Dubai: When it came to money matters, long-time UAE resident Mariam Khafagy was raised with two contrasting schools of thought.
“On the one hand, my dad always told me: ‘Never spend more than you earn’, while on the other hand, my mother's advice was: ‘To make money, you need to spend money’,” said Khafagy.
However, she believes that it was her parents’ opposing stance about money that gave her the preparation she needed to become an entrepreneur at a young age of 31.
“Depending on the stage of the company, I have learned to appreciate both of their advice equally. While my mother was building me up to become an early-stage entrepreneur, my father was preparing me to manage a more mature business," she added.
Chemical engineer to consumer goods exec
Khafagy, originally Egyptian, was born in Saudi Arabia but brought up in the UAE – where she has been residing for over 24 years. She had started her career in the corporate world as a supply chain executive at an FMCG (fast-moving consumer goods) company, before she decided to venture out on her own.
With an educational background in chemical engineering and renewable energy engineering, Khafagy worked for over seven years in the consumer goods sector before she took on the entrepreneurial role to deal with the industry’s challenges.
“My partner is a serial entrepreneur with expertise in marketing and branding. Our profiles came together perfectly to launch ‘Upfill’, a UAE-based business that focuses on making vegan, sustainable, and waterless personal care products.”
How did this business idea come to existence, and who funded the business?
Traditionally, cosmetics are made up of 70 per cent water, 10 per cent non-recyclable plastics and 10 per cent harmful chemicals; only 10 per cent of these products are active ingredients.
With a vision to create natural products, after exhaustive research and development for over two years, Khafagy’s company devised a product formula containing 100 per cent active ingredients, all packaged in a solid form to help preserve the environment.
"My partner and I have self-funded the entire business. We spent about Dh147,000 to Dh183,000 ($40,000-$50,000) in the first six months of activity. Approximately Dh36,000 [$10,000) of the total spend was allocated for the company set up, trade licence and visa. Moving forward, we will be initiating a fundraiser to support the firm's expansion into more regional and international markets."
"Apart from the initial costs of research and development (which had been incurred for two years before the inception of the company), we had to pay for the company set up, the municipality registration fees, all costs related to production and shipping, as well as customs duties and intellectual property. We needed to ensure that we were obliging with all necessary legalities."
Here are 4 lessons Khafagy learned in her journey to set up a business at a young age:
Lesson #1: Seek advice and guidance from the entrepreneurial community and legal experts in the UAE to learn about setup options and other financial implications
Like most entrepreneurs in the Middle East, Khafagy and her partner had studied and analysed the different company setup options available in the UAE.
They found that the most suitable choice for their specific business activity was to establish their company as a freezone entity. They made this decision after various engagements and meetings and evaluated the financial implications of each setup option.
"Initially, we needed to educate ourselves about the corporate laws of the UAE and our rights and duties as business owners in the country. We also had to clearly understand all the cost implications, which sometimes we only found out in the fine print.
"The entrepreneurial community in the UAE have given us advice and guidance in our choices and directed us to our accounting firm, which is another must-have for any entrepreneur. Through our network and contacts, we received legal advice to ensure that we are operating as per the laws of the UAE."
Lesson #2: Always keep a provision for unexpected expenditures, especially in the first year of setup and operations
Khafagy planned for their business’ initial funding during the initial two preparatory years, during which they saved the amounts that they had accounted for in their business plan. “It was also essential to include a margin of extra expenses, which proved our needed safeguard," Khafagy added.
"Our biggest recommendation to future entrepreneurs is to account for approximately 20-25 per cent for 'unexpected expenditures' that will likely arise during the first year of setup and operations."
Lesson #3: Look for ways your business can do good for the environment and planet
The business fostered a long term partnership with Azraq, a UAE-based marine conservation organisation. "It's more like an investment for us because we had built our brand with an outlook of eliminating water waste from the beauty industry and conserving our marine life," said Khafagy.
"Since we wanted our brand to 'walk the talk' from the very beginning, we invested in creating an artificial coral reef that we sank off the coast of Dibba in the UAE. Our commitment with Azraq is ongoing; for every 1000 products that are sold, we will add 1 meter of the artificial reef as our target is to have the world's biggest artificial reef right here in the UAE."
Our biggest recommendation to future entrepreneurs is to account for approximately 20-25 per cent for 'unexpected expenditures' that will likely arise during the first year of setup and operations.
Lesson #4: Set a business idea from market needs, find a niche and be client-centric and not product-focused.
Khafagy considered that the first step when you are looking to start your business in the beauty world is to find a niche. "The beauty industry is quite saturated, there are many players, but the game rules keep changing rapidly, so there is room for disruption.
"Your business idea must come from a market need. Many entrepreneurs mistake is being product-focused instead of client-focused, which is a purely speculative gamble. Focusing on a client-centric business increases your chances of business success and creates value beyond the enterprise.
"You have the next big idea, which is excellent, but the route can be very slippery without solid financial aptitude. Therefore, before diving into the world of entrepreneurship, people must learn the basics of accounting, business planning, finance, and corporate law," added Khafagy, as she shared from her experience.