Business Valuation – CPA Audit Firm in Dubai

Useful Tips to Reduce Operational Cost of Business in UAE 2024

Naqqash Ahmad — Sat, 10 Dec 2022 09:57:06 +0000

Low cost is not something that enters one’s mind when he thinks about establishing a business in UAE because the skyscrapers, explicit architecture, and living standards in Dubai send a completely opposite message.

However, UAE is not only a glimmer and big budget. There are different proven strategies that can help you reduce your business’s operational costs, if implemented in the right way.

Dubai, in a very short period of time has become a center of attraction for starting up businesses because of its countless opportunities for new companies to grow and establish their setups in the market.

Any company aiming to establish in the UAE surely has a vision and strategic plans because running a business there has never been a piece of cake, especially in a place like Dubai.

Here are some possible effective ways that you can adopt to run your business with reducing Costs of Operation.

Experience Growth by reducing operational cost of your business in UAE

Follow the techniques given below to reduce operational costs and daily expenses of a business.

Look out for free zones:

Free zones can be a home for low cost business setup because of its affordable license policies, visa costs, tax exemption etc. Running a business needs space for an office which requires a good amount of budget that becomes a problem for low cost buisnesses but in the free zones you do not have to worry about the expenses.

To reduce the operational cost of business in UAE, free zones are benefiting from 0% tax exemption, the ability to spread their business in all other states and zero currency restrictions.

Some of the free zones are:

Dubai 1 Central
Dubai Media City
Dubai Airport Free Zone

Promote remote working:

Digital revolution has been transforming the conventional ways of running a business. It has provided easy and quick ways to communicate and operate that can help to reduce the business operational cost.

With the shrinking of hardware technology there is no longer need for a large infrastructure for offices where you have to invest on a large scale.

The implementation of cloud based technology provides you with so many options that give you the power to access the company systems via a variety of devices, conduct meetings, sell and advertise your products, search for different ideas from other established firms and companies.

Pros of remote working

Increase autonomy
Cost saving
Save time and infrastructure

Cons of remote working

Difficult to stay motivated
Sedentary lifestyle
Management challenges

Reduce supply expenses:

If you are about to start a business in dubai with low operational costs, always look for alternatives. Do not spend too much at once on the supply expenses- be this your office stationary or manufacturing, always look for a better deal somewhere that will help you to reduce the operational cost for business in UAE.

Switch to modern tools and find your niche:

You do not need to travel in order to attend a meeting with your business partners, that surely is not going to reduce your operational costs for business in UAE.

You can now have a detailed conversation, discuss ideas and projects with many people at once just by getting your hold on the modern tools such as zoom and skype meeting. You can also explore and learn different strategies of many successful entrepreneurs just by one click that in turn can help you focus on your business goal more efficiently.

Hire an accountant:

An accountant is a person who sorts out all your financial planning that is needed to run your setup. From planning a business to the formation of the company, and from government audits to paying taxes,it is only a qualified accountant who can handle these things professionally. So hiring an accountant can run up your firm smoothly and can help you to reduce the operational cost for business in UAE by consuming time and keeping the company safe from any major loss.

Hire interns:

Hiring interns at the beginning of your setup is another useful strategy to reduce the operational cost of business in UAE.
Interns are paid comparatively less than the standard worker employee while still executing the same level of work as an experienced person, another cherry on the top for hiring interns is when they are done with their training they can be hired in the first hand without paying any additional costs on training programs for new applicants as they will be already familiar with the job.

Sponsor your events to reduce operational costs for business:

If you have to host any business event to build good relationships with large companies in UAE, always look for the right sponsors to pay for it by giving them the advertisement and discounts on your services. Hosting a party or event in the UAE can be challenging but with the right planning, you can reduce the operational costs for business in UAE efficiently.

Review expenses to keep on track in order to know your position in finance, hire someone who is professional enough to deal and manage the finance.
Keeping a professional record is essential to reduce operational cost for your business in UAE as it can provide you with a realistic scenario about where and how much of your finance is consumed.

