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Challenges of Business Environment

The benefits of establishing a business setup in UAE is talk of the town among entrepreneurs and businessmen. Undoubtedly, UAE is land of the opportunities and it brings opportunities and excitement, but the journey ahead is not as attractive as it seems. It is equally important to discuss and address the complexities and challenges of business environment. 

If you are an entrepreneur and going to start a business, it is important that you have an idea about the challenges that can come your way and how to navigate through them.

13 Challenges of Doing Business in UAE

 In this article, we will discuss major challenges in Dubai that you may face during business setup in UAE.

Finding Local Sponsor

A local sponsor is a person who holds 51% of the business, and it is mandatory to hire them for doing business in UAE. A local sponsor has a significant part in your business, it is important to find a sponsor who is responsible, has similar goals and mindset. It can be challenging to deal with unprofessional and unreliable local sponsors.

Business grows effortlessly when investor and local sponsor has same mindset and supports each other’s ideas while making any decision related to business. 

Regulatory Requirement 

Understanding the rules and regulations is a big challenge for entrepreneurs as they are different from their home country. Especially in UAE, the rules are strict, and there is no flexibility for anyone. For doing business in UAE smoothly, one must follow the rules; otherwise, unpleasant consequences can take place.

Understanding and following the rules and law is important if you want to stay out of trouble. Investors can ask a local for guidance to avoid challenges before investing in UAE business.

Tech Cost 

Technology is a necessity for almost every business setup in UAE, irrespective of the nature of the business. It can be related to education, entertainment, retailing, restaurant or any other sector. To stay one step ahead and competitive, the latest technology is used. For entrepreneurs, investing in technology can be challenging as it costs a lot, and they may not have enough knowledge to choose the right tech for their specific business. 

Another issue related to technology is that no one can predict how long it will stay relevant or when it will become outdated.

High Competition  

UAE is the center of attraction for each businessman because of its favorable environment and hundreds of business opportunities that are not available in any other country. It can be difficult for entrepreneurs to stand out and compete others in their business activities due to high competition. However, it shows that business is profitable and in demand but often results in loss. There is a need for unique and novel ideas so it can attract more customers. 

Choosing Right Location 

The factors that significantly contribute to maximizing the profitability of a business also include choosing the right location. As customers and their demands vary with location, it is important to consider a location that is suitable for your business type. It can be challenging to find the best location at a low cost for doing business in UAE.

Project Funding

Although the UAE offers funds to businessmen, it is not an easy process. Getting funding for a project is a big challenge and a time-consuming process as everyone is also in the same race. If you are an entrepreneur, applying for funding in banks, it is quite possible that banks simply refuse you a loan. Reason being, a loan is approved after several meetings, paperwork, and showing a record of your progress. 

Complaints of Customers 

In business, investors have to listen to complaints and sort them out calmly. In UAE, customers’ words weigh highly against businesses and it can be challenging to navigate these issues to maintain a good impression and reputation in the business market.

Management of Staff

Staff plays the most important role in business activities, and hiring good staff is crucial. Your workforce can make or break your business. While selecting, choose members who have valuable skills, are competent, and have experience in business work.

Unique thing about staff management of a UAE business is that they all come from different areas and have different mindsets, so there can be conflicts.

Cash Flow Management 

It is easy to expand business in the UAE because it provides favorable conditions for investors. However, expanding business without good planning can be risky. Having a complete understanding of cash flow management is essential for business expansion. Many business startups flop as they do not have cash management skills. To avoid such a situation, one should have an idea of the company’s earnings and ability to grow. 

VAT Eligibility 

In 2018, the UAE introduced a value-added tax system for businessmen. Businesses have to pay VAT on services other than food items and the education sector. It is mandatory to follow these rules, and for entrepreneurs, understanding the rules and purpose of tax can be challenging. 

Communication Barrier

The way of communication is also one of many challenges of the business environment. For foreign investors, it is difficult to understand the language and the style of locals. But it is crucial to talk to customers in a professional way and in their style. It might be a challenge for entrepreneurs, but with time, the communication style gets better.

Delays in Payments

On-time payments ensure a smooth business and maintain financial stability. In business, delays in payment are common, and they disrupt the cash management flow and affect the reputation and reliability of the company. Dealing with financial stress can be challenging for an entrepreneur.

Finding Distributor 

Finding a distributor in the UAE is not a walk in the park. Distributors play a crucial role in business by delivering products to the market and to customers. In business setups, careful research must be done to find a distributor. 


At the end of this article, we hope that it is clear that it is important to focus on the hurdles and obstacles of business. These challenges are part of any business journey, and every businessman faces them at some point. Addressing these challenges with a strategic and adaptive approach makes a significant difference and sets you apart from others. Learning from these challenges can make an investor a good competitor and a skilled and successful businessman. In tough times, seeking guidance and discussing the issues with businessmen who are experts and have valuable knowledge can be helpful.

Frequently Asked Questions (FAQs)

What are business challenges, and what are the main challenges in Dubai?

Business challenges are hardships and complications that are encountered by businessmen and can be overcome by a strategic and adaptive approach. The business challenges in Dubai are similar to those in the UAE and other countries. It includes high competition, language barrier, selection of business partners, and management of cash and staff. 

How can experts help in the challenges of business environment?

The entrepreneurs have little knowledge about the difficulties of business. However, experts have a complete understanding and have different strategies to deal with hurdles, so seeking help or advice from business experts can be advantageous for you.  

Can anyone start a business in Dubai?

Although anyone can start a business, it is not as easy as it seems. The business demands more than just money; it demands learning, a proactive mindset, and a deep understanding to launch a business. Without these requirements and hard work, business may flop.


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