The establishment of the training center is a responsible and rather a challenging task. The primary aim of the training center should be to provide employees with opportunities to receive necessary knowledge and skills to open one’s potential and become a professional in the particular sphere.
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From the first sight, it seems that there is nothing challenging about opening training center. People need to have qualifications and improve their skills while a training center will give them such an opportunity. However, a variety of factors should be taken into consideration before starting any business.
The first important thing is to realize all difficulties. Starting a new business can never be easy and quick, and one has to be ready to face challenges. The second aspect to consider refers to the necessity of such business. Training center for employees presupposes that the United Arab Emirates need new workers.
This fact can be proved via the evaluation of the current situation of the business sector in the UAE. Thus, the country has always had an oil-based economy. Its revenues depend on this sector predominantly. Nowadays, the state aims to change this dependency with the help of the development of other industries.
According to the World Economic Forum (2007, p. 2), ‘A significant proportion of the resulting assets are being re-invested in the country at both the federal and local level in a bid to develop an economy that does not rely on energy resources’. Thus, the country will develop industries that are not related to energy. Consequently, there will be a need for the labor force that is ready to develop the economy.
Description of Business
The primary mission of the training center is to provide employees with opportunities to build better future.
The vision of the training center refers to the desire to educate leaders and professionals who will be able to do their best and contribute to the development of the overall prosperity.
The core values of the training center are as follows:
- Excellence. The center provides high-quality courses for all people. The level of received knowledge and skills meets requirements of corresponding positions;
- Trust. The training center establishes the feeling of confidence among all individuals including employees, the staff, and communities;
- Commitment. The center is dedicated to the idea of the provision of high-quality services for all individuals who are willing to receive training;
- Respect. The center guarantees purely respectful treatment for all people regardless of their social backgrounds or any other factors;
- Transparency and openness. All activities of the center are transparent for everyone. Also, the center is ready to accept all individuals who want to take particular courses. The only requirement is desire.
The training center has become a plan after the realization that people comprise the most significant resource in every organization. The training is created to ‘change the behavior of the employee in a workplace in order to stimulate efficiency and higher performance standards’ (Adegoke 2013, p. 3).
The company provides courses in various fields for residents of the UAE and migrants as well. This direction is predetermined by the high level of migration in the country. There are no investors yet. However, the plan is to find support in companies’ owners who want to improve their performance and competitiveness by making their employees highly qualified professionals.
Product and Services
The training center for the UAE employees provides a broad range of training programs in various fields. The initial groups of courses include:
- Literacy training. This service is created primarily to non-residents of the United Arab Emirates. Many people arrive in the country without the knowledge of its language and the way of life. Basic literacy training is necessary to improve the quality of job performance. It is planned to collaborate with employers who can stimulate workers to increase their professional skills and knowledge. Basic literacy courses include studying of language and grammar;
- Management courses are crucial for the efficient development of the non-energy sectors of the state. Management courses include leadership, business communications, team building, motivation, customer service, project management, service management, sales management, and business development;
- Technical courses. Modern society must be technologically aware society. Technical training allows employees to widen their scope of knowledge of the particular sphere. The courses include Microsoft Software, Adobe Photoshop, Illustrator, Java, C+ and C++ programming, Android and iOS development, 3d Max, computer graphics, testing;
The sphere may be regarded as rather competitive due to the many existing training companies in the United Arab Emirates. One can find a list of top five training centers in the UAE in Appendix A. These companies have their employees and an established reputation.
However, most of them do not consider immigrants as potential clients. Thus, the provision of basic literacy training for immigrant can become an advantage of the training center. Also, it is necessary to establish a system of competitive prices to attract clients.
The training center for the UAE employees hires certificated professionals who can become instructors at courses. Technical devices are necessary for the efficient training nowadays. It is planned to buy computers, printers, scanners, Xeroxes, and projectors.
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The evaluation of the estimated target audience of the employees training center can be divided into several groups. They are:
- Individual employees;
Every group will be analyzed separately. Such division is necessary for the realization of clients’ needs. The training center should adapt to meet a comprehensive range of demands of potential clients. For instance, a large organization may like to have separate payment options because they supply the center with numerous clients. Immigrants may be satisfied to receive initial instructions in their native language and even from representatives of their nationalities.
Individual employees may need courses that broaden their knowledge and skills in the particular occupation. Training may be necessary to apply for the particular position. One can search for available job positions in Sharjah at indeed.ae.
