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good advice for better business



Sweet spot A serviced office can tick the boxes

Speaking sense Why Trade Credit Insurance is a must

Bullseye! Target setting and why you need it

Your money or your life Hisham Al Saghbini on the challenge of SME funding

Cast your net We meet the networking guru


100 Alexandar Williams on what Dubai SME has in mind for you


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Publisher Dominic De Sousa Group COO Nadeem Hood Managing Director Richard Judd +971 4 440 9126 EDITORIAL Senior Editor Paul Godfrey +971 4 440 9105 Sub Editor Rushika Bhatia +971 4 440 9115 ADVERTISING Commercial Director Chris Stevenson +971 4 440 9138 Media Sales Executive Emma Hughes +971 4 440 9120 PRODUCTION AND DESIGN Production Manager James P Tharian +971 4 440 9146 Circulation Manager Rajeesh M +971 4 440 9147 Head of Design Fahed Sabbagh +971 4 440 9107 Designer Froilan A. Cosgafa IV +971 4 440 9107 Photographer Jay Colina Abdul Kader Pattambi DIGITAL SERVICES Digital Services Manager Tristan Troy Maagma Web Developer Abey Mascreen

In a league of their own


he SME sector is always the most turbulent in any nation’s economy. SMEs simply don’t have the luxury of the more tranquil overview that larger corporates enjoy courtesy of their resources. That’s to be expected - but the problems start, though, when an SME has a turbulent life with precious little reward. In reality, the set of commercial constraints that SMEs face hasn’t really changed since the Industrial Revolution. So when there’s a major sea-change in how SMEs can build their business and expand their customer base, it’s time for us all to stand up and take notice. This is exactly what’s happening here in Dubai, with the advent of a new commercial platform called the High Performance League (HPL). This is nothing more or less than a paradigm shift, where SMEs become team players, literally joining forces with other businesses. As I understand it, the idea is that different teams of SMEs will compete together in a high-profile league – bringing the spirit of sport and its competitive dynamic to business and utilising the new visibility effect to drive leadership, innovation and collaboration. You can find out all about the HPL on page 28, where we interview one of the League’s founders, Omer Ghani. The fact is that the existence of the HPL can go a long way towards changing some of the endemic problems of the SME sector: these include the relative scarcity of bank funding, purchasing goods on advantageous terms (‘too small’), worries about cash flow and the difficulties of cost-effectively opening up new markets. The other factor is that, all too often, the spotlight falls on startups and the ‘small’ end of the SME equation. With the HPL, though, while every business can punch above its weight, the supreme connectivity of the slightly larger businesses can not only make its impact but create a chain of interaction that will make the quantum leap to (literally) world-class performance a perfectly feasible goal. There’s a famous management quote by Tom Peters that says “if you’re going to keep on doing the same old things, you’re going to get the same old results.” Well, with the advent of the HPL, at last a new champion has come along for the SME sector - and one which opens the door to doing things very differently indeed. I’m sure you’ll join us here at SME Advisor in wishing the HPL the best of luck. Good reading! +971 4 440 9100 Published by

Paul Godfrey Senior Editor Registered at IMPZ PO Box 13700, Dubai, UAE Tel: +971 4 440 9100 Fax: +971 4 447 2409 Printed by Al Ghurair Printing & Publishing LLC © Copyright 2013 CPI. All rights reserved. While the publishers have made every effort to ensure the accuracy of all information in this magazine, they will not be held responsible for any errors therein.

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June 2013


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Issue 91

June 2013



One in a 100

Alexandar Williams on what Dubai SME has in mind for you

Editor’s note 03 Paul Godfrey on how the High Performance League is transforming the traditional commercial template for SMEs. SHOPTALK 10 News and developments impacting SMEs in the region. FINANCE FOCUS 14 The latest financing opportunities for SMEs and allied financial services. SME ABOUT TOWN 18

Key events attended by SME owners and managers.


Attracting Finance – a case of walk, don’t run! A keypoint briefing on how to go about getting the finance you need.

Movers & Shakers 24 Finger on the pulse: SME Advisor interviews Alexandar Williams, Director, Strategy & Policy Division, Dubai SME.

20 June 2013




Meet Hazel Jackson and Hazel Cowling, founders of the Dubai SME 100 consultancy brand, biz-group.


Are you a high performer? Introducing the High Performance League - and what it means for the region’s SMEs.

Managing Risk 32 Nexus’ Shabnam Ansari on the powerful benefits of Trade Credit Insurance. Behaviour 36

How to break free from the ‘silos’ in your business.

Getting finance 40

Hisham Al Saghbini reviews the practical options when it comes to getting finance.


From the horse’s mouth: the founder of business networking, Dr. Ivan Misner, on networking to raise funds.


Workspace 48 The first priority: leveraging advantage from the right location and how a serviced office can help. 52

Talent management for SMEs; a keynote briefing from the experts at Ashridge Business School.

Performance 56 A target-setting masterclass with Aon Hewitt. Legal 60

Doing business in the new financial freezone, Al Maryah Island.

Industry watch 62 Positive signs for Q2 2013. 63

UK - UAE’s top source market.


Dubai - top choice for new retailers


Keeping pace with e-commerce.


The ‘unstoppable entrepreneur’.


Women in family businesses.


TECHNOLOGY FOR BUSINESS 70 IT trends and tools that are reshaping business in the region. The next level… 76 DHL’s experts explain why top performers are looking to do business overseas.



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Effectively managing information security

Dubai Government First Information Security Forum


nformation security management is a crucial aspect in the running of any government. In light of this, the Dubai Government First Information Security Forum was held recently in Dubai and saw attendance from over 80 Dubai Government entities.

The Information Security Committee (ISC), which is tasked with managing information security at Dubai Government, in collaboration with Dubai eGovernment, organised the Forum. The Forum focused on reviewing Dubai

Government’s Information Security Regulation (ISR), which was recently approved by the ISC in Arabic and English. The ISR seeks to manage government information in line with the Dubai Executive Council Resolution No. 13 for 2012 which tasks it with providing an integrated strategy for the security of information across Dubai Government. The Forum featured a presentation on the ISR details and guidelines for applying them, and was held in the presence of His Excellency Ahmad Bin Humaidan, Chairman of the Information Security Committee, committee members, IT and information security directors and departmental directors at government departments and entities. Mira Sultan Obaid, Information Security Section Manager at DeG, gave an overview of the ISR as well

as its purpose and scope. This includes three major domain areas: governance, operations and protection. She emphasised that the ISR would pave the way for an information security culture in all Dubai government entities which now have a framework to evaluate their government information for levels of confidentiality, integrity and availability and identify the responsibilities related to this information. Dr. Okan Geray, Strategic Planning Consultant at Dubai eGovernment highlighted the ISR implementation guidelines. He noted five guidelines required for implementing the ISR: establishing an appropriate IS governance at the government level; facilitation of information and knowledge exchange related to information security; setting a timeline for implementation at government level; and monitoring implementation of such a timeline.

Rise in business licences issued In the first quarter of 2013, the Department of Economic Development (DED) issued 4,582 business Saeed Matar Al Marri, licences, a Deputy CEO of Business Registration and Licensing four per cent (BRL) sector in DED increase since the same period last year. The major share of licences were accounted towards the professional sector at 24 per cent followed by the commercial and industrial sectors. “Confidence in Dubai is on an upswing with the emirate emphasising on overall competitiveness and sustained investment in infrastructure. While existing businesses in Dubai are venturing further out and spreading their wings, a growing number of investors are also sensing the ideal conditions to


step forward,” said Saeed Matar Al Marri, Deputy CEO of Business Registration and Licensing (BRL) sector in DED. Other highlights include: • The total number of amended licences in Q1 of 2013 was 18,977, up six per cent from 17,843 in Q1 of 2012. • The total number of renewed licences grew four per cent to 28,323, as against 27,247 during the same period in the previous year. • The total number of transactions rose seven per cent to 158,588 in Q1 of 2013, from 147,770 during Q1 of 2012. • The total number of commercial permits issued in Q1 of 2013 was 8,305, up seven per cent from the same period in 2012. • The total number of reserved trade names reached 18,601, a five per cent increase from 17,738 in 2012. • The total number of commercial

activities licensed in Q1 of 2013 was 11,461. • The number of professional activities licensed in Q1 of 2013 reached 2,925. • In the tourism sector, Inbound tourism was the leader with 39 licences, followed by Travel and tourism agencies (seven); Foreign tour operators (four); Hotels (two); Air charter service agents; Motels and Hotel apartments with one licence each. • In the industrial activities segment, blacksmith and welding led the list of licensed activities followed by Metal works for buildings; Turning workshop; Wooden interiors supplies; Metal parts for construction; Roasting, Salting and packaging nuts; Ice creams; Packaging of spices and seasonings; Wooden windows and doors, and Napkins.

