setting up or starting your own business in dubai, uae

Setting up a business in Dubai and the UAE has its many perks. However, it is never an easy process and comes with many challenges. Hence, it is always recommended to hire an excellent PRO service provider like ACT.

GN Focus asked those who have set up companies in recent years about their top challenges in starting a business in Dubai and the UAE. Not surprisingly there were a lot of challenges that the entrepreneurs faced while setting up their company.

Hence, we will elaborate on those challenges and give you a little run down on how to avoid these challenges for future entrepreneurs.

  1. No one tells you about admin

    You need to be aware of the pit falls and decisions that one has to make prior to entering into the process of starting a business in Dubai and the UAE. Points such as:

    1. What legal form do I want – LLC, Sole Proprietorship, Branch, etc
    2. Where do I set up my business – Free Zone or onshore
    3. What are the activities needed on the license to ensure compliance?
    4. What is the implication of Point 1 and 2 on my business model?
    5. How many employees I wish to hire and what will their visas cost?

    There are plenty of how-to guides in the UAE. However, realistically, nobody will ever know the steps to starting a business in Dubai and the UAE until they have done it themselves. It is therefore essential to employ the services of a professional business setup consultant in the UAE.

  2. You need to make a big investment

    From paid-up capital requirements to mandatory office space and trade license fees and visa fees. Entrepreneurs need to set aside as much as AED 40,000 in annual costs, depending on the kind of company they are starting.

    The cost of setting up a business in Dubai and the UAE is a big consideration to decide where and if one should setup or expand in this market or not.

    CAPEX and OPEX costs vary depending on the Emirate, Onshore / Free zone, Rental cost, Visa cost, Licensing cost and third-party affiliations. Ensuring that you have a proper breakdown of each aspect of a license setup should cover areas of Trade name reservation, Initial approval, Company documents (MOA, POA), Immigration accounts, labour accounts and Side agreements is essential. The general tendency of the market is to quote only for the DED fees or for a setup that is not customized to your requirements. Remember, the one size fits all concept does not work when it comes to setting up your company. Therefore, it is very important for you to get accurate setup information and costing. As correcting errors could then be more expensive.

  3. Operational finance may be a problem

    Many companies use personal resources or loans from friends and family to start businesses. This is mainly because banks in the country have a limited appetite for lending to start-ups. They prefer to examine business performance for a couple of years before approving a loan.

    Expenses such as rent, overheads, visa, licensing and insurance could come in as rude surprises if not considered correctly. Therefore, the importance of ensuring you have your 5 years OPEX plan in place and cover all the required aspects of operations costs to ensure you are safe.

  4. Being a corporate evangelist 24/7

    The UAE is one of the “smartest” countries in the world in terms of internet penetration and infrastructure. This makes it ideal for connected start-ups.

    However, do note that knowing the regulations, limitations and requirements to ensure you can conduct your trade under this ever changing environment is very important. Licensing activities in this region are always evolving and one needs to ensure that their license is up to date with accurate activities.

  5. Talent is hard to come by

    The UAE’s convenient location is a hub for three continents. It also has good connectivity with the rest of the world. This has made it a home to expat professionals from nearly 200 countries.

    Even so, finding the right team can be difficult. You might need to go through a number of interviews and applicants in order to find people who believe in your vision.

  6. Information can be hard to come by

    Although every licensing authority has a website, with detailed information about incorporation, fees and regulations, some entrepreneurs say this could be simplified.

    For starting a business in UAE, one would obviously try to do things themselves. This may help to minimise the initial investment before you realise there is a viable market for your services and establish a cash flow cycle.

    However, finding out the process of what is required and trying to do it yourself can be an uphill task. It is therefore important for you to choose the right PRO / Business partner who can understand the requirements. And also guide you as to where you want to see your company and not where they want to setup your company.

  7. Time is money

    Living in Dubai can be expensive. And without a paycheck even more so. Those starting businesses without external investment will therefore need to have enough in the bank to support their lifestyle for up to a year.

    Time is a bigger currency than money when working for oneself. If an entrepreneur decides to spend 10 months building a business, it equals 10 months on nothing and 10 months for your competitors to either catch up or pull away.

  8. Diversity matters

    The UAE’s relatively small population base requires that large businesses operate across borders. However, commercial opportunities in one country may not be the same as in another.

    Diversify to avoid dependencies on one industry or geography, and never chase money. Instead look to build sustainable businesses to reward yourself in the long run. The UAE is highly sophisticated and competitive. The UAE supports businesses with great infrastructure. As a result, it has become a highly competitive environment which is where one needs to be careful.

  9. You need to factor in cultural values

    Doing business in the UAE may be different from your home market for a variety of reasons. The county’s Islamic values underpin everything from its legal systems to working life. Hence, entrepreneurs will need to consider these factors.

  10. Travel is essential to stay on top of your game

    In many industries, being first to market with a new product or service differential can make a significant impact on the corporate bottom line.

    However, the UAE’s culture of innovation is only just beginning to take off. Staying on top of tech trends and educating the audience here is a challenge.

    The USA and Europe have always been ahead in the world of tech. It is hard to always be on top of your game and be cutting edge. One would need to overcome this by attending events across other countries. Also attending seminars / events as and when organised across the UAE.

  11. It can be hard to stick to your principles

    With people from different parts of the world bringing their own beliefs and value systems with them, sticking to your guns can be hard.

    The rules for doing business in your home country do not apply here. This may not apply in your peers’ home countries either.

    Dubai is small and word gets around, and you can lose trust in a second. Worry more about your business than about your competitors. There’s work for everyone, and every company will get their fair share. You don’t need to step on others to get ahead.

Get some tips on starting a business in Dubai and the rest of UAE with ease. For more information on the setting up business in Dubai you can fill out our contact form or contact us on +971 4 428 1505, +971 52 104 4794, +971 52 6679677, or email us at Check also our other ACT Services.