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An IITP A TP EExecutive xecutive xecu tive v Publication ti



DIRECT APPROACH How to appoint a board of directors

STAR APPEAL The pros and cons of celebrity endorsements

PLANNING AHEAD Why a successful business plan will help your company flourish



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An ITP Executive Publication



In this issue


— Loulou Khazen Baz is crowned the winner of du’s ‘The Entrepreneur’.

— The UAE has the least demanding tax framework, according to a new report. — Sugar Daddy’s Bakery is named Small Business of the Year at the Arabian Business Awards.



Would your business be suited to the famous Palm Jumeirah?



HR departments can divide opinion. We look at how one could help your company.


Not tweeting yet? We help you embrace the wonderful world of Twitter to increase your business presence.


In this issue VOL. 1 ISSUE 3 | DECEMBER 2012


Food and beverage is big business in the UAE, which is why a swathe of foreign brands are hoping to make their mark in the region. Ed Attwood and Claire Valdini look at why the Middle East is such a desirable destination.

36 DUBAI SME 100


Using a range of different evaluators, the Dubai SME 100 has ranked the top 100 performing SMEs in the emirate. We find out which companies made it to the top of the list.




We give you the lowdown on how to assemble and run a board of directors.


The man who can’t stop starting gives us some inside knowledge on easy entrepreneurship.



Celebrity endorsement isn’t new, but it is still one of the most high-profile ways of getting your product to stand out from the crowd. If you’re lucky enough to have a famous name attached to your business, however, dont think you’ll have it all your own way. We look at the pros and cons associated with celebrity endorsements. Working capital is considered the life line of any company. Nilanjan Ray of Abu Dhabi Commercial Bank explains why working capital is so vital, and outlines ways it can help your business.

The battle lines between Macs and PCs have long been drawn. Find out which is best suited to you and your needs.


You probably carry your iPad wherever you go, but which apps will help you get the most out of it? We look at the top ten apps that will boost your business.



Prepare for the future with a great business plan. We show you how to get your finances in order from the start.




The former CEO of Zain, Saad Al Barrak, tells us how he took the once ailing government firm and turned it into one of the world’s leading telcos.

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Editor’s letter Registered at Dubai Media City ITP Executive Publishing PO Box 500024, Dubai, United Arab Emirates tel +971 4 444 3000 fax +971 4 444 3030 ITP EXECUTIVE PUBLISHING CEO Walid Akawi MD, ITP PUBLISHING GROUP Neil Davies MANAGING DIRECTOR, ITP EXECUTIVE Karam Awad GENERAL MANAGER Peter Conmy EDITORIAL DIRECTOR Anil Bhoyrul EDITORIAL EDITOR-IN-CHIEF Rob Corder, email EDITOR Neil King tel +971 4 444 3142 email EXECUTIVE EDITOR Massoud Derhally email CHIEF REPORTER Shane McGinley tel +971 4 444 3631 email SENIOR CORRESPONDENT Claire Valdini tel +971 4 444 3667 email SUB EDITOR Edward Liamzon tel +971 4 444 3474 email CONTRIBUTORS Sara Hamdan, Neil Parmar, Dinesh Nair ARABIANBUSINESS.COM GROUP EDITOR Will Milner tel +971 4 444 3184 email DEPUTY EDITOR Daniel Shane tel +971 4 444 3316 email STUDIO GROUP ART EDITOR Daniel Prescott SENIOR DESIGNER Adrian Luca DESIGNER Rey Delante CHIEF PHOTOGRAPHER Jovana Obradovic SENIOR PHOTOGRAPHERS Isidora Bojovic, Efraim Evidor STAFF PHOTOGRAPHERS Lester Ali, George Dipin, Juliet Dunne, Murrindie Frew, Lyubov Galushko, Verko Ignjatovic, Shruti Jagdesh, Stanislav Kuzmin, Mosh Lafuente, Ruel Pableo, Rajesh Raghav PRODUCTION & DISTRIBUTION GROUP PRODUCTION & DISTRIBUTION DIRECTOR Kyle Smith DEPUTY PRODUCTION MANAGER Basel Al Kassem PRODUCTION COORDINATOR Sonam Bhoneshwar MANAGING PICTURE EDITOR Patrick Littlejohn IMAGE EDITOR Emmalyn Robles DISTRIBUTION EXECUTIVE Nada Al Alami CIRCULATION RETAIL DEVELOPMENT MANAGER Osama Baraka tel +971 4 444 3629 email HEAD OF CIRCULATION & DATABASE Gaurav Gulati ADVERTISING SALES DIRECTOR Wissam Younane tel +971 4 444 3592, email GROUP SALES MANAGER Paul Williams, tel +971 4 444 3348, email GENERAL MANAGER — SALES (KSA) Rabih Naderi tel Direct/Fax +966 1 206 8697 email MARKETING HEAD OF MARKETING Daniel Fewtrell tel +971 4 444 3684, email EVENTS MANAGER Michelle Meyrick tel +971 4 444 3328, email ITP DIGITAL DIGITAL PUBLISHING DIRECTOR Ahmad Bashour, tel +971 4 444 3549, email GROUP SALES MANAGER, ARABIANBUSINESS.COM Gemma Dickson, tel +971 4 444 3835 email INTERNET APPS MANAGER Mohammed Affan OPERATIONS MANAGER Asad Azizi ITP GROUP CHAIRMAN Andrew Neil MANAGING DIRECTOR Robert Serafin FINANCE DIRECTOR Toby Jay Spencer-Davies BOARD OF DIRECTORS KM Jamieson, Mike Bayman, Walid Akawi, Neil Davies, Rob Corder, Mary Serafin CORPORATE WEBSITE CIRCULATION CUSTOMER SERVICE tel: +971 4 4443000 WEB NOTICE The publishers regret that they cannot accept liability for error or omissions contained in this publication, however caused. The opinions and views contained in this publication are not necessarily those of the publishers. Readers are advised to seek specialist advice before acting on information contained in this publication, which is provided for general use and may not be appropriate for the readers’ particular circumstances. The ownership of trademarks is acknowledged. No part of this publication or any part of the contents thereof may be reproduced, stored in a retrieval system or transmitted in any form without the permission of the publishers in writing. An exemption is hereby granted for extracts used for the purpose of fair review. PRINTED by Emirates Printing Press L.L.C. Dubai CONTROLLED DISTRIBUTION by Blue Truck All photos used in this magazine are by Gallo Images/Getty Images/Shutterstock/Bloomberg Images unless otherwise credited.


SIT STILL? NEVER... THERE’S A LOT TO LEARN FROM PEOPLE WHO HAVE BEEN THERE AND DONE THAT. ESPECIALLY WHEN THEY MAKE SUCCESS LOOK SO EASY. YOU KNOW SOMEBODY HAS MADE IT WHEN THEY’RE KNOW ACROSS THE WORLD BY THEIR FIRST NAME. Utter the word ‘Stelios’ and most people will picture Stelios Haji-Ioannou, the billionaire entrepreneur who started countless businesses under the ‘easy’ brand which has made him famous. A man who has split opinion on occasion, Stelios undoubtedly deserves respect — perhaps even admiration — for his drive and entrepreneurial spirit. Born into a wealthy family, and given a leg-up in business by his father who owned a successful shipping company, Stelios never had to struggle for a big break in the way most entrepreneurs do. But regardless of family fortunes, he proved himself a shrewd businessman when setting up his own shipping company and, later, budget airline easyJet. Many people in his shoes might have sat on their success and concentrated on building easyJet but Stelios really earned his reputation by doing something quite different. He moved on. He formed the easyGroup and gave himself challenge after challenge. Cars, gyms, internet cafés, music, money, cruises and more — he became the eternal entrepreneur, always looking for the next big idea. It’s this desire to always be on the move, searching for new opportunities, which we at StartUp admire. We also believe this trait to be one that so many of you share. We know you have the potential to inspire, to succeed, and to take the business world by storm. When you do, we hope to tell your story y too.



GCC economic growth to slow in 2013

UAE HAS WORLD’S LEAST DEMANDING TAX Gulf states rank highly in new report


he UAE has the world’s least demanding tax framework for corporations, followed by Qatar and Saudi Arabia, according to a new report

globally, pay an annual total tax rate of 14.9 percent, make four payments a year and spend just four hours preparing the administration required for payments, said the report. The report, which studied 185 economies including 13 in the region, said companies in the Middle East pay a total average tax rate of 23.6 percent compared to a global average of 44.7 percent, the lowest of any region in the world. Companies operating in the Middle East make 17.6 payments annually and spend an average time of 158 hours to comply with the regulations.

Companies in the Middle East pay a total average tax rate of 23.6 percent compiled by the World Bank, IFC, and PricewaterhouseCoopers (PwC). Companies operating in the Gulf state, which was last year ranked sixth


“Economies in the Middle East feature so prominently in the top jurisdiction of the Paying Taxes indicators. This can be largely attributed to the relatively few taxes levied and the reliance on other sources of government revenues,” Dean Kern, tax leader at PwC Middle East, said in a statement. “With increased spending requirements and populations demanding greater economic rights, governments in the Middle East will face a challenge to raise additional tax revenues in the future, either by introducing new taxes, expanding the tax base or increasing tax rates,” he added. Other Gulf states also ranked highly with Bahrain seventh globally followed by Oman in tenth and Kuwait at 11th.

Economic growth in the Gulf Cooperation Council (GCC) will slow in 2013 owing to a moderation in oil production growth, according to a new report by Fitch Ratings. However, the rating agency said high oil prices and production will continue to “provide a supportive backdrop for another year of solid non-oil growth”. The report said GCC economies will remain heavily influenced by global oil markets. Fitch added that it expects Brent crude to average around $100 per barrel in 2013 despite the weak outlook for demand. “As most GCC exporters aside from Saudi Arabia are operating at close to capacity, there is little scope to raise output after the hikes over 2011 and 2012,” the Fitch report said.