The top positions for employees in Sharjah include document coordinator, secretary, assistant front office manager, front desk agent, and purchase officer (Jobs in Sharjah n.d.). The position of document coordinator requires advanced knowledge of TOS (CLT/NAVIS/CMC). The employee may need to take courses first to become applicable for the position.
Organizations comprise another market sector for the training center. The importance and need for employees training in companies are predetermined by several factors such as:
- Training enhances competitiveness in the market;
- It provides opportunities for personal growth and career promotion in the firm;
- Training increases job performance;
- It also makes employees more satisfied with the choice of the employer.
The list of top companies provided at Glassdoor may be used for the demonstration of potential customers. Thus, some companies that may become potential clients in Sharjah include Nabeel Perfumes, Chalhoub Group, Petrofac, and Air Arabia (Top Companies in Sharjah n.d.).
Currently, immigrants form a substantial part of the workforce in the United Arab Emirates. According to Malit and Al Youha (2013), the overall number of immigrants comprise almost eight million while the total population is more than nine million. These data makes the state’s migration stock the fifth largest in the world.
Immigrants from Pakistan, India, and Bangladesh present ninety percent of the workforce. They are both low and high-skilled workers. The training center services are useful for low-skilled workers who need necessary support and knowledge to become more professional in their spheres of activity. High-skilled workers can use the same services as described in previous two segments.
Sales and Revenue
Any startup should commence with the evaluation of future expenses. Thus, it is necessary to forecast expenses. The first thing to consider is a rent of the necessary building. The office of the total area of 800 square feet can be rented for approximately 33789 AED per year. Such office comprises of six small rooms including kitchen and water closet.
The next factor is utility bills. Basic utility (heating, electricity, water, and garbage) and the Internet cost approximately 920 AED in a month for such office (Cost of Living in Sharjah n.d.). The annual cost of basic insurance plan is approximately 11020 AED (How Much does Business Insurance Cost? n.d.).
The cost of furniture and technical devices should be taken into consideration as well. Thus, one laptop costs 2940 AED in the UAE. This price will be taken as general for other devices. The price for furniture will be counted on the basis of provided prices at Dubai Furniture website.
The price for the whole set of kitchen, tables, chairs, storages, and file cabinets will be estimated. Finally, employees’ salaries also should be taken into consideration. The average salary of instructor varies from 9180 AED- 20200 AED per month in the UAE (Stewart 2013). The salary of 12850 AED will be used for forecasting of expenses.
Thus, two tables will be provided with general calculations. The first table contains information about expenses that should be paid once.
|Type of product||Estimated cost|
|Technical devices (including laptops, printers, Xeroxes, scanners, and projectors)||36730 AED (for six laptops and two items of other devices)|
|Furniture||55100 AED for furniture (including limited number of chairs and tables for clients and kitchen for employees)|
Estimated annual expenses per year
|Type of expense||Estimated cost per year|
|Utility bills and the Internet||11040 AED|
|Business insurance plan||11020 AED|
|Salaries (for five employees)||770 000 AED|
|Total per year||825 849 AED|
|Total for the next five years||4 129 245 AED|
All calculations are made on the basis of found prices for mentioned items. In the table above, the payments for one month are multiplied by 12 to find the price for the whole year.
The cost of courses for employees may vary depending on the type and duration. The estimated average duration is four months. The cost for the four-month course for the individual comprises 7300 AED. The cost for companies who will train at least ten employees is 5500 AED per employee. Such price will be provided for the initial attraction of clients. Now, it is necessary to calculate estimated sales, revenues, and income.
Initially, it is expected that at least fifteen people will be engaged in one course. At least six courses per year will be conducted (though the choice is wide, it is better not to overvalue future sales). Six courses per year mean that at least ninety people will become clients during the first year.
What concerns companies, it is estimated that at least five companies will provide training for ten employees in five courses during the year (fifty corporate employees). The table with sales and revenues estimation will be provided.
It is expected that customers’ flow will increase by thirty clients (15 individuals (109 500 AED) and 15 corporate clients (82 500 AED)) annually. Thus, revenues grow by 192 000 AED per year.
|Year and Number of Clients||Sales||Revenues|
|2016 — 140 clients||11 courses||932 000 AED|
|2017 — 170 clients||14 courses||1 124 000 AED|
|2018 — 200 clients||17 courses||1 316 000 AED|
|2019 — 230 clients||20 courses||1 508 000 AED|
|2020 — 260 clients||23 courses||1 700 000 AED|
Also, it should be taken into consideration that revenues do not mean the same as income. Revenues mean the total sum of money received for the particular services. A substantial part of this sum is given to fixed expenses.
