Problems Faced By Entrepreneurs While Starting a Startup In UAE
1) Financial & Cash Flow Management
Getting your business funded is one of the main issues that all business face and have to tackle in order to survive.
While you might have initial money saved up to start a business, they don’t survive for long and you cannot just rely on the next sales check to arrive so you can pay the bills and take care of the next step in business.
A steady flow of cash is essential for small business to survive and you always need to have extra funds to take care of rainy and in-between days.
Many entrepreneurs struggle to make ends meet and at times don’t even pay themselves so they can clear the invoices in time.
What you can do is plan your finances better so there are no delayed invoicing and you have enough gap in between getting the money, clearing the invoice and paying your employees (including yourself) salaries.
For this, you need to make sure you have a well-prepared business plan in advance and that includes funds set aside to weather the worst-case scenario.
Remember you are new so you will have limited availability of funds, and thus you have less room for error.
You will also not make a profit right away so have enough funds set aside before you start and add it in your business plan and budget accordingly.
2) Hiring Employees & Team Building
We all have faced interviews at one or other point of our lives and for many, it has been one of the most stressful points in their lives.
While we all have been in the above situation one point or the other, there are very few of us who have conducted interviews and it is equally hard if not more as the majority you have not done it before and thus have no idea how to go about it.
The situation is only more stressful by the fact that you are doing it as a new entrepreneur and thus want to pick that perfect candidate that not only fits your budget but is also proficient at the work they are being hired for.
Picking the right combination team for a startup is equally stressful as you have no idea how the team will work together even if the candidates are right on paper and efficient working alone or on their own.
It is thus advisable that you be exclusive and look beyond resumes and job requirements. When posting jobs requirements be specific about what exactly are you looking for and with what budget and benefits.
Make sure you mention what qualifications candidates must have and what the job duties would be required and what hours and days they would be working.
This will save yourself a ton of time as people who would apply would be aware of the budget and duties while applying.
Once you have a pool of prospects, take them on a company tour and show what exactly would be the environment they would be working in. This will give you and them an idea of what to expect and how they react with your staff will give you an idea of how they join with your team.
Further for jobs where a person doesn’t need to be physically present in the office to work, look for skilled workers in other cities as this can end up saving you a lot of money that would otherwise be spent on developing a physical office for them.
This will also provide them with an opportunity to work with a company that is based in metros and move out when required
3) Accounting Mistakes Commonly Made By Entrepreneurs
– Mixing Business and Personal Money
How to Avoid It:
It’s never too early to get your business its own credit card and bank account. Use these accounts exclusively for your business expenses. If you accidentally use the business card for a personal expense (or vice versa), make sure to flag it right away.
– Using Single-Entry Bookkeeping
How to Avoid It:
Start things off right by using double-entry bookkeeping from Day 1. Regardless of which system you choose, you’ll have to switch to double-entry at some point, your partner/investors will want to see proper double-entry books. Like the company bank account, this will be easier to manage the earlier you implement it. Don’t wait until you have to switch.
– Using Cash-Basis Accounting
How to Avoid It:
Like double-entry bookkeeping, accrual-based accounting is an industry standard, and one that you’ll have to adopt eventually. You can save yourself headache later by using the accrual system right from the beginning.
– Not Getting Serious Until the Books Are Complicated
How to Avoid It:
Like many of the things on this list, the key is to start early. Don’t ignore your books just because they’re currently simple. In fact, that’s the ideal time to put a process in place that will scale as you grow. Starting off a strong foundation means you’re less likely to have a bookkeeping crisis steal your momentum later on.
– Not Realizing When You Need Help
How to Avoid It:
How much time are you spending on your books? How often are they being updated? Are you able to get quality financial statements? If the answers to these questions aren’t “very little, often, yes,” it’s time to bring in help.
Founding a company is hard enough, without having to worry about problems in your bookkeeping. To avoid these mistakes, you can call us now. We are happy to share our 60 years’ expertise to how we were able to save big and cut unnecessary factors and overheads affecting to your business environment.
4) Lack of Information on VAT/Tax
A lot of people in these days don’t have detailed knowledge about VAT/Taxation in UAE because of their busy schedules.
Let us tell you a short details.
A Business must register for VAT if its taxable supplies and imports exceed AED 375,000 per annum. The business has the option to register or opt out if their taxable supplies and imports are between AED 187,500 and AED 375,000 per annum.
In brief, the business pays to the government the tax it collects from the customers and gets a refund from the government (if eligible) for the tax it paid to its suppliers.
Tourists and Foreign businesses may also recover the VAT they incur when visiting the UAE.
And over time, that is likely to change and update.
One of the hardest and most stressful problems faced by entrepreneurs in UAE is decision making.
New entrepreneurs have a harder time making decisions as they often equate even small decisions with how it will impact the company and its budget. Self-doubt also makes them question the decisions they have made already made and if it was the right one.
It’s is only with time that they learn to take hundreds of decisions a day, big and small, without questioning themselves and often facing decision fatigue.
While it will take some time and experience to reach that point, they can start by following the 5 steps of the decision-making process to make crucial decisions.
These are – Identifying their goal, weighing their options, considering the consequences, make the decision and evaluate it before giving it a nod.
For crucial decisions, you can also allocate it to the advisory service you trust and are best suited to future and would know what works for you the best. We will love to help you:)
How Entrepreneurs can solve these Problems?
The main aim of the company is to acquire adequate profits along with fulfilling customer satisfaction. At the initial stage of the business you were having a smooth process without any disruptions. But later on you started to face a big challenge of employee turnover, reduction in their performance standards and increase in penalties and fines.
How Can We Help?
Get Your Free Meeting from Horizon Biz Consultancy to Resolve these Difficulties
Horizon Biz Consultancy is experienced in business/company setup, business consultation, trading license, Tax consultation, Outsource payroll, accounting services, CFO services and many other services too. Our UAE based qualified consultants, auditors and accountants are experienced working with many small and leading businesses/companies and organization.
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