Dubai SME 100 firms benefit from Insurance seminar


ubai SME, the agency of the Department of Economic Development (DED) mandated to develop the small and medium enterprises (SMEs) sector, and Nexus Insurance Brokers recently organised a seminar on risk management and insurance advisories to Dubai SME100 companies. The seminar, held as part of a memorandum of understanding (MoU) signed between Dubai SME and Nexus in March 2013, aimed to create awareness among SMEs on the need for basic business risk assessment and insurance. The seminar was held in view of the low insurance penetration among SMEs in the region, which stands at less than two per cent,

while their counterparts in the US and Europe remain far ahead in leveraging insurance for stability and growth. The Insurance and Risk Management Seminar was held over half a day and a Risk Assessment and Insurance Due Diligence Diagnostic exercise was made available to all Dubai SME100 companies. Speakers at the seminar explained how lack of insurance and absence of risk assessment expose SMEs to unforeseen threats and downturns. Key areas of review included ‘Asset and Liability Protection,’ ‘Workmen’s Compensation,’ ‘Trade Credit Insurance,’ ‘Employee Benefits,’ ‘Key Man’ and ‘Succession Planning.’ Mahmoud Nodjoumi, Chief Executive Officer of

New logistics facilities at DWC Developments at the Dubai World Central (DWC), the world’s first purpose-built aerotropolis, came as good news for new and existing customers interested to expand their business activities in DWC. The new growth plans at DWC’s Logistics District, included the start of construction on the fourth complex of agent warehouses. Covering a total area of almost 8,700 square metres, with 5,443 square metres for warehouses and 1,373 square metres for office area, the new agent warehouses will be open for leasing in the first quarter of 2014. DWC further announced that it is now developing a new logistics park

Nexus Insurance Brokers, said: “SMEs are the backbone of business and immensely important to the economic development of the region. We need a powerful and competitive SME community across the UAE in order to maintain the country’s strong economic growth and to create sustainable jobs. In partnership with Dubai SME, Nexus Insurance Brokers is raising awareness of many potential pitfalls faced by SMEs that can be mitigated by insurance. Although these SMEs experience strong growth, they remain ignorant of many aspects of risk and therefore we must do everything we can to ensure that those contributing to the UAE’s economy are equipped to succeed and

within the Logistics District, comprising of warehouses, offices and amenities. The logistics park will be completed in the first quarter of 2015, offering a total built-up area of 34,000 square metres while facilities will have a minimum area of 1,000 square metres. To improve the efficiency of the free zone operations, DWC also announced that it will be developing a fully dedicated customer inspection yard at gate four, in conjunction with Dubai Customs. The new facility, which will include truck scanning machines, will enhance operations in the current customs inspection facility and is designed for both normal and temperature-controlled cargo. Rashed Bu Qara’a, Chief Operating Officer, Dubai Aviation City Corporation, said: “Dubai World Central is catering to the evolving needs of our clients by developing the

are insured for all the known risks.” Participants in the seminar were also encouraged to look at risk assessment and insurance as an investment to protect the wealth and well-being of the business. The Risk Assessment Diagnostic module, developed by Nexus, enables SMEs to derive value from its businesses while simultaneously remaining well protected. The seminar and one-onone service are part of the capability and knowledge development initiative introduced by Dubai SME for the SME100 firms. Each capability development initiative typically has four components: an expert sharing/knowledge building seminar; business selfdiagnostic tools; one-on-one audit/due diligence with SMEs; and case studies and experience sharing by SME100 CEOs.

next phase of facilities that support the growth and expansion of companies operating within DWC. The fourth complex of the agent warehouses and the development of a new logistics park are crucial elements in our long-term expansion strategy as a new wave of investors and multinationals are now preparing to set up operations within the Logistics District. By providing an integrated platform catering to the requirements of businesses from various industries, DWC remains the ideal destination for investors, entrepreneurs and businesses that are looking to capitalise on emerging opportunities in the global marketplace.” Dubai World Central consists of eight fully integrated districts, helping drive business in different industries, including aviation, logistics, commercial, real estate and exhibitions.

June 2013




Leverage your business with new online portal

His Excellency Abdul Rahman Saif Al Ghurair, Chairman, Dubai Chamber, at the ceremony


nhancing Dubai’s role as the region’s business hub, Dubai Chamber of Commerce and Industry signed a Memorandum of Understanding with to facilitate and increase international trade through Dubai using the e-commerce platform. Dubai Chamber, in association with launched www.dubaichamber.

Dubai SME’s support boosts morale Dubai SME, the agency of the Department of Economic Development in Dubai mandated to develop the small and medium enterprise (SME) sector, has continually played a significant role in empowering small businesses in the region. A strong example is the recent visit by Abdul Baset Al Janahi, Chief Executive Officer of Dubai SME, to a manufacturing facility of Micro Automation Industries (MAI) in Jebel Ali Free Zone. MAI has made inroads into regional and European markets since 2003 and is increasing its global export footprint of Powermatic products this year. During the visit, Micro Automation presented to Al Janahi the company’s manufacturing capabilities in its facilities in Jebel Ali Free Zone facility, along with


com/alibaba as part of its strategy to help Dubai businesses embrace the exciting journey into the world of e-commerce. The portal will serve businesses across the entire MENA region. His Excellency Abdul Rahman Saif Al Ghurair, Chairman, Dubai Chamber, said: “The new e-commerce portal will generate an exciting and innovative opportunity for Dubai Chamber’s members to trade with a global client base.” has 36 million registered users from more than 240 countries and regions and showcases 2.8 million supplier storefronts. Michael Lee, Director of Global Marketing for, said: “We believe the future of e-commerce across the MENA region is very strong and Dubai leads

its entire range of products and future product developments in the pipeline. “We were impressed with Micro Automation Industries’ innovative approach to manufacturing, and its unique product development in Jebel Ali shows that Dubai-based companies can produce world-class products suited for a global market,” said Al Janahi. The Dubai-based manufacturer, MAI, is a premium member of Dubai SME100. Launched in 2012, Dubai SME100 ranks the top-performing SMEs in Dubai to help groom them into bigger, better and more sustainable enterprises, and support them through their growth into larger, internationally-focused companies. Ensuring that MAI continues to promote innovation and leadership in the power protection industry, Dubai SME is working closely with the organisation in opening avenues and opportunities to expand their product range. Hazim Al-Hajjaj, Managing Director of Micro Automation Industries, said, “The support that Dubai SME provides to

the way with adopting new technologies and approaches to global trade. We are pleased to work with the Dubai Chamber to bring our proven e-commerce platform to their members, giving businesses the opportunity to trade with the world.” Through the Alibaba. com collaboration portal, Dubai Chamber members will have the opportunity to create a virtual catalogue of their products free of charge. This will give them maximum global exposure and allow them to expand and manage their business wherever they are. The portal will create a club of trusted traders, which will be extended by Dubai Chamber over the medium to long-term to ensure Dubai’s growing e-commerce market will continue to thrive for years to come.

During the visit

small and medium enterprises like us is very important as it shows they value our contributions to the economy of Dubai and the UAE in general. We are glad to be collaborating with Dubai SME in identifying the needs and challenges of the sector, and provide valuable input to inspire a culture of innovation within the SMEs.” “Micro Automation is making the UAE industry sector proud, and Dubai SME will work with the company to study incentive schemes used in Europe for possible support and establishment of research and development activities in Dubai,” Al Janahi said.


