UAE startups, SMEs do what they think is best - launch or expand

Dubai: Owners of startups and small businesses in the UAE are clearly thinking beyond interest rates and inflationary costs to focus on two elemental issues - What are their chances of finding a consumer base? And if they manage to do that, will it be enough to sustain the business?

Whether launching a business or expanding their operations, these owners are using the present to take a crack at being successful. A lot of them are doing so simultaneously in the UAE, whether that’s in the tech or digital space, old-fashion retail but with suitable tweaks, or even trend-spotting categories such as fitness.

The one constant - no one is holding back from getting into business.

“Today’s start-ups are shifting their focus to disrupting micro-segments of ecosystems using AI and machine learning (ML) to cater to consumer needs,” said Eddie Maalouf of Toughlove Advisors. “(That’s) regardless of the industry. Startups are now targeting specific points rather than disrupting entire systems.”Startups still face the previous challenges, of limited access to capital, lack of resources, competition from established players, and limited access to local networks and resources. These challenges are unlikely to disappear anytime soon. Therefore, a start-up's success remains dependent on its business model and scalability potential

“They are creating payment gateways and micro-financing and automating logistics and last-mile deliveries, irrespective of whether they are supplying consumables, rides or services.”

Chances are opening up across categories - and platforms. For the right idea or product, there are platforms and funding available.

What all of the above reveals is that the platforms are there, and the funding too to make a fist of it. But shouldn’t businesses, especially emerging ones, be extra careful given that the cost of funds has risen since March 2022? (With 10 rate hikes by the US Fed, the cost of funding has certainly gone up.) Stewart Miller is the founder of The Platform Studios, a boutique health club that was bought by FitnGlam, a homegrown entity. He reckons interest rates and all of that can be looked at in different ways.

“UAE’s growth and (with that the) potential salary increases should ease the pressure on consumers’ wallets and boost disposable incomes,” said Miller. “Our target demographic prioritizes health and wellness - after (their) rent (payment commitments). So, our business is well-positioned.

“While there are many (fitness) operators in this market, success will come to those who offer a value-driven rather than a commoditized, business model. As the population of Dubai grows and more people prioritize health and wellness, there will be ample opportunity.” 

Industry sources say the post-pandemic shifts in business and entrepreneurship are still showing up. For evidence, look to the deals that are happening in the cloud kitchen space, where bigger players are acquiring niche operators and creating even more scale. The speed at which the cloud kitchen concept has grown has stemmed directly from changes in consumer behaviours and trends after Covid. It hasn’t been the only one. Anything related to expanding the scope of digital payments or BNPY too happened in the period after the pandemic broke out.

Wellness-focussed businesses are definitely among the top choices as the post-Covid phase takes over, along with startup ideas that give a spin to traditional concepts.

In the second case, it means even opening a brick-and-mortar store. “Though there are many success stories of brands becoming huge in a short period of time online, it’s a very small percentage,” said Gautam Sinha, Creative Director and Founder of Nappa Dori, a luxury leather accessories brand from India that recently opened an outlet in Dubai.

“What they don’t realize is that even if the online market is easy to set up, maintaining it in the long run is a different ball game. You are not only stepping into the most competitive marketplace but need deep pockets to be seen online with social media marketing. Everyone is competing with each other for that attention.”

That’s true, there is that other concept time will never overtake. Connecting with customers, whether via physical or digital. In the UAE, business owners are getting the chance to do all of that.