14th July 2022
Starting a new business is exhilarating, but it isn't easy. Statistics report a staggering 90% of startups fail (Failory) and whilst there are many reasons for failure, the second biggest reason (29%) is due to lack of money (CB Insights).
Starting a business which sells products is particularly difficult, especially where cashflow is concerned. Some of the things to consider include:
Business license to sell your products in Abu Dhabi
Stocks of products, or materials to make products, will need to be purchased in advance, unless you are opting for the drop shipping method.
Whilst supply chains are currently a global problem across industries affecting delivery timescales, combine this with current high oil prices and the result is the that the cost of shipping has gone through the roof and it's not unheard of for suppliers to add surcharges to orders with long fulfilment times to cover their ever increasing costs.
Adapting products for the local market.
Time and costs to make products.
Packaging design and production, including instructions, which if they are multi-lingual, will require translations.
If you are selling regulated products, it will be necessary to get them registered and approved to ensure their conformity with the UAE's standards.
Time and costs to set up sales channels.
Marketing costs, e.g. website, social media, trade shows, PR etc...
As you can see, there are a lot of up-front costs to be covered. However, the authorities have just made it easier for new companies setting up to sell products in Abu Dhabi.
Getting licensed to sell products in Abu Dhabi
Traditionally, all business licenses in Abu Dhabi required a commercial premise to compliment the activities of the business. Whilst, it of course makes sense for businesses to have a registered address for communications etc., it was a huge financial barrier for new businesses and startups.
Just think for a moment... Startups have to creatively operate in a lean manner, keeping expenditure to an absolute minimum, because it generally takes times for businesses to generate momentum and get sales. Barter agreements with other startups is one way businesses can save costs by providing something in exchange for something they need. Another common way of startups saving money is by starting out at home - building up their business from the kitchen table, or using a spare room as the storage/order fulfilment area. This saved on expensive commercial leases.
Even for foreign companies stepping into the Abu Dhabi market, the need for leasing a commercial space in order to get their business licence (aka trade license, commercial license) issued was often a financial burden because it didn't fit their operating model or they didn't need the space immediately.
Abu Dhabi just made it easier to start a new business selling products
Abu Dhabi has just removed the requirement of leasing a commercial premise for 1,200 of its business activities, during the first year of operation. The activities benefitting from this exemption make up almost 30% of Abu Dhabi Department Of Economic Development's (ADDED) business activities for mainland companies and include wholesale and retail trading activities, which means selling products.
So whether the best activity for your new business in Abu Dhabi is 'wholesale of games and baby toys trading' or 'retail sale of sanitary ware and fittings' or anything in between, this new relaxation of requirements will save you money.
What this means for new businesses is you can apply for you business licence, and providing the activities selected for the license are on ADDED's exemption list, you will not be required to lease a commercial premise. This gives new businesses time to mobilize and develop. However, the exemption is for the first year only, so a commercial lease will be required when you come to renew your business license at the end of year one.
What are the benefits of this exemption for new businesses getting licensed in Abu Dhabi?
Quicker issuance of your business license means quicker market entry.
Save time and money - if you don't need to lease a commercial premise to start your business.
Focus on developing your business - building relationships, marketing your products.
Frees up cash which could be better utilized in other areas of your business.
Gives you time to select the best location for your business' future retail space or warehouse.
One less thing to worry about.
Are there any disadvantages to be aware of?
Potentially yes! It really depends upon how quickly you expect to start getting sales.
You may experience difficulties opening a business bank account. Banks generally require a physical premise associated with a business licence for opening corporate bank accounts, and will even arrange inspections as part of their due diligence. However, some UAE banks will open corporate accounts for Tajer licenses and Freelance licenses, which don't require a premise, so there are likely to be limited options, meaning you may not get much of a choice when it comes to comparing the terms and fees. Banks regularly change their products and application requirements in line with regulatory conditions from the UAE Central Bank which they need to comply with and based upon their own appetite for risk. So, shop around.
For retail sale activities, be aware, that in order to set up an online payment gateway on your website for customers to purchase directly from you, you will need to have a corporate bank account. A way around this would be to sell indirectly through online shopping portals, but you would need to check whether they have restrictions about paying the proceeds from your sales into a personal account rather than a business account.