‘SeedApp’ fund to encourge creativity


ubai SME has incentivised the creation of mobile applications that will facilitate people’s access to government services with its new ‘SeedApp’ fund. His Highness Sheikh Hamdan Bin Rashid Al Maktoum, Dubai Crown Prince and Chairman of the Executive Council of Dubai, has instructed Dubai SME, the agency of the Department of Economic Development in Dubai mandated to develop the small and medium enterprise (SME) sector, to set up such a sub-fund. The fund will provide assistance to UAE nationals who develop user-friendly and commercially-driven mobile applications that would support the initiative announced recently by His Highness Sheikh Mohammed Bin Rashid Al Maktoum, UAE Vice President and Prime Minister and Ruler

Abdul Baset Al Janahi, Chief Executive Officer of Dubai SME

of Dubai, to fully transform the UAE into a Mobile Government (m-government) from an e-government within two years. Abdul Baset Al Janahi, Chief Executive Officer of Dubai SME, said that the fund will encourage creativity among UAE citizens and their active participation in the nation’s vision to be one of the best in the world. “Dubai SME and the Mohammed Bin Rashid Fund have been focusing on creating platforms for UAE nationals to deploy and advance their

entrepreneurial skills and innovative spirit. Through the SeedApp fund, we are inviting all nationals to join the nation’s complete evolution into a knowledge-driven and internationally best service environment,” added Al Janahi. The SeedApp fund for mobile applications will provide 60 per cent of the cost of developing the application to each entrepreneur. This will be towards developing and testing the applications, as well as, creating a company resident in the Dubai SME business incubator. The key eligibility criteria will be: • The ease with which one can use the application. • The value it adds to m-government and overall economic activity. A simple procedure is in place for those interested in accessing the grant.

Applications need to be submitted online at with a small description about the app, its utility, and development milestones. The public will be invited to vote for the best application concepts online which will determine the selection of the entrepreneurs to be supported. The Mohammed Bin Rashid Fund established as per Law No (11) of 2012 aims to support Emirati entrepreneurs and SMEs and has the authority to give seed capital, business loans, and provide financial guarantees to contribute to projects of Emirati entrepreneurs. “Unrestrained access to public services is a prerequisite for the heights of transparency, competitiveness and quality of living which the UAE seek to achieve. The UAE has the technology and infrastructure required for a successful Mobile Government initiative and Dubai SME believes SeedApp is a significant step towards integrating the human component to m-government,” Al Janahi concluded.

Tejar Dubai will bolster entrepreneurship His Highness Sheikh Majid bin Mohammed bin Rashid Al Maktoum, Chairman of Dubai Culture and Arts Authority, launched Tejar Dubai, the entrepreneur development programme. A joint effort between Dubai Chamber of Commerce and Industry and the Private Office of His Highness Sheikh Majid bin Mohammed bin Rashid Al Maktoum, the initiative is in line with the vision of His Highness Sheikh Mohammed bin Rashid Al Maktoum, UAE Vice President and Prime Minister and Ruler of Dubai, which states that the shortest path to a brighter future is that of entrepreneurship.

The programme is dedicated to provide a tailored individual learning experience to selected aspirant entrepreneurs and to arm them with the knowledge and skills necessary to ensure the success of their innovative ideas and creativity as well as their smooth entry into the world of business with their SME projects. The Entrepreneur Development Programme aims to foster the next generation of entrepreneurs by developing their skills and expertise through professional training while also cultivating a culture of entrepreneurship in the country. The programme will provide a tailored individual learning experience

and internship placement to selected aspirant entrepreneurs and is aimed at further maturing the entrepreneur’s business idea while supporting the enhancement of Dubai’s position in the global economic landscape. His Highness Sheikh Majid Bin Mohammed Bin Rashid Al Maktoum stated that Tejar Dubai is one of the leading initiatives that will inspire the youth to move forward towards development and progress required in various sectors. It will also lead to the empowerment of national entrepreneurs cognitively and practically and encourage them to establish small and medium-sized enterprises.

June 2013



The team of Eureeca: Sam Quawasmi, Managing Director & Co-Founder; Dr. Nasser Saidi, Deputy Chairman; and Chris Thomas, CEO & Co-Founder

‘Crowdinvesting’ for SMEs


inancing is a major concern for most SMEs and they are proactively looking for new options. With the launch of Eureeca, a global crowdinvesting platform for growth companies and SMEs to source funding from the crowd, SMEs in the region will now have access to another finance solution. Operating as a marketplace for businesses looking for funding as

well as crowd investors seeking new investment prospects, Eureeca offers growing businesses access to investment from the ‘crowd’ – typically made up of a business’ followers and fans, clients, friends and other members of Founded by experienced entrepreneurs and former investment bankers, Chris Thomas and Sam Quawasmi, Eureeca provides entrepreneurs and SMEs with an alternative to traditional methods of funding. By allowing investors to earn equity in a business listed on the website for as little as USD 100,

Eureeca lowers the investment barrier to entry, thereby opening up the pool of potential investors. Registration for entrepreneurs and investors on the Eureeca website is free. However, the company performs strict compliance checks and due diligence before publishing funding proposals online. Businesses are required to set a funding target and are provided a standard 90-day period to raise funds from investors on the website. Should the funding target not be reached by the end of the 90-day period, any funds raised are returned to investors. Dr. Nasser Saidi has been appointed as the Deputy Chairman of Eureeca. This highlights the significance of crowdfunding for improving access to finance and promoting overall regional economic growth. Dr. Saidi, who has held ministerial roles at the Government of Lebanon and also served as the Vice Governor of the Lebanese Central Bank, is eminent for his achievements in introducing major reforms in economic policy and corporate governance, across the Middle East. At Eureeca, Dr. Saidi will oversee company strategy and corporate governance while managing the company’s regional expansion.

The card that promises Infinite added benefits Standard Chartered, in partnership with VISA, launched the Standard Chartered VISA Infinite Credit Card offering a wide array of luxury lifestyle privileges and convenience to cardholders. Available to customers in the UAE, the Standard Chartered VISA Infinite Credit Card offers privileges such as complimentary access to exclusive golf clubs in the UAE like Emirates Golf Club, The Montgomorie, Jumeirah Golf Estates, Dubai Creek Golf and Yacht Club, and Saadiyat Beach Golf Club. Additionally, cardholders enjoy unlimited access to Fitness First centres across


the country and an exclusive concierge programme that assists the cardholder with basic tasks such as payment of utility bills or more extravagant requests like booking a private jet for a quick weekend break.

For frequent travellers, the Standard Chartered VISA Infinite Credit Card also guarantees red carpet treatment with unlimited Limousine and Marhaba Meet and Greet Services at Dubai International Airport, along with unlimited

access to all Standard Chartered partner lounges in leading airports worldwide. Moreover, the Standard Chartered VISA Infinite Credit Card provides an exclusive 50 per cent discount on all 2D and 3D movie tickets across VOX cinemas and discounts of up to 50 per cent at premium merchants, high-end retailers and dining outlets across the UAE. As an added benefit, Chip and PIN technology is introduced for increased payment security. Globally, more than 20 million terminals are Chip and PIN compliant and almost all merchants in the UAE accept Chip and PIN cards.

DIFC partners with Emirates NBD

During the signing


IFC Registrar of Real Property has signed an agreement with Emirates NBD allowing the bank to open accounts for owners’ associations (known as Bodies Corporate) in the DIFC jurisdiction. This agreement is aimed at promoting the proper utilisation of owners’ contributions to the owners’ association in accordance with DIFC Strata Title Law.

