10 major reasons why businesses fail in Dubai

by Zaara 28, Jul 2016

10 major reasons why businesses fail in Dubai

If you are a company that wants to start or expand your business, or an individual who wants to set up shop in Dubai, then this article is for you. The experts at Commitbiz have listed down some of the most common reasons that businesses fail in Dubai. Take a look at this article before you start, because forewarned is forearmed.

1. Lack of experience or awareness

 Apart from providing the product or service, business owners also need to learn how to manage their finances, accounts, legalities, marketing etc. They also need to be aware of the local market culture and business etiquettes in order to build trust and respect among people and stakeholders in a foreign country.

2. Selling an unneeded product or service

One of the primary reasons why most businesses fail is because the product or service provided by an entrepreneur or a giant company is simply unneeded by the market. Many business owners fail to conduct extensive interviews with their potential customers and find out what they really need.

3. Lack of working capital

It is important to stay realistic about costs. A lot of business owners overestimate the market size and under-estimate the running costs. It takes a long time for any business to pick up and flourish, hence it is prudent one tries to be as accurate as possible when seeking a loan.

4. Unplanned expansion

The business may take off quickly; this too can cause problems. If you are providing a service, you may have to keep customers waiting for too long, and they may find alternative suppliers. If a product is being assembled and is in demand, more raw materials will need to be purchased, more credit may have to be obtained from suppliers, as time will elapse between supplying the product and receiving payment.

5. Slack management

Being complacent will derail you from your goal. Practice self-discipline and make effective use of your time to avoid the downfall of your business.

6. Credit problems

It is not easy to avail credit facilities for a startup for up to 6 months in Dubai, UAE. Once you cross the initial stages always keep your bank manager informed of your financial position. If you know that a cash flow problem is likely in the near future, talk to him/her. It is better to do this early, thus demonstrating that you have control of your business. They will then be able to arrange further overdraft facilities.

7. Wrong location

Accessibility, parking space, visibility, and footfalls are vital for retailers, restaurants, and the like if the customer has to visit to make a purchase. Location is everything; ensure thorough research and planning is carried out before deciding upon a location.

8. Controlling business from another location

Many companies or business owners want to incorporate a business in Dubai but want to operate it out of their headquarters located in another country. This approach does not always work. Business in Dubai or Abu Dhabi is all about building trusting relationships with the potential customers, industry peers, stakeholders, and legal authorities. It is important to be seen frequently to give the members connected to your company a sense of your commitment.

9. Staff problems

This is a major stumbling block in large and small businesses alike.  Employees can be inefficient, disruptive and can cause other problems. A sound awareness of the tools and techniques involved in hiring and managing the right staff is necessary.

10. Vision and attitude

A majority of business setup in Dubai are started by expatriates. And they sometimes do not have long-term plans of staying in the country. This makes their outlook short-term in nature and they come with pre-conceived notions about the market which makes it rigid.

Thus, you have got a clear idea regarding the major loopholes. If you possess any of them, it is advisable to rectify them immediately. Contact us today for a piece of friendly advice.


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