FAQs

How to maximize profts and minimize costs?

Never compromise on your product quality, use modern advertisement strategies, get in touch with already established firms.

Why reducing operational task is important for business?

With growing business revenues also increases, so it is important to maximize your profit by keeping a strict eye on your business operational costs. For a business to grow, the foremost concern is to control the budget by making weekly or monthly plans and follow them strictly

What are some effective methods that can help you to reduce your business operational costs?

Improve demand forecasting
Re evaluate your assets
Find less expensive suppliers
Outsource some of your company tasks

Online Advertising can improve your sales and lower your operational cost?

Advertising through social media platforms can help you to gain more audience at lower cost as compared to the old outdated advertisement ways which are costly and time consuming. Modern marketing strategies can reduce the operational cost of business in UAE.

What are the main factors that lead to the downfall of your business in UAE?

having sales with negligible profits
Investing too much in the office infrastructur
Hiring more staff more than the requirement
poor management of revenue
Investing too much on advertisement while selling compromised
Quality in the market

How to Easily Apply for a Business Loan in Dubai in 2024

Naqqash Ahmad — Sat, 12 Nov 2022 06:21:49 +0000

Dubai is a dream marketplace to build a new start-up due to its efficient business environment and business-friendly tax policies. But to start any business in Dubai, first, you need some investment or funds to raise primary capital. Getting a loan from someone is a great way to gather initial funding.

If you want a sufficient amount to start your new business, you can choose different options to apply for various business loans. This article will guide you through top tips for applying for a business loan in Dubai and the benefits of each business loan, including four critical types of loans.

Apply for a Business Loan in Dubai

To acquire a loan in Dubai, you apply to higher authorities, Banks, and other loan funding organizations.
You have to apply for a business loan in Dubai with a step-by-step procedure. Otherwise, you will end up with the need for more required documents. That might lead you to high waste time, ruin your plans and screw your business schedule.

Here is a step-by-step guide to applying for a small business loan in Dubai.

1. Check your eligibility for a loan in Dubai.

Many small businesses in Dubai are eligible for loans, and your business might qualify for one too. Here are the eligibility criteria. Compare it with your business details, and if they match, proceed to the next step.
Your business age must be at least two years old. It means you have had a registered business in Dubai for the past two years.
Your business per anum turnover must be at least AED 1 million (depending on bank/loan funding organizations).
Bank statement of your business for the last 6 – 12 months.
If your business fulfills the criteria mentioned above, complete the next step.

2. Choose the correct type of loan.

To apply for a business loan in Dubai, you must pick the right kind of loan for your business. There are four different types of loans in Dubai for a small businesses.
These four types are described below.

1. Standard business loan

This type of loan is a bit strict compared to others as it is strictly for business purposes. You have to repay a fixed monthly installment over an extended period. Another is that it typically has set payment terms unless the loan is under a variable rate.

2. Friends and family loans (F&F Loans)

You can directly approach your friends and family for the desired amount. You can achieve the goal of flexible payment terms when you acquire this kind of loan. On the other hand, you can lose your relationship or friendship if repayment goes the wrong way. You need to be wise when choosing this type of loan.

3. Credit Card Loan

You can get an advance payment from banks through credit cards. Most banks charge high-interest rates. If you are not good in revenue in the initial stage of your business, you may end up in debt.

4. Small business Associations (SBA) backed loan.

This loan is supported or backed by the government of Dubai. You could go for this type if your bank loan applications got rejected. But the worst side is that the government will impose harsh penalties on your business if you do not meet the payment terms.

3. Familiarise With the Concept of Islamic Finance in Dubai

Islamic Finance indicates all the financial ventures and investments adaptable to Sharia, which is the term for Islamic Law. Before applying for a loan in Dubai, you must be familiar with these. A few of the essential rules ate listed here;

You cannot earn interest through lending or borrowing money; it is forbidden.
You must make money earned through legitimate trade and investment of assets.
Your money must be spent in productive ways.