Jaber Al Suwaidi, DIFC Registrar of Real Property commented: “To safeguard an owners’ contribution, while promoting integrity and transparency in the use of these funds, we now require all Bodies Corporate established under the DIFC Strata Title Law, to have a suitable escrow arrangement in place with an approved account trustee. We are pleased to partner with

Contactless transit emerges as a popular choice A joint partnership between Emirates NBD and Gemalto – the Go4it card is an all-in-one banking card combining both payment and contactless transit functionalities for seamless access to Dubai’s RTA public transport network. This successful collaboration between Emirates NBD and Gemalto was commemorated recently at an award ceremony. The Go4it card portfolio has proved to be a success since its launch at the end of 2011 and now accounts for close to 10 per cent of credit cards issued

Emirates NBD and provide the option for Bodies Corporate within the DIFC jurisdiction to use Emirates NBD for the required escrow account services.” The agreement has been signed by Jaber Al Suwaidi, DIFC Registrar of Real Property, Samir Sahu, Deputy GM and Head of Transaction Banking Services, and Sharad Agarwal, Head of Trade Sales, Factoring & Escrow Services, Transaction Banking Services at Emirates NBD. Under agreed terms and conditions, the bank opens “escrow accounts” in the name of owners’ associations in DIFC and acts as a trustee of these accounts for owners’ deposits and withdrawals to pay suppliers and service providers. The key objective of the agreement is to ensure the owners’ associations’ accounts are independently

by Emirates NBD. Card usage rates have increased and end users have commented that they appreciate the convenience and uniquely privileged features offered by the card. In addition to reducing the need to carry multiple cards, Go4it also enables fully automated top-up for both the RTA and SALIK eToll applications, ensuring that users are never left without the means to access public transport or the road network in Dubai. A Gemalto street survey [1] conducted in Dubai underlines the attractiveness of this multi-application contactless approach with 82 per cent expressing a strong interest in solutions that combine payment and contactless transit eTicketing. “Go4it was a challenging and complex project, converging EMV and contactless transit, a very first in the region,” said

managed. Service charge contributions of owners are collected in this account and spending is monitored against an approved budget. The DIFC Registrar of Real Property will play a supervisory role, while operational matters will be managed by the owners’ association, with the assistance of a licensed owners’ association manager and the bank, following guidelines provided by the DIFC Registrar of Real Property. The bank will also provide the DIFC Registrar of Real Property and the Body Corporate with online access to the escrow accounts, to facilitate transparency in their operation. Emirates NBD has a dedicated team to facilitate services relating to these accounts in compliance with the directives of the DIFC Registrar of Real Property.

R. Sivaram, SVP, Cards Business Head at Emirates NBD. “Gemalto has rich experience in both EMV payments and transit access and was the perfect partner for us in our aim to be the first in the market. They provided comprehensive support at every stage of the project development and we are very pleased to be celebrating this successful partnership today.” Emmanuel Payraud, Vice President of Financial Services and Retail at Gemalto Middle East said: “We have worked in close partnership with Emirates NBD for many years and it is a privilege to have been involved in the Go4it card project. We are fully committed to supporting them with their future initiatives.” [1] Street survey conducted amongst 500 Dubai residents by Salience Research on behalf of Gemalto – Dec 2012.

June 2013



Funding initiative to benefit Emirati SMEs


mirati SMEs can take advantage of the Credit Guarantee Scheme (CGS) of the Mohammed Bin Rashid Fund (MBRF). Set up within Dubai SME, the Fund has been created with the objective of supporting Emirati SMEs, and has the authority to give loans, provide financial guarantees or to contribute to projects of Emirati entrepreneurs. Dubai SME, the agency of the Department of Economic Development (DED) in Dubai mandated to develop the small and medium enterprise sector, and Emirates NBD announced the signing of a strategic partnership agreement to develop and implement the Credit Guarantee Scheme. This initiative, available to all UAE national-owned businesses and startups, aims to provide up to AED 50 million in new loans to Emirati entrepreneurs and SMEs. Abdul Baset Al Janahi, Chief Executive Officer of Dubai SME, said: “The Mohammed Bin Rashid


Fund is a significant valueadd to the continuous efforts of Dubai SME, to create a comprehensive and sustainable entrepreneurial ecosystem in Dubai. We are pleased to partner with Emirates NBD to develop the concept and management of the Fund to support UAE national entrepreneurs. The partnership will draw upon Dubai SME’s vast interface with the entrepreneur community and Emirates NBD Business Banking’s proven expertise in SME financing, to ensure that Emirati entrepreneurs are offered the best possible terms and support services to set up and manage their own businesses.” Through the CGS, Emirates NBD will work with Dubai SME on three levels including establishing the Fund, managing the Fund through a risk sharing module and utilising dedicated Business Banking resources through a seat for Dubai SME on the Emirates NBD ‘Business Banking’ credit committee.

Accelerated lending for SMEs SMEs can now benefit from Noor Trade, an innovative, Sharia compliant banking service tailored for SMEs that contribute significantly to the UAE’s trade flows. Through the initiative, Noor Islamic Bank (Noor) is targeting AED five billion of lending to SMEs over the next five years. In support of its Noor Trade strategy, Noor has opened its first dedicated trade branch in Almas Tower, home of the Dubai Multi Commodities Centre (DMCC), in Jumeirah Lake Towers (JLT). A second similar branch is scheduled to open in Deira, in July. With Noor Trade, clients will have access to fully Sharia compliant financial services, including cash management, trade, and working capital solutions, along with consumer, treasury and takaful products packaged at preferential rates based on eligibility criteria. Ehsaan Ahmed, Global Transaction Services and SME Head at Noor, said: “By establishing dedicated trade branches, we will be able to decentralise our service delivery and be closer to the customer. Both the DMCC and Deira branches will be easily accessible by the vibrant SME community, and position Noor to better respond to their growing needs for Sharia compliant banking solutions.” Furthermore, Noor Islamic Bank has partnered with DMCC for several initiatives that enable it to enhance service levels for customers, increase business volumes and introduce various innovative enhancements in the market. In addition, its alliance with the Department of Economic Development aims to support the SME sector development.

June 2013



Cass Business School Dubai Centre’s 2013 graduates celebrate on the steps of the Dubai International Financial Centre (DIFC)

Cass Business School’s graduation ceremony


is Highness Sheikh Ahmed bin Saeed Al Maktoum, President of the Dubai Civil Aviation Authority, Chairman of Dubai Airports and Chairman and Chief Executive Emirates Airline Group, was presented with an honorary degree from City University London. HH Sheikh Ahmed received the honour at the graduation ceremony for the

University’s Cass Business School Dubai Centre, which was held under the patronage of HH Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum, Deputy Ruler of Dubai and President of DIFC. The award was made in recognition of HH Sheikh Ahmed’s outstanding leadership in the development of professional sectors including aviation, finance, banking and

Marketing – key to business growth Over fifty marketing professors and professionals gathered at the University of Strathclyde Business School’s Dubai campus for the third annual Middle East Marketing Academia Meets Practice roundtable. An academic keynote by Dr. Ron Bradfield, Strathclyde Global MBA Director and an expert of scenario planning, on the potential future scenarios of social media started at the event. Dr. Bradfield discussed the


entrepreneurship among others in the UAE. This year’s ceremony, which was held at the DIFC Conference Centre, saw 45 students graduate from the Cass Dubai Executive MBA programme, a twoyear course delivered in a monthly block weekend format to accommodate busy working professionals. The Cass Dubai Centre attracts students from all over the world and the 2013 graduates include representatives from the UAE, UK, Italy, the Netherlands, Bosnia and Herzegovina, Romania, Turkey, Jordan, Lebanon, Kazakhstan, KSA, Iran, Nigeria, India, USA and Australia. The Dean of Cass Business School, Professor Steven Haberman, said: “As demonstrated earlier this month by the President of the UAE, HH Sheikh Khalifa bin Zayed Al Nahyan’s highly successful visit to the UK, the ties between our two countries continue to move from strength to strength. Since its inception in 2007,

recent escalation in social media use by businesses and consumers alike, and the new but widespread assumption that social media – as we know it – will become an increasingly important market channel. He further challenged the safety of that assumption by presenting a variety of high-impact potential outcome states in which social media structure, function, and importance could change in the future. In many of these scenarios, the social media marketing strategies of inflexible organisations would be put at high risk of failure. Additional food for thought was provided by practitioner keynote speaker Ali Faour, a Director at Memac Ogilvy who shared his insights from

the Cass Dubai EMBA has striven to meet the needs of business executives in the Middle East and surrounding regions and I would like to congratulate our students on successfully completing the 24-month course.” Cass Dubai’s EMBA offered specialist Islamic finance and energy modules and offers streams in general management and leadership, mainstream finance and entrepreneurship. In 2012, the Financial Times ranked Cass Business School fourth in the UK and tenth in Europe. The Cass EMBA offered in Dubai is a flexible part-time course aimed at managers in the Gulf region who wish to accelerate their career development while remaining in full-time employment. Its state-ofthe-art campus was opened in the DIFC in 2007 and has been home to over 300 executives and professionals studying on the internationally acclaimed Cass EMBA programme.

