Starting a Business in Oman
William Wresch, Ph.D.
University of Nizwa
Copyright 2016 University of Nizwa
Introduction
In 1996 the government of Oman created a policy paper to guide future development of the nation. Entitled Oman 2020, the plan was designed to reduce Oman’s reliance of petroleum products as a source of income for the nation. The plan for diversification included these elements:
• Pursuing a high value added strategy characterized by adopting capital intensive
production methods, and depending on advanced technology, scientific research and
development.
• Adopting an export led growth.
• Developing small and medium scale enterprises.
• Developing a dynamic, efficient and competitive private sector, in addition to pursuing
privatization.
• Developing human resources to match the global technological changes.
• Creating a suitable macroeconomic environment for development of productive
sectors.
• Furthering the integration of Oman’s economy with the world economy. (WTO, 2014, p 3-4).
Key here is improving the private sector. While much of the working population of Oman is employed by the government, planners were convinced that the nation would be best served if it created more private businesses –small and medium sized enterprises – especially those that could grow the variety of products being exported from Oman.
The purpose of this book is to guide Omanis who might want to start one of those small and medium sized enterprises. To that end, the book is organized around a series of steps a person might use when creating a business. It also addresses questions potential business people frequently consider:
What business might I start?
Are there customers for this business?
How do I compete against other businesses?
How do I actually create a product or perform a service?
Will this business make a profit?
How will I finance this venture?
This book will address all these questions.
What business might I start?
There are millions of businesses in the world. How did they start? Many ways. Some were started for fun, some by chance, some by careful analysis. We will review some examples to demonstrate just how many ways businesses have been created.
Hobbies
While we think of business as work, many very successful businesses have created by people who had a hobby and wanted to pursue it. Here are two examples:
Apple Computer
Steven Jobs and Steve Wozniak liked building computers. In 1977 they built their first machine and sold a few to friends. Investors saw the potential in their designs and financed upgrades to the computer – the Apple II. While very expensive (It cost $3000 USD), it worked well and was unlike any other computer available at the time. Their business grew quickly, and suddenly their hobby became a multi-million dollar venture in the middle of what came to be known as “Silicon Valley” California.
Mark Zuckerberg started out simply enough – he broke into the Harvard University computer system and downloaded pictures of all the students, and then shared his output with his friends. Harvard was not happy with him, but he managed to avoid
suspension and went on to grow the files to include other major universities. He expanded the program to include an opportunity for students to comment, investors in Silicon Valley saw the potential, and Facebook was born. Did he start out to found a billion dollar company? No. Rumors persist that he was mostly interested in meeting girls and thought Facebook would be a good method.
Which of your hobbies might become a thriving business? Here are some possibilities:
Games – What kind of games do you play in your leisure? A recent winner of an Omani business plan competition created a game to play on the beach.Frisbees were just pie plates a few students threw around, until one of the students decided he would turn the pie pans into a new game. What do you do for fun that others might also enjoy if you made the equipment for them?
Hobbies – What do you like to do in your spare time? Your art work might have value. Oman is trying to grow the number of tourists coming to the country. They might value an original painting of a local fort or landscape. Similarly, they might value a series of photographs of historic places as a way of better remembering their time here. For those of you who cook, cookbooks are always popular. A small book describing authentic Omani recipes might be very successful.
Equipment – Sports equipment is constantly being redesigned. Some people thought surf boards were too difficult to master, so they created “boogie boards.” Any ball you kick around can be redesigned to have special features. Lots of auto parts companies have been created by people who went out into the desert and decided special equipment could make the trip more fun or less dangerous.
Services – If you look around, you will also see where some people have made a good business out of sharing their hobby with others. They like to skin dive, so they create a dive shop and lead people out on dives, or they like to fish and take people out on fishing charters. People enjoy spending a night out under the desert stars, so they create a company that promotes desert camping. Others create web sites to keep people informed and engaged in a hobby. It would be easy for a camel racing enthusiast to create a camel racing web site with information about current races and sell advertising on the site.
In each of these examples, you make a business by looking at something you like to do, and you find a way to turn the hobby into a business.
