How to Start a Small Business in Dubai - Research Proposal Example

How to Start a Small Business in Dubai (Name) (University) Table of Contents Table of Contents 2 Chapter one 3 1.0 Introduction 3 1.1 Background of study 3 1.2 Aim of the Study 4 1.3 Research questions 4 1.4 Objectives 5 1.5 Significance of the Study 5 CHAPTER TWO 6 Literature review 6 2.1 Business background 6 2.2 Legal procedures and processes 6 2.3 Ownership of Business 7 2.4 Foreign Investors 8 2.5 Startup Challenges 9 2.6 Business Examples 10 CHAPTER THREE 11 Methodology 11 3.1 Research design 11 3.2 Participants 11 3.3 Sampling technique 12 3.4 Inclusion and Exclusion Criteria 13 3.5 Data collection instruments 13 3.6 Pilot Study (Reliability and Validity of the Tools) 13 3. 7 Method of Data Collection 14 3.8 Timescale 15 CHAPTER FOUR 16 Method of Data Analysis and Presentation 16 Limitations 16 Chapter five 17 Discussions 17 References 17 Chapter one 1.0 Introduction Different individuals have different reasons why they start a business. Some find it disturbing staying idle the whole day and other are looking for chances to develop themselves financially (International Small Business Journal 'Entrepreneurial Exit',2013). In either way, people in business always search for places with greater opportunity for excellence. Some locations have a higher probability of success than other due to various reasons. Some of these reasons include the availability of infrastructure, higher demand of proposed goods and services, Low cost of production, favorable legal system and chances for future expansion(International Small Business Journal 'Entrepreneurial Exit',2013). Dubai is considered as the business capital of the United Arabs Emirates with the favorable economy for both local and foreign investments. Due to that fact, the state of Dubai has become a business hub amongst Arab nations. This study tends to explain and explore how a foreign or local investor interested with business can establish a small business in Dubai (Business Startup Dubai | 5 Do’s And Don’ts To Get Started 2016). What are the legal requirement and the registry process? Who can and who cannot start a business in Dubai? In addition, the study tends to explore the most appropriate businesses to start, benefits and challenges of establishing a small business in Dubai. 1.1 Background of study The Nation of the United Arabs Emirates (UAE) is a business hub. Dubai as a commercial capital of the country offers access to more than two billion customers markets situated in West Asia, Africa, CIS countries, Middle East countries as well as Eastern Europe(International Small Business Journal 'Entrepreneurial Exit',2013). In the region the economic activities are controlled by the individual as well as the federal government. Dubai offers business operating environment that is not highly restrictive(International Small Business Journal 'Entrepreneurial Exit',2013). As a result, the state has provided business conditions that are highly attractive to both local and foreign investors. As a local investor, starting a business in Dubai requires only license registration and some other few legal formalities. For a local investor, there are no minimum amount of capital is needed but a minimum of AED 10000 is recommended (Business Startup Dubai | 5 Do’s And Don’ts To Get Started 2016). Local companies are allowed to deal with accountants, legal consultants and other management companies carrying on business in the country. In addition, the investors are required to be in any UAE bank for the reason of conducting the routine operational transaction(Business Startup Dubai | 5 Do’s And Don’ts To Get Started 2016). The Dubai government offers different types of investment for foreign investors which include special free zones, direct sale, representative office by a local, commercial agency arrangement and limited liability companies (Mackenzie,2016). 1.2 Aim of the Study The aim of the study is to explore and discuss how to start a small business in Dubai for both local and foreign investors (Mackenzie,2016). To evaluate different types of business startups, challenges during startups and reasons why one should start a business in Dubai (Mackenzie,2016). 1.3 Research questions This study seeks to answer the following questions; 1) What are various reasons to start a business in Dubai? 2) What are the legal formalities required to start a business in Dubai? 3) What are ordinary businesses available in Dubai? 4) What should one do to maintain his or her business in Dubai? 1.4 Objectives The research study has the following objectives 1) To outline and explain various reasons for starting a business in Dubai. 2) To understand and discuss various legal formalities required to start business in Dubai 3) To understand and evaluate different businesses available for startups in Dubai 1.5 Significance of the Study The importance of this study is to help different individual’s locals or foreigners, who have the willing to start a business in Dubai to have a clear view of all the requirements needed for a successful startup. In addition, the study has an intention of putting the theory learned in class into practice (Business Startup Dubai | 5 Do’s And Don’ts To Get Started 2016). CHAPTER TWO Literature review 2.1 Business background The Dubai City is globally popular for its great opportunities for businesses. In 2014, the state was ranked as the 5th most affordable and 1st for airport connections to business districts. In addition, the state has been ranked for lowest corporate tax rate globally, 10th in cost of living and 17th in the cost of business occupancy (Mackenzie,2016). The Dubai state was initially established on revenue from the crude oil and the gas industry. Currently, these products provide only two percent of the gross national product (Mackenzie,2016). The country has focused the growth of the economy of businesses such as hotels, developing real estates, Information and Technology (IT) plus other related financial businesses like banking. The economy of Dubai has capabilities to accommodate changes to market dynamics and open new frontiers (Mackenzie,2016). 