over 19 years of regional marketing, public relations, and corporate communications practice. Using specific examples from his experiences with a range of global and regional brands, Faour discussed how the explosive development of the UAE has been accompanied by a host of marketing industry revelations. He provided valuable advice on using research to better understand Middle East markets and customers. Highlighting the courageous approach of local companies towards marketing and business growth, he encouraged marketers to take the initiative and try out new methods without fear of failure, but rather with a willingness to learn, adapt, and respond.

The chemistry of leadership

Rajeev Kakar, Managing Director and CEO of Dunia Finance


unia Finance looks to launch a new initiative this summer aimed to equip ambitious young people with the skills and

knowledge required to become future business leaders – Young Business Leaders Programme. The programme takes place over three weeks between June 30 and July 18, and will work with a select group of first and second year university students, as well as Year 11 and 12 high school students. This provides them with early exposure to what it takes to be a leader in the world of business and entrepreneurship. During the programme, students will learn how to establish, grow and lead a company, along with developing other key business skills, such as identify and capitalise on new opportunities, learn how to allocate resources effectively, work as a professional team, and understand the importance of corporate social responsibility. Many of the programme’s sessions will be run by real life practitioners and subject matter experts, as well as industry role models and successful entrepreneurs who will share their experiences in person.

Rajeev Kakar, Managing Director and CEO of Dunia Finance, said: “We are delighted to be launching the Dunia Young Business Leaders Programme. As the UAE looks to increasingly diversify its economy, a key national objective is to focus on talent development programmes. Initiatives like this will help provide the early platform to expose our youth in their formative years, so that they can prepare and equip themselves to be the business leaders of tomorrow.” He further added: “The UAE market, and the global economy, needs a generation of job creators, and not job seekers, who are entrepreneurial and equipped to start new ventures, lead enterprises of the future, and to establish a new momentum for growth that our world so critically needs. I therefore encourage all students who are ambitious and keen to get an early insight into the world of business to sign up for this selective and insightful programme, being offered on a complimentary basis by Dunia for a group of ‘high potential’ students.”

‘Creating rivers of money’

Raising financial capital

‘Inspiration, concrete thinking and networking’ are three key tools that can help an entrepreneur or an SME owner leverage his or her business success. With keynote speakers, expert panellists and regular coffee networking sessions, ‘The Entrepreneur Forum’ by du, effectively provided all the three tools, at the Ritz Carlton, DIFC. What’s the secret behind an entrepreneur?

Interestingly, the event brought to light the fact that while there are several qualities that make an entrepreneur successful, there isn’t any one ‘foolproof combination’ that guarantees success. This was evident from the stories that several speakers shared during the Forum.

For instance, Deirdre Bounds, one of UK’s top entrepreneurs and keynote speaker at the event, was able to capitalise on the gap in the market by her power to ‘always say yes’ and her undeterred determination in the face of challenges. Her courage, enthusiasm and ability to understand the market helped her create the largest gap year travel company.

On the other hand, Waleid AbdulKareim, CEO of OnTime Group, emphasised that his love and passion for his brand motivated him to keep going and made him what he is today. He added that it was important for any entrepreneur to believe in what they were doing and enjoy it; this would ensure that they succeed no matter how hard the journey gets.

Getting financial funding and suitable investors is something that has continued to be a major challenge for SMEs and entrepreneurs across the region, and this emerged to be one of the main topics of discussion during the event. AbdulKareim, sharing his plans for the future, said that they would be looking at potential investors – and possible NASDAQ listing – in order to gain some additional funding for the company: both strong options for SMEs looking for financial support. Additionally, Donna Benton, Founder of the Entertainer, explained how she secured funding from Abraaj Capital to expand business operations. She further expressed that the process of global expansion is definitely expensive, especially for SMEs, and business owners should take one step at a time in order to move ahead.

June 2013


Banking for business

Attracting finance - a case of walk, don’t run! It’s inevitable that owners of SMEs will be attracted by the wealth of glamorous associations surrounding the word ‘entrepreneur’ – but the reality is that when it comes to getting finance from angel investors or a bank, it’s far more productive to focus on a cluster of much more down-to-earth essentials. Here’s an action checklist of the factors that will boost investor appeal and strengthen the financial operations of your business.


hero, a figure of indefatigable capability who will single-handedly transform the SME sector. An increasing number of university courses promise to teach the key skills of ‘entrepreneurship’, which is packaged and processed as a modular discipline which can be learned - so the marketing story goes - in much the same way as learning Hindi or French. Yet while it’s debatable if the talents and attributes of an entrepreneur can actually be taught at all - is the entrepreneur born, not created? - the fact is that in following such as aspirational goal, many of the more relevant and practical day-to-day skills of business management are overlooked. The irony is that these are the very skills which are most vital in attracting the funding and investment which is the ‘holy grail’ of any SME’s survival and prosperity. Using time effectively

Before looking at the core attributes that are likely to attract a would-be investor,

There are a set of five or six (relatively simple) actions that can make a dramatic difference to the likelihood of financial failure or success.

“With his vision of ‘one person, one computer’, Steve Jobs literally changed the world and became a billionaire. But most company owners would be happy if they could change their own world and attract a cluster of good investors” - Jack Welch, former Chairman and CEO, General Electric


nyone living in the GCC will be familiar with the rapidly-growing cult of the entrepreneur. The entrepreneur is seen as a

it’s important to emphasize that one of the paramount responsibilities of the SME owner or director is to use time as wisely and profitably as possible. In reality, there are a set of five or six (relatively simple) actions that can make a dramatic difference to the likelihood of financial failure or success. None of these actually have anything to do with being an ‘entrepreneur’ - instead, they are immensely practical steps which may not in themselves have much glamour, but are powerful tools for leveraging the results you want. If, however, you still want to attend a course on entrepreneurship, you might want to pause and consider the following facts from the career of Steve Jobs, perhaps

the greatest true entrepreneur of the modern era. Will you be able to follow these achievements, or will your time be better spent putting in place quite modest initiatives designed to leverage significant sums of investment capital? Profile of the classic entrepreneur • At 20 years old, Steve Jobs invented a circuit board for Atari that was so perfect that it removed 50 transistors from the existing manufactured version. • Only four years from the foundation of Apple, Jobs employed more than 3,000 sales people across the whole of North America. • During his 11-year exile from Apple, jobs acquired a majority interest in 37 companies and bought 14 outright becoming a billionaire. • Between 1997 and 2011, Jobs took Apple from near-bankruptcy (ranked 297 in the world) to being the world’s most valuable traded company, adding US$254 billion to its value. Perhaps you can equal or exceed these achievements? The reality is that whether you can or not, your best starting point is to focus on the fundamentals that will build your business’ financial platform. The quest for investment – an SME factfile

These are the actions and the thought processes that an SME can take to ensure it’s best-placed to secure investment. • Know when to borrow Borrowing is a serious undertaking, not to be entered into lightly - so it’s vital to know when to borrow and to understand when it’s not necessary or appropriate. For example, perhaps you already have a level of informal funding from family or friends, and - at least for the time being - that’s enough to fuel your business plans? Or you suspect that in the medium term, you might not be able meet the repayments that a loan will involve – perhaps a key client account isn’t looking healthy and could endanger your cash flow and ability to repay a loan? Borrowing is more appropriate when you’re approaching a key stage in the business’ development. Perhaps you need to expand your premises and acquire new

