Before starting a company, every entrepreneur must have a clear idea of the type of business they want to create. However, deciding which option is the most suitable for your needs and the requirements of the country can be a long process. This is why we will show you some of the best online business ideas in Saudi Arabia, so you can finally choose the right option for you.
In this article, you will find information about small businesses, some online business ideas in Saudi Arabia, the process to start a business, and also how we can help get fresh ideas for your company.
1. What is a Small Business?
A business that functions on a small scale level involves less labor, less capital investment, and also fewer machines to operate are classified as a small business.
In other words, a small business is the kind of industry that produces services and goods on a small scale. These companies play an important role in the economic development of a country. The owner invests once in plants, industries, and machinery. A few examples of small-scale industries are pens, candles, bakeries, paper, toothpicks, local chocolate, etc. These companies are, generally, settled in an urban area as a separate unit.
Usually, these types of companies are constituted of a minimum of 250 employees and a maximum of 1,500 employees. They are partnerships, sole proprietorships, or privately owned corporations that have less revenue than larger businesses.
1.1 Definition of small business, industry by industry
Some size definitions by larger industries are the following:
- Utilities: The maximum number of employees goes from 250 (for renewable electric power generation) to 1,000 (for electric power and also natural gas distributions business).
- Agriculture: Maximum of $750,000 in average receipts.
- Mining: Depending on the sub-sector of the mining, the maximum number of employees can range from 250 to 1,500.
- Construction: Maximum of $36,5 million in average receipts.
- Retail trade: For one-third of all retail trade sub-industries, size standards are set at $7,5 million in average annual receipts. Other industries are defined by 100 to 500 employee max.
- Manufacturing: Maximum number of employees ranges from 500 to 1,500.
- Warehousing and transportation: The maximum number of employees goes from 500 to 1,500. Some sub-industries in warehousing and transportation are defined by a range of $7,5 million to $37,5 million in average annual receipts.
- Finance and insurance: A maximum of 1,500 employees (for casualty insurance carriers and direct property) and a maximum in average annual receipts ranging from $32,5 million to $38,5 million.
- Information: Depending on the sub-industry, the maximum number of employees can range from 500 to 1,500. The maximum average annual receipts for this industry range from $7,5 million to $38,5 million.
- Scientific, professional, and technical services: A maximum of $7,5 million to $20,5 million in average annual receipts. Or a maximum of 1,000 to 1,500 employees.
- Health care and social assistance: A maximum of $7,5 million to $38,5 million in average annual receipts.
- Rental, leasing, and real estate: A maximum of $7,5 million to $32,5 million in average annual receipts.
2. Main characteristics of small-scale industries
Some characteristics of the small businesses are the following:
- Flexibility: Because they are small, they can overcome challenges easily, unlike large industries.
- Resources: They use local and immediately available resources. They do better with the utilization of limited wastage and natural resources.
- Labor-intensive: They mainly depend on manpower and labor, so their dependency on technology is very little.
- Ownership: They generally have a single owner. So they are also known as a sole proprietorship.
- Limited reach: They have a limited sector of work. So they may be an industrial located in one area or a local shop.
3. Online business ideas in Saudi Arabia
The Saudi Arabian economy is one of the 25 largest economies in the world. It is also the biggest economy in the North Africa Region and the Middle East. This is why company formation in Saudi Arabia is so attractive to foreign entrepreneurs.
Some online business ideas in Saudi Arabia you can start with low investment are the following:
3.1 Construction Business in Saudi Arabia
This country offers one of the fastest-growing construction markets in the world. The Government of Saudi Arabia encourages entrepreneurs to invest in education, transport, improving infrastructure, and also real estate. This creates big opportunities for investors to get involved in construction-related activities.
3.2 Solar energy
The hot weather of the country is ideal for solar energy production. The authorities are also encouraging investment in solar power generation for alternate power sources, reducing fuel pollution. You can invest in this energy sector through production, solar installations, and also sales of solar panels.
3.3 Education Business
This country is the world’s 8th highest education spender. The government impulses investment in funding overseas degrees and training programs for Saudi students and in the building of new educational institutes.
With the increase in investment from foreign countries, Saudi Arabia’s population is in need of learning English to communicate better. English language tutoring is a profitable opportunity in the education sector in this country.
3.4 Healthcare
Saudi Arabia is the largest market for healthcare products and medical equipment in the Middle East. There are great opportunities to meet the demands for healthcare solutions due to the growing population of the country. You can invest in the health sector through research, medical education, provision, facilities, and also reimbursement.
3.5 ICT
This region presents the largest IT market, with strong growth in consumer and enterprise-end markets. Huge investments in health, infrastructure, and also education have paved the way for security systems and advanced technology in the country.
3.6 Processed foods
Due to the lack of availability of fresh foods, there is a high demand for processed foods in this part of the world. You can import fresh food and process them as per demand, or you can start a quick-service restaurant.