If you intend to employ staff during the first year, you will need to lease a commercial premise first because employment visas relate to the business and its premises.
When your business license is due for renewal, after 12 months, you will need to have secured a commercial lease at that time in order to be able to renew your license.
Is the new lease exemption just for wholesale and retail trading activities?
No. In total, the lease exemption for the first year of operations is applicable to 1,200 business activities in Abu Dhabi and includes activities in the following sectors:
Rental and installation activities
Contracting, maintenance and installation activities
Consulting and services activities
Sewing and detailing activities
Salons and beauty centers activities
Management offices activities
Selling meals and kitchens activities
To view the complete list of activities which no longer need a commercial lease (Tawtheeq) for year one, click the button.
How to get the best experience setting up your new business in Abu Dhabi
I been setting up businesses in Abu Dhabi for over 10 years now and I am still astounded at how people don't focus their time and energy correctly, which results in them taking much longer to start generating sales and ultimately getting their ROI. And, this is from my personal experience of working with all sizes of businesses, from one-man-bands, to listed multinationals. The solution is simple.
If you want to get your new business off the ground as quickly as possible in Abu Dhabi, then you need to focus on developing the business. By this I mean investing your time and energy into building relationships, promoting your products and services, networking and really getting involved with business and sector events in Abu Dhabi. Get your name into the market and focus on building your reputation and credibility.
Instead, I regularly experience top international executives, decision makers and business owners, waste their time on trying to fathom how to establish their business and employ staff. Whilst, on the surface, the DIY-route might appear to save you money, it's actually a false economy. Doing it yourself will take up so much of your time, finding out to do things, where to go, and going back-and-forth if things aren't quite right and at the end of things, still finding that you need to engage professional help. Rather than spending you time on activities which don't generate money for your business, such as setting up your new business and organizing work permits and employment visas for your staff and residence visas for their families, your time is far better invested in activities which will make you money, such as my suggestions in the paragraph above.
Therefore, I strongly urge you to engage professionals, like us at Gateway Group, to manage the setup of your company in Abu Dhabi. You will benefit from a faster time to market and having experienced, on-the-ground support giving you peace of mind, that your business is correctly registered and fully compliant with no nasty surprises hidden around the corner.
Connect with us to get started.
Request a call back for Gateway Group to setup your business in Abu Dhabi. Click the button!
Gateway Group - Who We Are And Why We Exist
With offices in Abu Dhabi and Dubai, Gateway Group helps international companies get registered to do business in the United Arab Emirates (UAE). We are the authority on business licenses and visas for expats in Abu Dhabi and Dubai.
Founded and headed up by husband and wife team, Nathan and Jenny Hunt, Gateway operates with it's core values at heart: Honesty. Trust. Integrity. We do what's in the best interests of our clients rather than what's best for our bottom line. After all, we are just like our clients - we've invested our own money into our business licenses, so we fully appreciate what a big investment a commercial license is. We believe this uniquely positions us to provide our services with understanding and empathy.
From our own first-hand experience and knowledge, generated from living and working in the UAE, as well as setting up companies and building relationships here, we are able to offer unique insight and guidance to help our clients successfully step into the market and do business in the UAE.
We value long-term relationships and our incredible client retention is one of our strongest assets, which is extremely rare in our industry.
Founding Partner, Jenny Hunt, has been setting up businesses in Abu Dhabi and Dubai for over 10 years and is ranked in FORBES' Top 100 Most Influential Women In The Middle East!
Connect with us for your international expansion into the UAE. Get the best company registration experience, as well as employment and residency visas for your expat staff and their families, in Abu Dhabi and Dubai.
Request a call back for Gateway Group to get you licensed to do business in the United Arab Emirates. Click the button!
☎️ +971 600 567562
Written by Jenny Hunt
Founding Partner, Gateway Group, Abu Dhabi & Dubai, United Arab Emirates
FORBES' Top 100 Most Influential Women In The Middle East
Gateway Group - We're Pretty Good At What We Do
Top 25 Abu Dhabi Blogs And Websites - Feedspot (Ranked 7th, 12 July 2022)
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Most Client-Focused Company Formation Specialists - UAE 2021