[Infographic] 4 Tough Questions to Ask Yourself Before Launching a Start-Up in Saudi Arabia

If you’re thinking about launching a start-up, asking yourself just four questions right now could save you years of struggling later. I covered this topic in detail in my last article, 4 Tough Questions to Ask Yourself Before Launching a Start-Up in Saudi Arabia. Now this article has been adapted into an infographic, with extra information on topics like trending potential start-up locations added in. The full text of the infographic is also available on this page for those who prefer text.

Please see the text version below if you are having trouble viewing this image.

4 Tough Questions to Ask Yourself Before Launching a Start-Up in Saudi Arabia

Starting a company anywhere is difficult, but as a Saudi entrepreneur, you will need to deal with special issues. Be sure you can answer the 4 questions in this infographic before you launch your start-up.

1. Is your business model scalable?

Scalable business model: A design that lets your company grow without having to keep hiring more people, and keeps growth ahead of expenses.

Ask yourself:

  • Will your business stop growing if you stop hiring more team members?
  • Will you need to grow your resources at the same rate as your business growth rate?

If you answered “yes” to both of those questions, your business model is not really scalable. It will be difficult for your company to grow no matter how hard you work.

To Do: Decide whether you want to launch a classic small business or a true start-up. If you want to launch a start-up, keep working on your business model until you have a plan for growing without always pouring in more resources and team members.

2. Do you have access to the infrastructure your start-up needs to be successful?

Infrastructure: The everyday services and facilities you need to have in place for your business to work. This can include high-speed Internet access, physical highways, or an online payment system.

The facts…

Saudi Arabia currently has the following gaps in infrastructure:

  • No affordable, local online payment system
  • Outdated commercial laws set up with construction and trading businesses in mind, not service-based businesses
  • Obsolete intellectual property laws

To Do: Make a list of all of the types of infrastructure your start-up will need to be successful. Research each item to figure out whether it is available to you in Saudi Arabia or not. If not, is it available in nearby countries and accessible to you? Or is there a way you can adapt your business model to work with missing infrastructure while still remaining scalable?

3. Will you be able to finance your business without using traditional funding channels?

Traditional options for financing: Ways of getting funding, such as applying for bank loans, that don’t work for most Saudi start-ups.

The facts…

Banks that offer small business loans: don’t offer enough money for scalable start-ups

Governmental entrepreneurship organizations: don’t offer enough money for scalable start-ups

Banks that fund big corporations: have financial requirements most start-ups can’t meet

Venture capital funds: are helpful, but focus more on companies in the growth stage, not the start-up or early stage

Angel investors: are helpful, but very reluctant to invest in intangible assets
To Do: Perfect your business model and pitch. Once those are 100% ready, seek funding from venture capital funds and angel investors.

4. Is Saudi Arabia really the best country from which to launch your start-up?

Saudi Arabia is a good consumption market, but often not a good base for an innovative start-up business. This is due to issues like gaps in infrastructure and lack of trust in local brands.

The facts…

Dubai Internet City—Free economic zone: easy to set up there, but can be expensive, and might make it harder to reach U.S. and European markets

Amman, Jordan—Easy to set up a business, easy to access from Saudi Arabia, availability of affordable talents

Istanbul, Turkey—Good infrastructure available and easy access to European markets, but can be expensive due to currency fluctuations

Berlin, Germany—Low cost of operations and inexpensive access to talented professionals, but dealing with different taxation system can be complicated

To Do: Consider different countries, both inside and outside of the MENA region, as possible sites for your headquarters. You can still serve Saudi customers by maintaining a strong local market presence in Saudi Arabia. If you decide you want your headquarters to be in Saudi Arabia, make sure you have sound business reasons for making this choice.

Most of what determines whether your start-up will succeed or fail happens before you even launch. The extra time you spend now designing a scalable business model, making sure you have access to needed infrastructure, finding alternative sources of funding, and carefully planning where you will set up your headquarters can save you years of headaches later.

Big dreams require big plans.

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