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When is a UG (haftungsberschränkt) worthwhile?

09/01/2023 | by Patrick Fischer, M.Sc., Founder & Data Scientist: FDS

An Unternehmergesellschaft (haftungsbeschränkt) or UG (limited liability company) is a legal form specifically designed in Germany for companies with lower start-up capital. Deciding whether it is worthwhile to form a UG depends on a number of factors. Here are some situations in which the formation of a UG might be considered:

Low start-up capital: If you have limited start-up capital but still want to form a limited liability company, the UG may be an option. The minimum share capital for a UG is lower than that of a GmbH, which makes it easier to get started.

Test phase or start-up: If you want to test your business idea before making larger investments, founding a UG can make sense. It allows you to start the business and check if it is successful before you decide to go for a more comprehensive structure like a limited liability company.

Young entrepreneurs: if you are a young entrepreneur and want to start your first business, the UG might be a suitable choice. It allows you to enter the business world with lower financial commitments.

Flexibility in raising capital: The UG allows you to build up the share capital gradually, so you can invest money in the business little by little while you are already operating.

Smaller Businesses: If your business is more focused on smaller or local markets and you don't need a lot of capital, the UG might fit your needs.

The cost of starting and operating a UG can vary depending on several factors, as mentioned in previous answers. It is important to conduct a thorough cost-benefit analysis and possibly seek professional legal and tax advice to make the best decision for your individual situation.

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How to recognize fake stores & online shops on the Internet

08/25/2023 | by Patrick Fischer, M.Sc., Founder & Data Scientist: FDS

In today's digital era, online shopping and e-commerce have undoubtedly revolutionized our consumer behavior. But with the rise of online commerce, fraudulent activities such as fake stores have also become a serious threat to consumers. These enticing but fraudulent websites lure unsuspecting shoppers with supposed bargains and high-value products that are often never delivered. So how can consumers distinguish between genuine online stores and scams? Here are some important tips for spotting fake stores online and protecting yourself from fraud.

1. Check the URL and website details

The first step to identify a fake store is to carefully check the website address (URL). Scammers often use similar-sounding URLs to mimic real online stores. Look for typos, unusual subdomains or extra words in the URL. A secure website should also have a "https://" instead of "http://" to ensure data encryption.

2. Research the online store

Conduct a thorough online research to find out if the online store is reputable. Look for reviews, customer ratings and experiences of other buyers. Authentic stores usually have an online presence on social media and platforms like Google My Business. If any trace of a store outside its own website is missing, beware.

3. Watch out for unusual payment methods

Fake stores tend to offer unusual or questionable payment methods. Be skeptical if only bank transfers, cash shipments or prepaid cards are accepted. Reputable online stores offer a wide range of secure payment options, including credit cards, PayPal and other established service providers.

4. Too good to be true? Be skeptical!

Offers that are too good to be true are often just that. When an online store offers extremely low prices for products that are normally much more expensive, alarm bells should ring. Scammers use this tactic to grab buyers' attention and lure them into the trap.

5. Check the imprint and contact information

Every reputable online store should have an imprint with clear contact information. If this information is missing or the contact information is vague and incomplete, it indicates a possible fake store. Verify the information provided by doing a quick online search for the company or people responsible.

6. Trust your instincts

In the end, your gut instinct is often a good indicator. If something about an online store strikes you as odd, or if you have an uneasy feeling, it's probably better to back off and shop elsewhere.

The rapid increase in fake stores requires consumers to be highly vigilant. By following these tips and being discerning about their online purchases, they can protect themselves from fraudulent activity and ensure that they spend their hard-earned money with trustworthy merchants.

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Click fraud with Google Ads, YouTube & Co: How clickbots eat up your advertising budget

08/25/2023 | by Patrick Fischer, M.Sc., Founder & Data Scientist: FDS

In today's digital era, online advertising is an essential tool for businesses to reach their target audiences and promote their products or services. Platforms such as Google Ads and YouTube are particularly popular because they offer a wide reach and allow ads to be targeted to specific audiences. Unfortunately, the growing popularity of these platforms is also attracting unwanted attention from scammers who use click fraud to eat up advertising budgets and harm advertisers.

The Rise of Click Fraud: A Threat to Advertisers

Click fraud refers to the intentional generation of clicks on online ads with the aim of financially harming the advertiser or eliminating competitors. So-called "clickbots" are often used, automated scripts or programs that behave like real users and click on ads. As a result, the advertiser's advertising budget is quickly used up without actually reaching potential customers.

Platforms such as Google Ads and YouTube are particularly susceptible to click fraud, since the cost per click (CPC) plays a central role here. If an advertiser pays for every click on their ad, this creates an incentive for scammers to use clickbots and thus quickly pull money out of the budget.

The Impact on Advertisers: Lost Resources and Credibility

The impact of click fraud on advertisers is diverse and can be severe. Not only does the scam waste the budget earmarked for legitimate marketing efforts, but it can also result in false data that affects analysis of campaign performance. Advertisers may mistakenly believe their ads are getting high click-through rates, even though they are caused by clickbots. This could lead to wrong decisions when adjusting and optimizing campaigns.

