Entrepreneur vs solopreneur: Who will win the business race in the UAE?

January 22, 2018

With low tax requirements, simple setup solutions, established infrastructure, and a whole wealth of government support, it’s plain to see why so many choose to start a company in the UAE.

Choosing the right startup style, however, is critical; you must decide whether to be an entrepreneur or a solopreneur – a manager of a business, or an individual specialist. While the two share common traits and advantages in business, the mindset of one is very different to the other.

To understand your best option, you need to think deeply about who you are as a businessperson and where your priorities lie. Are you passionate about the work, or focused on growth and the potential for evolution and new horizons? An effective multi-tasker, or a born leader and delegator?

The best decisions are those that are fully informed. Today we review these two options, arming you with the knowledge to make the best choice for your future. 

So … is there really much difference between entrepreneur and solopreneur?

Yes, undeniably so. Let’s break it down:

Entrepreneurs: In the most traditional sense, an entrepreneur is an individual who attempts to start their own business entity. They may set up a small company and, in the first instance, only employ a handful of people. Each year, the UAE sees thousands of entrepreneurs enter the business sector and bring with them ingenuity, originality, and innovation. They are instrumental to the growth and success of the UAE economy, especially since small businesses make up such a large percentage of companies in the UAE.

An entrepreneur is an individual who attempts to start their own business entity. They may set up a small company and, in the first instance, only employ a handful of people.

Solopreneurs: On the other hand, solopreneurs do not run businesses. They work as freelancers or independent contractors and trade under their own name. While it is relatively straightforward to start up as either a business owner or freelancer, the latter tends to be slightly quicker. In part, that’s because there are fewer hoops to jump through.  

What are the advantages of being a UAE entrepreneur?

Building a business from the ground up is the dream for many aspirational entrepreneurs and the UAE offers great scope for those hoping to establish a successful venture. Here are some of the major advantages that lie tantalisingly within reach.

Support from the government: Small businesses and startups are immensely valuable to the UAE economy as a whole. Dubai SME reports have found SMEs to account for 95% of establishments in Dubai, while micro firms account for 72% of businesses. As this sector is essential to the economy here, the government seeks to do all they can to support new ventures and their growth.

Dubai SME, for example, is a government entity set up with the mission to ‘foster the development of a flourishing entrepreneurial culture.’ They offer startup subsidies which allow them to eliminate the initial labour security deposit and licensing fees for new businesses.

The initiative allows businesses to save around 90% of their startup fees. It is estimated that this amounts to as much as 20% of the company’s capital in the first three years. Support from Dubai SME is available to fledgeling solopreneurs and entrepreneurs both. This assistance can vary from initial education through diplomas and workshops, through to facilitation of business licensing and direct subsidies and labour guarantee exemptions.

Scaling is easy: Shortly after the business has been established, it’s only natural for entrepreneurs to seek to scale. Since it’s in the government’s interests to support these fledgeling companies, new entrepreneurs can tap into the Business Incubation, Entrepreneur Relations (ER), and Development Advisory services.

These services are in place to support the ongoing growth of small businesses in the region. In fact, Dubai SME even lists aiding the expansion of the country’s top SMEs as one of their primary missions. This is largely of benefit to the entrepreneur; while a solopreneur can grow their business and profits over time, being an individual responsible for all tasks naturally inhibits and caps their potential for scaling.

A wealth of opportunity: The 2017 report SMEs Business Optimism Survey found that 48% of firms anticipate improvement in the business environment, while hiring expectations for the region are continually on the rise. A 56% increase in SME sales revenue was also predicted.

These findings offer in-depth insight into the UAE entrepreneur landscape, with the report’s methodology based on the surveying of over 500 enterprises across key manufacturing, trade and services sectors in the UAE, including what were classified as ‘micro’ businesses such a solopreneur may operate.

The extent to which a solopreneur is relevant to such reports should be kept in mind. A projection of increased hiring expectations is of no relevance to a one-person operation, whereas a startup of any size can expect to enter a healthy market where 56% sales revenue increases apply to all within it.

The chance to sell: While some entrepreneurs intend to see their business through from its startup state to full fruition, others would prefer – or build their strategy around – the option of selling. Whereas freelancers (ie, solopreneurs) cannot sell their identity to another entrepreneur, business owners have the option to relinquish their equity to another party.

