5 things to do before starting your own business in UAE
So you have finally decided to take the plunge into the world of entrepreneurship. While being an entrepreneur has its own share of challenges, the rewards of making it big and being your own boss with the amazing feeling of overall satisfaction are hard to beat. So what are the 5 main things you need to consider before starting a business?
1.Think product, demand, competition and sustainability
Once you have decided to start your own business, one of the primary considerations is your product. Is your product or line of business unique? What value addition does it offer to the customers, what is the competition you are up against? And how sustainable is it? Once you have these questions sorted out, you would have the initial framework of your Business Plan. This is a first step in the company formation process.
2.What type of business incorporation setup would suit your business?
Options for corporation
• Offshore – eg British Virgin Islands (BVI), RAKICC, Jebel Ali Free Zone (JAFZ)
• Onshore UAE (Dubai DED or Abu Dhabi DED), under the UAE Commercial Companies Law (01.06.15)
• Limited Liability Companies (LLC)
• LLC with a local service agent (Professional License)
• Joint Liability Companies
• Public Joint Stock Companies – Regulated by Emirates Securities and Commodities Authority (ESCA)
• Private Joint Stock Companies
• Holding Companies
• Investment Funds
Numerous UAE Free Zones:
• Dubai Airport Free Zone
• SAIF Zone
• Meydan Free Zone
• Fujairah Creative City Free Zone
• Ajman Free Zone
• Dubai South
• Dubai Design District
• Dubai Multi Commodities Centre
• UAQ Free Trade Zone
• And many others…
3.What are your existing fund sources? Would you need any financing?
Among the key considerations prior to starting any business would need to be your sources of funding and how soon you expect to monetize or break-even. It is safe to set aside at least one year’s worth of setup costs and working capital as base before venturing out as this will serve as an effective foil against setup pains and market vagaries.
4.What about the regulatory and compliance requirements in your business?
Certain business activities may require additional approval or may be subject to supervision and regulation of certain statutory bodies E.g Finance and Banking (UAE Central Bank), Food and Hospitality (Dubai Municipality or respective Emirate regulators) etc. Check these prior to start-up.
5.Check for hidden costs or carrot-payments
Some deals offered by consultants or the free-zones may be mouth-wateringly attractive. Low down-payments, instalment facilities or “only AED xxx*”. Ensure you read the fine print and go for an all-inclusive package, clearly being told about the net expenses upfront. It helps plan capital requirements and avoids unnecessary hassles.