After considering all the above points, let’s move to the next one.

4. Prepare the correct documentation.

Suppose you prepare all your documents to Apply for a Business Loan in Dubai. It will ease and fast your next step in the procedure.
Here are the few primary business documents that the bank requires to apply for a business loan in Dubai:

past 6-12 months Bank statements
Bank application fulfilled form.
Association document / Power of Attorney of your business / Agreement document for partnership;
Your original trade license for verification;
Your passport copy (the one who apply for a business loan in Dubai).

Besides these essential documents listed above, some banks usually require additional documents. There should be with you as well:

Your Home Residence Tenancy Contract or your Sharing Accommodation Letter
Transaction invoices (should be high volume)
VAT Certificate
Financial Audit statements / Reports
List of employees provided by the Ministry of Labor
Your business Trade License

5. Final step

Visit any of your nearest bank branches, which have the facility to give you a loan for business in Dubai. Ask for their terms and conditions, minimum time to get access to your loan, range of business loans, repayment methods, repayment time, monthly repayment amount, and most importantly, their interest rate.

If you feel satisfied with their methods and conditions, fill out their application form. Attach all of the required documents and submit your application to the manager.

They will let you know the time taken to process your amount; wait for that time. And yeah, your loan is delivered to your business account.

Benefits, if you'll apply for a business loan in Dubai

No security requirements: free and easy access to finance with rock-bottom formalities.
Best and fair pricing, with a commitment to maintaining fees and profit rates amongst the lowest in the market.
Fast decision-making and processing turn-around times, with most credit decisions made within 48 hours.
Transparency; Clear and straightforward terms, conditions, and eligibility requirements.
Convenience; All installments will be automatically debited from your business bank account.
Flexible repayment tenure; Choice of repayment periods between 12 and 48 months.
Loan top-up facility after 12 months of satisfactory loan performance.
Buy-out option; you can take help to transfer your existing loans and credit facilities from another bank.
No requirement to submit audited annual statements.

Risk involved in business loans in Dubai

1. Credit Score

If you rely on debt financing too much in Dubai can help your personal or business credit score if you make timely payments. But if you will not be able to make timely returns, it will hit your reputations in Dubai and might affect you, when you will try to apply for a business loan in Dubai other time.

3. Personal Liability

If your company goes out of business, before it can pay its debts, you may be left with a personal financial load that may take years to settle and may even result in personal bankruptcy. Finance grows slowly in the first few years of operations to prevent acquiring too much debt before your company model sustains your operations.

4. High Debt

Occasionally, your company will discover that you can acquire many loans simultaneously or over time. Just because your company can do so does not imply it should.
If you secure a loan and then borrow more before the initial loan is returned, it could indicate that your company is experiencing significant financial difficulties.

5. Interest Rate Volatility

Depending on the type of business loan, you may be required to repay the principal and interest. A fixed-rate loan means your company will pay a fixed amount in interest over the loan’s tenure.

Each type of business loan in Dubai has its threat. Therefore, there are no exact right or wrong choices. Evaluating what loan features you prioritize more is crucial, which will help your business succeed. Being aware and prepared for the application process before apply for a business loan in Dubai can make the process much simple and more sophisticated.

FAQs

1. Where to apply for a business loan in Dubai?

Many banks give business loans easily in Dubai, such as:

ADCB
Emirates NBD
Mashreq Bank
Rak Bank and more

2. Is it a hassle-free process to apply for a business loan in Dubai?

Yes, applying for a business loan in Dubai is a smooth process. But sometimes, the process looks complex. Banks in Dubai demand to meet the set of companies’ requirements to approve a loan.

6 Valuation Mistakes for Business Owners to Avoid

Naqqash Ahmad — Mon, 16 May 2022 07:34:09 +0000

Business valuation is highly important for large business owners that can be a deciding factor to sell, continuing, or even adjourning a project. Figuring out the business valuation is a complex task and different methods can be used for it. If a business owner plans to sell or transfer their business, then figuring out the right value without valuation mistakes is extremely important. A professional business valuation performed by an authorized specialist, based on accurate valuation, can give maximum financial returns for the business owner.

