The Pros And Cons Of Starting A Business In The UAE

Opinions expressed by Entrepreneur contributors are their own.

You’re reading Entrepreneur Middle East, an international franchise of Entrepreneur Media.

This article was co-written with Nidhi Sethi, co-founder of Skin Story.

Starting a business is undeniably challenging, particularly in the early stages. Overcoming these obstacles is crucial to establishing a sustainable and resilient foundation for future success. Indeed, the journey to entrepreneurial achievement can take various forms, and regardless of the path chosen, difficulties will always arise. While it may sound cliché, it requires unwavering determination and hard work to prosper in the world of business.

Despite the many challenges we faced (which includes the recent COVID-19 pandemic), we, Nidhi and Rashi Sethi, the founders of Skin Story, went ahead with our entrepreneurial dreams by deciding to have faith in ourselves and our products. In December 2021, we took the leap and launched our brand, beginning with our multisticks. As brown-skinned women, we had often struggled to find suitable makeup products that met our needs, which revealed a gap in the market. This realization, combined with the necessity to cater to women like us, drove us to create Skin Story, and introduce it to the UAE.

Drawing from our own experiences, as well as insights shared by fellow entrepreneurs within the local startup community, we have identified the pros and cons of operating a startup business in the UAE. For starters, here are the pros:

1. Access to a growing market While no startup location is perfect, Dubai offers more opportunities than most. The startup ecosystem in the UAE in general boasts a vast network of companies in similar growth phases. Consequently, this translates into invaluable support from the community, outstanding prospects for networking and collaboration, and an exhilarating energy focused on establishing household-name businesses. The UAE is experiencing rapid growth within the clean beauty and sustainability sector. When Skin Story first launched, only a few clean beauty brands were present in the market. Today, dedicated platforms solely focused on clean beauty have emerged, providing a stronger messaging platform, and increasing brand awareness for smaller brands like ours.

2. The availability of support networks Dubai, with its youthful and vibrant atmosphere brimming with ambition and opportunities, continues to attract top talent. Having a startup in the UAE has become easier due to the presence of numerous homegrown brands, fostering an environment of mutual learning and support. In the beauty industry, brands tend to collaborate, learn from one another, and provide assistance and guidance. The region exhibits a positive and supportive mindset among women and entrepreneurs in general, creating an uplifting ecosystem.

3. An accessible market The clean beauty space in the UAE offers numerous sales channels. In addition to clean beauty retailers, nearly all fashion and lifestyle brands stock beauty products, substantially expanding the target pool. Many retailers also operate e-commerce platforms, ensuring easy accessibility for customers. Given the current “see now, buy now” generation, it is essential to ensure your brand is readily available and easily accessible to capture the market.

4. In tune with innovation and trends The UAE remains at the forefront of innovation across various industries. Rapid advancements in technology are revolutionizing beauty products, making them more sophisticated and personalized, while placing sustainability at the forefront of innovation and future trends. As a brand, it is crucial to remain informed about industry-transforming trends and the future of beauty. Following the COVID-19 crisis, there has been a significant increase in understanding and acceptance of the importance of clean beauty. Customers are now interested in the ingredients used in their products. Recognizing this early on, and building products that bridge the gap between health and beauty is crucial. Consumers are no longer seeking products solely to enhance their appearance, but also to feel and be better, leading to an increased demand for sustainable offerings.

Now, as impressive as the UAE business ecosystem may be, it also presents a few challenges for those wishing to launch and build businesses here. Here are a few cons that we encountered:

1. Making sense of all the rules and regulations Navigating the legal and regulatory framework can be a daunting task in the UAE. Rules pertaining to specific business frameworks often undergo frequent changes, causing confusion and complexity. Different companies that set up their businesses just months before us may have had different regulatory requirements, necessitating extensive research to ensure compliance with current regulations. This dynamic nature of regulations sometimes creates challenges and confusion.

2. A limited market size One of the significant drawbacks of launching a brand in the UAE is the relatively small market size compared to larger countries worldwide. This limitation becomes particularly challenging in highly competitive markets. Consequently, we plan to expand our presence to global markets, beginning with KSA and India. The Indian market has shown significant interest in our product offerings. Expanding internationally not only brings new opportunities, but also helps mitigate overdependence on a single market. However, it does introduce logistical and legal challenges that must be carefully managed.

3. Infrastructure The startup incubator infrastructure in the UAE is still maturing. Many countries around the world offer more conducive environments for running and operating businesses, making it easier for startups to thrive. Due to the UAE’s relatively young status compared to more established countries, the region still needs time to mature in this aspect. Nonetheless, we anticipate witnessing the emergence of numerous homegrown brands originating from the UAE, successfully expanding globally in the coming years.

As entrepreneurs who have experienced the highs and lows of starting a business in the UAE, we believe that despite the challenges, the region presents unique opportunities for growth and success. By harnessing the advantages and proactively addressing the limitations, startups can carve a niche for themselves, and contribute to the vibrant entrepreneurial landscape of the UAE.

Source