2.2 Legal procedures and processes Dubai being an investor’s solid state, starting a business includes only a few procedures of business documentation and registration (Mackenzie,2016). The first procedure is reservation of the company’s name which includes an application for registration at the Department of Economic Development (DED) (International Small Business Journal 'Entrepreneurial Exit',2013). The process takes only one day to complete with a cost of AED for initial approval and an additional of AED 210 for name reservation. The second step is to notarize the business Memorandum of Association which also takes one day at DED (International Small Business Journal 'Entrepreneurial Exit' 2013). The cost for this second phase is 0.25% of the capital for all three copies of Memorandum of Association and AED 5 for any page extra of additional copy. The third step involves filing company’s documents with the DED, obtaining the trade license and register for membership at Dubai Chamber of Commerce and Industry (DCCI) which only takes three days(Business Startup Dubai | 5 Do’s And Don’ts To Get Started 2016). The fourth step is an application for the establishment card at the ministry of labor which take only one day at the cost of AED 2000. The last step includes registration of the native workers with the department of labor which take one day and another registration of native works with the General Authority for Pension and Social Security which also take one day to complete(Business Startup Dubai | 5 Do’s And Don’ts To Get Started 2016). 2.3 Ownership of Business The property of any Business in the UAE requires above 51% participation of the local citizen's excerpts in some of the following circumstances; Where the law only allow 100% local ownership, in Airport and Jebel Ali free zones and activities with 100 % AGCC ownership. In addition, the wholly owned AGCC companies when they enter into a partnership with the UAE nationals can have different shares (Landed, & Landed 2016). On top of that, artisan enterprises or professionals who have 100% ownership permission or representative offices in Dubai also have different ways of ownership(Landed, & Landed 2016). The legal structures of business are guided by the federal law number 8 of 1984 which was later amended by the federal law number 13 of 1988 in the Commercial Companies Law which also governs the operation of foreign businesses(Landed, & Landed 2016). In simple terms, the federal law requires that the entire entity of any business must have a 51% ownership by the local citizen(Landed, & Landed 2016). The law defines seven business organizations with the set of requirements regarding shareholders, minimum capital events, directors and combination and dissolution of the companies. The following business group categories are included; general partnership company, public, Shareholding Company, Joint Venture Company, limited liability Company, private shareholding business, and share Partnership Company(Landed, & Landed 2016). 2.4 Foreign Investors There are three main things any foreign investors need to understand before starting a business in Dubai. To begin with, one must have a good knowledge of the area. This is done by performing extensive research on the corporate sector required with a viable business plan(Landed, & Landed 2016). A business plan should include a study on the conditions of the market, competitions and predictions of the future outcomes. In addition, one must be prepared to look for necessary investments from personal resources or bank(Landed, & Landed 2016). A good plan will attract local investors and possibly government support (International Small Business Journal 'Entrepreneurial Exit',2013). The law requires one to have a local partner who holds the majority shares of more than 51 %. The partner does not need to contribute to the startup capital or finance. When registering the business one must present to the Ministry of Commerce that he or she has a substantial amount of money for the investment(Landed, & Landed 2016). The required sum varies from state to state which is between $ 10, 000 to $ 50,000 United States of America Dollars. This is a guarantee against liabilities which you can withdrawal later. The local partner must be paid an agreed amount of money per year. For right continuous with the business, it is advisable to choose wisely your local partner since the law has given them the power to terminate the business if required. Creating a good relationship enables proper handling of local legal formalities and market(Landed, & Landed 2016) In addition to that, there are several other things need to be considered as a foreign investor. One of them is a selection of a free zone if you wish to own the business fully(Landed, & Landed 2016). This is the only way to own a 100% of business as an individual. However, it requires a company that does not need to be in the city(Landed, & Landed 2016). Businesses like restaurants and retail stores cannot be amicable in free zones. The rental in free zones may be higher than in non-free zones. Despite that, free zones offer various significant advantages like 100% ownership, quick startup, and duty-free customs boundary. 