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NBAD to offer UAE’s first IVF fertility loans

National Bank of Abu Dhabi (NBAD) has become the first lender in the UAE to offer special loans aimed at helping families undergoing IVF fertility treatments, it was announced. NBAD IVF Fertility Financing will be offered in conjunction with the Emirates Family Network (EFN), a non-profit agency chaired by HH Sheikha Hind Bint Abdul Aziz Al Qassimi. The loan is the first of its kind in the UAE and will offer families up to AED100,000 (US$27,224) towards the cost of medical fertility treatments and is available to UAE nationals and expatriate residents. Under the terms of the agreement, couples must repay the loans within a year and interest rates are charged at 6.49 percent. p

DU’S ‘THE ENTREPRENEUR’ CROWNS WINNER Loulou Khazen Baz, founder of, announced as the reality TV show’s first winner


drive and inspirational entrepreneurial oulou Khazen Baz has spirit,” said Hala Badri, Executive Vice been crowned Grand Winner President, Brand and Communications, du. of the inaugural season of “She went head to head with the nation’s du’s ‘The Entrepreneur’. most talented entrepreneurs and managed Khazen Baz was revealed as to thrive despite steep competition. We are the winner in the finale confident that her business will not only which aired on Dubai One on flourish, but also pave the way for other 21 November, earning a cash budding entrepreneurs in the region.” prize of AED1 million. Capping off the Khazen Baz’ pioneering business idea for eight-episode season, Khazen Baz’s Nabbesh – the first freelance and much-coveted prize includes a guaranteed skill-seeking portal in the Middle East – is office space for a period of one year, a what garnered her top spot on du’s ‘The dream business meeting to set her idea on Entrepreneur’. Throughout the show, she track, media exposure, the chance to faced myriad challenges and intense grow her company value, and scrutiny from an eminent judging money-can’t-buy recognition, panel comprising Abdul Baset Al adding up to another AED1 ”Now we have Janahi, CEO, The Mohammed million in prize value. the investment and Bin Rashid Establishment for “We’re thrilled to finally backing we need to SME Development (MBRE); announce the show’s first take Nabbesh to Muna Al Gurg, Director of Grand Winner! As one of ten the next stage” Retail, Easa Saleh Al Gurg finalists out of thousands of Group (ESAG); Nisreen Shocair, applicants, Loulou truly stood President, Virgin Megastore, out from the season’s very MENA, and Yogesh Mehta, Founder beginning thanks to her impactful and Managing Director, Petrochem. idea, original business plans, exceptional “I am very honoured that the judges were so impressed with Nabbesh and that we went on to win ‘The Entrepreneur’. The show has helped all of us competitors expose our ideas, fine-tune our business skills and showcase our entrepreneurial flair,” said Khazen Baz. “Now we have the investment and backing we need to take Nabbesh to the next stage and consolidate our position as the Middle East’s skills marketplace. ‘The Entrepreneur’ is a great initiative from du  ‘The and has been a once in a lifetime Entrepreneur’ experience.” Winner, Loulou Khazen Baz

S Sugar Daddy’s takes top award Sugar Daddy’s Bakery has been voted Small Business of the Year at the Arabian Business Awards held last month. Sugar Daddy’s was a concept that entrepreneur Fadi Jaber - a son of Palestinian refugees - brought to Jordan and the Middle East in July 2007 when he was 30, long before the craze over cupcakes went viral around the world. Jaber, a graduate of the college of William & Mary in Virginia, left his marketing job at Unilever in Jeddah, Saudi Arabia to attend a baking and culinary management programme at the Institute of Culinary Education in New York and went on to start his first shop from scratch at a cost of $180,000. Jaber’s chain of shops operate in Amman, Jordan; Beirut, Lebanon; and Dubai, UAE selling a wide variety of cupcakes in addition to cheesecakes and brownies.


Location, location,





WHAT’S THERE NOW? Thousands of apartments, hundreds of villas and some pretty swanky hotels such as The Atlantis and The Fairmont.

WHERE IS IT? Surely you must know… one of the wonders of the world, that amazing island shaped like a palm tree.

 The Palm is one of Dubai’s most desirable areas to live.


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Top TIP:

IS THERE ANY SO CAN I LOCATE THERE? FREE SPACE? Depends what you do. Along the Shoreline apartments on the beach side are a number of club houses with a small amount of retail space.

WHAT KIND OF BUSINESSES GO THERE? Along the Shoreline it is a mixture of small grocery stores, nail bars, haidressers… that kind d of thing…

Appears to be plenty


Grocery stores exist on The Palm... room for more

WHAT WILL IT COST? WHAT ELSE IS THERE? Probably more than anywhere else in town.

The big hotel developments still have some conc concessions… and don’t forget a huge chunk of land is still being developed.

WHAT ABOUT GOLDEN MILE? Also on the Palm, there are no retail outlets there. But with a great running track and park having just opened, this could be a gold mine.

SHOULD I DO IT? We still reckon Golden Mile and Shoreline are great catchment areas for the right kind o off business.


Should I...





What’s the point?

Good question. Many people actually wonder what HR managers do. And whether it’s worth paying them to “do something rather vague”. But once your organisation starts to grow, it’s worth thinking about.

But shouldn’t I being doing all the recruitment myself?

Initially yes, especially for a small sized company you need to be totally in control of who you are bringing in.

At what point should I get one then?

You need to really have at least 30 staff on the books before this becomes an issue.

And after that the HR manager does recruitment?

No, entrepreneurs generally keep control of the recruitment side of the operation. HR is however much more


than recruitment – it is about putting systems and practices in place, about taking an interest in the welfare of employees, and all sorts of related issues such as medical insurance.

Shouldn’t I be doing that from day one?

You should, but as the company grows you should quickly start putting better systems in place. Many successful businesses have grown very fast to around 100 staff in a year, and been completely caught out – in some cases nearly brought down – by the lack of HR systems.

How much will it cost?

A competent person to begin with shouldn’t set you back more than AED16,000 a month. After that, if the company grows, you will need to invest more.

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The socialite >

TIME It’s the biggest social media phenomenon on the planet, but in the Middle East, Twitter still lags behind Facebook as the social media of choice. Getting started can change your business. Here is our quick guide on how to kick off your Twitter account. What is Twitter anyway? Twitter is an information network made up of 140-character messages called tweets. It’s an easy way to discover the latest news related to subjects you care about. How is it useful? Twitter contains information you will find valuable. Messages from users you choose to follow will show up on your home page for you to read. It’s like being delivered a newspaper whose headlines you’ll always find interesting – you can discover news as it’s happening, learn more about topics that are important to you, and get the inside scoop in real time.


How to start using Twitter: If you remember one thing after perusing this page, it should be this: reading tweets and discovering new information whenever you check in on your Twitter timeline is where you’ll find the most value on Twitter. Some people find it useful to contribute their own tweets, but the real magic of Twitter lies in absorbing real-time information that matters to you. 1. DISCOVER SOURCES: find and follow others It’s best to begin your journey by finding and following other

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Making the web work for you

interesting Twitter accounts. Look for businesses you love, public service accounts, people you know, celebrities, or news sources you read. Tip: One great way to find more interesting accounts is see who those you know or admire are following. 2. CHECK IT OFTEN: pay attention to what’s happening Messages from others you follow will show up in a readable stream on your Twitter homepage. Once you’ve followed a few people, you’ll have a new page of information to read each time you log in. Click links in others’ Tweets to view images they’ve linked to. Click hashtagged keywords (#) to view all tweets about that topic. 3. TAKE IT WITH YOU: connect to your mobile One of the best things about Twitter is that it’s portable. Connect your account to your mobile phone or download a Twitter application to begin reading tweets on the go. Now you can get updates about traffic problems in the middle of your commute, find out what the players are saying while you’re at the game, or catch up on the buzz about an event you’re about to attend. Tip: Using Twitter via SMS allows you to pick and choose which updates you want from those you follow, so you can get mobile updates from the accounts that matter most to your life on-the-go.

HOW TO START TWEETING: Many users find it fun or exciting to contribute their own content to Twitter (we call this “tweeting”). If you’re one of them, here are some good ways to get started posting your own tweets. People who are interested in what you have to say may follow you and they’ll see all the tweets you share with them. 1. BUILD A VOICE: Retween, reply, react Use existing information (other people’s tweets) on Twitter to find your own voice and show others what you care about. Retweet messages you’ve found and love, or @reply with your reaction to a Tweet you find interesting. Tip: If you’re a new user, others are more likely to find your messages if they are Retweets or @replies. 2. MENTION: Include others in your content Once you’re ready to begin authoring your own messages, consider mentioning other users by their Twitter username (preceded by the @ sign) in your tweets. This can help you think of what to write, will draw more eyes to your message, and can even start a new conversation. Try posting a message mentioning a celebrity or person you admire – they often respond to fans. You’ll see their response on your Mentions tab. Tip: Can’t think of anything to write? You don’t have to. The real magic lies in your reading of content on Twitter. 3. GET FANCY: Explore advanced features As you become more engaged on Twitter, others will begin to find and follow you. Once you’re familiar with Twitter basics, consider exploring the site’s more advanced features: lists, direct messages, and favorites. Learn how to include images or videos in your tweets, or consider connecting your Twitter account to your your blog, Facebook, or website. Tip: The best way to gain followers on Twitter is to regularly engage and contribute in a meaningful way.


How to...




 A board of directors can become necessary as a business grows

he owner of a growing small business has a great deal on their mind. A board of directors may not necessarily be one of the most pressing issues, but it should be. As a business expands and matures, so does its need for involved direction and experienced guidance – elements that a board of directors can provide. Here are eight issues to bear in mind when considering a board of directors:


DO YOU REALLY NEED ONE? It’s essential that you think about the areas in your business where you may need help or input, such as finance or management. Target potential problem areas and imagine how a board may help. Consider, too, what the presence of a board may mean for your company’s image. “Having independent directors on a company is generally consid-

ered beneficial to prospective investors,” says attorney Greg Balder. “Independent directors can oversee auditing and can be beneficial in preventing management abuse and corporate fraud.”


WHAT SORT OF BOARD IS BEST? How binding do you want your board’s role to be? Many small businesses maintain advisory boards for feedback only. That may be adequate for some businesses, but a formal board of directors carries greater clout. If it’s a legally formed board, it assumes a fiduciary responsibility for how the company is run. That can boost a sense of responsibility to board members, but it has a downside: “Formal boards can outvote you on key decisions,” says consultant John Reddish. “As principal shareholder, you can often override them, but that will only cause the best directors to resign. Go with an advisory board if you want advice but don’t want it mandated.”

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WHOM DO YOU CHOOSE? One company’s needs differ from the next. Here are a few things to consider: If you aim for diversity on your board—from gender and political preferences to professional experience—you will help to ensure a diverse set of skills, expertise, and feedback. Consider a broad range of people and look for expertise in the kind of business you operate.


AVOID MIRROR IMAGES. The last thing you want in your board is a mass of “yes” droids. An effective board comprises people of diverse backgrounds and viewpoints that can differ from yours. This board shouldn’t be the least bit afraid about offering guidance and feedback that may be disconcerting. A solid board of directors comprises “people who don’t think like you and who are not afraid about standing up to anyone with their ideas,” says consultant Dr. Ted Sun. You need strong-willed people with a great deal of experience.”


HOW WILL THE BOARD FUNCTION? Figure out the areas of your business that need a board’s involvement. Are they company audits? Help with raising outside capital for a project? Or management decisions? “Create an accountability structure between the executive team and the board of directors,” says Sun. “Each needs to be accountable about implementing what’s

 Variety on a board is essential in order to hear different viewpoints.

discussed. The worst thing is to let your board meet and talk, but nothing actually happens.”


HOW OFTEN WILL THE BOARD MEET? The frequency of board meetings will differ from one company to the next. Although the average is every quarter, structure your board’s schedule to address your needs. If issues are occurring that require the board’s attention then monthly meetings may be needed. Take the time to prepare for each meeting. It’s also critical to set up a thoughtful agenda for the board to hit issues that warrant attention.

 Board members should not be afraid to speak their mind.


HOW LONG SHOULD THEY SERVE? Experts suggest that terms for board members (or the boards themselves) only run from one to three years. Reddish also suggests term and age limits for board members: “That can be a blessing when a friend should leave but you’re afraid to ask or if someone just becomes too disinterested.” Additionally, stagger terms so that you don’t have too many board members leaving in the same year.