Here are six top valuation mistakes you must avoid when determining your business worth.

1. Having unrealistic expectations

It is commonly observed that business owners have an optimistic view of their business value. Unrealistic expectations about cash flow or future earnings, lack of knowledge about how companies are valued, or a poor understanding of buyer needs for their company can be the reasons for it.

As a result, business owners can end up questioning the results of an outside business valuation. Also, Business owners may feel that the valuator does not believe in them if they have unrealistic expectations about their company’s value or its future growth.

At the very same time, buyers may also have unfeasible expectations about a company’s value. For example, they might be prepared to pay a premium for the business because of expected synergies, but buyers frequently underestimate the costs of an ownership transformation and overestimate savings from the merger.

2. Not sharing information

Whenever you hire a business valuator, you must share detailed information about the company and work cooperatively. Some business owners may not feel easy to reveal confidential information, But providing all the necessary information is important for a realistic business valuation and to avoid valuation mistakes.

Also, the valuation process involves more than just giving numbers and waiting for a valuation figure. The valuators need to meet key company members, make on-site visits, and ask follow-up questions to better understand the business.

3. Trying to do your own valuation

As Business valuation is a complicated process that can involve different methods and levels of assurance and complexity. The selection of valuation approach depends on the transaction, type of company, and available information.

Valuation mistakes could be possible when business owners or entrepreneurs trying to figure out a company’s value without the help of an authorized and competent business valuator. Some common mistakes are:

Abruptly mixing valuation methods.
Using the net book value of the company’s assets rather than using fair market value.
Making unrealistic presumptions in cash flow projections.
Using an inappropriate business valuation method that is not suited to the type of business or cash flow stability.
Disregarding the changing sales trends.
Fail to consider ownership transition capacity.

4. Expecting a fixed value

Business valuation is not a perfect science and may contain valuation mistakes. Your valuator is not expectedly to give you one accurate value for the business or company that everyone in the market will accept. It is a common misconception that valuation gives an accurate value.

Valuators generally offer a suitable price range that the company would possibly sell. That means a buyer who does not have a sound reason to pay lower or higher than the fair market value. For example, a family member of the business owner may be able to get a lower price. As a result, you can expect a different range for smaller businesses and companies in certain areas, such as technology.

The valuation also gives a mirror image of the company’s stand-alone value. That means the company’s value without any strategic consideration and potential synergies from the buyer. It’s common that this figure can be different from the final price. The price can be contrived by different factors such as:

Also Read:
Best practices for cash flow forecasting

5. Expecting valuation to stay the same

It is common for business owners to falsely assume that a business valuation will remain valid over a long time. This can cause huge conflict among business owners. For example, the family members of the owner may become upset if the business is sold and its value eventually rises after the business is sold out.

In fact, a company’s sell-out value can change for different reasons, including sales trends, market conditions, and new rules.

6. Valuations not performed by a qualified professional

A proper business valuation includes different complex variables that must be considered. If a business valuation is not performed by a qualified professional, the probability of inaccuracies and mistakes increases significantly. Although many CPAs and business brokers offer business valuation services, they are not likely to have the expertise, experience, and depth of knowledge as valuation professionals have, and thus chances for valuation mistakes are higher.

It is necessary that the valuator hired to do the valuation is expert in his knowledge and skills. The art of business valuation is dynamic and continually changing. A valuator must be aware of new rules and guidelines regularly emerging from court cases and IRS pronouncements to avoid valuation mistakes. There are always new risks that need to be considered in valuations. For example, there is a high risk of cyber-data cracking that could be fatal to the value of a business.

It has been observed in history, that valuations for private companies have used traditional business valuation methods. Valuators of public companies have been more innovative in their ways of different businesses and industries visualization, which has evolved into new methods that can be considered for certain private companies.