Sharjah: Entrepreneurship can prove to be a viable career option for fresh graduates, particularly in a recovering economy, says an expert in the field.
According to Andy Klein, assistant professor of management at the American University of Sharjah (AUS), contrary to what most people would think, a bad job market is actually a good scenario for budding entrepreneurs.
Prior to the 2008 financial crash, Klein says that he would have been likely to advise students against trying to launch their own business right out of college. Then, he says, he would have told new graduates to seek a job with a good management programme, gain some experience, and wait for a lucrative opportunity to arise before thinking about starting up.
But in today’s environment, he notes, it is comparatively hard for students to find new jobs. In some cases, they are better off trying to create their own. However, he acknowledges that they need to be prepared in case it doesn’t work out.
“It’s very high risk,” says Klein, who teaches a course on entrepreneurship at AUS. “At most, 40 per cent of new business startups make it to the third year. Cash flow for a new business will be negative for the first few months, and the business may even take a few years to become profitable.”
Fresh graduates with an exciting business idea who want to start up their own firm should also consider bringing in people who are older and more experienced so as to benefit from their expertise, he adds.
Among the first steps for a budding entrepreneur would be to draft a business plan that considers financial implications, he says. “Any investor wants to see how you think.”
Sources of funding
As entrepreneurship is often high-risk, it is advisable to have strong financial backing to start with. Sources of funding for college students and recent graduates mostly include family and friends. But even with their investments, it is best to keep in mind the risks associated with the venture, Klein cautions. “We don’t want to put granddad’s retirement money into your new startup.”
Working for a startup
While not all students might have the financial means of launching their own company, they can consider working for a startup. Ali Khan, a recent graduate and junior financial analyst with Nestle, says he has previously worked with three startups, which gave him valuable job experience.
“I got what I was looking for,” Khan says, adding that he mostly sought to improve his communication and negotiation strategies when he landed a two-month contract with a startup.
“It would be very useful for an intern to get into a startup,” Khan says. A student’s job in a startup often entails performing more than one role, he adds, thus enabling one to get more of an overall, hands-on experience. “That helped me out with my job.”
Furthermore, it is a mutually beneficial relationship as startups can do with people who work hard and don’t get paid, he says. However, although Khan says he enjoyed working with the company, he is not likely to go back.
“It’s a very unstable environment. There’s no such thing as complete job security. You might see people let go constantly,” he says, adding that this is “unsettling.”
Economic climate
According to Forbes, the UAE is ranked 11 in the Economic Freedom of the World index, lagging behind only Bahrain in the Middle East. As oil reserves in the emirate of Dubai run low, a great deal of focus has shifted to construction, trade and re-export, and financial services, all of which generate more revenue than energy.
Factors that have played a key role in Dubai’s economic growth, according to the Department of Economic Development, include “visionary leadership, high-quality infrastructure, an expatriate-friendly environment, zero tax on personal and corporate income and low import duties.”
Red tape
However, not all is well for budding entrepreneurs locally.
“The UAE has got a fair amount of red tape,” Klein acknowledges, adding that the country needs to be more efficient in reducing this and streamlining the regulatory process.
On the bright side however, he notes that the government is not corrupt. “We don’t have to pay bribes here.”
Furthermore, the UAE government realises that entrepreneurship needs to grow if young Emiratis are to find jobs, he says, as the public sector would be unable to accommodate all job-seeking Emirati youth. “They need Emiratis in the private sector,” Klein says. “That’s why the government puts so much focus on entrepreneurship for Emiratis.”
The writer, a former intern at Gulf News, is a final year student, majoring in journalism at the American University of Sharjah’s mass communication programme.
