Opening a Business in France: A Mountain Guide
So here is a trail-blazing guide to help intrepid expat entrepreneurs navigate safely over those mountains. Some of them are easier than others, but as any self-respecting Sherpa guide will tell you - be prepared. So make sure you have plenty of ring binders in which to store your paperwork and a good sense of humour to get you over the rocky patches.
Mountain 1: Business Plan
This small mountain is like a practice run to test the strength of your business idea. You need to include these key elements within the document:
- your market - who are your customers?
- your investment - how much money are you or your investors bringing to the table?
- your added value - what life and work experience will you bring to the business?
- your projected income for the next three years - how much will you spend? How much will you make?
This plan will eventually be looked at by a banker in order to check your suitability for a business bank account. But for now, by detailing all the information about your business you will not only create a solid foundation on which to raise further funds, but will also see the strengths and weaknesses of your idea. It’s so much easier to tackle any difficulties at this stage than leaving it until later when you may have spent precious funds and gone down a path that leads you off a steep cliff.
Mountain 2: Structure & By-laws
Now we’re getting further into the mountain range as we approach the first legalities of the French system. Firstly, you need to tackle the question: what type of company do I choose? So to help you out, here are the three common structures of company in France:
- SARL: the most popular form of company. The French version of a Limited or LLC company. It has at least one shareholder and one director.
- SAS: Societé Par Actions Simplifieé which is a Simplified Stock Company for a joint venture between a French company and a foreign partner.
- Branch: an extension of a foreign company in France.
Once you’ve chosen your structure, you’ll need to register your by-laws. This can be done two ways – either by a registered company formation agent or a lawyer.
When you come to do your by-laws you have to be very specific about your activity description. For example, if your business is selling mountain climbing ropes but later on you decide that you’d like to sell mountain climbing boots as well, if that’s not written into your by-laws you might end up being fined if the sales represent more than 20% of your turnover.
So when you draw up your by-laws you need to think about the future – think about what your business could become, then draft that into the by-laws.
Mountain 3: The Banker
This is a mountain that casts a big shadow on many entrepreneurs as they approach it, but if you’ve studied the terrain you’ll have no problem.
When meeting the banker you will go through the “stress test”. Unlike in Britain and America where banks can’t wait to take your money off you, France is a little more reticent. Your business plan will be scrutinized thoroughly before any sort of cheque book or credit card is issued.
But despite the interrogatory nature, the banks are actually doing you a favour. By examining the financial aspect of your business idea, they are giving you an expert opinion on whether your business is likely to succeed in France. If the banker gives you the thumbs up on your business idea, you have a very fair chance of making it through the first year in business. And if you get the thumbs down, well at least the banker has saved you from ploughing your savings into an idea that doesn’t stand a chance.
Then you can either go back to Mountain 1 or go and get a 9-5 job and give up mountain climbing altogether. But for those who have passed the banker’s “stress test”, it’s on to the next challenge.
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