June 2013


Banking for business

plant and equipment; or need the funding for an R&D programme; or want to upgrade a small fleet of vehicles. Alternatively, you might want to or reinforce your market share with increased production volume and aggressive marketing. All perfectly good and credible reasons to apply for funding, and examples of where a fresh injection of cash can leverage your business’ growth to the next stage. Remember, it always pays to be aware of the exact purpose of the borrowing. Being quite clear and specific in your goals is the first step to acquiring funding - and helps ensure that you will be well-placed to repay a loan as the advantages of those initiatives click into place. • Decide how to borrow There are basically two main types of lender: a risk partner and an investment partner. A classic example of a risk partner is a bank. The bank is risking its own funds by making you a loan. Although it stands to benefit if things go well - and your business repays the loan plus interest - it doesn’t have any organic involvement in your business and its shareholding. So it won’t receive any quantum, critical benefits if you break into a new market, or launch a new product with great success - it will just keep on getting its loan repayment until the loan is paid off. The great advantage of a risk investor from the standpoint of an SME is that the arrangement is very ‘clean’ - it doesn’t warp the structure of your business or the composition of the Board. You receive the funds, repay the loan and then both parties simply walk away. An investment partner, however, will in most cases receive a seat on your Board of Directors and may influence the development and day-to-day running of the business for decades to come. Of course, this can be very advantageous if the individual has considerable skill and also gets along with the other directors. Consider, though, that if there are problems, they may literally tear your business apart. There are several different types of investment partner. The phrase ‘angel’ investor is becoming increasingly common, and this refers to a wealthy individual who specializes in investment opportunities. This will usually involve specific types of company, such as, eg, hi-tech businesses, media production, or aviation services. So it’s important to know what the


specialisation is before you make the - Audited figures showing current approach: a hi-tech specialist isn’t going profitability and cashflow to be interested in your plans to launch a - A full review of internal and external risk motor fleet service centre. factors So-called ‘crowd’ investment is also - An analysis of creditors, receivables and becoming more widespread. Here, you the viability of chosen key markets register your business with a web-based platform which literally advertises your Whereas an investment partner, who will quest to a membership base, with the be entering into a closer (and potentially aim of finding a cluster of investors who longer-term) relationship with your contribute a relatively small sum each business, may look for far more intangible (perhaps US$10-20,000), until your factors, such as your character and proven investment target is reached. Repayment track record; the commitment of personal of sums invested is then managed by equity; how passionate you are about the accountancy software which is able to track enterprise; and the positioning and market the progress of each investor’s entitlement. viability of your business concept. In all these respects, the role of the Business Plan is paramount. It should be crisp and clear while providing (through its Mission Statement and Corporate Values) Your best starting a snapshot of your ability to be a visionary point is to focus on the predictor of markets. fundamentals that will Of course, the investor will be looking for proof that he/she will exit in the future build your business’ with a significant return on the investment financial platform. - so there will also be a requirement to see audited figures at the earliest stage possible, as proof of the Directors’ credibility to work Another option is corporate investment as astute financial managers. - finding a company who will invest in your business, typically because it wants a • Get prepared! foothold in a different market, or specializes The more prepared you are, the better you’ll in growing start-ups in its sector. This is the be perceived and the greater your chances most ‘adult’ style of investment: you will of success. Key factors in the preparation typically need advanced strategic skills to process include deal with a corporate investor of this kind, - Being ready to give a clear, concise who may want to exercise increasing levels and effective presentation on why you of control, or who could potentially sell-out require funding and precisely how it will the interest when their own business in be used. - A mentality of ‘if in doubt, ask’: always under pressure. make sure you’re very clear about what is being discussed. • Know what the lender is looking for Given that some types of lender require an - Be proactive! Whether you’re dealing organic, structural relationship with your with a bank, finance house or investor, business while others take on risk with volunteer information - rather than limited returns, it’s no surprise that they wait to be asked - and err on the side will be looking for rather different things of too much detail, rather than too when it comes to evaluating your approach. little. This not only shows that you’re A bank, for example, has to mitigate its prepared, it demonstrates that you take risks in the best way it can. This means that the relationship with the bank seriously it will require a good deal of ‘proof’ of your and view it as a long-term partner. ability to repay the loan, as it calculates its likely ‘Risk to Return’ ratio. It will want to • Be as professional as you can – act like acquire as many facts about your business a veteran as possible, always with an emphasis on There are also a set of specific initiatives you validating assets, plant and equipment and can take that will put your enterprise in a analysing how your money is being spent. good light and show that you can work as a So Factors here will be: credible trustee of the sums involved. These

will also be invaluable in giving structure to a growing business and ensuring the best chances of transition, survival and growth. For example – Appoint a Chartered Accountant to the Board of Directors

Many businesses that have reached the stage of appointing a formal Board often forget that the most important skillset on that Board is an experienced accountant. Clearly, if an investor sees that his or her money will be properly managed by a qualified accountant, there will be a greater chance of securing funds. A Chartered Accountant will be comfortable at managing key business functions such as financial reporting, auditing, forensic accounting, corporate finance, business recovery and insolvency, or accounting systems and processes. Also, he or she will be able to prepare financial statements, including monthly and annual accounts, as well as financial management reports. These are the very lynchpins on which your application for finance from investors will rest. Start keeping a formal set of Accounts from Day One

How can anyone invest in your business if they don’t know precisely how it’s performing? In other words, how can they invest if they don’t know if you’re capable of repaying the investment and the investment premium - and when? Without a formal set of accounts, an SME is not a proper trading entity: you might attract investments from friends (or friends of friends), but certainly not from a serious investor, a bank or a venture capital firm. In other markets, the presence of taxation would coerce a business to put together a set of accounts as a first priority. It will repay you time and time again to do so here, and as a matter of urgency. Once prepared, these accounts should be audited and reviewed every six months. Protect receivables with Trade Credit Insurance

Late or non-payment of receivables can be a powerfully destructive force in the life of an SME - especially since receivables can account for up to 40 per cent or more of a company’s assets. Trade Credit Insurance (TCI) exists to protect these valuable outstanding sums, and it’s especially

important in the life of an SME, because even one single financial default from a creditor can often disrupt a company’s success and growth. TCI in effect shields both the cash flow and the profitability of an SME, and while it’s often used for protecting foreign trade (and in this capacity it’s known as Export Credit Insurance), a large segment of the market uses TCI for protecting domestic business as well. TCI transforms the sum total of the book of receivables into workable collateral, which means banks are more willing to provide finance, given the dramatic reduction in risk. Compile a risk audit

When presenting your business plan, attach an appendix compiled by an authorized risk manager, which lists the raft of key risks confronting the business and how each of them in turn has been addressed, with a proper solution found. These risks can include organisational risks, endemic to the business sector or posed by competitors, risks involved in plant and machinery, property risks such as fire and security, or financial risk posed by lack of cashflow and capital. Spread the exposure with a raft of smaller investors

The more investors you have on board, the less risk each of them faces (which is precisely why larger companies invite share issues and often want public status -

they are leveraging growth while spreading risk). This is bound to be an influential factor when approaching a bank: the simple fact is that the bank’s interests are better-protected if a small raft of investors is already on board. Also, this can be a catalyst for ensuring better cashflow in the business and a better ability to leverage market opportunities and product development. Another step in the right direction is the use of ‘Third Party Funding’ - an investor-facing insurance policy that ensures investors are compensated if a key person in the SME falls seriously ill, or passes away. Again, more comfort factor for a bank reviewing a loan application. Start as you mean to carry on

