It’s not just health insurance you need to think about as a freelancer. It’s also wise to think about protecting yourself from any sort of claims that could arise as a result of any working mishaps. 

If, for example, you lose your laptop which contains confidential client information, you need to be protected against claims.

That’s why it’s good to have both Betriebshaftversicherung (business liability insurance) and Rechtschutzversicherung (legal protection insurance).

6. Plan your time wisely

All of these bureaucratic obligations take time. So it’s really important that you take account of that when planning your time. For example, planning half a day a week to deal with your invoices, filing, emails to clients, and conversations with authorities can be really beneficial when scheduling your working time. 

7. Grow your network

As a freelancer, networking is absolutely crucial to success. 

Keep an up-to-date profile on websites like LinkedIn and German equivalent XING and keep in contact with anyone you’ve ever worked with, no matter how brief the contact was. 

Having a network is not only about getting more clients, but also about building a support network in your field to exchange advice, tips and generally for your own enrichment. 

Participating in workshops related to your field, going to seminars, and meet-ups, can be great ways of broadening your network.