3.7 Consumer and luxury goods
Because of the high purchasing power of the average citizen, consumer and luxury goods companies are certainly a profitable business sector in the country.
3.8 Professional and financial services
Entrepreneurs with a professional background in engineering, finance, medicine, nursing, etc, are always in demand in the country as there is a shortage of efficient professionals from domestic sources.
3.9 Wastewater and water
The warm weather encourages accessing new water sources and finding ways of using water much more sustainably and efficiently. The water industry is also a huge energy consumer. This means that these companies create a carbon impact that needs to be tackled.
This offers a huge opportunity for businesses operating in this sector to invest in this part of the world.
3.10 Defense and security
The defense and security sector is one of the most important sectors in Saudi Arabia. This sector provides great opportunities for entrepreneurs. Security is a fast-growing sector and it currently has an estimated worth of between SR 2,27-2,51 billion.
3.11 Become a scrap dealer
Selling and buying scraps is a profitable business in this country. If you are interested in a metal-related business with low investment, consider starting a scrap dealership business.
3.12 Recycling business
Saudi Arabia offers a great market in terms of metal recycling. Actually, nearly 6% of the total exports are aluminum scrap.
3.13 Start a blog
One of the online business ideas in Saudi Arabia that will allow you to generate profits from the comfort of your home, is starting a blog. There are millions of people all around the world making money blogging.
3.14 Start an e-commerce business
Starting an e-commerce company is one of the online business ideas in Saudi Arabia that will generate profits at a very low cost. There are several e-commerce website builders that will help you start your ecommerce business online in a matter of minutes.
3.15 Online tutoring
The business for online tutoring has grown exponentially in the last few years. The COVID-19 pandemic has also helped in the growth. If you are an expert in this sector, online tutoring can fetch you high returns.
4. How to start a business in Saudi Arabia?
Before you start with the process of your business setup in Saudi Arabia, you should first book a consultation with Company Formation Saudi. We will help you understand the business setup process before guiding you through the following process:
4.1 Choose your business structure
Firstly, you will need to define the industry you want to work in and the activities your company will undertake. This will determine whether it is best for you to set up in an economic-free zone or Mainland Saudi. This will also determine the legal entity and the type of license you require.
4.2 Business premises
From 2023, Saudi Arabia will no longer issue a license to those companies that do not have regional headquarters in the country. Therefore, if you are planning to set up a branch company, you must work with a local agent or lease business premises.
4.3 Investment license
If you are a foreigner wanting to start your process of company formation in Saudi Arabia, you will need an investment license. The Ministry of Investment of Saudi Arabia (MISA) is the entity in charge of issuing them. Once you get the license, you can invest, establish or buy a new company or set up a foreign branch.
You will also need to apply for a commercial registration certificate from the Ministry of Commerce and Industry at this stage.
4.4 Additional documentation
Next, you will need to get a few more documents from the Ministry of Commerce. We will liaise with the relevant authorities to obtain your Memorandum of Association and your issuance of Commercial Registration. To finish the establishment of your company, you will also need to appoint a General Director and provide the following documents:
- Passport copies of shareholders and directors
- Bank reference letter
- Copy of trade name confirmation
- ID and address for shareholders and directors
- Memorandum of Association (MoA)
- Articles of Association (AoA)
You will also need a business visa to work, live, and reside in Saudi Arabia.
5. What is the cost of starting a company in the country?
The total cost of a company set up in Saudi Arabia will depend on several factors. For example, the number of employees, nature, and size of your business, location of your premises, etc.
If you want a personalized breakdown of the costs involved in your company, you can always contact us.
6. Some considerations on how to start a business in Saudi Arabia
Company formation in Saudi Arabia has become easier over the years. However, there still exist some hurdles along the way. To avoid bumps in the road, some considerations you must take into account are the following:
- You will figure out how to start a business if you have food knowledge of the region.
- Forming a partnership with a local agent can be an invaluable asset to the company.
- As soon as your business becomes legal, you must prove your financial capabilities.
7. How can we offer you innovative online business ideas in Saudi Arabia?
Our specialists can guide you through every step of your business setup in Saudi Arabia. On Company Formation Saudi, we are your best allies when it comes to a wide range of legal processes in the KSA.
In this way, we will provide you with the best legal and financial advice, always thinking in your company’s best interests. All you have to do is reach out to our consultants to find out more! With us, you can protect your business and boost your finances.
We can, in addition, offer you other excellent and comprehensive services for your company. For example, managing investment, business planning, a proper tax strategy, and so much more.
If you are ready to take your business to the next level with the help of our agency, you can contact us at +971 43 316 688. If you wish to provide us with a more detailed explanation of what you need, feel free to email us all of your questions at contact@companyformationsaudi.com. Our team is ready to assist you.