Sandi Saksena
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, the 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, 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?
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. 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.
Fierce competition
In certain sectors, particularly retail and hospitality, event management, coaching/mentoring, and wellness, the market is beyond saturation. Competition is fierce, and it can be challenging for SMEs to differentiate themselves and capture market share.
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. Expanding beyond the UAE’s borders can also be challenging. While the UAE is strategically located, accessing regional and international markets can require navigating trade barriers and customs regulations.
Increasingly, businesses are facing pressure to adopt sustainable practices. SMEs may find it challenging to invest in sustainable technologies and meet environmental standards. Also, some SMEs entering the market may struggle with the adoption of new technologies, which are becoming increasingly important for competitiveness and efficiency. Cultural and language barriers can pose challenges for SMEs looking to establish and build relationships with local partners, suppliers, and customers.
Right priorities
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 and meeting all payments might become a challenge. For those coming to the UAE and wanting to set up an enterprise, the expenses are manifold.
What might seem innocuous can turn out to be the straw that broke the camel’s back. 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 or over-confident is another. Get your priorities right. Spend 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. Consult a lawyer, take the services of a qualified chartered accountant.
The exit strategy
Check out competition versus your product USP, target market affordability and the gestation period. The business plan must include company description, market analysis, organisation and management, service or product line, marketing and sales, and financial projections.
However, the most important part of the plan is your exit strategy. Remember in any building in the world, it is the ‘EXITS’ that are clearly marked; and you should do the same.