2.5 Startup Challenges There are various challenges and difficulties businessmen face when starting a business in Dubai which includes definition the exact and appropriate type of the investment to start or to license which consist the free zone trade or the other one. The other difficulty involves finding the local collect partner (International Small Business Journal 'Entrepreneurial Exit',2013). In addition, registration and filling the business documents is also tedious. Some of the licenses require professional qualification and interpretation so as to allow approval from the government. The last one is opening a bank account for those with less knowledge may be complicated and time-consuming (Landed, & Landed 2016). 2.6 Business Examples The following are various conventional profitable business startups in Dubai; Advertising because Dubai has high chances of having a lot of professions (Landed, & Landed 2016). Advertising agents can work even as they are at home using the internet. The second is apparel business. Dubai is the popular destination for clothing fashion shoppers(Landed, & Landed 2016). This can be very profitable. Other activities include art and craft making, automobile, education, e-commerce, computer related business, entertainment, restaurant, fast-food business, fish farming, green business, consultant, handyman services, IT industry, oil and gas and jewelry making(Landed, & Landed 2016). CHAPTER THREE Methodology 3.1 Research design A quantitative cross-sectional descriptive design will be used in this study. Descriptive research studies use different approaches to describing situations to provide more relevant information(Nieto-Rodriguez, 2014). The research design has been chosen because the study aim is to gather information from businessmen working in Dubai city to determine the various ways to start small businesses for either a local or a foreign investor (Nieto-Rodriguez, 2014). In addition, the study seeks to get information about various types of businesses familiar and basic knowledge about them. The other thing the study aim to obtain is about challenges these businessmen had during the startup. 3.2 Participants Probability simple random sampling will be employed in the study. Probability sampling is the random selection of members from the target population to minimize bias and enable generalizability of the results (Nieto-Rodriguez, 2014). In simple random sampling, the population members are identified, and the sample is selected using a form of random number generation. In this study, businessmen from ten streets in the city will be chosen to be the participants(Nieto-Rodriguez, 2014). A self-regulated survey will be used to gather the required information. 3.3 Sampling technique The sample size for a descriptive cross-sectional study can be calculated using the formula [Sample size (N) =t2pq/d2] (Nieto-Rodriguez, 2014). Therefore, in the current study the following parameters will be used: t = the standard normal deviate, which is 1.96 at 95%. P = the estimated proportion of the target population. According to the National Business Ethics Survey in The United States of America, the majority of people in business are no capable of participating in a research program, and only less than 20 % will comply(Nieto-Rodriguez, 2014). Assuming the percentage of people in business who will meet to the study will be 20% the sample for the research will be q = 1-p (1-0.2 = 0.8). D = the level of significance set at 0.05. Therefore, the sample of this study is N = 1.962 x 0.2 x 0.8 / 0.0025 = 126 The planned sampling techniques to be used will be simple random technique and proportionate stratified sampling(Nieto-Rodriguez, 2014). The research should be conducted in ten chosen streets of Dubai since each street has a different population of businessmen; proportionate sampling will be performed to make sure each stratum had an equal percentage of participants. To get the percentage of participants in each street, the below formulae will be used The total number of businessmen in Particular Street divided by a total number of businesses in all streets multiplied by 100%(Nieto-Rodriguez, 2014). To get the specific individual to participate in each street, convenient sampling will be used in such away only the business men available will be given questionnaires. 3.4 Inclusion and Exclusion Criteria The following inclusion and exclusion criteria will be used in recruiting businessmen to participate in the study: Inclusion criteria Must be a businessman in Dubai must be available on the day of research Must provide informed consent to participate in the study Exclusion criteria All businessmen outside Dubai Businessmen who are not available during the period of data collection Businessmen who declined to give consent to participate in the study 3.5 Data collection instruments The data collection instrument in the study will be a questionnaire. The questionnaire will contain fifteen questions about the business startup in Dubai. All participants will be supplied with one questionnaire and allowed to fill for a specific period(Nieto-Rodriguez, 2014). A questionnaire will consist of four sections. The first section will involve the bio data of the participant, the second portion will be composed of a type of the business being operated, the third section will consist of challenges the business is facing now and during the startup, and the last section will ask about job satisfaction(Nieto-Rodriguez, 2014). 