“I love flowers and as a teenager, I used to think that one day when I’m older, maybe when I’m 40, I’ll start my own flower shop. I didn’t think I’d be able to set up my own business so soon just after graduating from university,” shared Emirati serial entrepreneur AlReem AlAmmari who is in her early 20s now.
AlAmmari set up two online start-ups, one being a flower delivery business named ‘Baaqah’ and another, a delivery aggregator platform known as ‘Wasla’. In doing so she feels that the UAE entrepreneurial landscape has evolved greatly in terms of great ideas and talent, access to capital, funding and mentorship, easier and more flexible ways of getting a license and setting up a business, among others.
From fundraising to keeping tech expenditures at the minimum, AlAmmari shares some essential tips on how to start and financially manage a start-up.
At the age of 13, when AlAmmari started getting a monthly allowance from her parents, it was her first experience of budgeting her expenses. “At that time, I probably wasn’t as grateful for that monthly allowance, but today as a businessperson I understand the worth of every dirham. Today I realise that my monthly allowance was quite like getting funding to run a business. You’ve to account for expenses, plan for growth while keeping aside some amount as an emergency fund for unforeseen expenses.”
On that note, as an entrepreneur what kind of financial support did you receive?
“A big reason I could even start my first business in 2018 is due to a grant of Dh50,000 received from the Sharjah Entrepreneurship Center (Sheraa) having participated at their Startup Weekend Competition in 2017. This was coupled with Dh220,000 funding received from Khalifa Fund after participating at a competition in 2019.
“Frankly, as a 20-something belonging to a family of engineers with no prior experience of running a business, the initial funding was intimidating. Especially knowing that I’d have to pay back the funding received from Khalifa Fund, quite like a loan, within five years, with a two-year grace period. There was a real pressure to do well and prove the viability of my business model. Besides the funds raised, I’d also put in an additional Dh200,000 in my business in the beginning.”
What are your learnings from the fundraising process?
“Besides receiving funding, which is a huge support, as a fresh university graduate when I started my first business, Sheraa and Khalifa Fund’s guidance was invaluable. They gave me access to mentors who were willing to answer the simplest of questions about the basics of accounting, how to file tax and even how to get the right and the most cost-effective trade license.
“At the beginning of the pandemic, I started facing logistics and last mile-oriented challenges because flower delivery requires refrigerated vans at a certain controlled temperature that most delivery companies don’t offer. That’s when I met my now business partner Abdulla Al Hashmi who was also part of the Sheraa incubator programme and set up our second business, a delivery aggregator platform thereby plugging a gap in the market. We raised Dh1.3 million from Dubai SME and Sandooq Al Watan for the second startup that is solving a problem that my first startup was facing.
“In the process of setting up my second business, I learnt the importance of getting into the entrepreneurial ecosystem to network with mentors, fellow entrepreneurs, angel investors and venture capitalists. Networking helps to understand what they [investors] are looking for so we can shape our business model accordingly and together solve a problem.”
Being a serial entrepreneur, what are your thoughts on the importance of understanding and managing finances?
“To begin with, I think having an annual financial plan is crucial that must be evaluated every month and tweaked based on trends and demands. For example, there are peak seasons for our flower business and at such times I allocate more funds for digital marketing, hiring delivery personnel and so on.
“Here it’s probably worth mentioning that sometimes the initial financial plan might even go wrong, and it’s okay to tweak the plan in time. It’s also important to have business partners who are specialists, be that finance, technology, operations or marketing; in our case, Abdulla is an astute finance person.”
How do you manage finances, both capital expenditures or CAPEX (long-term expenses made for major purchases) and operating expenses or OPEX (day-to-day expenses a company incurs)?
“In terms of CAPEX, we don’t purchase but rent vehicles. In a certain month, we might rent 10 vans but reduce the number in another, based on demand. Notably for a tech-based business like ours, website and software are big expenses, on which we’ve already invested approximately Dh150,000 for each platform.
“However, I must mention that the tech spend doesn’t have to be so large initially. It was huge for us because at one point we had to completely change our business model that added to our expenses. But it also eventually helped us to optimise spending. I could have set up my first platform with Dh20,000 if I got the model right in the beginning, although getting it wrong taught me some key lessons. Tech-based expenditures can be kept at the minimum by creating a minimum viable product (MVP). For example, in the beginning use templates from WordPress, Wix and Shopify and then invest in your own coded platform after testing the MVP.
“In terms of OPEX, accounting for a 30 per cent month-on-month growth, we like to hire freelancers, part-timers as well as paid interns. However, in a month where demand plummets we refrain from hiring people and allocate the money towards digital marketing. Salaries happen to be a big responsibility and expense for any business that must be carefully assessed and planned.
“Finally, in terms of cost of acquiring customer we allocate 70 per cent more budget towards digital marketing during events and occasions when the demand is high, compared to the normal months. For instance, during the normal months we spend roughly Dh20,000-30,000 on search engine optimisation (SEO), email marketing, Google AdWords and social media advertising. And we change the mix in terms of marketing spend based on demand.”
Finally, a word of advice to fellow entrepreneurs.
“For anyone with an entrepreneurial dream, its necessary to pursue your goal irrespective of the mistakes you might make. Don’t feel afraid of rejection but research as much as possible to know the right agencies to seek support from. There are many opportunities for startups that we may not even be aware of.”
“Today there are several agencies like Dubai SME, Khalifa Fund, Sandooq Al Watan, Sheraa and many more that are keen to support bright talent from the UAE and the region. Licensing has become easier and cost-effective through agencies like Tajer Abu Dhabi. Finally, while raising funds that are not linked to equity, it’s okay to ask for more. Every startup is an experiment for at the least the first three years so planning the runway accordingly is crucial.”