HOW MUCH DO YOU PAY BOARD MEMBERS? Again, size, frequency, and other variables dictate how much you should pay your board of directors. But at the very least, look to pay your directors a per meeting fee of several hundred US dollars plus an annual retainer. Rule of thumb: the bigger the company, the greater the importance of a board member so you’ll have to pay them more. Even relatively small companies which ask a fair amount of their board members can expect to pay upwards of USD 30,000 a year per member. Advisory board members without legal responsibilities can expect to receive a good deal less. *courtesy of Microsoft Small Business




SO WHICH SHOULD YOU GET? ERIC CLEMENS t’s hard to deny the appeal of Apple’s Mac computer line. Its sexy design, intuitive interface and proven reliability make Apple an attractive alternative to PCs for many small businesses. Plus, how can you not love the commercials? As small business owners build out or update office infrastructure, they face the decision of whether to buy Mac or PC computers. During this decision, it is important that you restrain your inner Apple fan – he’ll cloud your judgment. Below, I’ve outlined what I believe to be the three most compelling business cases that support the purchase of PCs over Macs: price, support and applications. COMPETITIVE PRICING 1 Apple has always charged the premium for its products, boosting it to become the most valuable company in the world. Unfortunately for many small businesses, premium pricing is what puts Apple’s technology out of reach. “We would love to have a ton of Apple products in the office, but in reality, they are just too expensive to purchase and upkeep. When it comes down to it, we can successfully run all our business operations through PCs,” says Ian Aronovich, CEO of, in


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PC IS BETTER FOR SMALL BUSINESSES? FROM ACROMENT GIVES HIS VERDICT. the Inc. article, Is Your Business a Mac or a PC? Case in point: if you compare two similar laptop computers in terms of screen size, memory, hard-drive space and warranty, the cost savings from a PC is clear. The comparison below looks at manufacturer pricing: MACBOOK PRO: US$2,698 • Screen Size: 15-inch HD • Memory: 4 GB • Hard Drive: 750 GB • Warranty: 3 years DELL LATITUDE E6520: US$2,124 • Screen Size: 15.6-inch HD • Memory: 4 GB • Hard Drive: 750 GB • Warranty: 3 years Now, multiply this cost difference across dozens, or even hundreds of computers. PCs make more fiscal sense for small businesses, especially those on tight budgets.



M Macs have a huge fan-base, but are PCs better for small businesses?

GREATER TECHNICAL SUPPORT OPTIONS AVAILABLE 2 PCs have a greater share of the business-computer market than Macs. In November 2011, Mac’s made up 5.2 percent of total world market share (a fifteen-year high). As you would expect, the availability of qualified support professionals mirrors this difference. A Google Maps search for Cleveland computer support shows PC support out numbers Mac support by more than four to one: • “Cleveland PC Computer Support”—697 results • “Cleveland Mac Computer Support”—162 results PC owners have the advantage, as neither PCs nor Macs are immune from technical troubles. Troubleshooting and resolving issues takes time, which many small business owners and employees just don’t have. As small business


owners know, access to qualified IT support professionals is essential in getting your employees back up and productive as quickly as possible. AVAILABLE BUSINESS 3 APPLICATIONS Before choosing Mac or PC, understand the impact for applications critical to your business—there are often a few unavailable for Macs, or at the least, available with less functionality.

For many small businesses, premium pricing is what puts Apple’s technology out of reach

For example, CNet users gave Microsoft Office for Mac two out of five stars, while reviewers voiced similar dislike for the software despite a positive overall review by the publication. Other applications may be only available on Windows machines. Available software—like Boot Camp, Parallels Desktop for Mac, or other virtual desktop programs—can virtually turn your PC into a Mac. Unfortunately, this software is an additional expense, challenging to install and requires significant harddrive space. CONCLUSION When customers ask us which computers they should choose, we almost always recommend PCs. I’m a fan of Apple, and I believe they make great products. However, until prices are competitive, support is more readily available and all programs are created equal, I side with my buddy PC when it comes to computer selection for small businesses.

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The United Arab Emirates Government will be hosting the third Global Entrepreneurship Summit in December 2012

11-12 December 2012 Dubai World Trade Centre United Arab Emirates, Dubai

The 3rd Annual Global Entrepreneurship Summit (GES)

Entrepreneurial Ventures of Arabia (EVA) Summit and Expo

Launched in Washington, D.C. in 2010 by President of the United States Barack Obama, the 3rd Annual Global Entrepreneurship Summit now comes to United Arab Emirates, Dubai

Under the Patronage of: His Highness Sheikh Mohammed Bin Rashid Al Maktoum UAE Vice President, Prime Minister and Ruler of Dubai


The Preeminent Global Summit and Exhibition for Innovation, Entrepreneurship and SMEs


Power Keynotes, Panels and Debates led by Sessions


Abraaj Capital, AllWorld Arabia500, Emirates-Aspen Partnership, Higher Colleges of Technology, Kauffman Foundation, Wamda


SPECIAL EVENTS & EXHIBITION Business Gala International The Biggest Networking Gala of the Year

jointly presented by Dubai Chamber of Commerce and Industry, Expo 2020 Dubai

Grow Your Business | Regional SME Competition and Awards Sponsored by du, Dubai Internet City Global Innovation through Science & Technology (GIST) Programme & Awards AllWorld Arabia500 Awards & Celebration 10 December 2012 Spotlight on Success Feature Experiential Showcase Strategic Partner

Lead Partners

REGISTER NOW! Limited Seats. Official Airline Partner

Industry Partners

International Media Partner

Regional Media Partner

Official Magazine

Official Knowledge Partner


Organised b


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THE ART OF A BUSINESS PLAN THE HARDEST PART OF ANY BUSINESS PLAN IS ESTIMATING THE START-UP COSTS. HERE’S HOW TO DO IT. By Tim Berry usinesses spend money before they ever open their doors. Start-up expenses are those expenses incurred before the business is running. Many people underestimate start-up costs and start their business in a haphazard, unplanned way. This can work… but it is usually a harder way to do it. Customers are wary of brand new businesses with makeshift logistics. Use a start-up worksheet to plan your initial financing. You’ll need this information to set up initial business balances and to estimate start-up expenses. Don’t underestimate costs. • Start-up expenses. These are

expenses that happen before the beginning of the plan, before the first month. For example, many new companies incur expenses for legal work, logo design, brochures, site selection and improvements, and other expenses. • Start-up assets. Typical start-up assets are cash (the money in the bank when the company starts),



 Take the time to organise your finances.

"Many people can be confused by the accounting distinction between expenses and assets" and in many cases starting inventory. Other starting assets are both current and long-term, such as equipment, office furniture, machinery, etc. • Start-up financing. This includes both capital invest-


ment and loans. The only investment amounts or loan amounts that belong in the start-up table are those that happen before the beginning of the plan. Whatever happens during or after the first month should go instead into the cash flow table, which will automatically adjust the balance sheet.

double counting of expenses and non standard financial statements. All the expenses incurred during the first year have to appear in the profit and loss statement of the first year, and all expenses incurred before that have to appear as start-up expenses.

E T Timing is everything Some people are confused by the specific definition of start-up expenses, startup assets, and start-up financing. They would prefer to have a broader, more generic definition that includes, say, expenses incurred during the first year, or the first few months, of the plan. Unfortunately this would also lead to

Expenses vs. assets Many people can be confused by the accounting distinction between expenses and assets. For example, they’d like to record research and development as assets instead of expenses, because those expenses create intellectual property. However, standard accounting and taxation law are both strict on the distinction: • Expenses are deductible

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ď ž Planning expert Tim Berry.

against income, so they reduce taxable income. • Assets are not deductible against income. What a company spends to acquire assets is not deductible against income. For example, money spent on inventory is not deductible as expense. Only when the inventory is sold, and therefore becomes cost of goods sold or cost of sales, does it reduce income. Generally companies want to maximize deductions against income as expenses, not assets, because this minimizes the tax burden. With that in mind, seasoned business owners and accountants will always want to account for money spent on development as expenses, not assets. This is generally much better than accounting for this expenditure as buying assets, such as patents or product rights. Assets look better on the books than expenses, but there is rarely



"Sometimes people want to treat expenses as assets. Ironically that's usually a bad idea, for several reasons" any clear and obvious correlation between money spent on research and development and market value of intellectual property. Companies that account for development as generating assets can often end up with vastly overstated assets, and questionable financials statements. Another common misconception involves expensed equipment. The U.S. Internal Revenue Service


allows a limited amount of office equipment purchases to be called expenses, not purchase of assets. You should check with your accountant to find out the current limits of this rule. As a result, expensed equipment is taking advantage of the allowance. After your company has used up the allowance, then additional purchases have to go into assets, not expenses. This treatment also indicates the general preference for expenses over assets, when you have a choice.

Why you don’t want to capitalise expenses? Sometimes people want to treat expenses as assets. Ironically, that’s usually a bad idea, for several reasons: • Money spent buying assets isn’t tax deductible. Money spent on expenses is deductible. • Capitalising expenses creates the danger of overstating assets. • If you capitalised the expense, it appears on your books as an asset. Having useless assets on the accounting books is not a good thing.

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Types of start-up financing Investment is what you or someone else puts in the company. It ends up as paid-in capital in the balance sheet. This is the classic concept of business investment, taking ownership in a company, risking money in the hope of gaining money later. Accounts payable are debts that will end up as accounts payable in the balance sheet. Generally this means creditcard debt. This number becomes the starting

balance of your balance sheet. Current borrowing is standard debt, borrowing from banks, Small Business Administration, or other current borrowing. Other current liabilities are additional liabilities that don’t have interest charges. This is where you put loans from founders, family members, or friends. We aren’t recommending interest-free loans for financing, by the way, but when they happen, this is where they go. Long-term liabilities are long-term debt, long-term loans.


Expect a loss at start-up The loss at start-up is very common…at this point in the life of the company, you’ve already incurred tax-deductible expenses, but you don’t have sales yet. So you have a loss. Don’t be surprised; it’s normal.

Cash balance on starting date Cash requirements is an estimate of how much money your start-up company needs to have in its checking account when it starts. In general, your cash balance on starting date is the money you raised as investments or loans minus the cash you spend on expenses and assets. As you build your plan, watch your cash flow projections. If your cash balance drops below zero then you need to increase your financing or reduce expenses. Many entrepreneurs decide they want to raise more cash than they need so they’ll have money left over for contingencies. However, although that makes good sense when you can do it, it is hard to explain that to investors. The outside investors don’t want to give you more money than you need, for obvious reasons – its their money! About the author: Founder and President of Palo Alto Software and a renowned planning expert. He is listed in the index of “Fire in the Valley”, by Swaine and Freiberger, the history of the personal computer industry. Tim contributes regularly to the bplans blog, the as well as his own blogs. *content supplied from





erial entrepreneur Stelios is best known for his easyJet start-up in 1995, at the age of just 28. After floating the massively popular budget airline on the London Stock Exchange in 2000; he stepped back to concentrate on extending the easy brand to several businesses - all dedicated to offering consumers more value for less. These include easyHotel, easyCar, easyBus, easyOffice and easyGym - all owned through his private company easyGroup.

