Idea to Incorporation to Success seems like a fair few cliché words however any founder can recite memorable ‘painful or painless’ experiences thinking of the start of their entrepreneurial journey. The best way to learn is from mistakes, but hopefully they will not be yours to make. Incorporating a company or getting licensed is not going to guarantee success to say the least and there are a pot pourri of elements that would be wise to consider:
1. Have a plan
It is exciting to have an idea and then pour your passion into creating it but when you create a business plan you are putting your thoughts to paper, identifying your demographic, getting to know your competitors, your runway and burn rate, and writing down exactly how you are going to monetize your idea and if it would be profitable at all. A plan also gives you a goal, vision and mission which motivates you to work towards a collective goal if you have co-founders, shareholders and employees too.
2. Understanding the costs, wisely
Nobody says its easy or cheap to set up a business in UAE, but it is definitely well worth it. Owning a business gives you wings to fly but also quickly teaches you to face you innate fears very quickly and if you fear budgets and finances, you can quickly face a reality check. The one piece of honest advice I would give entrepreneurs in this millennial era is not to be conservative when creating a budget for a new business and add estimated costs for any foreseeable risks, imaginable. After your careful forecasting and assessment of costs, if you cannot afford it, simply do not start a business now and wait for the right time when you can afford a runway to follow your passion.
3. License, License, License
UAE has over 60+ Free Zones and over 7 mainland options to choose from. The importance of getting the ‘right’ license in the right jurisdiction with the right activity is extremely critical. Licenses once issued cannot be transferred from one jurisdiction to another or from free zone to mainland or vice versa. Dissolving a company also has additional costs therefore it is extremely important to get the right advice before you go get a license. Ask as many questions as you need to ask about the regulator, the details of the activity, the obligations on companies from that regulator, the costs of renewal, and any other costs that you should be aware of. Some free zones for example, are known to charge incredibly high fees for issuing simple documents like ‘no-objection certificates’ which unfortunately for some of us, sometimes becomes a necessity and it is fair to say that there is no market standard cap for the regulator to adhere to when it comes to such administrative costs.
4. Know the Laws that apply to you
‘Forewarned is forearmed.’
It is smart to consult with a ‘licensed’ lawyer before you actually launch into getting a company license because lawyers are regulated, have access to the laws and they will most definitely be able to advise you of the laws that will be applicable to you and special compliance requirements if any that must be met. It is never advisable to structure your business in a way that ‘avoids’ a law or regulation because the costs of being penalized are just too big a risk to take. Regardless of the business activity you are in, knowing the law is everyone’s legal (mandatory) obligation and there cannot be an excuse of not knowing it.
5. Detailed record keeping
Remember that all records right from financial, to personal details of customers and your sales inventory needs to be recorded in appropriate software and it is simply not recommended nor efficient to write and store this information manually in a black book or on a written e-note method somewhere. Anticipate what records you would need to maintain – financials/invoicing, list of customers and their personal details, inventory lists, supplier lists, cloud storage; these are some items you may wish to anticipate for your business. Make a list and consider and review the best software systems for your business activity, how much the subscriptions would be and how much the upgrade costs would be or the transfer costs from one system to another if you ever decided to change your mind in the future.
6. Have a digital presence
Pre-2020 we all harped on location, location, location. Today, it is critical to have a digital presence. If you cannot be found on the internet through a local search engine, you may be classified as an alien and customers may not fully trust you. Remember to reserve the names, handles and spaces on various social media platforms that you wish to be present on. It is not necessary to be present on all the social media platforms you can find but the fair few on which you will find your most targeted demographic. Remember also to talk about your business in bite sized information pieces so you educate your demographic through your digital presence, consistently and unforgettably.
In conclusion, before you incorporate your business which will hopefully become your legacy someday, don’t forget to pick the right name for it, something memorable that strikes the ear or catches the eye of the beholder. I hope this article has given some practical yet legally immersive insights into what you need to consider before starting a business.