26/02/2014
Dubai as a melting pot of business ideas
Affordable rent and space have to become available if we want to see our entrepreneurs develop
The Dubai International Financial Centre. Dubai is like living in one big franchise trade show. For those looking to return home one day, your best business opportunity may be right under your nose. Picture for illustrative purpose only.
There’s no doubt for many who visit or move to the UAE or for those who already live here, multiple opportunities exist to invest in an international franchise or to set up their own café, restaurant, beauty salon or in any business venture for that matter. Having said this, there is also so much to consider before entering the market.
With growth come opportunities. However, such opportunities are becoming few and far between due to oversaturation within the marketplace, skyrocketing rents and shortages in prime and mid-prime commercial space. This is compounded by the fact that we live in a region with high unemployment and instability in neighbouring countries.
Those fortunate enough to leave their homes and arrive in the UAE with deep pockets look to invest and settle in a stable Arab country close to their country of birth. Those without the financial means are also arriving from other Middle East countries as well as Europe. They too have great ideas to incorporate a business or simply to find an employment opportunity.
But with an oversaturated employment market, many would look towards starting a business with a friend or a family member, while others are fortunate to find potential investors. Having worked on the business plan and supplier secured, finding staff is easy enough. The licensing and registration fees are fine.
But looking for retail space becomes the major stumbling block. They soon realise the difficulty in acquiring a decent space anywhere in the city. Most malls have a waiting list, and if there is any space it is simply unaffordable and does not fit in within the budget of the business plans.
An example of this is a local client who has just signed a Gelato franchise from New York. She is in a crisis as she cannot find any space in any mall whatsoever. Part of her franchise agreement states that she has to open five locations a year to be a master franchiser.
Some of the responses she received are from malls that have a waiting list and only looking for top global brands ... and that’s if there is space available. Another mall, not even the largest in the city, quoted her a 3x3 meter kiosk for Dh800,000 yearly.
How many Gelato cones do you have to sell to pay the rent, salaries, franchise fees and day-to-day expenses? It is virtually impossible to make any kind of income to survive or even to get your business off the ground.
Affordable rent and space have to become available if we want to see our entrepreneurs develop. It’s a fact that small business is the fuelling catalyst of any economy. Many new clients now are having to put their ideas on hold or look elsewhere to get their foot through the door such as in the smaller emirates, or simply in commercial warehousing space outside of expensive malls and the city core.
Owners complain that having your own business is not as financially rewarding as they thought it would be and are looking to jump back into the labour market. They say their long working hours for the landlord, franchisee and suppliers leave them with hardly anything for themselves at the month’s end due to the high overheads required to run a business.
Dubai itself has become a magnet for every global brand you can conceive of, while those that are not yet here are simply on the sidelines waiting for the right space to become available. At a recent trade show in California, I was shocked as after introducing myself as being from Dubai, the response was they already had two or three persons pass by the stands who were from Dubai as well.
It was the first day of the show and it was only 11am. This would have never happened as recently as a few years ago. Yes, the world is smaller and everything is moving that much faster. We live in an aggressively business-minded entrepreneurial region where everyone thinks business and has hopes of starting their own one day.
Unfortunately, many who enter the market do so without an in-depth study of the potential risk possibilities, competitive analysis, or roadblocks for the product or service they are looking to represent. There are government rules and requirements needed to bring a product into the country, and not doing your due diligence can cause your product to be stuck at customs for months, or completely rejected causing great expense to any new business owner.
With more international brands entering the region, it seems the only people able to afford getting a foothold in the market are large business groups already established with several brands under their banner. Or someone with very deep pockets not overly worried about the potential risk involved in a start-up.
Dubai is such an exciting and growth-minded place that one can take fresh ideas and concepts back to your own home country. Dubai is like living in one big franchise trade show. For those looking to return home one day, your best business opportunity may be right under your nose.
Be it a café, a burger joint, a boutique, or something in fitness, there’s absolutely no shortage of ideas. Dubai is a melting pot of business ideas, making it difficult to come up with something fresh and something new.
The questions you need to ask yourself if you decide to take the plunge are:
Do I have what it takes to open a business? Do I have the drive to work long hours? Do I have what it takes to face fierce competition?
Is this the business I want to get into or am I only doing it for something to do and keep busy? Is the space appropriate? Is it affordable space?
Take into consideration upfront expenses of government fees, salaries, rent, fit-outs and product storage expenses, etc. The list just goes on.
Many of us feel if we had our own business we would be happier and more successful in our lives. Unfortunately this only happens to a lucky few; while the rest feel that they work just as hard or harder than they did working for someone else, but with responsibilities now resting solely on your shoulders.
Business is not easy wherever you are and seems to get harder, which means you have to get smarter when looking to start something new.
Dubai is not the town it once was when I arrived 12 years ago. It’s moving faster than most cities around the globe. As exciting as it may be, it gives the sense that things are easy to do. To survive in this competitive environment, you have to be diligent and driven with eyes at the back of your head as well.
Even that does not guarantee success. You need the right ingredients such as being at the right place the right time, the right idea, some luck, and most important, deep pockets.