Stelios and his family continue to own 38 percent of easyJet where he retains a keen interest in the airline as its largest shareholder. In 2006, at the age of 39, Stelios received a knighthood from Queen Elizabeth II for services to entrepreneurship. In 2009, Stelios was nominated the Honorary General Consul for the Republic of Cyprus in the Principality of Monaco. In the last five years, Stelios has begun to concentrate on making a difference to society by launching a


number of philanthropic initiatives supporting entrepreneurship, higher education and environmental sustainability. So what’s his secret? Where did you start? My first business was a shipping company which was a comfort zone. (Stelios’ father owned a shipping line). I received money from my father to start - I was lucky because my angel was familiar with the industry. But at the age of 26 I stepped down and let a manager run my company. Since then it has been

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“Entrepreneurs mess around. Once you’ve proven the business model leave it alone and get a manager in”



“In easyJet I had two assets, the airline and the brand” listed on the US stock exchange and it has done better since I left. I wouldn’t profess to have the skills to find a good manager, but if you look for someone that complements you, don’t get someone that has the same values. You can’t have two entrepreneurs in the company. What made you start easyJet and how did you research it? My inspiration for easyJet was Branson and a company called Southwest in the US. I do research on trying to understand businesses, and in most cases there’s no way of doing it other than kicking the tyres. Why did you exit your business? Entrepreneurs mess around. Once you’ve proven the business model leave it alone and get a manager in. What made easyGroup successful? In easyJet I had two assets, the airline and the brand. It was the fact that the name meant something to people, so I separated the brand from the airline. Why did you start your other projects away from easyJet rather than from inside? To do it (start other companies) from within the company would be a disaster. There would be a lack of focus and the ability for that company to raise capital would decrease and the company would fail. The best way was to create a company, put in the capital and let it float. Put all the risk on the company. What are your secrets for a succesful company? By trial and error, and reverse engineering of what worked at the airline, I have created this list:  easyHotel is just one part of Stelios’ private company, easyGroup.


1) Look at companies where the consumers are paying out of their

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Stelios Haji-Ioannou

 Stelios received a knighthood from Queen Elizabeth II for services to entrepreneurship.

“Outsource your work to the customer, think how you can transfer the workload to them” own pockets – (ie) consumer facing B2C. Consumers behave in a rational way when confronted with a value judgment. Give them a product at the right price and they will take it. B2B and people spending the company’s money don’t work in the same way.

2) Choose a product/service with a price elastic demand curve - a product/service where reducing the price means more consumers will buy. 3) Look at the yield management. Yield management is the same product given at different prices. 4) Eliminate the frills - the cruise business is ripe for this. Outsource your work to the customer, think how you can transfer the workload to them. At easyJet the customers print out the tickets, they do the catering. 5) Under promise and over deliver. 6) Don’t expand too fast. At easyInternetCafe I found out that a flagship store is just another name for a white elephant.



 easyGroup has expanded into mobile phones, gyms, and car rentals among other sectors.

I went to all these countries at once (in Europe, America, etc). I opened a store on Times Square and I have the certificate from the Guinness Book of Records to prove it (it’s the world’s largest internet café). This (easyInternetCafe) is also an example of yield management. We are going to the staff-less model, using vending machines. With easyInternetCafe I felt like a company doctor in my own company. We convinced companies to allow us to work from their premises (companies like McDonald’s). What business models work? Franchising is the lowest possible cost model in business, particularly in retail. You effectively make an entrepreneur in each store. And franchising is a huge business, if you think of fast food, hotels and car rental companies they are all franchises. The Post Office is the best franchise and leanest franchise I can think of.


 Starting with two routes in 1995, easyJet now goes to 600 destinations in 30 countries.

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Stelios Haji-Ioannou

“You can’t delegate entrepreneurship - if you are going to make mistakes, make them yourself” How do you choose your suppliers? Monopolies are bad unless you own one. Try to have multi-vendors. The best way to get a discount is not to put all your money with one vendor. Play them off against each other. How do you choose the businesses you target? Car rental companies are car washes in disguise. There are people just employed to wash cars. Now if I was a clever manager I could probably roster things to do it cheaper. However the cheapest person to do this is the customer. With easyCar the renter has the option of returning the car clean or paying £10. Some 90 percent clean the car, so 90 percent of the customers value 30 minutes of their time at less than £10. Never overestimate how people value their time. We live in a society that supposedly is short on time. But actually most people have tons of time. I’ve also done away with an office. What are the key lessons you’ve learnt over the past few years? You can’t delegate entrepreneurship - if you are going to make mistakes make them yourself. Pay attention to the details of a business, those mistakes in the business model may be small now but they are compounded by growth. Don’t overestimate what consumers will pay for something that saves then time. Don’t bet the farm on your business, put enough in to have enough skin in the game, an amount that is meaningful but leaves an amount small enough for you to survive. *content adapted from a speech made by Stelios Haji-Ioannou which was first reported in

 After 20 years as an entrepreneur, Stelios has a net worth of approximately £1.29 billion.




THOUGHT THE F&B SECTOR IS EXPERIENCING A BOOM, WITH A STRING OF FOREIGN OUTLETS LOOKING FOR MIDDLE EAST PARTNERS. WHO ARE THEY, AND WHAT CAN THEY OFFER? By Ed Attwood and Claire Valdini here aren’t many retail outlets that manage to attract crowds that line around the block unless, of course, it is sale season. But Nespresso, the single-portion coffee firm owned by Switzerland’s Nestlé, manages to do just that at its Champs-Elysees store in Paris on a regular basis. The in-store tasting experience that attracts the tourists and locals shopping along one of Paris’ most famous streets has become synonymous with the brand and is in part why sales of single-portion coffee have skyrocketed in the last five years. Sales of coffee capsules make up eight percent of total worldwide coffee sales, a figure that Richard Girardot, CEO of Nespresso, believes could double in the next few years. “We believe that portion coffee has many drivers, the percentage of portion coffee will double,” he tells StartUp. “Nespresso is on the same [growth] trend [as 2011]; it will be 15 percent,” he adds. Single-portion coffee, of which Nespresso is the current market


leader, is one of the fastestgrowing ways to drink one of the world’s favourite beverages. While worldwide coffee sales, including fresh and instant, increased 17.5 percent last year to reach $70.86bn, global sales for singleserve packs grew 31.1 percent

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 Nespresso has proved hugely successful in Europe and has now expanded into the Middle East.

to $5.75bn, according to market researcher Euromonitor. Although most popular in Western Europe and the US, market leaders are now eying up new growth opportunities further afield. Nespresso, which currently has fifteen boutiques across the region, says the Middle East is becoming an increasingly important market for the firm. “[The Middle East]; it’s  Irish company Butler Chocolates is coming to the UAE. the future. Nespresso is still a Western European [company] because of the introduce a website that coffee culture in Italy and will initially offer delivery France, but clearly the services within the UAE brand has the potential to before branching out to be worldwide. This region the wider GCC, says Jean is one of the key [markets] Marc Dragoli, market for the future; we believe director for Nespresso, there is huge potential for Middle East, Africa and this region,” says Girardot. Caribbean. “Our strategy is [to “Our consumers will expand in] cities where then have a third channel; there are two habits; the the possibility to go in habit to appreciate the the boutique, call the call coffee and the habit of centre or to go through the shopping. Clearly this internet. The UAE is a very region has a habit of important market for us shopping, so here we have [so we’ll start there],” he to develop,” he adds. says. In addition to expanding Parent company Nestlé its boutiques in the launched the Nespresso region — a figure Girardot concept machine and declines to give — the capsules in 1986 in a bid Swiss-based firm will also to boost sales in the luxury

home coffee market. The company’s growth story is unique in that unlike Nestlé’s other mass-market products, its single-serve coffee wasn’t available in retail outlets until 2002 and was instead sold via call centres before being launched online in the 1990s. Hoping to join the regional arena is Irish chocolate giant Butlers. It has signed a franchise agreement to open outlets in the UAE. The deal between Prime Hospitality and Butlers Chocolates, the manufacturer that owns and operates Butlers Chocolate Cafés in Ireland and England, has led to the first café opening in Sharjah, closely followed by a

“Clearly this region has a habit of shopping, so here we have to develop”


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second in Abu Dhabi. The company also hinted that the UAE stores might be the first step in an expansion plan across the Gulf region. Owen Sorensen, of Butlers Chocolates, said in a statement: “The UAE has always been a market of immense interest to us. We have been carefully looking for a local partner with a successful track record and high reputation to represent our brand. “Prime Hospitality was the ideal choice for us with their expertise, quality, and network to maximise the success of Butlers Chocolate Cafés in the UAE, and potentially the region.” Nawwaf Ghobash, managing partner of Prime Hospitality, added: “We are very proud to represent pioneers in confectionerybased concepts to establish their presence in the UAE through us. “This milestone comes as part of our strategy to expand the portfolio of Prime Hospitality.” Prime Hospitality is the food and beverage arm of Ghobash Trading and Investment group, which has interests in retail and hospitality, oil and gas, real estate, healthcare and information technology. Butlers Chocolates is Ireland’s leading independent chocolate producer. The company, owned by the Sorensen family, is celebrating 80 years in business this year. Butlers Chocolates are exported all over the world and are available in more than 40 countries. Butlers Chocolate Café is an award winning concept that was conceived in Dublin in 1998. Today, its network includes 23 cafés located in Ireland, the UK, New Zealand and Pakistan. Meanwhile, FoodFund International is set to

open two new brands in Dubai in the next eight or nine months, and will also be opening The Meat Company in Cassablanca, Morocco. Talking at the Caterer Middle East conference, Joseph Chalfoun, area general manager of FoodFund International, said: “One brand will be called Eat Greek and the other will be a franchiseable concept called Ribs & Burgers.” FoodFund International

Branded tableservice restaurants generate about $600m a year in the UAE, a number set to swell to $780 in 2015

already operates The Meat Company, Ribs and Rumps and Tribes in the Middle East. “The chairman has Greek heritage and has a soft spot for the food and so that’s the reason behind Eat Greek,” added Chalfoun in comments published by Hotelier Middle East. He added that the firm would “test” the concepts in Dubai before exporting them to London, with plans to open in other key markets. “Our restaurants are wellreceived in Dubai and it’s a good place to see how they will do,” he said. The UAE restaurant market is set to grow 30 percent to $780m in the next four years and will be dominated by Americanstyle fast food brands, an industry expert said in November. Branded table-service restaurants generate about $600m a year in the UAE, a number set to swell to $780 by 2015, said Stefan Breg, founder of Tribe Restaurant Creators in Abu Dhabi. In a poll of dining

 Richard Girardot, CEO of Nespresso.



 Foreign brands are keen to tap into the Middle Eastern market.

outlets in the Gulf state, Tribe found American brands comprised up to 47 percent of food and beverage offers in Dubai malls. Homegrown restaurants, by comparison, made up between 8-17 percent. But it isn’t just Dubai that is being targeted. A US-based fondue restaurant chain has announced plans to expand into Saudi Arabia in a deal with franchise holder Albabteen United Foods Company. The Melting Pot Restaurants Inc, which currently runs 36 outlets outside of the United States, has signed a five-unit franchise development agreement. Dr Mazen Almugbel, of Albabteen United Foods Company, said: “With its long history of success and unique fondue dining experience, The Melting Pot will elevate the standards of American casual dining in Saudi Arabia. “I’m proud to partner with The Melting Pot to bring five locations to Saudi Arabia.”