The steps outlined above position your business as credible, responsible and aspirational. They also set the stage for a basic level of corporate governance - the valuable internal discipline of ensuring that everything in your house is in order, which will actually become a legal requirement as your business grows in size and stature. This is in itself another reassuring signal for banks and corporate investors, who can see that the business is ready for the ‘next level’ of funding, which - according to all the evidence - will be used in a businesslike and correct way. What’s more, once you receive that funding, perhaps you will be on your way to becoming something of an entrepreneur…

June 2013



From cradle to global As Director, Strategy & Policy Division of Dubai SME, Alexandar Williams is at the epicentre of the initiatives designed to boost the local SME agenda and give businesses a better platform for innovation and growth. We asked him about the role of Dubai SME and its practical value for business owners and directors hungry to upscale their companies and find a workable raft of operational solutions.


irst things first. Coming from 17 years of work with the SME sector in Singapore arguably one of the most developed SME markets in the world - Alexandar Williams is in no doubt as to one of the key factors distinguishing the role of SME development in the GCC. He comments that: “Entrepreneurship in the GCC is driven mainly by opportunity, rather than by necessity. This gives it a certain unique character, but means that many of the entrepreneurs who will see a ‘greenfield’ opportunity won’t always have had prior experience or have the skills to develop their businesses at the operational level. For example, they may not be sure how to build an effective team, or manage cashflow optimally. That’s why one of the key functions of Dubai SME is to help entrepreneurs improve their management and operational capabilities, build capacity, thus ensuring that there’s a better chance of a business idea taking root and being executed effectively.” How does this impetus for SMEs break down in practical terms? We asked Alexandar some questions about the practical, day-to-day benefits of working with Dubai SME, along with the role of the Dubai SME 100 rankings. What is the purpose of Dubai SME and what is its broad strategic direction?

“Dubai SME exists to build an initiative around entrepreneurs and established SMEs that are willing to start and invest their passions in growing their


Alexandar Williams, Director, Strategy & Policy Division, Dubai SME

businesses. Our role is as an enabler businesses. Whatever the size or sector What’s the top challenge that SMEs and a facilitator for the development of your SME, you’ll have a solid business face when accessing finance today? of the entrepreneur as a person, their platform behind you.” How can they overcome it? businesses and their organisation. Our “It’s the same story time and time again – a end in mind is to seed, grow and develop Do you agree that the UAE has a much lack of proper financial book keeping. If as many SMEs that can add economic broader definition of SMEs when I was an investor and I wanted to invest value to the Emirate’s economy. This compared to other parts of the world? in your business, my first request would is something very significant, because “We arrived at our definition of an SME be to see evidence of your financial our research shows that 95 per cent of from looking at the definitions used in documentation and accounts if there are all businesses in Dubai are SMEs and 42 different countries. We felt that the any business activities or events. If I was that’s a massive share of the local market. EU model was one of the most relevant bank, it’s only natural that I would want In terms of how we work, we strongly because it looked at the number of to get a clear picture of your financial represent a culture of transparency employees, and included this in its performance that is credibly certified and sharing, and we want businesses definitions, alongside the actual turnover by a third party auditor. So we always to feel very comfortable in their dealings of the business. This is important, because emphasize that it’s vital to get into the habit with us. We’re still quite a new entity you could easily have a trading business, of keeping proper accounts from Day One, where the whole Dubai SME sector for example, which might have a turnover even if you’re just at a project phase and is concerned and it’s really all about of AED 100 million, with only three or four starting-up operations. In other countries, building trust: this is very important. employees. But it wouldn’t share any of the presence of taxation means that you Companies are encouraged to have a the values and challenges of other SMEs have to get into this habit early on. Always two-way dialogue with us; we’re here which might need 45 staff to generate try to do the same here, as well – because to help - don’t think of us as just a that turnover. Needless to say, we also if you don’t, it will mean you would have a one-way street into the Government. adapted the definitional characteristics harder time trying to build your financial We also seek to learn continuously to the economic structure of the Emirate story. Remember this: The financial story is really what your company is all about. from the markets, the businesses, the to reflect realties on the ground. “It was important to us that if we were entrepreneurs, the SME CEOs and “For a company to be featured in the the industries they operate in; so the going to create a really strong template Dubai SME 100 ranking, we require exchange of knowledge is vital for our for SME development, the staffing factor three years’ externally audited financial establishment’s development as well. should be an ‘and’, not an ‘or’.” accounts, because we believe this is the best way to determine the success and We don’t claim to have monopoly of knowledge of entrepreneurship and What would you say about the growing viability of the SME, before anything else.” SME development.” popularity of entrepreneurship at the cost of effective management skills?

What do you believe is the most critical

“It is well documented and discussed in stage in the growth curve of am SME? public discourse that in the UAE and the “At Dubai SME we take the view that if region at large, there’s a general fear of you can survive the first three years, The first thing I should say is that we the risk of failure in starting one’s own you are likely to survive, and perhaps support the Emiratisation of business, business. (This is one reason, for example, break even in 5- 8 years. Statistically, by way of encouraging as many Emiratis why each year so many nationals prefer the first three years are critical, and to see entrepreneurship as a preferred to join the public sector). We therefore within that curve, there is a high stress choice in life, especially the younger promote entrepreneurship in the factor. This is why a number of SME generation. So if you’re an Emirati and colleges and recognize local business organisations offer ‘incubator’ services you own an SME - or you are planning icons and local entrepreneurs who that help protect the new-born SMEs to start a business - there’s a variety of have started and grown a business from the harsh realities it is likely to face, services that we can offer you. These project. To increase the chances of ensuring it’s better-prepared in terms of include waiving of set –up fees, visa success, we guide the entrepreneurs in skillsets and increasing the chances of fees, various subsidies, including their development journeys, giving all survival. At Dubai SME, we operate an introductions to potential investors and the necessary knowledge and tools to incubator that enables and guides the access to government contracts. If you execute their ideas”. local entrepreneur to stand on their feet are a Dubai SME 100 company, you get a “We also try to spread the awareness so that when they graduate within three suite of advanced corporate development that when it comes to building a business, years, they are in a healthy state in the services such as business valuation, it’s advisable to employ people who are open market. financial diagnostics, corporate smarter than you! These people will be “Our aim is to be able to guide & enable governance and risk management to the lifeblood of your business and will the SME “from cradle to global’. We can enable your growth. leverage your success in a way that you give the SME access to a spectrum of Another aspect is the value of being couldn’t have dreamed was possible. So, services that can play a crucial role in this part of a network: the moment you don’t be bound by your own horizons development, responding to the needs join forces with is, your company isn’t and; want to always be the best - employ of individual businesses and providing alone anymore, but can reap all the people who are smart enough to turn a direct channel to the expert help that an SME owner is likely to need.” benefits of being with other like-minded your vision into a reality.” How does Dubai SME give me, an SME owner or director, tangible benefits in my day-to-day running of the business?

June 2013



The business of Any SME looking for an infusion of dynamic fun and energy should walk into the offices of biz-group. It’s hard to ignore the vivacious décor and the attentive reception staff. SME Advisor met with their equally vibrant founding personalities, Hazel Jackson and Hazel Cowling, and discovered that this energetic appeal is definitely not limited to their office walls…

“Without passion, you don’t have energy, without energy you have nothing.” – Donald Trump

learnt that verve and vitality are important factors to incorporate within a business – something that they have done with a good deal of success. “The fun family feel is something that attracts people to your organisation and makes them want to stay with you,” says Hazel Cowling. While this approach is quite deeply applied within their team of employees – apparent from their daily 9 am team huddle tradition – it’s also something that has trickled down to their clients. “Fortunately, we are now at a stage in the business where we can select clients that want this energy and vibe from us. We consistently get client feedback that reflects this,” explains Cowling.

“The intersection of doing something that you are good at and something that you are passionate about is bound to create a spark of energy and fun,” says Hazel Jackson. At biz-group, this is exactly the case. The firm has created a niche for itself in the market with its training, business consultancy and personality development programmes. Yet it’s more than the sum of all the individual parts. It’s essentially a cross between a traditional management consultancy and a team building/ leadership firm – a business that can leverage your growth on the path from startup, small to medium. Values Having been in the business for around So, what’s the secret behind this approach? 20 years, the dynamic duo at biz-group have “One of the main element was values.