3.6 Pilot Study (Reliability and Validity of the Tools) A pilot study of the self-administered questionnaire will pre-tested on ten businessmen from the ten business streets in Dubai to confirm reliability. The pre-test will be done to check the clarity of the questions, identify obstacles that might be encountered during data collection and estimate the time required to complete the questionnaire. During the pilot study, the researcher should confirm that participants understood each statement in the questionnaire so as to make changes if require in the instruments’ items(Nieto-Rodriguez, 2014). The businessmen who will participate in the pilot study will be excluded from the final sample. Face validity will also be checked to verify the accuracy of the instruments. Face validity is the extent at which instruments of the study measure what is supposed and work as designed. There are two types of validity that are measured, that is, external validity and content validity. The external validity measures an extent which the study can be generalized using a sample size. The content validity measures the appropriateness of the instrument contents (Nieto-Rodriguez, 2014). Both external and content validity will be assessed by providing the questionnaires to the target population. 3. 7 Method of Data Collection The researcher should contact the school and the required authorities to obtain approval for the data collection. A copy of this proposal and an official letter from the university should be provided. After receiving approval, the researcher should contact streets for information about the business men number and policies regarding research approval.. Next, 125 questionnaires will be distributed to the proportional stratified sample of each street along with a letter giving the research aim, contact information, and what was expected of the respondents and the informed consent document. Simple random sampling should be used to select the participants. In every street, each businessman will be assigned a unique number that was placed in a bowl. Those who will take the required number will be included in the research to make sure all businessmen were given equal chances of participation. 3.8 Timescale The data collection process took four weeks from date 15th February to date15th march 2017. The researcher should check all questions on the questionnaire and coded the data in numerical order. Questionnaires that will be coded and entered should be verified by the researcher to increase the quality of data analysis. CHAPTER FOUR Method of Data Analysis and Presentation Data should be analyzed using SPSS PC software, version + 21.0. Descriptive statistics (frequencies, percentages, mean, standard deviation and standard error) will be used to describe the categorical study variables(Nieto-Rodriguez, 2014) (age groups, gender, marital status, nationality, educational status, years of work experience, place of work, participation in actual business startup) and quantitative outcome variables (scores of different factor that contributed to startup, total score, self-regulation score,) (Nieto-Rodriguez, 2014). Student’s t-tests for independent samples will be used to compare the mean values of quantitative variables about the categorical variables, which have two categories(Nieto-Rodriguez, 2014). Levene’s test of equality of variances should be used to determine the significance of the difference of variability, and the assumption of equal variance should be considered in using the t-test statistic and its p-value(Nieto-Rodriguez, 2014). Data presentation should use presentation instruments such as tables, pie charts, and graphs to show various parameters of the research. Limitations The study has various limitations that may hinder smooth collection and performance of the research. One of the limitations is transport cost. The cost of traveling to various streets daily may be extremely high. The other is a failure of businessmen to participated fully. Most of the businessmen tend not to display their business strategies to others. The other one is the ability to use analysis tools like SPSS which requires special skills. Chapter five Discussions The discussions of the research will be based on the results of data collection and the literature review provided(Nieto-Rodriguez, 2014). A well outline conclusion and recommendation will be provided at the end of the discussions. References Business Startup Dubai | 5 Do’s And Don’ts To Get Started 2016). UAE Company Formation. Retrieved 17 December 2016, from https://www.varaluae.com/company-formation-in-dubai/business-startup-dubai/ International Small Business Journal 'Entrepreneurial Exit' (2013 International Small Business Journal, 31(7), 837-838. http://dx.doi.org/10.1177/0266242613506160 Landed, J. & Landed, J. (2016). Starting a Business Just Landed. Retrieved 17 December 2016, from https://www.justlanded.com/english/Dubai/Dubai-Guide/Business/Starting-a-Business Mackenzie, A. (2016). STARTING A NEW CHAPTER London Business School Review, 27(1)52-55. http://dx.doi.org/10.1111/2057-1615.12102 Nieto-Rodriguez, A. (2014). LEADERSHIP LESSONS FROM DUBAI Business Strategy Review, 25(4), 75-75 http://dx.doi.org/10.1111/j.1467-8616.2014.01129.x Tips & Advice | How to start business in Dubai, UAE| Alliance Business Advisors (2016). Alliance-dubai.net Retrieved 17 December 2016, from http://alliance-dubai.net/our-services/knowledge-base/how-to-start-business-in-dubai/ Top 10 Reasons to Choose Dubai. (2016). Visitdubai.com. Retrieved 17 December 2016, from http://www.visitdubai.com/en/business-and-investment/business-culture/top-10-reasons Read More