American chains are coming to the Middle East because of the growing wealth of the middle class As part of the five-unit deal, the first Melting Pot location in the Middle East is slated to open in Riyadh in late 2012. Additional locations are planned for Jeddah and the Eastern Province of Saudi Arabia. Dan Stone, vice president of franchise development for Front Burner Brands, the management company for The Melting Pot Restaurants, added: “The Melting Pot experience transcends cultural differences and is especially attractive to cultures that place great value on spending time with family and friends

around a table of food.” The Melting Pot began researching international expansion opportunities a few years ago when the credit crisis hit the US. The first international location (with seven units committed in Canada) opened in Edmonton, Alberta, in 2010 followed by the first Mexico location in Mexico City as part of a seven-unit deal in Mexico. With 36 international locations open, signed or committed for development in Canada, Mexico, the Middle East and Asia, the company is also looking to Australia, China, India, Brazil and other provinces in Canada for further expansion opportunities. Analysts say in the next decade US restaurant chains plan to open more than 250 locations in the Middle East, where growing populations and increasing wealth offer one of the best chances to expand outside of the saturated US market. “There’s been almost an explosion of interest in the region,” said Shonil Chande, a London-based food and drink analyst at Business Monitor International. American chains are coming to the Middle East because of the growing wealth of the middle class, which has “developed so quickly from energy over the last 10 years,” he said in comments published in November.

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nlike other rankings which are based mainly or purely on financial indicators, the Dubai SME 100 ranking places a balanced emphasis on financial and non-financial dimensions that affect enterprise performance and development. The non-financial dimensions cover Innovation, International Orientation, Human Capital Development and Corporate Excellence. So who made the top ten?


Dimensions Healthcare Dimensions Healthcare (DHC) is a healthcare informatics and consulting firm founded in 2008. The company assists both public and private health sectors in establishing high standard healthcare systems. It

blends healthcare information, technology and experience to provide evidence based solutions for healthcare providers. DHC houses a number of young, motivated and highly skilled professionals who work relentlessly for innovations that further enhance the company’s products. DHC attributes its success to the



use of solid technologies, a deep understanding of true market needs and building partnerships with renowned healthcare informatics companies around the world. The company’s main product lines are built to cater to the true needs of the healthcare industry. DHC benefits from the experiences of its many allies, some of which are Ingenix of United Health Group (US largest health informatics company), MedImpact (US largest Independent Pharmacy Benefit Manager — PBM) and DataSEL (a leading health information systems provider in Turkey). Additionally, DHC is a partner of numerous American, European and regional companies as well


Ecobility Energy Solutions Innovation is key to business — especially in the fast evolving world of LED lighting as the exclusive local partner of Ingenix in UAE. By 2015, the company aims to have its solutions deployed at more than 6,000 healthcare facilities, used by more than 50,000 clinicians and serving more than 20 million lives worldwide. Not so impossible when you’re an SME in Dubai.


Ecobility Energy Solution Ecobility was launched by two former investment professionals with a passion for sustainability who were determined to leverage their expertise to catalyse a new kind of business in the region that delivers

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returns across to people, planet and profit. Much of the company’s success can be attributed to a unique partnership approach of openly sharing knowledge and raising awareness among stakeholders. Compound this further with the company’s first mover advantage as a sector pioneer, and you will recognise the company as a driven, innovative and fastgrowing organisation. Growth strategy is focused on entering new markets poised for mega infrastructure development as well as those with energy challenges. Ecobility develops and commercialises solutions designed specifically for the region. This has garnered

a unique advantage and a differentiated position in the market. The company works in the interest of the client to create genuine value. Moreover, in the pursuit of service excellence, they maintain open channels of communication with clients, allowing them to remain informed of client needs and exchange ideas. Testimony to the success of this approach is the considerable amount of client referrals. Innovation is key to business — especially in the fast evolving world of LED lighting. Accordingly, Ecobility has embarked on an aggressive product development plan to cater to new market segments and locations. They anticipate

engaging macro-level stakeholders across the region to work together towards the development and adoption of efficiency standards.

3 Michael Lahyani had heard of the opportunities in the real estate industry of Dubai. Arriving here with plans to buy property, he noticed how the only available method for research was to go through the endless real estate supplements in the newspapers. It was, no doubt, very inconvenient, and so Lahyani decided to come up with an alternative media. An online property portal,, a part of REA Group, was established in 2007 as the first online



Lahyani recruited an efficient and able research and development team which helped bring cutting edge technology to the website in order to provide the best service to its client


property portal in the UAE. A pioneer in its industry and offering a unique and much needed service, PropertyFinder was able to attract numerous real estate agencies in Dubai of all sizes and specialities. Lahyani recruited an efficient and able research and development team which helped bring cutting-edge technology to the website in order to provide the best and most reliable service to its


clients. The website offers a more cost-effective marketing option to all real estate agents, especially since many corporations are now switching their focus from print to online advertising to keep up with evolving consumer trends. Lahyani believes that there is a lot of potential for further growth in the UAE and wants to use his website to help promote property sales in Dubai.

Intercoil International Intercoil International, established in 1974, are the pioneers of bedding manufacturing in the UAE. Through constant development of its infrastructure, continuous innovation, and implementation of total quality management, the company has grown to become one of the leaders in its industry. Their success is mainly attributed to long-term vision aligned with the tried and tested organisational mission, vision, purpose and values which addresses the needs and expectations of all stakeholders. Sound management practices complemented by the loyalty of its employees and business partners have enabled Intercoil to achieve its objectives. The company plans to grow further by continually developing its business procedures, expanding geographically and acquiring forward integration. Over the years, Intercoil has been successful in strengthening its market position, market share, and leadership role in the bedding industry locally

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and in the region through increased brand awareness and aggressive marketing campaigns. Intercoil’s vision is to become the market leader in orthopedic sleep systems in the Middle East region. They elevate their position as a guide for consumers with regards to information on healthy sleep and orthopedic mattresses and beds. By developing a

learning organisation that easily adapts to changing market conditions, Intercoil plans to be proactive in providing customers with superior quality products and services based on their feedback and requirements.


Mepco Gulf Co In 2006, Fadi Baaklini’s business partner decided to focus on other ventures and opted

out of Mepco Gulf Co. Baaklini bought his shares and decided to impose some major changes to the company. He worked to change the modus operandi of the company, converting its status of ‘commission agent’ to ‘trader’. Eyeing great success, he took a calculated risk with its long-standing clients by increasing its margins considerably, and soon enough his efforts



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 Enerplastics credits much of its success to Dubai’s stellar reputation.

Mepco Gulf Co The company pays special attention to its customers and suppliers, ensuring loyalty

proved fruitful. Today, Mepco Gulf Co. has earned much success through its hard work. Regardless of its relatively small size and limited budgets, the highly efficient workforce at the company ensures a high turnover every time. Baaklini believes that in order to allow his staff to work to their fullest potential, he has to empower them through motivation and a sense of security and recognition. The company pays special attention to its customers and suppliers, ensuring loyalty, and provides complete transparency. Believing strongly in providing personalised support to clients, Baaklini ensures that all sales managers

make quarterly visits to the markets they cover. Baaklini wants to solidify Mepco Gulf Co’s presence in every market it currently covers before looking at expanding to other regions. The company will soon be introducing an interactive blog where members of the senior management team can exchange ideas and induce a communityoriented atmosphere among itself and with its clients, as well as entering social media networks in order to reach a wider target market.


Enerplastics Enerplastics, a petrochemical company established in 1999, attributes its success largely to Dubai. The reputation

of Dubai, they say, allows customers who order products from this country a certain sense of comfort and trust. Enerplastics, which was initially funded solely by its owner, now generates a cash flow healthy enough to allow comfortable investments towards its potential growth. Aman Ur Rahman, the owner and CEO of Enerplastics, believes the research and development department deserves the greatest investments. Since Enerplastics belongs to the manufacturing industry, which is largely dominated by giants including the UAE Government, the company needs to focus especially on keeping up with competition. In order to do so, it must have a highly functioning and well experienced research and development team working continuously to create good, better and best. Innovation, too, is key to the company’s success. In a market, where other larger companies are providing the same product as yours, it is essential that you continuously introduce products that are newer, more efficient and more affordable than the previous. Enerplastics aims at fostering a strong sales culture where customer service is at its finest and uses Dubai’s increasingly positive reputation as a port to leverage its own successes.


e-Home Automation International Group managing director architect Khalifa A Al Jaziri wanted a state-of-the-art home automation system for his newly built villa. When the options available in the market did not provide him with what he had in mind, he decided to do it himself, and that led to the beginning of e-Home Automation. Since 2003 the



company has been supplying world-class home automation systems to real estate mega projects in Dubai and the GCC. With a lack of revolution in the automation market, e-Home systems are technologically superior, offering the highest levels of functionality and innovation. Breakthrough products created through intense research and development, selecting well-connected local experts as partners for e-Home branches in other countries and strategic collaborations all played a major role in the company’s success. The only automation products in the world that have built-in Islamic features, e-Home products have been specifically designed so large-scale real estate developers and telcos can deploy Smart Cities quickly, affordably and with


Mani Foods Industry Mani works towards bridging the gap between health and convenience with a focus on wellness and innovation

low maintenance costs. The systems support Smart Grid energy-saving technology — making them ideal for governments and utility companies. e-Home Automation International plans to grow by winning more megaprojects and by working with telcos and government agencies throughout the Middle East.


Mani Foods Industry The Rahmani family, who have a strong background in the agro manufacturing industry, established Mani Foods Industry in 1887. The company specialises in the production, processing and marketing of branded premium quality dried fruits and nuts. Strong believers in

startup | vol. 1 /december 2012

Mani is planning to introduce new products, that are high in fibre and protein and low in cholesterol and saturated fats, to the global market. These products are aimed to become a great snack for anyone at anytime, anywhere they go. The company has been honoured with several international awards for its consistent high quality and environment-friendly practices.

simplicity and purity, their wealth of expertise has been gathered over a century of selecting the best fruits and nuts and caring for them in environmentally sustainable ways throughout the entire process, from picking to packing. Simple choices that people make for a healthy living can have a huge

impact on the future of healthy families. Consumer demand for healthy snacks is growing in the global food market. Mani works towards bridging the gap between health and convenience with a focus on wellness and innovation in global market from Europe to Canada and North America.


Paramount Computer Systems Paramount Computer Systems was founded in the year 1992. There was a simple vision: a determination to adhere to clearly articulated values while focusing on excellence and nothing short of it. Over the years, Paramount Computer Systems has acquired the widest range of customers in the region, including Etisalat, Qtel



DUBAI SME 100 and Emirates Airline. The company has also established joint ventures with a number of brands in the region apart from international giants such as McAfee and Juniper. Paramount Computer Systems was the pioneer in the information security market in the GCC, as well as the first company in its field to earn an ISO rating in the Middle East. The company has also earned a number awards and recognitions. The company follows the philosophy that a business is built upon three pillars — People, Process and Technology, and that business deals should provide a ‘win-win’ situation for all parties involved. In keeping with their philosophy, the CEOs of the company have recruited an ingenious leadership and management team, making Paramount Computer Systems the largest reservoir of security talent in the GCC. The management at Paramount Computer Systems has developed a well-defined agenda for its growth over the next three years. The company will be focusing primarily on geographic expansion, spreading its influence to countries such as KSA and Brunei. It is also looking at using inorganic growth to foray into the global market while it continually evolves to stay ahead of competition in its field.


On Time In the busy daily life of Dubai, a city teeming with people hailing from every nation and industry, there is a massive demand for government-related paperwork regarding labour, immigration, visas, translations and the like. With more than 150 different languages brought to this soil, it is extremely


 On Time aims to bring peace of mind to its varied client base.


