Browsing 'Entrepreneur' News

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Amid a broader push to diversify Qatar’s economy beyond oil and gas, the government has begun rewriting several cumbersome rules for starting a new business.

While some changes remove onerous requirements – such as the need to raise QR200,000 before obtaining a commercial registration – others appear to be adding new hurdles for those trying to launch a company.

The most recent initiative by the Ministry of Economy and Commerce (MEC) was announced this month.

It relaxes the rules around business centers, which rent furnished offices and provide access to boardrooms and other facilities to companies with modest space requirements.

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Flazingo Photos/Flickr

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While the cost of renting space inside business centers run by some of Qatar’s largest operators, such as Regus and Servcorp, is out of reach for many early stage companies, the move was welcomed by some in the country’s business community.

“This is a positive step forward to increase the supply of smaller office spaces, and therefore, provide more affordable office space in Qatar for small and medium-sized enterprises,” said Liam Trump, a business development executive at Pro-Partnership, which sponsors foreign businesses that wish to establish a presence in Qatar.

“There is a massive undersupply of (suitable and affordable) office space for (small businesses) in Qatar,” he added.

New challenge

Finding office space is a central part of starting a business in Qatar. Firms must prove they have a physical presence, such as a storefront or office, before they receive a trading license and the “computer card” that allows a company to sponsor employees.

In theory, this makes it easier for authorities to follow up on consumer complaints and conduct inspections to ensure compliance with Qatar’s labor laws.

But several entrepreneurs said they are now facing a new challenge when it comes to meeting this office space requirement.

Landlords traditionally require new tenants to submit 12 months worth of rent checks before signing a year-long lease. This means businesses need a bank account before they start shopping for office space.

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RikkisRefuge Other / Flickr

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But some say banks are refusing to open new business bank accounts for customers without a trading license. Since that requires office space – which tenants, in turn, generally need checks and a bank account to lease – some entrepreneurs say they’re stuck.

“It’s frustrating,” said serial entrepreneur Bilal Taha. “There is no official solution by the banks or authorities on how we can (properly) open a corporate bank account.”

Taha – who is the co-founder of The Gaming Lounge and managing director of Sand Phoenix Projects – said he supports efforts to ensure companies complete all necessary licensing and registration steps.

But he said the new barriers to opening a bank account are making entrepreneurs more wary of starting a new business in Qatar.

At least one financial institution – Qatar National Bank – said it allows new business customers to open an account if they provide other documents, including a company’s article of association and commercial registration, and promise to show the bank its trading license and computer card once they’re issued.

An MEC spokesperson told Doha News that he didn’t have any information about the bank account changes.

QR200,000 requirement

Historically, new companies would initiate the commercial registration process with the MEC and obtain a letter from the government that they could bring to a bank where they would open a temporary account, experts say.

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Omar Chatriwala / Doha News

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Business owners would then deposit at least QR200,000 – the minimum amount of capital previously required – and then return to the MEC to complete their commercial registration. Once that was finalized, companies would move on to applying for a trading licence and computer card.

However, that QR200,000 requirement was scrapped last June for limited liability companies, which represent the bulk of firms incorporated by entrepreneurs and investors in Qatar, according to the MEC.

“(It’s part) of the ministry’s efforts to modernize legislation … to boost the private sector,” an MEC spokesperson told Doha News last year.

Taha said the move was a “big help” to entrepreneurs that give companies more flexibility.

“Every company needs a different amount of money to start,” he said, pointing to the different capital requirements to start, for example, a heavy construction business versus a software firm developing mobile apps.

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Mohamed Nanabhay/Flickr

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However, it appears this change has subsequently created confusion over the process for opening a bank account and even more challenges in securing office space.

In the meantime, entrepreneurs say they’re either forced to write landlords checks from their personal bank accounts and seek a promise that they can be exchanged with business checks once they’ve opened a corporate account.

It’s a less-than-ideal workaround that’s hurting efforts to diversify the economy, according to Taha.

“It’s not encouraging any expat foreigners to invest here. It’s even scared them off,” he said.

Thoughts?

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Omar Chatriwala / Doha News

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More than half of would-be entrepreneurs in Qatar are put off from starting their own businesses because of a lack of financing and onerous bureaucracy, according to the results of a recent survey.

The findings come a week after Qatar’s Emir Sheikh Tamim bin Hamad Al Thani stressed a need to cut the red tape that has inhibited more startups from opening in the country.

