Avoid UAE-specific startup challenges with these 4 tips
There is no doubt that establishing a company, especially a
startup, isn’t an easy job, no matter where you are in the world.
Hans-Henrik Christensen, director of Silicon Oasis Founders, says
that despite the UAE’s advanced ranking in the World Bank Ease of Doing Business
2014 report, the process is no easier in the Emirates than
elsewhere, “especially if the company is a startup fighting for
credibility.”
Christensen, who has vast experience in helping entrepreneurs
establish their startups in his work at
Dubai Technology Entrepreneurship Center (DTEC) and DSOA’s initiatives, says that the
authority is working on facilitating the startup process and making
it less costly. “Within months, we’ve helped more than 35
technology startups join Dubai Technology Entrepreneurship Center.
We made procedures much faster and costs very reasonable.
Establishing a technology startup costs around 12,000 AED ($3,200
USD) per year,” he adds. Christensen cites the UK as an example of
how simple it can be to establish a company (it takes only a few
hours there), as well as Singapore, which many consider to be the
ideal country in which to start a business.
In the UAE, you have two options when establishing a startup:
you can either register it as a limited liability company, which
requires you to have an Emirati partner, or you can establish the
company without any local partner in one of the 21 free zones.
To establish a company in a free zone, entrepreneurs need to
choose the zone that best suits their startup’s activities. They
only need enough money to launch their operations and pay their
staff. Then they are eligible to apply for incorporation.
Further, in the UAE, the law doesn’t distinguish between
corporations and startups, despite a few
initiatives launched with the aim of helping startups. In the
west, by contrast, startups are able to negotiate the taxes they
pay in the crucial first years.
Despite the challenges, “mentalities and culture are changing in
the region and are now more receptive of most startups, making thus
the task easier for entrepreneurs,” he adds.
Aside from the country-specific logistic and administrative
procedures involved in founding a startup, here are some tips from
Christensen that any entrepreneur should consider:
- Have a clear picture of what you want.
Christensen says that many think that the “business plan” times are
over. They’re wrong. You must have a clear idea of your project and
cost forecasts. “If you get funding, you should have enough money
to move to the next stage and be [careful with it] because things
don’t always go as planned.”
- Set a clear growth strategy. Christensen says
that a company goes through different stages and that you must make
the right decisions in every one of them. “You might consider for
instance stepping down from the CEO position because you’re not
qualified to run a company with 50 or 100 employees. You should
take into consideration here that working with a few friends is
different than working in a company that has a complex
organizational chart,” he adds. It might be better for the company
director to focus on their area of expertise instead of being an
obstacle to the company’s growth. Christensen believes that most
startups don’t grow and develop because of the poor managerial
skills of their founders.
- Test the market as soon as possible. Don’t
wait to produce the perfect product. “The first iPad wasn’t
perfect, but Apple still sold gigantic numbers of it,” Christensen
says, adding, “I’ve seen many people invest huge sums in developing
and designing the perfect product without testing market demand
first. Entrepreneurs need to make a lot of noise in the market for
customers to discover the product, without wasting a lot of money.
They need to reach the largest segment possible of people in the
right way, especially with the many options available for
customers, and to only see the ‘good product’ as one station on the
road to success.”
- Build a network of partners. You should think
of the type of customers you want to work with. “An entrepreneur
can choose for instance to outsource the marketing or sales aspect
to a specialized company, which would require them to share their
profits with it. However, this company would be accelerating in
return the scaling process of the startup, as the latter would
benefit from its network of contacts and significant business
relations.”
Christensen says “the UAE is working towards encouraging and
supporting entrepreneurship as fast as possible and is competing
today with the biggest countries which have years of experience in
this field.”
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