Needs
Some important businesses can been created because someone needed something – and so invented it.
The Spreadsheet –
Dan Bricklin was a college student taking a finance class. He needed to do multiple calculations over and over again. Rather than use a calculator like all the other students in his class, he spent a weekend writing a computer program that would allow him to enter numbers on a screen that looked like balance sheet in accounting. He called the program “Visicalc.” It was hugely successful and earned him millions of dollars. Later his concepts were applied by MicroSoft in their spreadsheet – Excel – which we all use in business.
The Shipping Container
Malcolm MacLean needed to ship products all over the world, but the process was far too slow and expensive as each item was often hand-carried into the hold of a ship. Working with engineers he devised a box that could be stacked – and locked. They sized it so the box could fit ona ship, on a truck, and on a railroad. Now a cargo could quickly be loaded from a truck right onto a ship or onto a rail car. Shipping became much faster and cheaper, with less damage to products as they were moved.
What needs do you have? You like pizza, but there is no pizza restaurant in your town – so you make one. You are annoyed by insects, so you make a new way to catch them. You want to rent a car to use this weekend, but they are too expensive, so you create a way to rent cars from other students. Or, you are short on money, so you find a way to rent your car to others. The next time you feel annoyed because you cannot do what you want, you may be looking at a business opportunity.
Needs you see around you
Some great businesses have been created by students who saw that other students had needs.
PizzaHut
Frank and Dan Carney were students at Wichita State University in the U.S. They saw their fellow students liked pizza, but didn’t’ have much money. So they opened a very small pizza restaurant that sold cheap pizza to their fellow students. When the store had lines of students waiting to get in, they knew they had a good idea – and built a bigger restaurant.
What needs do you see around you? What do your fellow students complain about? What is Oman missing? What is your town missing? Are problems arising that need solutions (warmer temperatures, less water, shortages of food)?
The family business
Many businesses are family businesses. Your parents have a store, or manufacture a product, and you join the business. Maybe the most interesting example of this is McDonalds.
Richard and Maurice McDonald worked for their father in his restaurant – a very small restaurant that served mostly sandwiches. After working for him for years, they bought the restaurant from him, moved it to a larger city, and changed the menu to focus on hamburgers and French fries. Within a few years this new approach to fast food was being franchised across the United States and they were selling millions of hamburgers.
If your family has a business, you are already learning about business just by seeing what your family does. You are gaining practical experience. Now is the time to start thinking about what you can add to the business. If your family business was started years ago, much has changed in Oman. What opportunities do you see that your family might have missed?
Businesses responding to change
The world is changing in many ways. These changes will hurt some businesses and help others. The key is recognizing what the change is and how it might create a new business opportunity.
Tesla Motors
Cars have been powered by internal combustion engines for a century. No other engine made sense – until battery power was improved. Now it was possible to run a car exclusively on electricity. Elon Musk founded a company to make these cars and created cars that are extremely popular, even though they cost nearly 100,000 USD.
Curves
Curves is based not on technological changes but on social changes. It is common for many Americans to exercise at health clubs. But most of the people were men. Women were uncomfortable exercising around men. Many women neglected exercise rather than do so around men. But as the number of young women who wanted to exercise grew, they created their own health clubs. Now they can do the kinds of exercises most appropriate for women, and they can exercise with no men present.
Omani Travel
A huge change that is taking place around the world is the increase in travel. Airlines are cheaper, and many people have enough money that they can travel to many parts of the world. Countries like China are sending millions of tourists all over the world – people who may never have traveled internationally before. Businesses like hotels, tour guides, and special restaurants enjoy a great business opportunity from all these new travelers.
KickStarter
How are other people turning their hobbies, interests, and needs into businesses? An interesting place to look is Kickstarter ( It has hundreds of small businesses offering new products for sale. Some of the products are interesting, and some are just silly, but the site will show you the wide range of products people are creating. For example, here is a product that wraps a cat around a coffee cup. It seems like an odd idea, but the numbers show that it is very popular with consumers. Maybe a good business idea is to make cat products.