The latest Entrepreneurship in MENA Survey results also come ahead of the start of Global Entrepreneurship Week in Qatar on Sunday, which brings together numerous private and public sector organizations to support small and medium-sized enterprises in the state.

According to the survey, which was conducted by online recruiters Bayt.com with polling agency YouGov, some 66 percent of respondents in Qatar would prefer to run their own business – slightly more than the regional average of 64 percent.

However, 59 percent of those polled said they felt it was somewhat or very difficult to do. And nearly a fifth (19 percent) admitted they had tried and failed to establish their own business.

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Heather/Flickr

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When asked about the hurdles facing start-ups in the country, 59 percent of respondents cited unavailability of finances, while nearly half (45 percent) blamed strict government rules and regulations.

Over a third (38 percent) said successful start-ups battled against the need to establish the right contacts, or have “wasta.”

When respondents were asked what their top concerns would be if they set up their own business today, financing again featured as the main worry and was cited by 62 percent of those surveyed.

This concern was also common in the UAE among 65 percent of respondents, and appears to be a bigger issue in Bahrain, with 71 percent of respondents citing it.

Suhail Masri, Vice President of Sales at Bayt.com, said the survey results showed more needs to be done to support new start-ups.

“Encouraging entrepreneurship is a huge focus for many countries throughout the Middle East and North Africa region, as it bolsters the economy and drives innovation.

While people in Qatar are keen to start their own business, financing it is still a key hindrance in achieving their aspiration. This may suggest that the region needs more investors to step in and help entrepreneurs.”

More entrepreneurs

Bedaya Center

Bedaya Center

Brainstorming

Encouraging more young people to start up their own business has been a key focus of Qatar’s economic diversification for a number of years, with organizations such as Bedaya Center and Qatar Business Incubation Center (QBIC) providing support to entrepreneurs.

However, numerous reports and surveys have repeatedly cited barriers to entry for those trying to make a success of their new businesses.

For example, a survey released early last year by telecoms firm Ooredoo found that youth in Qatar have the highest entrepreneurial ambitions among their Gulf peers, but also feel the most frustrated with the legal hurdles involved in starting up a business here.

“A potential hurdle for these entrepreneurs to overcome is the legal registration and establishment of a company in their country,” the Ooredoo report authors said.

In Qatar, 64 percent of youth surveyed for that report said it was difficult yet important to address the legal restrictions related to setting up a business. That was the highest response in the entire MENA region after only Yemen, at 65 percent.

Would-be entrepreneurs in Qatar are required to have a solid financial foundation before launching a company.

To register their business, they must have QR200,000 (US$54,921) in their bank account, in addition to having signed a one-year lease for office space that’s been approved by Civil Defense – a commitment that can run above QR100,000 ($27,460).

There’s also an added burden on expats, who must have a Qatari sponsor who owns 51 percent of the company.

Emir’s call

Sheikh Tamim at opening of the Advisory Council.

QNA

Sheikh Tamim at opening of the Advisory Council.

Addressing the country’s youth last week, Sheikh Tamim urged them not to rely solely on the state but to have the drive and motivation to start up their own businesses and to have a larger role in the private sector.

The Emir said the government should help by creating favorable investment conditions, supporting startup firms and eliminating bureaucratic bottlenecks.

“Duplication among the ministries, and frequent changes in the procedures, transactions, requested forms and licenses … tend to confuse citizens, as well as local and foreign investors. Many would not venture to invest, if the investor is requested every day to fill out a new form, a new license; or if several conditions were changed many times during the submission of the application,” Sheikh Tamim added.

However, with regards to the private sector, official surveys of the labor force show that most unemployed Qataris are unwilling to work in it due to perceived unsociable working hours, a long working day, lower wages and the frequent requirement to work a six-day week.

In the latest Bayt.com survey, which interviewed 8,164 people from 13 countries in the GCC, the Levant and North Africa between Sept. 27 and Oct. 4., just over half (52 percent) said they preferred to work in the public sector, but this figure includes expat and Qataris.

Among those considering starting up their own business, nearly a quarter said architecture and engineering would be the most attractive sector, while hospitality and leisure was the next most popular field for 14 percent.

Would you start up your own business in Qatar? Thoughts?

All photos by Chantelle D’mello

An expat couple has started one of Qatar’s first all-natural homemade soap lines, tapping into a growing market for sustainable and locally-produced wellness products.