The Dubai SME 100 uses six evaluation themes to rank the region’s best performing SMEs

necessary that service providers available offer a set standard of quality and reassurance. In 2005, Waleed Abdul Kareim set out to provide exactly that. His company, On Time, entered the market with the promise of staying true to its name. From simple assistance in the typing of application forms for various consulates to ID card processing, On Time offers a wide array of services to help the people of Dubai. On Time has become an authorised agent for the Saudi Consulate and is entrusted with visa processing for many other countries such as Thailand and India. It intends to build stronger relations with governments and government-related organisations in order to

improve the accuracy of its products and services. On Time aims to provide its clients with complete peace of mind by absorbing the documenting process completely in its own hands and provides accurate and punctual results. To cater to the everexpanding market of the GCC, the workforce at On Time has developed a passion for hard work and commits to provide highquality material that meets the standards of both its clients and international governments. The On Time staff operates with a very goal-oriented approach, working cooperatively with a strong sense of discipline and integrity to produce only the best results for its customers.

startup | vol. 1 /december 2012



In-depth news, expert views, big name interviews and exclusive videos now on the Arabian Business iPad App.

Download your FREE App today. Search for Arabian Business in the App store



1TripIt p

The TripIt app helps road warriors manage their trip itineraries all from one handy console, from flight e-tickets to car reservations. reservati TripIt can even read PDF e-tickets to pull out the necessary flight information you need to travel on time. Other travel information such as maps and directions are also available on the app. If your flight gets cancelled or delayed, TripIt can even help with alternatives from other airlines to accommodate your change in plans. Also available: TripIt Pro, which is like having your own


| vol. 1 /december 2012

Especially helpful for frequent travellers, TripIt Pro monitors your flights for potential airfare savings and sends you status alerts and other helpful reminders



 TripIt helps the busy entrepreneur to organise when and where they are travelling.

personal travel assistant for £34.49/year. Especially helpful for frequent travellers, TripIt Pro monitors your flights for potential airfare savings, and sends you status alerts and other helpful reminders while you’re travelling. The latest version of TripIt also includes; photo uploading so you can add photos to your trip objects, and a very useful local search and itinerary map, and the ability to search for restaurants, activities, and points of interest near your trip items. PRICE: Free (The Pro version is available for £34.49)


2 Cisco WebEx Meetings

With Cisco’s WebEx Meetings you can take your Web meetings anywhere in the world. The app allows you to join and participate in WebEx conferences directly from your iPhone. WebEx Meetings allows you to view a presentation, document or application shared from another computer, and if you are a host of the meeting, you can start

 You can now hold a meeting anywhere in the world via your iPhone.

| vol. 1 /december 2012

The LinkedIn app has just been updated to version five and has had a whole raft of new features added

 Cisco WebEx Meetings.

your meeting from the iPhone and then assign presenter privileges to one of the attendees who joined on a computer. PRICE: Free  You can use the LinkedIn app to connect with millions of members across the globe.

3 LinkedIn

Find and connect with more than 160 million members worldwide, rread the latest worldwide industry news, keep up-to-date with your groups, and share content with your network from anywhere. The LinkedIn app has just been updated to version five and has had a whole raft of new features added. The latest version allows you to: • Sync your calendar to get LinkedIn profile information about the people you’re meeting with. • View and save recommended jobs. • Read the latest industry news.

 xxxxxxxxxxxxxxxxxxxxxxxxx LinkedIn has been updated to include a number of new features.



Documents To Go provides you with the ability to create and edit Microsoft Office documents.

• Keep up-to-date with your groups. • Share content with your network. PRICE: Free


To Go – Office Suite While the iPhone allows you to read and view Microsoft Office d documents, it doesn’t allow you to create or edit them. However


with the help of Documents To Go you can do everything from creating a Word document while you’re on the road, to tweaking your sales forecast in Excel. With Documents To Go you have two options; Documents To Go – Office Suite, and Documents To Go Premium – Office Suite. The Premium package also allows you to add creation and editing of PowerPoint files in Office 2007/2008/2010 versions. Additionally you can view and edit files stored in Google Docs, Dropbox,, iDisk and SugarSync as

 Managing your work on the road has been made much easier.

| vol. 1 /december 2012

well as enabling opening and editing files within Documents To Go from any third party app that supports the iOS 4 “Open In” feature. PRICE: £6.99 (Documents To Go - Premium - Office Suite £11.99)

5 Instapaper

If you are like us, then there are tens of articles that catch your eye every day, but most of the time, you just don’t have time to read them, there and then. With Instapaper you can make a note of the article and then read it at your leisure in your own personalised Instapaper newspaper. What’s even better is Instapaper doesn’t need a connection to the web for you to read the articles, all the articles are stored offline, so even when you’re 30,000 feet up you can still read those interesting articles. Instapaper is very simple to use, just click on the “Read Later” button at the top of your browser’s navigation bar, and then open up the app. If you want reading suggestions, Instapaper also has a list of the community’s most-read stories. PRICE: £1.99

 Store your favourite articles to read later with Instapaper.

6 Evernote

Evernote is an easy-touse, free app that helps you remember everythin everything across

 Evernote lets you make notes, take photoes, create lists and much more.



 Save all your important documents on Dropbox.

all of the devices you use. Stay organised, save your ideas, and improve productivity. Evernote lets you take notes, capture photos, create to-do lists, record voice reminders-and makes these notes completely searchable, whether you are at work, or on the go. Evernote Premium extends the functionality of Evernote and offers additional features including, additional bandwidth, offline editing, editing by multiple users and a PIN lock on the Evernote app. PRICE: Free (Premium is available for £2.99 a month to £31.99 for a year)


7 Dropbox p

With the Dropbox app, you can take everything that matters with you, you wherever wh you go. Dropbox is a free service that gives you 2Gb of cloud-storage to save any documents you want, from PowerPoint presentations through to spread sheets, photographs and videos. After you install Dropbox on your computer, any file you save to your Dropbox will automatically

 You can share important information with the tap of the finger.

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save to all your computers, your iPhone and even the Dropbox website. You can then read your documents when you’re out and about. Save photos or videos to your Dropbox and share them with colleagues in just a couple taps. And because everything is saved in the cloud rather than on your iPhone or on your PC if you accidentally leave your iPhone in a taxi, your stuff remains safe and secure. PRICE: Free (for first 2Gb of storage, additional storage can be bought starting at 50Gb £69.99)

8 Skype yp

The Skype application for iPhone brings you all the power of mobile-friendly Skype in a m format. The main advantage with Skype is there are already so many people on the network that it’s a virtual business no-brainer. By using Skype over your phone’s Wi-Fi data

The main advantage with Skype is that there are already so many people on the network that it’s a virtual business no-brainer  Use Skype to talk to friends family and colleagues on your iPhone.



 With claims that it can produce dictated text five times faster than typed text, Dragon Dictation could be a vital time saver.

connection you can make voice and video calls for free with other Skype users, and as long as you don’t eat too much into your phone’s data allowance, you can also make free voice and video calls over your phones 3G network. PRICE: Free

9 Dragon

Dictation Nuance’s Dragon Dictation, is a fast, simple to use speech-to-


text dictation package. In a nutshell, you talk, it types. Fire up the application, start talking and your words magically appear as text, which you can then cut and paste into any application you want. Powered by Dragon’s award-winning NaturallySpeaking speechrecognition software the app claims it’s five times faster than typing on the keyboard. However as the speech recognition is handled via Nuance’s servers rather than the iPhone you do need to be connected via 3G or Wi-Fi for the app to work. As well as cutting and pasting text you create

 Typing a message is a thing of the past for Dragon Dictation users.

| vol. 1 /december 2012

in Dragon Dictation, there are also quick links to more common apps, so you can update your Facebook status, email notes and reminders to yourself, or Tweet to the world with just your voice and two clicks. PRICE: Free

10 LogMeIn g

Smartphones can do a lot, but there’s no substitute for a proper PC or a Mac Mac. Log LogMeIn allows you to remotely control your PCs and Macs over Wi-Fi/3G so you get all of your desktop applications running on your iPhone. To make it work, you need to install LogMeIn on your broadband connected Mac or PC there’s a free version - and then download the app on your iPhone. It’s a ten minute pain-free process and after that you can remotely access your files, run your applications and control your desktops from anywhere. PRICE: Free

 Control your PC or Mac through your smartphone with the LogMeIn app.




W hen Kylie Minogue told a British newspaper that she regularly uses Ponds Cold Cream, sales of the $6 moisturiser soared 120 percent. Unilever might have been selling its Cold Cream, known for its popularity among pensioners, for a century but never has it seen such a dramatic increase in sales. “We’re calling it ‘the Kylie effect’, and it has been dramatic, to say the least,” says a Unilever spokesperson. “It’s been crazy. Stockists are increasing their orders and we’ve had to up our product orders pretty dramatically.” Minogue might not have been paid to endorse Ponds but brand strategists wouldn’t be surprised if the pint sized star was offered


a lucrative deal to front its next campaign. “Kylie represents a fantastic opportunity for brands due to high levels of familiarity and affinity among consumers,” says Rob Valsler, a media researcher at the Londonbased research company, Millward Brown. “Both parties potentially stand to gain from this alliance so I’d advise each side to seriously consider ways of working together.” Marketers are increasingly partnering with celebrities to maximise brand awareness and forge emotional connections with consumers. Desperate Housewives star Eva Longoria and Victoria Beckham laugh and giggle in adverts for LG’s Fashion Touch Phone. Madonna starred in Louis Vuitton’s summer campaign while Cheryl Cole swishes her hair in adverts for French beauty company L’Oreal. Football stars Wayne Rooney, Didier Drogba and Ronaldinho each took it in turns to line up a goal in Nike’s FIFA World Cup advert. Celebrity endorsement is nothing new. Ever since the advent of radio and television, companies have been using celebrities to increase brand awareness. Al Jolson was just as famous for his endorsement of Lucky Strike cigarettes as he was his acting and singing during the 1940s.

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“Kylie represents a fantastic opportunity for brands due to high levels of familiarity and affinity among consumers�


CELEBRITIES The Monkees appeared in several Kellogg’s adverts at the height of their fame in the 1960s. Despite the global downturn this trend has continued. A quick flick through any magazine, website, blog or television channel reveals the frequency at which celebrities are used to promote products. Celebrity endorsement has doubled in the last ten years, according to a report by the market website, www. . At high-profile events such as America’s Super Bowl, celebrities and music stars featured in 40 percent of the commercials while celebrity ads increased 150

“Match the correct celebrity with the right brand and the uptake in sales can be instant”

percent during the Grammy Awards this year, according to the talent and rights consultancy, GreenLight. Why the increase? It’s simple celebrity sells. Match the correct celebrity with the right brand and the uptake in sales can be instant, says Hermann Behrens, CEO of The Brand Union, Middle East. “The short term reward of aligning a product with a celebrity, who is currently a strong equity in themselves, may lead to a quick uptake by consumers and an immediate response in terms of sales and commercial benefits.” “At the end of the day it is about vanity,” adds Elie Khouri, the chief executive of Omnicom Media Group, MENA region. “If you see Justin Timberlake promoting a brand of aftershave and you are a Justin Timberlake fan, then you are probably more likely to buy that aftershave. Why? Because you are a fan. Do you think other people will think you are Justin Timberlake? No, of course not, but it means you are associating yourself with his image.” Almost two thirds of consumers (29 percent) said celebrity endorsements influence their purchasing decisions while 25 percent admit-

 Wayne Rooney joined other footballers to help promote the 2010 FIFA World Cup.


