Being an entrepreneur in Saudi Arabia is relatively easy. According to the World Bank’s Doing Business 2010 data, Saudi Arabia ranks 13 out of 183 countries in ease of starting a business. Yet despite these impressive rankings, young entrepreneurs face a lot of challenges when deciding to start their own company. Over the past three years, I have met with several young Saudis who have managed to build their companies into successful enterprises from scratch, with no family money and often no support. They all came from different backgrounds and industries with distinct issues and experiences. I have heard about their challenges, their setbacks, their triumphs and above all their pride in going against the grain. Below is a summary of those conversations.
Disclaimer: I am not a Saudi and the article is based on my observation and conversations with local business owners over the years. These do not represent views of any one person and may or may not agree with the opinion of some of the readers.
What are some of the good things about starting a small business in Saudi Arabia?
Apart from the fact that the process of setting up a company here in Saudi Arabia is rather simple, the regulatory environment is also very encouraging and there are many financing options for young entrepreneurs with limited resources to start their own business. From commercial bank loans to the Arab Trade Financing Program, the Saudi Industrial Development Fund (SIDF) and other credit Institutions, it’s getting much easier to find funding in the kingdom. The Saudi Arabian General Investment Authority has a page dedicated to these resources, which is a great starting point for anyone in need of funding.
If you are on the technical side, The KAUST Seed Fund is designed to help dreamers become entrepreneurs. The funding helps bridge the initial gap at the idea stage of development, and provides support to entrepreneurs who want to take their innovations to the marketplace.
Another great thing is that more and more consumers are buying form local companies. Only a few years ago, the preferred choice was always the foreign brand and only cost conscious consumers would buy local. However, things are changing now; as small businesses offer better quality, better service and better prices, consumers are slowly but surely shifting to local.
What are some of the Challenges?
The biggest challenge that I faced in the beginning was a lack of entrepreneurial culture in the kingdom. Yes, a lot of Saudis have launched businesses as a side hustle, but hardly ever as their main source of income. If you decide to go against the grain, it is often seen as a sign of weakness or a failure to land a good job. Yet the culture is slowly becoming more accepting of start-ups, and I have seen a number of young people start and succeed at businesses that people might have laughed at five years ago.
There is also the challenge of not having enough opportunities for growth and networking, in terms of trade fairs, industry collaborations, and conferences. If only there were more networking platforms, young entrepreneurs would not be as intimidated. There are some very inspiring people in the kingdom who have built their empires from the ground up, but young entrepreneurs do not have access to them and or ways to learn through their experiences. This essentially means that we have to go through our own learning curve and many end up making easily avoidable mistakes or worse, winding up a company at the first sign of failure.
What three things you would want to change about corporate culture in Saudi Arabia?
Firstly, companies should be more transparent. It is understandable if companies do not want to talk about where they fall short, but they don’t even talk when they succeed. They do not tell the world what worked for them. Often we simply see a press release, possibly drafted by a PR guy who is disconnected to its value as news. We don’t have very many success stories, case studies, and tips from seasoned entrepreneurs.
Secondly, I believe that companies must adapt and embark on creative means of dealing with cultural and social developments. We should be able to see products and services that evolve and grow in line with the changing needs. A robust corporate environment needs to respond to the nuances of the market in addition to providing quality product and service.
Finally, I think it is crucial for companies to have formal codes of ethics. The good thing about the Saudi corporate culture is that it is influenced by Quranic principles and Prophetic prescriptions which serve as a guideline for Muslims in conducting their business and family affairs. An Islamic moral foundation encourages businesses to have a sense of duty towards their craft and towards one another. These ethics could be formalized into an official document, so that compliance could be codified; this could have a large impact on the way companies conduct their business across the board.
Q. What is your advice for people contemplating a new business?
Go against the grain, pursue your passion and turn it into a business. Provide opportunities to others like you. Create things that are irresistible. Entice consumers to prefer local products over foreign products, and make your product a symbol of national pride. The right time is NOW!