From getting a license to setting up a bank account, creating a website to buying raw materials, there are different costs to factor in before starting a home-based business in the UAE.
Dubai: The high cost of starting a business may have deterred many skilled and talented entrepreneurs from taking off. However, over the past three-four years a lot of initiatives have been rolled out to encourage and support the UAE’s entrepreneurial community.
With the rise of e-commerce, Dubai Economy launched the ‘DED Trader’ license in 2017 to support business activities online and through social media. As the COVID-19 pandemic hit the UAE and consumers turned online, many entrepreneurs saw this as an opportune moment to launch their long-dreamt of business endeavours from home. As such, almost 10,000 DED Trader licenses was issued until the end of 2020, of which more than 50 per cent went to women.
Several other free zones in the UAE, including Ras Al Khaimah Economic Zone, Creative City Fujairah, and Sharjah Media City Free Zone (Shams), also offered flexible packages to enable home-based start-ups. Today’s article is about three such home-based online businesses started by women.
How I started my own bespoke art business from home?
Dhan Creatives is an online home-based business selling bespoke, handmade art products. It was launched in the beginning of 2020 by a survivor of domestic violence and single mother Dhan Tope at an initial investment of roughly Dh2,000. While the DED Trader license cost Dh1,300, Tope spent Dh300 to register the website on GoDaddy and sought help from a family member to create the website design. She spent approximately Dh500 to buy the initial supplies and on day-to-day operating costs including client meetings, transportation and phone calls.
“Earlier a trade license would cost roughly Dh12,000-15,000 making it almost impossible for individuals like me with meagre savings to even think of starting a home-based business. But the affordably priced DED Trader license was very encouraging, which allows me to sell products online.”
Tope is an artist who turned her passion into a home-based business. Since she always pursued art and painting, while starting the business Tope did not have to spend a lot of money to buy the initial supplies. Now she spends roughly Dh1,000 per quarter to buy supplies. However, she pointed out that hidden costs can add to the operating expenses taking it up to even Dh2,000 in certain months.
“The logistics of sourcing art and craft materials in the UAE is expensive. Aside from Dubai Library Distributors and Mesco (Middle East Stationery), other places selling art supplies are quite expensive. The availability of raw materials is limited too. In addition, calculating the tangible value of an art piece versus hours spent in doing it is quite tricky. In my case, creating samples especially for corporate orders adds to the operating expenses. For instance, once when I did a wall mural project, I had to pay Dh300 only to demask the floor to avoid causing damage.”
Gradually Tope has learnt to do her pricing prudently accounting for overheads and cost of raw materials. Since her goal is to make art affordable, Tope believes in offering a fair price. “My profits are low, but it covers the cost of the annual license renewal and raw materials. When I started Dhan Creatives, I did not have much savings nor end of service money to bank on. I have struggled to bootstrap. Unfortunately, angel investment or seed funding for handmade art business is almost non-existent.”
Smart tips: Since art supplies tend to be expensive in the UAE, request friends and family to buy materials when they are travelling therein saving cost. For overseas orders, instead of spending on courier services try to find someone who might have baggage space and will be willing to carry the products.
How I started a customised pet accessories business after job loss?
After completing her post-graduate degree in Pharmacy Management in India, when Keertana Neeraj returned to the UAE in 2018 she struggled to find a job. In 2019 Neeraj found a job that she lost due to COVID-19 pandemic related redundancies last year. That’s when she decided to start her own home-based business launching Auggie’s Attire, an online customised pet accessories concept in September 2020.
The business started at an initial investment of roughly Dh12,000. This included the DED Trader license at Dh1,300 plus an extra charge of Dh500 to the consultant. Neeraj bought raw materials worth Dh5,000, sewing machine and other printing equipment for Dh4,000-5,000. In addition, she pays a monthly charge of Dh110 for the Shopify powered website, coupled with a monthly maintenance fee of Dh200 for the zero-balance business banking account.
“This is only the start-up cost after which I have had to spend a couple of thousand dirhams to buy more equipment. Since I store the products at home, I don’t have to pay any extra warehousing charges. On the other hand, I have to pay 3.5 per cent per transaction on sales made via Zbooni (mobile application for social commerce in UAE) plus an additional Dh10 when I transfer money made from the sales to my business bank account. So far, I have not done much social media advertising, barely spending Dh500 on Instagram campaigns. This is an expense I have to factor in, going forward.”
When asked about hidden costs, Neeraj said participating in pop-up events and exhibitions is a hidden cost. “Depending on the location and duration of the event, charges can range anywhere between Dh100 and Dh1,000. As a start-up, I have to participate in at least a few exhibitions to create brand awareness and build a customer base.”
Auggie’s Attire has started generating profits as initial start-up costs have been covered. “Having run the business for almost 10 months now, I have learnt to factor in manhours, logistics and payment gateway related costs into my pricing.”
Smart tips: Even if it requires ploughing back a major part of the earnings into the business, constantly expand your product line to be ahead of competition. Also, keep aside some money for marketing initiatives.
How I leveraged my skill to start a visual content business?
Specialising in creative content production Sapphire Fernandes decided to quit her full-time job in 2018 after seeing the first signs of failing health. Being aware of the challenges associated with a high-pressure job, Fernandes had started putting money aside from her salary and side hustles with the intent to start her own business. This enabled her to launch Boho Creatives specialising in photography, videography, design and content production soon after quitting her job at an initial investment of Dh55,000.
Here is a break-up of the start-up costs: annually renewable trade licence from Creative City Fujairah including three activities (Dh15,000), a Nikon DSLR full frame camera and lens (Dh25,000), an Apple iMac computer with editing software (Dh13,000) and monthly charges for a search optimised website and domain on website building platform Squarespace (Dh150).
“My first year of operation was spent in recovering the initial investment. Then the pandemic hit, and business dried up quickly. After eight months of hiatus in 2020, I have finally started making profits in 2021. It is important to understand that the initial investment will only get us started. We must account for operating costs such as phone, water and electricity bills (DEWA), fuel and in my case renting certain equipment for photo and video shoots. These can go up to even Dh1,500 per month. Due to various project related expenses, I have not been able to spend a dime on marketing. Due to word of mouth and strong relationships, I have been fortunate to sign some retainer projects but setting aside some marketing spend is essential to generate awareness.
Smart tips: When I started the business, I used to avail accounting services from a company at Dh2,500 per quarter, which added Dh10,000 to my annual expenses. Post-pandemic I have signed up for an online accounting service on QuickBooks that will cost me Dh50 per month. Also, I am considering switching from a Dh100,000 minimum balance to a zero-balance business account.