In addition, click fraud can undermine advertisers' confidence in the overall effectiveness of online advertising. If advertisers get the impression that their ads are being clicked by bots and not by real potential customers, they may hesitate to continue investing in digital advertising.

Fighting Click Fraud: Prevention and Technology

To protect against click fraud, advertisers need to be proactive. Here are some proven strategies:

Monitoring and Analysis: Continuous monitoring of click patterns and activities in the advertising campaigns. Noticeable anomalies could indicate click fraud.

Use of security measures: Platforms like Google Ads offer protections against click fraud, including IP address bans and detection of suspicious activity.

Filtering Technologies: The implementation of filtering technologies to weed out suspicious traffic and only allow genuine interactions.

Partnership with trusted providers: Working with trusted advertising networks and platforms that take active measures against click fraud.

Conclusion: vigilance is key

Click fraud is a serious threat to advertisers investing in Google Ads and YouTube. It is crucial to be aware that this type of scam exists and to take proactive steps to protect yourself from it. By combining monitoring, analytics and technology, advertisers can leverage the full potential of their advertising budgets while ensuring their ads are reaching real prospects.

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Difficult times for startups: challenges resemble those of the Corona era

08/16/2023 | by Patrick Fischer, M.Sc., Founder & Data Scientist: FDS

The rosy times for German startups appear to be passé as they struggle with a weak economy and tougher financing conditions. According to a Startup Association survey conducted by Deutsche Presse-Agentur, the business climate in the industry is at one of the lowest levels since the low point during the Corona pandemic in 2020, with the current score of 38.1 points only slightly higher than in 2020 (31.8 points). This continues a trend that has been seen since the record-breaking 2021.

The survey, which is based on a similar calculation method as the Ifo Institute, reflects a high level of uncertainty among founders. About 65 percent of the startups surveyed have difficulty assessing the future situation. Nevertheless, a slight increase in business expectations is evident, while the current business situation remains at the lowest level since the beginning of the pandemic.

The association stresses that after a wave of innovations that followed the shock of the pandemic in 2020, the current situation has become more difficult. Rising inflation and higher interest rates have led startups to act more cautiously. One-third of companies have reduced hiring and adjusted funding plans.

Since 2022, German startups have faced major challenges. While they were able to raise record amounts from investors in 2021, geopolitical tensions, rising interest rates and economic uncertainty have dampened the market. Investors are more cautious, resulting in many startups having to cut jobs and funding dropping dramatically in 2022. The situation remained tight in the first half of 2023, as startups raised about half the funding they did last year.

In particular, the ability to secure large funding rounds has declined sharply. There has not been a round over 250 million euros this year, compared to four such rounds in 2022 and eight in 2021, and the majority of founders rate the willingness of funders, particularly venture capital funds, as poor.

In view of these challenges, the startup association is calling for increased support from the German government. In particular, the expected "Future Financing Act" should be passed promptly to strengthen the location for founders. Among other things, this law should offer more favorable regulations for employee shareholdings and easier access to the capital market for growth-oriented companies. However, the implementation of this project has been delayed so far.

On Tuesday, the federal ministries of economics and finance announced that a new financing instrument called "RegioInnoGrowth" will support startups and small innovative SMEs. For this purpose, the federal government plans to provide up to 450 million euros from the Future Fund and the ERP Special Fund. Companies can each receive up to five million euros in funding.

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Challenges for Expats in Germany: Isolation and Everyday Barriers

08/16/2023 | by Patrick Fischer, M.Sc., Founder & Data Scientist: FDS

In Germany, life for expats - people who live and work far from home - is apparently anything but easy. A recently published survey by "Expat Insider" reveals that starting a new life in Germany comes with a variety of challenges. From bureaucratic hurdles to a lack of digitalization and difficulties with social integration - the list of obstacles is long.

The international expat community took to the "Expat Insider" report to offer insight into the lives of expats in various countries. Germany ranked 49th out of a total of 53 countries. The situation seems to be even more difficult only in some other countries. The general quality of life in Germany still reaches 18th place in the ranking. Factors such as the healthcare system, travel and commuting infrastructure and leisure opportunities are included here. Germany also does relatively well at work, with 15th place for earnings and career opportunities, work culture, and job security and wages.

However, a different picture is revealed in the social sphere, with Germany landing in 50th place, indicating a lack of friendliness, difficulties with social networking and an inadequate welcoming culture.

Expats complain in particular about the lack of digitization in Germany. The "Expat Essentials Index," which evaluates the infrastructure designed to help foreigners organize a life abroad, places Germany in last place. A lack of digitization, the tight housing market and language barriers pose significant challenges. Germans' preference for cash meets with a lack of understanding.

Expats working in Germany are often in IT, manufacturing and engineering or the financial sector. They come predominantly from the U.S., the U.K. and India. So the hurdles to a happy life in Germany appear to be high for expats, while other countries are rated as much more hospitable and livable.

The "Expat Insider" survey thus makes it clear that while Germany appears to be an attractive work destination for expats, it faces a number of difficulties in the areas of social integration and infrastructure. Improving these aspects could benefit not only expats, but also the country itself by increasing its appeal to international professionals.

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