The UAE continues to be a magnet for aspiring business owners and attracts entrepreneurs from all over the world. People of all nationalities flock to make money, improve their standard of living make their dreams a reality. Overall confidence index for UAE SMEs stands at 61, based on the RFI’s Global analysis of UAE macroeconomic indicators and a survey of over 1,000 SMEs conducted between November and December 2023.
Despite the positive outlook of a strong economic backdrop in the UAE, with non-oil GDP forecast to grow by over 4%, SMEs are now cautious due to increasing costs and the introduction of corporate tax.
For every SME that succeeds there are several that bite the dust! So, what are the essentials that make for a successful enterprise? Bombarded by ubiquitous social media advertising be it Instagram, TikTok, fb one gets the impression that setting up/starting a business is a breeze and so reasonable!! A fallacy!
True one is spoilt for choices when looking up jurisdictions for setting up a business in the UAE. Each Emirate offers free zone options where rules, procedures and requirement have been streamlined. Welcoming, Easy, Prompt, for a price. You want service you pay! However, commonsense dictates that before launching your company you need to do your Research. Most important is to understand the laws of foreign ownership, investment rules, minimum investment requirements, accounting rules, and repatriation of funds AND the new *** On 1 May 2024, Federal Law Decree No 51 of 2023 concerning Financial Restructuring and Bankruptcy (New Bankruptcy Law) came into effect in the UAE. The New Bankruptcy Law repeals the previous bankruptcy law, Federal Decree-Law No 9 of 2016 (Old Bankruptcy Law) in all respects. Much of the architecture of the OId Bankruptcy Law remains broadly in place.
Market Saturation: In certain sectors, particularly retail and hospitality, event management, coaching/mentoring, wellness is beyond saturation. Competition is fierce, and it can be challenging for SMEs to differentiate themselves and capture market share.
Cash Flow Management: Managing cash flow is a common challenge for SMEs in the UAE. Late payments from clients or customers can disrupt operations, and access to credit can be limited. This can lead to legal and criminal proceedings
Access to Markets: Expanding beyond the UAE’s borders can be challenging for SMEs. While the UAE is strategically located, accessing regional and international markets can require navigating trade barriers and customs regulations.
Sustainability and Environmental Concerns: Increasingly, businesses are facing pressure to adopt sustainable practices. SMEs may find it challenging to invest in sustainable technologies and meet environmental standards.
Technology Adoption: While the UAE is technologically advanced, some SMEs entering the market may struggle with the adoption of new technologies, which are becoming increasingly important for competitiveness and efficiency ….. an additional cost The Cultural and Language Barrier can pose challenges for SMEs looking to establish and build relationships with local partners, suppliers, and customers.
More basically though, those looking to start a business need to consider personal costs!
Already living in the UAE? Most expatriates have a personal loan, car loan, outstanding credit card amounts just to name a few. If you are transitioning from employee to entrepreneur the income drop may become a factor you must keep in mind. With no fixed regular income managing cash flow meeting all payments might become a challenge. Many times those transitioning from salaried jobs to business person might find that their terminal indemnities are swallowed up by the bank to recover loans/overdrafts, as salaries, indemnities are paid into the account which is generally opened by the employer to credit employees salary/bonuses etc.
For those coming to the UAE wanting to set up a personally run enterprise be it services, coaching, tech related etc. your expenses are two-fold business Licensing, bank accounts, office space. Add on media, personnel, networking/ marketing, rent, electricity/water, transportation, mobile/internet, household expenses (food, laundry, cleaning etc.) personal grooming, health insurance. Ideally you should be able to meet ALL the above costs and more from your own financial resources for at least 1 year
What might seem innocuous can turn out to be the straw that broke the camel’s back (pun intended) People forget about these things, but if you don’t have them in place in a foreign country you’re going to struggle. Being positive is one thing being over optimistic, over confident is another.
Get your priorities right! Spend your money to get documents drawn, vetted by appropriate lawyers. Legal implications, agreements, partnership, vendors, clients, rental, lease, just to name a few. Professional legal advice at any of these junctures is not only essential but crucial. Unless you are a lawyer, please consult one BEFORE you sign on any document. Take on the services of a qualified chartered accountant to keep your books in order!
First step is Research and Preparation Check-out the competition vs your USP and product, Target market & affordability of that market, gestation period The Business plan, not a one pager but a detailed one that includes → Company description → Market analysis → Organization and management → Service or product line → Marketing and sales → Financial projections
However, the most important part of the plan is your EXIT Strategy which should be the first part of your plan. Remember in any building in the world it is the EXITS that are clearly marked and you should do the same