While some entrepreneurs intend to see their business through from its startup state to full fruition, others would prefer – or build their strategy around – the option of selling.

This offers the opportunity to form and develop a valuable business venture, and then sell it on to the highest bidder – a profitable option that is unique to the entrepreneur business model. 

What are the advantages of being a solopreneur in the UAE?

Flying solo tends to suit self-starters who are looking for a quick way to begin trading in the UAE. There are many advantages and reasons as to why a person would choose this route. Here are some to consider.

Full control over your work: The work a person chooses to undertake is entirely up to them when they are trading as a freelancer. An individual can determine the workload that they wish to accept at any given time. This level of autonomy over your workflow means that you are in full control of how much money you make and how much time you dedicate to projects. While the entrepreneur will invariably determine and dictate the pace of growth and new business, the presence and management of assets and staff will always make them less agile than an individual operation.

Setup is quick and easy: Speed and convenience – two decidedly attractive traits of the UAE solopreneur. There are two routes to go down when you wish to set up as a freelancer the UAE: Either you apply for a permit with the Department of Economic Development (DED) or you can set up in one of the region’s free zones.

The latter allows you to have 0% corporate and personal tax while keeping 100% of your profits. Permits are issued for almost all DED-listed business activities, which means that you can start trading in a range of industries right away. That level of liberty and choice is often the very thing that draws people to the freelancing option.

What’s more, there’s less red tape involved in setting up as a freelancer than starting a business. Many free zones do not require a No Objection Certificate (NOC) from a local sponsor. So, no matter how long an individual has been residing in the region, they should be able to begin trading with minimal obstacles. The path for the entrepreneur, it should be said, is also made easy due to this established setup infrastructure.

No obligation to staff members: Being responsible for your own income is one thing, but having to provide one for someone else is quite another. Starting a company means that you will have a body of staff for whom you have to provide. Their livelihoods fall on your shoulders. In the wider SME environment overseas, 46% of stress comes from workload – commonly leading to headaches, fatigue and more – and can be massively damaging to a growing company in constant need of entrepreneurial leadership.

Starting a company means that you will have a body of staff for whom you have to provide. Their livelihoods fall on your shoulders.

Freelancers only have to take care of their own income. Many find that the freedom of working in this manner suits them when they first embark on their journey into the business world, allowing them to focus on leveraging and promoting their expertise within their chosen market or industry.

There are no huge overheads: There is nothing to say that freelancers have to have a registered office space in the UAE. When a person starts up as an independent contractor, they can decide to either rent an office, hot-desk or even work from home.

This last option suits the bootstrapping strategy of business setup well as it allows individuals to get started without dealing with huge upfront costs. Another task made simple for the solopreneur. 

Become a business at a later date: Finally, it’s crucial to remember that freelancers will always have the option of taking the next step and starting their own business. After establishing a client base, a logical progression may be to set up a venture either on the mainland or in a free zone, so it’s always worth considering at a later date. 

Which one is best suited to the climate of the UAE?

In truth, the climate here in the UAE is primed for both solopreneurs and entrepreneurs to co-exist and be equally as successful in their given fields. The question we ought to be asking, rather than which will win the business race, is which suits each individual best.

Every aspiring professional has their unique way of working and creating their own wealth. It’s important to consider your individual attributes and how they align with the advantages outlined above.

Those who favour a fast setup, low-cost overheads and the ultimate level of flexibility and freedom will ultimately be drawn to the notion of going solo and being a freelancer. However, should an individual have grander plans for their company, wish to sell it in the future, or just need a body of staff around them, starting a business will be key. Taking the time to mull over this decision is essential as it will dictate how you trade going forward.

Setting up your own business has never been easier. Virtuzone takes care of it all so you can focus on what matters – building your business. For more information about company formation in the UAE mainland or free zones, please call us on +971 4 457 8200, send an email to info@vz.ae, or click here. 

About the author: Neil Petch, Chairman at Virtugroup
About the author: Neil Petch, Chairman at Virtugroup

With a history of business successes, Neil Petch is well known in the UAE and beyond as a visionary entrepreneur with a passion for helping others establish and grow their own businesses. Neil founded Virtuzone in 2009 and quickly established it as the region’s leading company formation expert, before launching Virtugroup, a holding company that has a wider mandate of supporting startups from establishment; to successful market entry; and all the way through to exit.