The pure income is everything that is left after all debts are paid. The forecasted growth seems to be positive one even with low expectations. Still, market changes, rise in prices (such as for utility bills), constant expenses (e.g. office materials, coffee, tea) may influence the income drastically.
A pro forma income statement is necessary for the evaluation of the future development of the business. The basic template for the pro forma will be utilized as far as only estimated numbers are used for forecasting. The information about taxes that has been used for calculations in provided in Appendix B.
Thus, the taxes are included when the estimated income will be more than 1 000 000 AED. The estimated growth of revenues comprises 192 000 AED per year. This number is taken as minimum to avoid exaggerations and too positive expectations. The sum is taken as far as previously it was expected that 30 more customers will buy courses every year.
These numbers comprise gross sales because the cost of sales from courses is primary for business. Employees’ annual salary form cost of goods sold. As far as the number of clients is expected to grow, the more products will be sold and, logically, the costs of goods sold should increase too.
The estimated growth of the cost of goods sold and administrative expenses is 10%. The growth of goods sold is for hiring more employees or paying for more courses. The increase in administrative expenses is also 10% because there is a possibility that these expenses will increase because of more extensive use of the office.
|A Training Center for Employees in the UAE|
|Five Year Pro Forma Income Statement|
|Gross sales||932 000 AED||1 124 000 AED||1 316 000 AED||1 508 000 AED||1 700 000 AED|
|Cost of Goods Sold||770 000 AED||847 000 AED||931 700 AED||1 024 870 AED||1 127 357 AED|
|Administrative expenses||55 849 AED||61 433,9 AED||67 577,29 AED||74 335, 019 AED||81 768,5 AED|
|Earnings before taxes||106 151 AED||215 566,1 AED||316 722,71 AED||408 795 AED||490 874,5 AED|
|Taxes||0||112 400 AED||131 600 |
|150 800 AED||170 000 AED|
|Net Income||106 151 AED||103 166 AED||185 122,71 |
|257 995 AED||320 874,5 AED|
Net income for the first year is higher than in the second because no taxes should be paid if gross sales are less than 1 000 000 AED. As revenues grow and taxes remain the same, there is a distinctive gap between net incomes in 2017 and 2018. Then, net income rises by 60-70 thousand AED annually.
Finally, balance sheets with major information for the following five years will be provided too. As far as all numbers are estimated, some variables (such as current cash and long-term assets) will be omitted. The rent is usually agreed for the next several years that is why the payment for rent is the same for all five years.
The amount of money invested in furniture and devices is also for the next five years. That is why the same sum is used for all years. Accounts receivable are revenues from gross sales. Accounts payable refer to utility bills and business insurance plan. Accounts payable for every year are expected to rise by 10% to take into account possible changes in prices.
|Balance Sheet for 2016|
Accounts receivable — 932 000 AED
Prepaid rent — 33789 AED
Equipment and furniture— 91830 AEDTotal — 1 057 619 AED
Salaries payable — 770 000 AED
Accounts payable — 22000 AED
Total— 792 000 AED
|Owner’s Equity — 265 619 AED|
|Balance Sheet for 2017|
Accounts receivable — 1 124 000 AED Prepaid rent — 33789 AED
Property, plant, equipment — 91830 AED
Total — 1 249 619 AED
Salaries payable — 847 000 AED Accounts payable — 24200 AED
Taxes payable — 112 400 AED
Total— 983 600 AED
|Owner’s Equity — 266 019 AED|
|Balance Sheet for 2018|
Accounts receivable — 1 316 000 AED
Prepaid rent — 33789 AED
Equipment and furniture— 91830 AEDTotal — 1 441 619 AED
Salaries payable — 931 700 AED
Accounts payable — 26620 AED
Taxes Payable — 131 600
Total— 1 089 920 AED
|Owner’s Equity — 351 699 AED|
|Balance Sheet for 2019|
Accounts receivable — 1 508 000 AED Prepaid rent — 33789 AED
Equipment and furniture— 91830 AED
Total — 1 633 619 AED
Salaries payable — 1 024 870 AED
Accounts payable — 29282 AED
Taxes Payable — 150 800 AED
Total— 1 204 952 AED
|Owner’s Equity — 428 667 AED|
|Balance Sheet for 2020|
Accounts receivable — 1 700 000 AED Prepaid rent — 33789 AED
Equipment and furniture— 91830 AED
Total — 1 825 619 AED
Salaries payable — 1 127 357 AED
Accounts payable — 32210 AED
Taxes Payable — 170 000 AED
Total— 1 159 567 AED
|Owner’s Equity — 666 052 AED|
The organization of work at any company is crucial for the further efficient functioning. The organization should be implemented in different sectors. Every area is to be analyzed separately.
