8 Common reasons why a business enterprise face failure in Dubai

Are you really serious about starting a business in Dubai? Read this article to get some valuable information and precautions regarding business risks in Dubai. Start your business with a professional-oriented approach and transform your failure into business opportunities.

When does a business enterprise face failure in Dubai?

Now you may wonder – “When I am about to start a business in Dubai, why should I read this and demotivate myself”?

But when you are really serious about your business plan in Dubai and want to do well, the failure lessons can be of great help. Startup ventures and young investors can learn from these and prepare themselves to be proactive and professional-oriented in their approach. Business failure in simple terms results from inadequate strategy and mismanagement. And the consequences of the same lead to no or less profit resulting in failure.

Here are the 8 major reasons for the business failure in Dubai.

Lack of market research

Many startup ventures end up in failure due to the lack of market research. An in-depth study of the market like customer preferences, target customers, demography studies must be conducted prior to business set up. If the new product launched by the company has no buyers, it will be difficult for the company to make an impact. Customer buys a product or a utility based on certain preferences and needs. If those needs are not met, the product would remain in the store. Understand those preferences, conduct interviews with potential buyers and get to know the market pulse.


Complacency is one of the most common reasons for business failure and it has got to deal with individuality or character of a person. Time-management and self-decline are the basic ingredients of success irrespective of your endeavour. And if you compromise those, the consequences will be evident in your business and personal life.

Credit-related issues

An investor should be updated about the working capital expenditure of the company. Startups are denied credit facility for the first 6 months of operation in UAE. Have clear communication with the bank on matters regarding the overdraft facility. The bank should be informed beforehand about the financial status of your business. Don’t hesitate to talk with the concerned bank authority regarding cash flow issues.

Employee related issues

Work-related delays or inadequacies can occur when your employees lack the required knowledge and expertise. The problem is prevalent among both small and large businesses. Matters related to employee recruitment and management must be done in the most professional manner.

Inappropriate location of the company

Business concerns that require physical presence or involvement of the people in the form of purchase should have a favourable location. This applies to restaurants, retail outlets, stores, groceries etc. Lack of parking area, accessibility issues, traffic congestion can really affect the number of buyers.

Inexperience and lack of expertise

Many startups face failure due to lack of adequate knowledge and inexperience in core company management issues. Matters related to marketing and finance are very crucial as far as any company is concerned. All legal issues must be sorted out in the most professional and timely manner.

Shortage of working capital

A limited understanding of the running cost of the business can seriously affect your working capital. One must be very practical when it comes to running costs.

Lack of understanding of the local market and business culture

At times foreign investors may find it difficult to understand the local market. Lack of business contacts, etiquettes can affect the overall market presence of your company. Understanding the business culture prevailing in Dubai and UAE plays a vital role in the progress and success of your business.

The above-mentioned are the aspects that you need to be aware of before you set up business in Dubai, UAE. This article can also serve you as an introspective guide to figure out what went wrong in your existing business and fix them at the earliest.

Transform your failure into business opportunities

Dubai is the commercial capital of the UAE and no wonder it serves as a business haven for investors across the globe. The centre-stage geographical location of Dubai offers an added advantage in connection with transportation and trade. Certain business sectors in Dubai have witnessed a significant increase in investment during the last 5 years. And the business sectors are tourism, real estate, technology, media and finance. If you are planning for a minimum investment, maximum return strategy here is some of the most lucrative options.

Real estate – Dubai is not just a business centre, it is also one of the most preferred tourist destinations in the world. Dubai is home to Burj Khalifa, Dubai mall, an artificial island, and various other residential and commercial endeavours. Dubai has the unique recognition of being the 6th most visited city in the world. As per the statistics, Dubai welcomed around 15.8 international visitors during 2017-2018. The inflow of visitors and expatriate workforce constitute a significant share of real estate revenue of Dubai. Dubai World Expo 2020, which will be held in October 2020 would create huge accommodation requirements in and around Dubai. Based on the report published by the Dubai Land Department, Dubai witnessed a 12% rise in real estate deals in 2019 compared to the previous year. This amounts to an AED 106 billion-worth transactions.

Advertising - Advertising sector of Dubai has witnessed significant growth in recent years. Many advertising and digital media professionals have moved to Dubai in large numbers from Asian countries like India realizing its immense potential. If you are a creative individual, the opportunities revolving around advertising is manifold. Some of the promising areas are Animation, branding, 3D modelling, managing advertising campaigns etc.

Transportation – Tourism and transportation sectors are related to each other. The transportation sector generates significant revenue from tourism. The Dubai World Expo 2020 is promising for the transportation sector as the event is estimated to bring around 11 million international visitors. Companies that offer taxi services and mass-transportation services can really benefit from the 6-month mega event.

Recruitment firm –UAE is in need of skilled labourers and professionals. IT and medical professionals have huge opportunities in Dubai and UAE. 91% of the UAE workforce constitute of the expats. Accounting firms and construction firms require skilled employees. There is always scope for recruitment firms in Dubai.

For further queries and support, please contact Kiltons Business Setup Services LLC. Our experiencedbusiness set up consultants in Dubai can guide you in the right direction.


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