Top 3 Ways New Businesses Can Succeed in Dubai
Up to 80% of new companies fail in the 1st 18 months
By Corrie Block
Dubai is a global hub for innovation and entrepreneurial initiatives. Here, an entrepreneur investing in an SME is meant to succeed. The government is on your team, and any resource you require is readily available. So, if you’re thinking of starting your own company, take my advice, there are only three things you need.
Up to 80 per cent of new companies fail in the first 18 months. That leaves behind a huge graveyard of ghost dreams. I have started six companies in my career, five of which are still operating. The one that died was a clothing brand. I was 25 years old, and I didn’t research the market well. I lost money and time, but I think the whole project was open and shut within six months, so I learned young to cut and run when I’m in a losing investment.
But why did I fail?
What went wrong?
Founders of failed companies agree that the Top 3 reasons new businesses fail are, as follows:
- MARKET: They provided a product/service that the market wasn’t demanding.
- MONEY: They ran out of liquidity.
- MASTERY: They did not have the right people on the team.
I call these the 3M’s of entrepreneurial success.
Clearly, my precious clothing brand fell flat on the market. I had great designers, and an amazing supplier, but the market didn’t want my better-than-theirs, super-cool shirts and hats. There was no demand, so my product was what we call a ‘push’ product. It needed a lot of investment in marketing in order to push the product to a market that was not demanding it. With enough money invested in marketing, you can successfully transform a push-product into a pull-product (something in demand). But if I had kept going, I would have run out of money and failed on the money aspect as well. So I had the mastery, but not enough money to compensate for being weak on the market. My advice: invest in some market intelligence and don’t go for it unless you are 80 per cent sure that you have something that the market wants. Alternatively, make sure you have enough money to push.
How much is enough? Well, that depends on what you’re trying to sell, to whom, your cost of goods, taxes, overhead, labour, and other indirect expenses. My advice is to start lean. Spend as little as possible for at least a year. My first marketing materials I made myself. One of my early successful companies was a media production company, and guess who the first editor was? Yes, I even learned Adobe Suite to keep labour costs low. Eventually, I made enough to hire editors and buy great equipment, but my initial capital was only Dhs35,000, and that was enough because I kept my operations lean. The Dubai Chamber of Commerce is a good source of information on where and how to access financing options in Dubai.
In Good to Great, Jim Collins said that where you’re going isn’t nearly as important as who you’re travelling with. I agree. There is not enough market or money to compensate for a lack of mastery. My first company was an education provider, and when I built our first official offices, I didn’t include an office space for myself. My assistant asked me where I was planning to sit, and I told her that I’d be either at the boardroom table or in a café downstairs. When asked why, I was thrilled to tell my team that they didn’t need me, the company could run without me, and it was due to their perfect blend of competence and character. Each member of the team was a master in their specific role, and with that kind of team, failure is nearly impossible. A big-man desk in a big-man office communicates high power distance in a company. The more mastery is present in your people, the less that hierarchy is required.
My advice: be patient and picky. And for the record, it’s much easier to build competence than character.
With a strong market position, you don’t need much money. And with a lot of money, you can compensate for a weaker market position. Mastery is the only ingredient that’s non-negotiable. In a start-up, you don’t have the extra resources to compensate for bad character or a lack of competence.
With these 3 Key ingredients, your business will succeed.
Dubai is a great incubator for turning dreams into legacies. Count yourself lucky to be living in a country where the government is on your mastery team.
Corrie Block is an independent corporate advisor
Paul Ebeling, Editor