Inspired by their native Portugal, husband and wife team Celso and Sofia Batista created Lisbonnete, an organic line of soaps produced in their own kitchen, late last year.

The project is the brainchild of Sofia Batista, a former open-water swimmer, current physical education teacher at Compass International School and a long-time practitioner of aromatherapy and natural therapy.

Lisbonette soap

Chantelle D'mello

Lisbonette soap

Speaking to Doha News, her husband said the couple dabbled in soap-making back home, and decided to become more serious about it after moving to Qatar.

“The name is a play on words. In Portuguese, the word for soap is ‘sabonete,’ and the capital is Lisbon…so we get ‘Lisbonnete,’ ” Celso Batista added.

Because of Qatar’s high temperatures and humidity, perfecting the recipe for the soap took some time, the 43-year-old said.

“There was a lot of trial and error and math involved in the process. Even now, for every 10 kilos of soap we make, there’s one batch or one kilo that doesn’t go right for some reason or the other. It’s a learning process,” he added.

Once they settled on a recipe, the duo decided to test their products on friends and colleagues, whose feedback they then incorporated.

Process

Making a bar of soap is a two-hour long process that mainly involves mixing, melting and stirring.

Using a carefully guarded recipe, Sofia Batista – clad in goggles, a face mask and a pair of gloves – melts butter, beeswax and oil over a flame, bringing the mixture to a liquid consistency.

Lisbonette soap making

Chantelle D'mello

Lisbonette soap making

To this, she adds a mixture of lye, a strong alkaline solution consisting predominantly of potassium hydroxide that gives homemade soap its cleansing properties, with water.

The lye facilitates the process of saponification, the technical name for what happens when lye and the fatty acids in the butters, oils and wax react.

Natural pigments and clay for color, essential oils for healing and aroma and dried herbs for texture are then added.

Once done, the mixtures are poured into silicone moulds using various techniques like swirling and layering to get different textures and color patterns.

The finished product is then made to rest for anywhere between four to six weeks to ensure that the chemical processes run their course and that the soap hardens.

Sustainability

In an effort to give back to the local economy, the couple tries to source most of their products locally.

“You’d be surprised at what you can find in your local grocery store or if you really look here,” 40-year-old Sofia Batista said.

Lisbonette soap ingredients.

Chantelle D'mello

Lisbonette bath salts

Base materials like palm, olive, coconut and avocado oils, beeswax and shea butter are usually bought from local grocery stores, while the Batistas source herbs like jasmine and lavender from the souqs.

“Essential oils were the one thing that wasn’t available here. There’s a store that sells them, but it’s way too expensive and the quantities are too small for what we need. So we decided to look for other sources, and now we import the oils (by the cannister) from India,” Sofia Batista said.

Natural pigments and other special herbs are also imported, mostly from Portugal, or are grown by the couple.

Growth strategy

Like most small business owners and entrepreneurs, the duo uses Instagram to market their products and Whatsapp for taking orders.

To gauge their customer base, the couple also tries to participate in various handicraft fairs organized by Virginia Commonwealth University in Qatar, Doha Mums and other organizations.

Lisbonette soap types

Chantelle D'mello

Lisbonette soap types

Currently, the couple makes more than 15 types of soap, including jasmine, lavender and cinnamon-scented bars. But Celso Batista said they are considering narrowing down their offerings to one standard menu.

He added, however, that the couple does cater to special requests. Certain locals, for example, have asked for aroma combinations with elements of cedar and sandalwood, oud and patchouli.

The Batistas have also begun exporting their products.

“Through a friend, we’ve starting selling our products in Lebanon. We’re (also) trying to sell our products in the UK and Portugal now, so we’re in talks with a chemical engineer who will be testing our products to ensure quality control and that everything is safe,” Celso Batista said.

The market, he added, was substantial, as the duo is the one of the few who make soap in Qatar.

However, with less than a year of experience behind them, the couple hasn’t yet sought to register their small business, but plan to do so in the future.

Like many entrepreneurs in Qatar, the couple sees the large amount of paperwork and high financial investment required to register a company in Doha as obstacles that substantially hinder their progress.

“We’re planning on expanding in the future, maybe, but it’s a lot of work. Owning a store is out of the question because it’s so expensive, but we would love to reach out to stores and sell our products there,” Celso Batista said.

Soaps aside, the duo has also begun experimenting with selling homemade candles, lip balms, creams, bath salts and bath bombs. All products retail for between QR20 to QR30 per piece.

Thoughts?