Writing a business plan takes time, energy and a lot of research. So why go through all that effort?
One reason is that it’s simply a good idea – in his book on the subject, author Mike McKeever justifies it like this: ‘Almost without exception, each business owner with a plan is pleased she has one, and each owner without a plan wishes he had one.’
A business plan helps you decide if your entrepreneurial idea has potential, helps you improve your business concept and is normally essential for accessing funding. And if you’re planning to start up a new business in Dubai or the UAE, having a business plan is more than just a ‘nice-to-have’. In certain scenarios, having a business plan is a requirement, without which you won’t be able to start your company at all.
So let’s look at why you need a business plan in the UAE and how to write the perfect plan for your startup.
Why Do You Need a Business Plan in the UAE?
The World Bank ranks the UAE 21st out of 190 countries for ‘ease of doing business’, yet on a different metric – ‘ease of starting a business’ – it ranks much lower, in 51st place. If you are planning on starting a business in Dubai or the UAE, the process of forming your company is a little more complicated than in other countries – read our blog on forming a company in Dubai for an overview. The upside, of course, is that once you’re set up and ready to go, actually doing business will be pretty fluid.
The upside, of course, is that once you’re set up and ready to go, actually doing business will be pretty fluid.
So let’s look at the three principal reasons you need a business plan in the UAE.
- Funding: If you hope to get investment from a bank or venture capital firm, you will need to provide a business plan.
- Free zone or industry requirement: The UAE allows companies to form in the many free zones in the country, each of which has its own specific requirements. Some of them stipulate you must have a business plan.
- Your nationality: Some free zones require people from certain countries to provide a business plan as part of their application.
Does Your UAE Startup Need a Business Plan?
The short answer to this question is ‘maybe’. Depending on your business and the free zone you hope to work in, you might need to create a business plan. Here is what you need to consider:
- Some free zones always require them: If you want to launch your startup in certain free zones, providing a complete business plan is an essential requirement. For instance, in Ras Al Khaimah Economic Zone (RAKEZ), the provision of a business plan is part of the online application process.
- Some free zones require them for certain activities: In other free zones, specific business types require a business plan. For instance, in Dubai Multi Commodities Centre (DMCC), health or education-focused businesses need one.
- Sensitive nationality applications: Entrepreneurs from certain countries may be required to provide a business plan as part of their application. For example, the Dubai South Free Zone requires certain nationalities to provide one depending on the requested license activity.
To work out whether you will need a business plan, you should investigate the website and application process for your chosen free zone.
How to Write a UAE Business Plan in Five Steps
While you may have written a business plan in the past, be aware that the UAE has somewhat different format requirements compared to Western countries, so it needs to be much more diligently researched.
While you may have written a business plan in the past, be aware that the UAE has somewhat different format requirements compared to Western countries, so it needs to be much more diligently researched.
Let’s look at the five simple steps to writing a business plan for your Dubai or UAE startup.
- Show you are compliant: More than anything, your business plan needs to show that the activities your company proposes to carry out are in line with your business description, that they are legal, permitted within that free zone and that the free zone has the space and equipment required.
- Specify the purpose of the business plan: You cannot provide a ‘generic’ business plan in the UAE. Your document will need to be tailored to a specific audience and it should be clear what its purpose is – be that to apply for investment, to be admitted to a free zone, or for shareholders.
- In-depth research: As noted above, a business plan in the UAE or Dubai needs to contain significantly more detailed research than what may be required in other countries. You should make use of market research and collect data from reputable sources to support your business proposition.
- Thorough finances: You should provide thorough and realistic financial data for your company and projections for the future. Do not be tempted to provide over-optimistic estimations – these will likely be picked apart during your application process.
- Follow the template: The free zones in the UAE that require you to provide a business plan usually offer a template which will include all the information they need from you. In some cases this is an online form, in other cases you will be able to download a Word document and edit it yourself. Stick to the format, and only provide the information required.
The Benefits of a Business Plan
As the World Bank data shows, starting a new business in Dubai or the UAE is not as straightforward as in other places, and sometimes you will need to jump through the bureaucratic hoop of writing a business plan. This is where working with a company formation specialist really comes into play, allowing you the peace of mind that goes with knowing all the red tape is under control.
Leaving you to focus on what matters most – launching your business.
Setting up your own business has never been easier. Virtuzone takes care of it all so you can focus on what matters – building your business. For more information about company formation in the UAE mainland or free zones, please call us on +971 4 457 8200, send an email to info@virtuzone.com, click here.