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Sainsbury’s says Jamie Oliver boosted sales.

When Victoria Beckham and Eva Longoria signed up to promote LG’s Fashion Phone the two stars’ input into the design of the phone was evident

ted they had bought a product because a celebrity was promoting it, according to a 2009 study by the media agency, Mediaedge:cia. When the British supermarket Sainsbury’s appointed the up-andcoming chef Jamie Oliver (also known as the Naked Chef) as the public face of the chain in 2000 they credited the chef with an extra £1bn of sales or £200m gross profit in the first two years. The ten-year partnership still remains strong. Just last month the supermarket attributed a spike in sales of asparagus and Jersey Royal potatoes on Oliver’s current TV campaign. “When you look at the reports that showed the value of the [Sainsbury’s] brand and Jamie Oliver partnership two years into the deal, a lot of them were predicting the effect would start to diminish because of Oliver’s exposure levels. But in fact they carried on using him and he’s actually become a much stronger brand than when he was just the Naked Chef,” says Valsler. “Sainsbury’s could have gone with the general consensus thinking he’ll be overexposed and shifted to another up-and-coming celebrity but then they would have missed out on a lot of those benefits that they’ve had from that long-term partnership,” he adds. In February, Nielsen credited Cheryl Cole’s collaboration with L’Oreal on a 2,400 percent


CELEBRITIES uptake in sales of the firm’s Elvive Full Restore 5 hair care products, for which Cole fronts the campaign. Sales increased from 10,000 at the start of September to a peak of more than 250,000 by the end of November, according to the marketing and advertising research firm. Cole isn’t the only one. Nicole Kidman’s 2003 feature length advert, directed by Baz Luhrmann, resulted in a 30 percent increase in sales of Chanel perfume, according to Euromonitor. But unlike Al Jolson’s Lucky Strike adverts, today’s most successful endorsements go much deeper than

 Cheryl Cole is credited with helping increase sales for Elvive.

“Brands are created not by saying any more but by doing”

simply signing a star to a brand. The two have to work together; whether it’s promoting the two brands alongside each other or getting the celebrity involved in the design. “That’s where you really start to see ownership and believability. Consumers are so smart and so informed that believability is created not by saying but by doing and brands are created not by saying any more but by doing,” says Behrens. “If the actual celebrity is involved in the design of a product, if there’s a real transfer of the celebrity’s personality into the design and the way the product is delivered that is quite a deep form of endorsement and certainly the heartland of celebrity endorsement.” The Lebanese star Nancy Ajram’s collaboration with Coca-Cola is a good example. Ajram signed with the drinks company to become the official celebrity spokesperson for the Levant, Arabia and North Africa region shortly after the launch of her fourth album in 2004. Her first Coke advert featured the song Oul Tany Kida? (Say That Again?). The advert was so successful the song was filmed as a music video and the two


 Elie Khouri of Omnicom Media Group says consumers try to identify with celebrities.

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 Nancy Ajram’s relationship with Coca-Cola has led to benefits for both parties.

have since released four hit singles, which feature Ajram and a can of Coca-Cola. When Victoria Beckham and Eva Longoria signed up to promote LG’s Fashion Phone the two stars’ input into the design of the phone was evident. LG produced short video clips that clearly showed Longoria and Beckham working with the phone’s designers. Other collaborations include Madonna’s tie-up with H&M, Kate Moss’s own range for Top Shop, Christina Aguilera’s jewellery line for Steve Webster and David Beckham’s sportswear range for Adidas. Some savvy stars are becoming brands in their own right. Actress Jennifer Lopez, who also has her own clothing line, was one of the first to successfully market her own perfume Glow by JLo back in 2002. Global sales peaked $78m in 2003, according to Euromonitor. Since JLo’s debut on the fragrance scene, a plethora of big name stars have released their own perfume from

“There is a big trend towards celebrities having their own perfume” Britney Spears to Sarah Jessica Parker to Paris Hilton and P Diddy. Behrens - who is currently working with a local fashion designer to develop their own perfume - says celebrity fragrance in the Middle East has yet to reach the same epic proportions as in the West, and sees room for growth. “There is a big trend towards celebrities having their own perfume. Particularly in this market, perfume is a personal thing and an important ritual in the

culture that I think there’s quite a lot of interest from celebrities in having their own perfume brand,” he says. Some companies take brand association one step further by asking celebrities to join the company board. It may sound absurd but when Disney appointed actor Sidney Poitier to its board in 2004, the firm’s share price jumped 4.2 percent that day. ‘Reaching for the Stars: The Appointment of Celebrities to Corporate Boards’ is a study by four US economists that was released in March. Of the 700 celebrity director appointments (out of 70,000 board appointments in all between 1985 and 2006 in the US) all of the firm’s shares continued to outperform significantly over the subsequent one, two and three years. Why? Because “celebrities make firms more visible,” one of its co-authors, Kenneth A Kim, tells StartUp. Paramount to success is picking the right star. London-based Millward Brown recognised the need to help companies choose appropriate



 Hermann Behrens says Shah Rukh Khan risks diluting his own brand due to overexposure.

celebrities several years ago when it launched a formula to calculate the relationship between a celebrity and brand partnership. The formula calculates cebra (celebrity plus brand) by measuring several factors including familiarity, affinity, buzz (how talked about the celebrity/brand is) and personality matching matrix (whether the celebrity is firm, reserved, calm etc). According to its most recent report Kylie Minogue, Cheryl Cole, David Beckham and Ant & Dec are Britain’s most popular while Will Smith, Brad Pitt and Oprah Winfrey are all popular choices Stateside. But marrying a brand to a celebrity can have its pitfalls, Tiger Woods being the most obvious example. The golfer was said to receive an annual salary of $110m from endorsements and tournaments and was the highest paid celebrity in the 12 months from June to December, according to Forbes. Shortly after his fall


“The danger is that it can very easily, in a single moment, go badly wrong” from grace several adverts featuring him were pulled. According to the David Brown Index, which is used to gauge the ability of personality to influence shoppers, Woods ranking dropped to 24th from 6th following the reports about his infidelity. “The danger is that it can very easily, in a single moment, go badly wrong,” says Khouri. “You are relying entirely on the reputation of an individual. The best (and worst) example

of this is Tiger Woods; within a few days he went from being the greatest brand ambassador in the world to someone nobody wanted to touch.” Companies should also be careful to tread the fine line between successful endorsement and overexposure. While it’s almost impossible to sign exclusivity rights to celebrities, it is important not have their names splashed across everything; it doesn’t bode well with consumers and in some cases has the opposite effect. Behrens raises some concern over the overexposure of the Bollywood star Shah Rukh Khan who endorses several products in India and the UAE. “Khan is over endorsed. It will dilute his own brand and consumers will see [his association with the product as] labeling rather than a true endorsement. It cheapens the whole exercise.” So if you’re looking to increase brand awareness and can afford to sign a celebrity, it could be a winner all round. Just make sure you choose wisely.

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An ITP Ex ecu tive


Joining ITP Executive’s market leading portfolio of business publications, StartUp is a much needed publication for the Middle East focusing specifically on small to medium p enterprises (SMEs).



TH SH E OW Th MO M e Th insid N E E e e SO Entreprterack onY A A ne ur Air M B RI A MI ho rabia IT NG w t ’s C C I O os You RO et u EO ex N rg p a pla uid FI n a ins e to irlin a $ NA e 70b ng N lob CE al in du str y



Providing monthly updates and advice on the topics that small businesses need to know to boost their bottom line and successfully grow their business, StartUp is a must read for SME employees and employers. Subscriptions are free for qualified professionals in the Middle East. Simply visit to start receiving your new monthly tool for building your business.


KEEP THE BALL ROLLING WORKING CAPITAL IS CONSIDERED THE LIFE LINE OF ANY COMPANY, ALLOWING THE BUSINESS TO GROW, EXPAND OPERATIONS, AND WEATHER FINANCIAL FLUCTUATIONS. NILANJAN RAY, SENIOR VICE PRESIDENT AND HEAD, SME BANKING AT ABU DHABI COMMERCIAL BANK, EXPLAINS HOW MANY BUSINESSES COMMIT THE FATAL MISTAKE OF IGNORING THE VITAL WORKING CAPITAL ELEMENT AND OUTLINES THE FINANCE OPTIONS AVAILABLE TO HELP BOOST BUSINESS. orking capital is a financial metric which represents operating liquidity available to a business. Positive working capital is required to ensure that a firm is able to continue its operations so that it has sufficient funds to satisfy both maturing short-term debt and upcoming operations expenses. The term working capital has several meanings in business and economic development finance. In accounting and financial statement analysis, working capital is defined as the firm’s short-term or current assets and current liabilities. Net working capital represents the


excess of current assets over current liabilities and is an indicator of the firm’s ability to meet its short-term financial obligations. From a financing perspective, working capital refers to the firm’s investment in two types of assets. In one instance, working capital means a business’ investment in short-term assets needed to operate over a normal business cycle. This meaning corresponds to the required investment in

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 Working capital is essential to a growing company.

cash, accounts receivable, inventory, and other items listed as current assets on the firm’s balance sheet. In this context, working capital financing is about how a firm finances its current assets. A second broader meaning of working capital is the company’s overall non-fixed asset investments. Businesses often need to finance activities that do not involve assets measured on the balance sheet. Thus, working capital can represent a broader view of a firm’s capital needs that includes both current assets and other non-fixed asset investments related to its operations. Working capital management refers to the

management of current or short-term assets and short-term assets include inventories, loans and advances, debtors, investments and cash and bank balances. Short-term liabilities include creditors, trade advances, borrowings and provisions. The major emphasis is, however, on short-term assets, since shortterm liabilities arise in the context of short-term assets. It is important that companies minimise risk by prudent working capital management. This is an important yardstick to measure a company’s operational and financial efficiency. It must form part of the company’s strategic


ADCB and operational thinking. This will yield greater efficiency and improve customer satisfaction.


USERS AND BENEFITS The first, and most critical, use of working capital is providing the ongoing investment in short-term assets that a company needs to operate. A business requires a minimum cash balance to meet basic day-today expenses and to provide a reserve for unexpected costs. It also needs working capital for repaid business costs, such as licences, insurance policies, or security deposits. Furthermore, all businesses invest in some amount of inventory, from a law firm’s stock of office supplies to the large inventories needed by retail and wholesale enterprises. A second purpose of working capital is addressing seasonal or cyclical financing needs. Here, working capital finance supports the build-up of short-term assets needed to generate revenue, but which come before the receipt of cash. Since most businesses do not receive payment for goods and services, they need to finance these purchase, production, sales, and collection costs prior to receiving payment from customers. Another way to view this function of working capital is provide liquidity. Adequate and appropriate

ď ž Having available cash gives a company more security.

When working capital is not sufficiently or appropriately financed, a firm can run out of cash and face bankruptcy


working capital financing ensures that a firm has sufficient cash flow to pay its bills as it awaits the full collection of revenue. When working capital is not sufficiently or appropriately financed, a firm can run out of cash and face bankruptcy. As a business grows, it needs larger investments in inventory, accounts receivable, personnel, and other items to realise increased sales. New facilities and equipment are not the only assets required for growth; firms must also finance the working capital needed to support sales growth. A final use of working capital is to undertake activities to improve business operations and remain competitive, such as product development, ongoing product and process improvements cultivating new markets. With firms facing heightened competition, these improvements often need to be integrated into operations on a continuous basis. Consequently, they are more likely to be incurred as small repeated costs than as large infrequent investments. This is especially true for small firms that cannot afford

the cost and risks of large fixed investments in research and development projects or new facilities. Ongoing investments in product and process improvement and market expansion, therefore, often must be addressed through working capital financing.


