top of page

Valuable Information for Starting a Business

What are the Risks of Starting a Business?

Naturally, there are potential risks and challenges to consider when entering the UAE market:

  1. Local Regulations and Laws: The UAE has specific regulations and laws that must be adhered to when starting a business and during ongoing operations. These regulations can vary depending on the emirate and type of business. It is important to thoroughly research local regulations and ensure all legal requirements are met.

  2. Local Ownership: For some business forms, like the Limited Liability Company (LLC) on the mainland, local ownership is still required in certain sectors. The local partner holds at least 51% of the shares, while the foreign investor can own up to 49%. These ownership restrictions can influence business control and decision-making.

  3. Cultural Differences: The UAE has different cultural norms and business practices compared to many Western countries. Familiarizing yourself with local business etiquette and showing cultural sensitivity is essential for building effective business relationships.

  4. Competition: The UAE is a highly competitive market with many international and local companies. Depending on the industry and market segment, competition can be intense, especially with Asian and Indian companies. A careful competitive analysis and a differentiated business strategy are important for successful market positioning.

  5. Dependency on Sponsors and Partners: For certain business forms like the LLC on the mainland, a local sponsor or partner is still required in some cases. Choosing a trustworthy and reliable sponsor is crucial for ensuring a long-term business relationship and avoiding potential conflicts.

  6. Economic Fluctuations: Like any economy, the UAE economy is subject to fluctuations. Changes in global oil prices, political events, or worldwide economic uncertainties can affect business conditions in the UAE. It is important to prepare for economic challenges and issues.

Therefore, it is advisable to thoroughly research the current conditions, challenges, and risks before starting a business in the UAE, conduct careful due diligence, and seek the support of an experienced advisor if necessary. Good preparation and a solid understanding of the local business environment can help minimize risks and increase success. Cooperation with our agency facilitates your understanding of the UAE market and helps you leverage its unique characteristics. We provide administrative services for you, handle personnel recruitment and management, payroll, contract reviews, support in negotiations, legal and tax advice, invoicing, collections, and sales development.

This content was kindly provided to us by our partner agency.

bottom of page