Is your overseas business structured to succeed in the Middle East? Some of the biggest brands and best business ideas failed in the competitive (and complicated) Middle East business environment. Companies ended up losing a lot of money and closing shop, simply because they didn’t have the right structure and support from a company setup consultant.

Here are some of the biggest mistakes that companies make while setting up businesses in the Middle East.

You didn’t consider business continuity

Most companies will expand into the Middle East by entering a local partnership agreement. You feel comfortable knowing that you’re working with a company or individual who knows the market, and you’re so focused on setting up the business that you don’t ask about the What Ifs.

What if something happens to your partner? Who will take over, and how can you protect your original terms of agreement? Under the Sharia Law, the shares of your partner will pass on to his family members, who is not required to uphold any previous contract.

However, other corporate structures (like Limited Liability) will protect your original terms and agreements, even if the shares pass hands.

That’s why, before working with any business partner, you need to ask about the security, trustworthiness, and your legal recourse if you wish to change or exit your original terms.

What kind of partnerships and activities would you like to have in the future?

Right now, you’re focused on market penetration. But over time, as you think about building your brand and reaching out to your customers, you may want to do business with other private companies. Does your corporate structure legally allow you to engage in those kinds of marketing activities?

Unfortunately, your corporate structure will define the kinds of contracts and partnerships you can have with local, privately-owned companies. There are restrictions for 100% foreign ownership, which can limit the extent (and effectivity) of your expansion efforts. You have to think long-term, and work out the pros and cons with experts on Middle East corporate restructuring.

You don’t have a detailed business plan

This is a common mistake of start-ups: your Middle East business plan is modelled after what you did in your region, and isn’t fleshed out according to the local business environment. You can’t take a cookie cutter approach of “it worked here, so it can work anywhere.” You have to consider culture, laws, logistics, economics, and other factors that only a local expert can understand. While you will always be in full control of your business plan, be sure to inform it with the help of a Middle East business consultant who is familiar with the territory. Then, you can really roll up your sleeves and work out the details, thus managing your risk and increasing your chances of success.

You didn’t add appropriate exit clauses

You want to succeed, but that includes having a plan in case you fail. Exit clauses and an exit strategy can help mitigate any losses and protect your core business from any fallout. Remember, every business expansion has some degree of risk – but with the right exit clauses, you are able to protect as much of your business reputation and resources as possible.

Middle East business consultants can help you create that exit strategy. From their experience in working with companies, and their insider expertise on Middle East business practices, they can lay out the different scenarios and work out  a legal safety net for every possible scenario.

You’re not familiar with the business culture

Business ideas can’t succeed in a vacuum. Even if you have a great product, very talented people, and an iron-clad business plan, you need to factor in the business culture. This is especially true in the Middle East, where personal relationships and network are such huge factors for success. The last thing you want to be is the proverbial bull in a china shop, being too aggressive and short-sighted to realize that you’re destroying opportunities simply because you aren’t sensitive to other people.

That’s one of the advantages of working with a Middle East business consultant. Aside from giving critical legal and corporate advice, he can be a bridge and a guide as you enter unfamiliar cultural territory. His insights into the way business is done, and helpful tips on how to conduct meetings or introduce yourself to potential partners, can help prevent expensive faux pas.


Get the right business structure – and support

Creation Business Consultants can help entrepreneurs, SMes and multinationals enter, expand and restructure in the Middle East. Work with its team of corporate, legal and financial advisors to get the right support and market intelligence for business success in United Arab Emirates, Saudi Arabia, Kuwait, Bahrain, and Oman. For more information, visit Creation BC website.