SOURCES OF WORKING CAPITAL There are three potential sources in these instances – equity, cash advances, and bank loans. Commercial banks are the largest financing source for external business debt, including working capital loans, and they offer a large range of debt products. With banking consolidation, commercial banks are multistate institutions that increasingly focus on lending to small business with large borrowing needs that pose limited risks. Commercial finance companies are important working capital lenders since, as non-regulated financial institutions, they can make higher risk loans. Some finance companies specialise in serving specific industries, which allows them to better assess risk and creditworthiness, and extend

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loans that more general lenders would not make. Another approach used by banks and finance companies is asset-based lending in which a lender carefully evaluates and lends against asset collateral value, placing less emphasis on the firm’s overall balance sheet and financial ratios. An assetbased lending approach can improve loan availability and terms for small firms with good quality assets but weaker overall credit. Trade credit extended by vendors is a fourth alternative for small firms. While trade credit does not finance permanent or long-term working capital, it helps address short-term borrowing needs. Extending payment periods and increasing credit limits with major suppliers is a fast and cost-effective way to finance some working capital needs that can be part of a firm’s overall plan to manage seasonal borrowing needs. Other working capital finance options exist beyond these three conventional credit sources. Venture capital firms also finance working capital, especially permanent

working capital to support rapid growth. While venture capitalists typically provide equity financing, some also provide debt capital. A grown set of mezzanine funds, often managed by venture capitalists, supply medium-term subordinate debt and take warrants that increase their potential returns. This type of financing is appropriate to finance long-term working capital needs and is a lower-cost alternative to raising equity. However, the availability of venture capital and mezzanine debt is limited to fast-growing firms, often in industries and markets viewed as offering the potential for high returns.


GOVERNMENT INITIATIVES While small in total capital, non-profit and government revolving loan funds help firms’ access conventional bank debt by providing subordinate loans, offering smaller loans, and serving firms that do not qualify for conventional working capital credit. Dubai SME (formerly known as The Mohammed

While trade credit does not finance permanent or long-term working capital, it helps address short-term borrowing needs Bin Rashid Establishment for SME Development) aims to promote new business creation and the expansion of existing small enterprises owned and operated by UAE nationals in Dubai. They provide training and guidance as well as start-up capital for aspiring business people, thereby closing the finance gap. The SME Establishment is also able to provide funds for expansion of existing small businesses through affiliate banks. The Khalifa Fund provides start-up loans, expansion loans and training for entrepreneurs in Abu Dhabi. In addition, the fund is able to bring together aspiring entrepreneurs and venture capitalists.

C  Ensuring you have working capital will allow you to focus on other business matters.

CREDIT FUNDING Many entrepreneurs and small firms also rely on personal credit sources to finance working capital, especially credit cards and second mortgage loans on the business owner’s home. These sources are easy to come by and involve few transactions costs, but they have certain limits. First, they provide only modest amounts of capital. Second, credit card debt is expensive with interest rates of 18% or higher, which reduces cash flow for other business purposes. Third, personal credit links the business owner’s personal assets to the firm’s


HEDGING ADCB success, putting important household assets, such as the owner’s home, at risk. Finally, credit cards and second mortgage loan are not viable for entrepreneurs who do now own a home or lack a formal credit history. Immigrant or low-income business owners, in particular, are least able to use personal credit to finance a business. Given these many limitations, it is desirable to move entrepreneurs from informal and personal credit sources into formal business working capital loans that are structured to address the credit needs of their firms.


FORMS OF FINANCE Working capital financing comes in many forms, each of which has unique terms and offers certain a advantages and disadvantages to the borrower. Some of the forms of working capital include; OVERDRAFT FACILITIES An overdraft is an open-ended loan with a borrowing limit that the business can draw against or repay at any time during the loan period. This arrangement allows a company flexibility to borrow funds when the need arises for the exact amount required. Interest is paid only on the amount borrowed, typically on a monthly basis, A line of credit can be either unsecured, if no specific collateral is ledged for repayment, or secured by specific assets such as accounts receivable or inventory.


Credit cards and second mortgage loans are not viable for entrepreneurs who do not own a home or lack a formal credit history [70]

ACCOUNTS RECEIVABLE FINANCING Loans secured by accounts receivable are a common form of debt used to finance working capital. Under accounts receivable debt, the maximum loan amount is tied to a percentage of the borrower’s receivable increase, the allowable loan principal also rises. However, the firm must use customer payments on these receivables to reduce the loan balance. FACTORING Factoring entails the sale of accounts receivable to another firm, called the factor, who then collects payment from the customer. Through factoring, a business can shift the costs of collection and the risk of non-payment to a third party. In a factoring arrangement, a company and the factor work out a credit limit and average collection period for each customer. As the company makes new sales to customer, it provides an

invoice to the factor. The customer pays the factor directly, and the factor then pays the company based on the agreed upon average collection period, less a slight discount that cover the factor’s collection costs and credit risk. INVENTORY FINANCING As with accounts receivable loans, inventory financing is a secured loan, in this case with inventory as collateral. However, this financing is more difficult to secure since inventory is riskier collateral than accounts receivable. Some inventory becomes obsolete and loses value quickly, and other types of inventory, like partially manufactured goods, have little or no resale value. Firms with an inventory of standardised goods with predictable prices, such as automobiles or appliances, will be more successful at securing inventory financing than businesses with a large amount of work in the process or highly seasonal or perishable goods.

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TERM LOAN While the four prior debt instruments address cyclical working capital needs, term loans can finance mediumterm noncyclical working capital. A term loan is a form of medium-term debt in which principal is repaid over several years. Sometimes, a bank will agree to an interest rate cap or fixed rate loan, but it usually charges a fee or higher interest rate for these features. Term loans have a fixed repayment schedule that can take several forms. The ability to obtain a loan is based on the credit worthiness of a company. The two major factors that determine credit worthiness are the existence and extent of collateral and the liquidity of the business. A company’s balance sheet is used to assess both these factors. CHALLENGES


BUSINESSES’ POINT OF VIEW Working capital financing is a key financing need and challenge for most. Small businesses have less access to term sources of capital than large businesses,

 Abu Dhabi Commercial Bank

including limited access to equity capital markets and fewer sources so long term debt. Thus, many small firms are heavily dependent on short-term debt, much of which is tied to working capital. However, limited equity and reliance on short-term debt increases the demand on a firm’s cash flow, reduces liquidity, and increases financial leverage – all of which heighten the financial risks of extending credit. Consequently, small firms may have trouble raising short-term debt while at the same time facing obstacles to securing the longer-term debt necessary to improve their financial position and liquidity, and lessen their credit risk. Development finance has an important role in addressing this problem, either by offering working capital loans when private loans are not available or by providing debt terms that reduce a firm’s financial risk and help it access private working capital financing. In particular, practitioners can help businesses finance permanent working capital to reduce their short-term financial pressures.

Businesses face some difficulties in accessing finance during the start-up phase from financial institutions. In most developed markets, it is possible to get viability based financing, where an aspiring entrepreneur applies for a loan on the basis of a business plan.


BANKS AND FINANCING INSTITUTIONS POINT OF VIEW In some markets the perceived risk has two sources. The first is the difficulty in assessing the credit quality of businesses in some markets – often these market structures have incomplete and unreliable financial statements. For this reason banks prefer lending to companies that have existed for some time. Bankers have expressed some concern over the recovery mechanism to seize the assets of defaulters. The legal framework for this is in place, but results and speed of the process can sometimes lack consistency. Apart from the above, there is a fundamental information gap which always exists between lenders and borrowers. The borrower knows in detail their own credit record and intentions, while the bank can only guess at either. This asymmetry cuts both ways; on the one hand, borrowers with poor credit records can evade them and may still be able to borrow because their payment history is unavailable to the bank in totality. About the author: Nilanjan Ray currently heads the SME business at Abu Dhabi Commercial Bank (ADCB). He has also worked in ICICI Bank Bahrain, HDFC Bank & IDBI Bank in India. Nilanjan holds a post graduate business degree and a is a graduate in economics.


How I did it



STARTED MY CAREER as an engineer and then I failed so I was promoted to a manager. When I failed as a manager I was promoted to CEO and when I failed as a CEO, I became a consultant. Only when I fail as a consultant will I become a politician,” Dr Saad Al Barrak laughs. “That’s a good quote,” he quips. Jokes aside, few people would agree with Al Barrak. In just seven and a half years he managed to transform Zain, Kuwait’s provincial telco, into a global giant. Under his guidance the former-state owned operator grew from a customer base of 500,000 operating in one Gulf state to 72 million customers across 23 countries. Over the same period, revenues at the company jumped from $570m to $8bn. Al Barrak’s book – A Passion for Adventure – charts his early days as managing director at the Kuwait IT solutions firm International Turnkey Systems (ITS), ITS’s continued growth during the Kuwait invasion, to his transformative years at Zain, and is peppered with anecdotes from those he worked closely with at the former monopoly holder. Back in 2002, Zain – or


MTC as it was known – was a very different beast to the telecoms giant operating today. A year earlier, the Kuwaiti government had reduced its stake in the company from 49 percent to 25 percent, leaving behind a firm scarred by over a decade and a half of red tape and bureaucracy. “I discovered a company that had been stymied by government culture for sixteen years, which was an unprofessional, politicised monopoly. It had a big marketing department that knew nothing about marketing and little about PR,” Al Barrak describes in his book. “Many internal appointments were based on favouritism, and the government always chose the chairman-cummanaging director who always happened to be the former under-secretary of telecommunications. The government appointees bought red tape and bureaucracy, and they were sometimes allied to some of the shareholders. Worse, the management had never heard of a business plan,” he adds. Despite some initial hesitation, Al Barrak persuaded global consultants McKinsey to provide the firm with a diagnostics report. The McKinsey report made for shocking reading,

 Al Barrak’s time at Zain will probably be best remembered for the firm’s acquisition of Celtel Africa, the African telecommunications firm founded by the Sudanese billionaire, Mo Ibrahim.

prophesying that the company would lose 60 percent of its value in three to four years if it continued along the same performance indicators it had at the end of 2002. The report was enough to convince MTC’s shareholders that they needed to “not only adapt but revolutionise,” says Al Barrak. With shareholder approval, Al Barrak embarked on a series of acquisitions and deals, including the 2005, $3.36bn acquisition of Celtel Africa, the African telecoms firm. Al Barrak has now moved on and plans to take the lessons he learned growing Zain and apply them to small to medium-sized companies. In addition to lecturing at universities around the world, he is also the chairman of the consultancy firm ILA Group, which has offices in Bahrain, Egypt and Kuwait. If anyone can help firms see their potential, it’s him.

| vol. 1 /december 2012

An ITP Executive Publication



Sectors covered by Manufacturing Executive Middle East include Motor industry FMCG Chemicals and Pharmaceuticals Power and Energy Oil and Gas Construction LATE ST TR

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Startup Magazine - December 2012  

Startup Magazine is an ITP Executive Publication Released from Dubai, Vol 1 - Issue 03 - December 2012 (76 pages)