The website has products in many categories, and since it shows sales figures for each product, it provides a great guide to what kinds of products are likely to be successful if sold on-line.
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PESTLE
A more formal way to look for business ideas is to use a common analysis method. PESTLE is an acronym for a step-by-step approach to reviewing the world around you as you look for business opportunities. “PESTLE” is the initial letters of six areas experts advise us to review for opportunities:
Political
Economic
Social
Technological
Legal
Environmental
In each case we are advised to look at current conditions, and to consider upcoming changes to see where we could find business opportunities. Let’s review them one at a time.
Political Conditions – Governments – and general political conditions – are important to business. One major contribution governments make to business is infrastructure creation – roads, ports, airports. The Omani government is investing in all these areas. The new port at Duqm will create a need for all kinds of new businesses – restaurants, shops, hotels – as well as major businesses to handle the flow of goods into and out of the port. The larger airport at Muscat should increase the number of international travelers coming to visit the country. The government is also improving roads across the nation. Better roads draw more travelers, and more travelers mean more consumers for business.
The best response is to read national newspapers and stay aware of national developments.
Economic Conditions – In general, after five to seven years of economic growth, the world experiences a recession. During growth, there is more money to support new businesses. During recession, many small businesses are eliminated. Since Oman draws more than half its revenue from oil, when the price of oil drops, the economy is hurt. The government cuts back on projects and cuts back on subsidies.
While this generally hurts businesses, it can also help. If you see that people have less money, and that the price of electricity will go up, then you may have a business opportunity in selling high-efficiency air conditioners. With the price of gasoline going up, this might be the right time to sell cars that use less gas.
Social conditions – Social conditions include many parts of our lives. They include culture (how we dress, what we eat, how we feel about such things as color), population changes (and age distribution), and attitudes toward work (which jobs provide the most status). Omanis have a particular way of dressing, have favorite foods, and have a rapidly growing (and young) population. All these influence the kinds of clothes a business might sell, the restaurants that might be most successful, and the kind of products we might buy for children.
Business opportunities can be created if you are aware of social changes before others. As a young person in Oman, you might see changes in the clothes young people wear or the food they eat. You might create hijabs in new colors, or find new materials for clothing that seem popular with the young.
Technological conditions – So much is changing so fast in the world of technology, we are told that we are currently in the fourth industrial revolution and that so many jobs will be changing that most of us will work in careers that don’t currently exist. We all carry smart phones and assume we will have wi-fi access everywhere. But technology is not just in consumer products, it is also changing basic approaches to problems. Where energy has come from oil in the past, now it is being harvested from the wind and from the sun. Medical technology is changing how our medical problems are diagnosed and treated.
Business opportunities here will go to the trained and to the imaginative. Experts in technology will see opportunities before others. Science and engineering courses will be crucial in helping you see where possibilities exist. And if you don’t like science classes, maybe it is time to make friends with students who have technical skills you lack. They may end up being your boss.
Legal Conditions – An important legal force in Oman is “Omanization.” The government would like more Omanis to take positions currently held by expatriates. The result is labor laws that encourage the employment of Omanis. Several businesses have been created to help train Omanis for work in fields like construction.
As laws change, they create opportunities or challenges for business. New tax laws will create a burden for businesses as they collect the tax and keep records of the taxes they collect. Often times new businesses are created in such times, businesses that help with record keeping.
Environmental Conditions – It appears we are in a period of great climate change. Scientists are still determining the exact impact this change will have. It will probably mean higher average temperatures and rising seas. International agreements will try to lessen the impact of climate change by reducing such things as coal-fired power plants. Some businesses that use coal may be forced to close. Businesses that find energy in other ways – wind or sun – are growing.
While climate change is certainly a threat, it can also be an opportunity. Businesses that help people cool their homes, or find new ways to grow crops with less water will find opportunities. Even recreation businesses can find new opportunities as people are forced to stay indoors as outdoor temperatures rise. We have seen shopping malls add large game areas for children so children can have fun in an area with a comfortable temperature. We should see more businesses redesign their products and services so that they can be used indoors.