- Hi, I am Muhammed Shafeekh, founder of Finanshels.com, automating Accounting & Tax operations for SMEs in the UAE.
- In under two years, our team has grown to 40+ members, serving over 250 clients in Dubai.
- With the UAE aiming to have 1 million SMEs by 2030, and a growing economy, this is the perfect opportunity for providing automated back office services.
- Here is my journey and why I am betting big on the UAE.
Back story
I kicked off my professional career with Grant Thornton India in 2014.
I have always been fascinated by entrepreneurship and in 2018 I moved to Kuwait to assist my friend in establishing a business. We built a last-mile logistics company similar to Dunzo in India.
From the outset, I knew that entrepreneurship was my life’s purpose, and I envisioned myself in the Middle East in the years to come.
Fast forward to 2020, as COVID-19 gripped the globe I decided to return to my family in India, seeking solace during uncertain times.
In 2022, a vacation to Dubai proved transformative as I noticed a huge gap in the back office bookkeeping and tax market for SMEs.
This discovery unveiled my next entrepreneurial endeavor. But before I delve into that, let me share what I observed.
Spotting an opportunity in the UAE
Did you know 94% of companies in the UAE are SMEs (Small and Medium Enterprises).
If we have to compare to say the US, UK, or other markets, that figure would stand at around 30-40%.
Now, if you consider the vision for the UAE, the government aims it to become an $800 billion economy, and have 1 million SMEs by 2030.
On the other hand, currently, the GDP is around $500 billion, growing at 3-4 percent.
To realistically reach $800 billion in GDP, the growth rate needs to be 7-8% consistently.
However, SMEs face several challenges and have high failure rates here is why:
High cost of hiring accountants: There are around 250,000 SMEs in the UAE with 1 to 10 employees. Most of them don’t have an in-house accountant. The cost of hiring in the UAE is exorbitant.
There are more than 2,000 accounting firms here but very few focus on automation.
Manual back office operations: Firstly, manual operations are prevalent in the back office. From company setup to bookkeeping, payroll, and tax filings, much of the process is done manually.
Take India, for example, where Fintech companies like Razorpay disrupt the entire process, making it easier for anyone to set up and run a company. Even banks and digital neo-banks offer integrated bookkeeping services. However, here in the UAE, it’s predominantly manual. Banks don’t communicate with accounting systems, and tax authorities don’t integrate with tax systems, leading to a plethora of manual offline operations.
No data-based decision: I was fortunate to work with many SME owners in this region. I noticed they often make decisions without proper data and expand businesses without considering the bottom line.
Due to the lack of integrated infrastructure, small and medium-sized businesses (SMBs) across the Middle East face challenges. Looking at the data, the failure rate is remarkably high compared to other regions.
Solution? Implementing technology can help scale operations by automating back-end and front-end processes.
When you examine traditional industries, such as logistics, there’s a lot of room to bring in technology and scale operations. It’s the same way if you look at the accounting industry there is a huge potential for automation.
I noticed this massive opportunity.
With that vision, Finanshels.com was born in 2022 to automate accounting & tax operations, provide access to skilled finance professionals, and offer real-time financial health insights.
In less than 2 years, we are a team of 40 with over 250 clients; this speaks volumes about the untapped opportunity!
How did we start and scale?
When I came to Dubai and started thinking of starting a company, you always start thinking about sales first, right?
So, I picked up my phone and called a couple of friends. I said, ‘Hey, if you need any bookkeeping or financial advisory, I am happy to assist. Let’s schedule a call, and I’ll do that for you.’
That’s how I got a couple of initial clients from friends and my circle. Then I slowly hired team members whom I was in talks with very early on – they used to work with me on projects at my previous organizations.
Primarily, I was looking at sales, while my team focused on operations since they were strong in that area.
We acquired 100-150 clients, and then we started building the product and back-office infrastructure. And on the front end, we are ramping up our tech team and all those capabilities.
To be a massive company, you hardly need 10,000 clients or even 1,000 clients is good enough.
It’s been a journey of one and a half years. We are still just scratching the surface – it’s a very early stage for us.
Unlocking the UAE’s potential
Now you may ask why I am betting big on the UAE. So let’s start from the start.
Economic diversification: If you look at the macro factors, the UAE wants to diversify from non-oil sectors, and they consider technology and SMEs as asset classes that could grow very rapidly.
They wanted to diversify the economy into sustainable, renewable energy, tourism, and technology. So they have an appetite to diversify, and they are hungry for growth.
Business-friendly environment: The culture of entrepreneurship is deeply ingrained in the UAE. If you look at the local citizens of this region, many of them have restaurants, flower shops, or some other small businesses. That’s also fascinating to me.
A lot of these factors you see in most developing economies – the same appetite for growth. That’s where you need to bet, unlike other more saturated markets.
Are you looking at expanding to the UAE?
As you can tell, there are tremendous opportunities for anyone looking to explore the UAE.
If you already have a presence in India and want to expand to the UAE, here is how you need to go about it.
Network: I would say, collaborations are the most effective way to go because the UAE puts huge emphasis on building relationships. You need to understand their culture and have the right connections to conduct business here.
Acquire clients: Your next focus should be acquiring clients, rather than wasting time on administrative tasks.
For example, you can attend an event and introduce yourself as an account and tax consultant. Out of every 10 people you meet, you are bound to onboard at least one client.
Initially, your whole focus should be on getting your first 10 to 20 customers, not wasting time setting things up. I used to have my first client deposit money into my friend’s bank account.
Establish a local office: You first need to set up an office in the UAE. Why? Because finance is a sensitive topic. Businesses in the UAE are typically hesitant to outsource to a different country.
Pick your location: You can either build your office on the mainland or a free zone in the UAE.
In my opinion, starting a company in Dubai can be relatively straightforward, especially if you choose to operate within the free zones.
Have enough capital: The costs of running a business in the UAE can be expensive. Plus the compliance requirements can be a barrier to entry, especially when compared to markets like Saudi Arabia or other regions.
In some places, you can start a company for as little as $200, such as in the UK. So it is important to have a good budget.
However, the UAE has numerous incubation centers that provide highly incentivized licenses and office spaces for individuals with innovative ideas who wish to start their companies here.
Marketing: Lastly, when you are considering scaling, you should invest in various marketing strategies such as digital marketing, and other omnichannels to reach out to a wider audience.
Also read: UAE Corporate Tax Consultants Decode Opportunities, current trends and hiring trends
Wrapping up
The business line falls at the intersection of accounting and technology. Globally, numerous companies are operating in this sector such as Pilot.com in the US, and Bench Accounting. However, the UAE is still in its early stages.
I don’t think we have scaled enough, that’s why over the next 2 to 3 years, we plan to go full steam ahead.
We want to grow 10 to 15 times what we have grown to date. That’s the goal.
We are also heavily investing in technology to leverage growth. We’re also looking at expanding to other markets, like Saudi Arabia, maybe by the end of 2024.
