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The Untold: Struggles of Startups in the UAE
The United Arab Emirates (UAE) has long been recognized as a hub for business and investment opportunities, attracting entrepreneurs and investors from around the world. With its strategic location, favorable tax policies, and a diverse population, the UAE offers a promising environment for new companies to thrive. In this blog, we will take a closer look at the struggles faced by new companies in the UAE.
The Struggles of Startups in the UAE
Despite the investment opportunities startups in the UAE, faces a set of unique challenges and struggles. The UAE business landscape is highly competitive, with thousands of new companies emerging every year. This intense competition makes it challenging for new companies to establish themselves and gain market share.
One of the main obstacles faced by startups in the UAE is the high cost of doing business. The cost of office spaces, recruitment, and other operational expenses can add up quickly, putting a strain on a new company’s finances. This is especially challenging for fintech companies that require substantial investments in technology and infrastructure.
Another major struggle faced by new companies in the UAE is access to funding. While there are many investment opportunities available, securing funding for a new business can be a daunting task. Banks and other financial institutions have strict lending policies, making it difficult for startups to obtain loans. Moreover, angel investors and venture capital firms often have stringent criteria and only invest in companies with high potential for growth.
Furthermore, navigating through the legal and regulatory framework can also be a struggle for startups in the UAE. The country has stringent laws and regulations governing businesses, which can be overwhelming for startups that do not have prior experience in the region. Compliance with these laws can add significant costs to a company’s operations.
Some other challenges includes, language barriers. Arabic is the official language, but English is widely used in Business meetings and transactions in the UAE. However, all employment records, including contracts and other documents, such as instructions sent to employees, the contracts everything should be in Arabic. Next one is the adhering to the culture.
Also, the tax environment has also taken its ground in the UAE. The UAE is known as a largely tax-free country, but it introduced VAT in January 2018. The Federal Tax Authority (FTA) has stated that it will get tough on companies that are obliged to register for VAT. Penalties include Dh20,000 for late registration, and other fines for late payment and conducting business without a VAT registration.
Overcoming Obstacles: What Can New Companies Do?
While the struggles faced by startups in the UAE may seem daunting, there are steps they can take to overcome these obstacles and thrive in the market.
First and foremost, it is crucial for startups to have a strong business plan and a clear understanding of their target market. This will not only help them secure funding but also guide their operations and growth strategy.
Networking and building relationships with other businesses and potential investors can also be beneficial for startups. This can help them gain valuable insights into the market and potentially secure partnerships or investments.
Moreover, new companies should also take advantage of government support and initiatives aimed at promoting entrepreneurship and innovation. The UAE government has launched various programs and initiatives to support startups, such as providing funding, mentorship, and access to resources.
Lastly, having a resilient and adaptable mindset is crucial for the success of any new company in the UAE. Startups must be open to learning, evolving, and embracing change as they navigate through the challenges of establishing a business in a highly competitive market.
In conclusion, with a solid business plan, networking, government support, and an adaptable mindset, new companies can overcome these challenges and succeed in the dynamic business landscape of the UAE. Before you are on to setting up a business in UAE or investing in Business, always take advise from the experts in the industry. Fimkin as always, listens to your problems, provides valuable advise and becomes a lighthouse to your ocean of business.