The current business plan should be regarded as the initial step in the establishment of the training center for employees in the United Arab Emirates. The primary aim of the marketing strategy is to attract as many clients as possible. The company plans to contact local firms and offer services for employee training.
Besides, the center intends to use advertisements in both newspapers and websites for further promotion. Also, it is necessary to conduct the analysis of the target audience. The received business analytical data will be useful for the choice of the most appropriate advertising campaign.
The chosen pricing strategy also aims to attract as many clients as possible. Special prices for employees from particular companies form another method to increase the competitive advantage in the sphere. Also, the payment for courses should vary depending on the difficulty and duration. Initially, all courses are prepared for four months. Later, it is planned to develop various options for clients.
The training center for employees faces a need to find a way to remain competitive. The adequate pricing policy, as it has been already described, is the first method. Also, the center should employ and retain only highly qualified professionals. The specialists are required to use modernized and efficient ways of teaching and training.
The training center needs a great management staff for the realization of all planned activities. Initially, it is advisable to hire a business analytic who can investigate the market and provide recommendations for the organization of the company. The company will function with the help of standard hierarchical structure.
Thus, one manager will be the head of three departments (one department for one group of courses). One instructor per one group of courses will be employed at the beginning. However, the potential expansion of courses and influx of clients presuppose the need to hire more instructors. Also, there should be a person responsible for the arrangement of courses schedules and recording of all activities in the center.
The preparation of the exit strategy is an integral part of business plan. Entrepreneurs should not avoid thinking about the exit strategy because of hopes that it will not happen. Such attitude is extremely unprofessional. A good specialist comprehends that every business has a life cycle that will end sometime. However, the preparation for the exit should not be constantly procrastinated. Before the choice of the exit strategy, several factors should be taken into consideration.
The first aspect refers to owner’s desire to stay in business. Teams and leaders of some companies prefer remaining in charge while others do not want to be involved in it anymore. The second factors is a need for liquidity.
The increase of individual liquidity can be rather a challenging task especially if the IPO type of exit strategy is chosen. The third aspect concerns the owner’s potential in the company. Thus, some owners would like to remain their role in the decision-making process concerning company’s growth. Market conditions, being the fourth thing to consider, should be evaluated too.
The dual-track approach is a strategy used by owners to ensure two exit strategies at the same time. ‘Public market investors generally want to understand your company as a whole — what your main businesses are, what your prospects for growth are — while strategic buyers may be more interested in specific parts of your company that are complementary’ (How to Choose an Exit Strategy 2010, para. 15).
The center’s team and leader will not stay in business. The receiving of liquidity needs is preferable too. However, the center plans to participate in the future development of the company. The Initial Public Offerings seems to be the most appropriate strategy for further participation.
Unfortunately, the IPO has declined drastically since 2000 and is not considered to be the advisable exit strategy for current startups. Consequently, a strategic acquisition is the chosen exit strategy. It presupposes that the larger similar company will buy the training center.
A SWOT analysis of the business plan and center’s future performance is provided to sum-up the delivered information.
|Strengths ||Weaknesses |
|Opportunities ||Threats |
Adegoke, B 2013, Effects of Training of Employees’ Productivity in Public Service Organization, GRIN Verlag, München.
Cost of Living in Sharjah n.d., Web.
Galadari & Associates n.d., Taxation in the United Arab Emirates, Web.
How Much does Business Insurance Cost? n.d., Web.
Jobs in Sharjah n.d., Web.
Malit, F & Al Youha, A 2013, Labor Migration in the United Arab Emirates: Challenges and Responses, Web.
Stewart, K 2013, Salary Expectations for Teaching in the United Arab Emirates, Web.
Top Companies in Sharjah n.d., Web.
World Economic Forum 2007, The United Arab Emirates and the World: Scenarios to 2015, Web.
Five Most Relevant Training Centers in the UAE
|Name and Location||Basic Information|
|Minds Training Center, Sharjah||Accounting and finance, corporate training, workplace training, teacher training, computer skills.|
|Capital Educational Institute, Abu Dhabi||Administrative business and accounting|
|AIMS Training Center, Abu Dhabi||Soft and management skills|
|National Training Center, Abu Dhabi||Health, safety, environmental management, risk management|
|Sites Power Training Center, Dubai||Management and technical courses|