Our values are something that we hire on and fire on. They are something that align our goals in the same direction and create the family feel; giving the employees a clear framework in which to behave,” says Cowling. The company’s six values, listed across the office, are a constant reminder of what brings the firm together. “We spend a significant amount of time in our business rewarding, creating experiences, storytelling and motivating based on these six values. We realise that you can train skills but not values,” adds Jackson. The concept of ‘corporate values’ is often talked about and, for an SME owner, it is natural to wonder – how important are values in the context of my business? Values form the core of an SME and are the DNA of the business. “It doesn’t matter how small your business is, you have to set your values; each business should

Hazel Jackson, CEO, biz-group

have about five to six values. It is a very structured process.” This process can be broken down into three key steps: • Setting the values: Firms need to steer away from the stereotypical values such as ‘integrity’, ‘quality’, ‘team work’ and so on. “We often see SMEs following the popular trends and aping the larger corporations. My advice to them is to keep their identity and be original – while setting values or otherwise,” says Cowling. Values are ideally phrases and not individual words. Business owners need to uncover the commonly shared qualities across the organisation that essentially form the foundation of the business – these evolve to become the values. “Sustainable values are discovered not defined. They are already there, you just need to identify them,” adds Jackson. • Validating the values: The values which are discovered should not be aspirational values – they need to be realistic. “It is important to validate them to see if they genuinely exist in the organisation and if they actually mean something to the employees,” says Jackson. • Following the values: After the values are validated, the most crucial part is ensuring that they are implemented across all aspects of the business. “We hire on them, fire on them, and also spend money on them,” says Jackson while Cowling adds, “In fact, even as founders, we have to make sure that all our business decisions are aligned to our core values.”

Team management just clients but our employees as well,” While strong values have played a critical adds Jackson. With this example, there is role in biz-group’s success, there is a lot an emphasis on the importance of nurturing more that has empowered the journey from employees and building a bond with them. a startup to a listing on the Dubai SME “It is vital to surround yourself with a team 100 ranking. What catalysed their growth? that wants to continually grow and push Jackson quickly replies, “A lot of hard work boundaries along with you,” says Cowling. and having fun while doing it alongside a team who was ready to do the same!” The A strategic plan duo attribute a substantial amount of their Finally, one of the most powerful tools growth to a very talented team. “We have that has facilitated their business growth built a team that allows us to step back as is their one page strategic plan – an effective founders. We love to see our employees go tool for SMEs. This business solution, in out and perform – sometimes better than partnership with Verne Harnish, Founder us! Business owners and entrepreneurs of Gazelles Inc., is something they describe have to invest in their team and give them as the turning point of their business. the space to grow,” says Cowling. She relates What is the one page strategic plan? this to the ‘Rockefeller’ phenomenon – the “This is a one page spread document with oil billionaire who credited his success to the fact that he employed people smarter questions for an SME to answer which than him. include their values, purpose, promise to When asked to describe their company, their clients and what they want to achieve. Jackson says, “At biz-group, we help you This starts with a three year strategic plan leverage your performance. Our three which is further narrowed to a year, followed divisions are biz-strategy for business by a quarterly vision. The one page plan performance, biz-ability for people ties everything neatly together into one performance and biz-events for team small document which is still immensely performance. A combination of the three meaningful to the business. It also cascades down very well across the organisation,” explains Cowling.

Why is this important for an SME? “This is essentially to discipline the undisciplined entrepreneur. It helps SMEs uncover their real potential and put things into perspective; they start thinking about key aspects like expansion plans or differentiating factors. Apart from offering this solution to SMEs, we actually apply this in our business too,” adds Jackson. Another tool, supporting the strategic plan, is the ‘SWOT’ approach which the founders say they have now revised to ‘SWT’ – strengths, weaknesses and trends. Hazel Cowling, Partner & So how do they keep up with the market Consultant Director, biz-group trends – especially with the added responsibility of being a Dubai SME 100 is what empowers an SME to accelerate ranked company? “We are definitely nervous performance and we apply this within our about the new rankings but in a positive way business as well.” – it reminds us to be competitive and nonWhat is interesting, however, is that the complacent. It keeps us motivated and on founders apply these leadership, training the top of our game,” says Jackson. and business development strategies first Cowling adds, “For instance, since being hand in their business. For instance, they previously ranked on Dubai SME 100, we have a dream book in the office where all have constantly grown and evolved. We employees record their dreams or wishes have introduced several new products, and, as a team, they try to help one another business simulations and business events. in fulfilling these. “We are in the business What’s more, our theme for this quarter is to make an impact on people and it’s not Innovation for growth!”

June 2013



Are you a high performer? What would you say if there was suddenly a completely new, dynamic way of finding customers, getting premium services across the raft your business’ needs and benefitting from partnerships with the smartest SME operators in town? Well, there’s now a dramatic new business concept that’s arguably the most important commercial model for decades - the High Performance League (HPL). Will your business be part of the HPL challenge? We spoke to the concept’s founders, Omer Ghani, Reem Bin Karam, Omer Alvie and Mohenad Itayim… “There’s no limit to what you can achieve if you’re prepared to work as part of a team” Tom Peters


t’s taken as a given that every business will be created alone, compete with other businesses alone, and succeed (or fail) alone. Far from collaborating with other businesses, each company sees them as the enemy, to be out-marketed, outstrategized and outsold. But what if suddenly there was new paradigm - a dramatic seachange that encouraged active co-operation, where the accent was on teamwork with other companies and where the rewards were far greater than any one single entity could ever achieve? That’s exactly the quantum breakthrough that the founders of the High Performance League (HPL) - Omer Ghani and Zaigham Khattab - have achieved. A paradigm shift where SMEs become team players, literally joining forces with other businesses and then complementing each others’ strengths and weaknesses. Their team is then pitted against 10 other teams to see which one is the best overall performer - the Champion of the HPL. During the competitive process, of course, the synergies between team players push each and every one to a higher and


higher level of performance, raising the bar collaboration, the three pillars of business to a level that’s simply unimaginable in the performance.” traditional world-view of the company as a solo entity. An idea whose time has come? Where did the idea come from? HPL Absolutely, judging from the results of the GE founder Omer Ghani comments that: “We Global Innovation Barometer 2013. 88 per had to deliver on an extremely challenging cent of UAE respondents said that their firm project for one of our clients - building take- had increasingly been looking at innovation up and awareness in the business sector - and through the collaborative angle and 91 per we saw that in the ‘real world’ nothing had cent of respondents agreed their firm would the resonance or appeal of sport. We then be more successful at innovation through found a way to translate the central pillar of partnership than if their company went sporting contests - the team competition - about it alone. into the business arena. Suddenly, all the Plus, of course, there’s another hook traditional limitations disappear, as the SMEs here, too: the HPL physically addresses the cease to be wary of each other and instead, challenges of today’s business realities and see the opportunities for each of them to delivers the sought-after results of job growth, plug a recognised weakness or market gap. increased economic activity and social wellThis is new corporate thinking, and you see, being. What’s more, the top performers in it only changes everything.” the HPL are supremely well-placed to catch The reality is that the team structure the eye of larger corporates and become gives each SME a ‘licence’ to collaborate, their preferred innovators and contractors/ providers of choice. leveraging the skills and connectivity of its fellow team members (a 10-fold boost), The HPL therefore becomes a nearwhile the league structure and visibility perfect incubator for talent evolution and of performance drives the competitive - challenging businesses to raise the bar and spirit that holds the teams in place. Omer lateral-think collective solutions - brings the comments that: “The big idea here is to Olympic spirit to the business world of Dubai. bring the spirit of sport and its competitive dynamic to business and utilise the visibility Too good to be true? effect to drive leadership, innovation and Putting on the cap of ‘devil’s advocate’, SME

Bringing the resonance of team sport

Advisor spoke to a selection of SMEs about the potentials and pitfalls of the HPL as they understood it. We then turned them into questions for the HPL’s founders, Omer Ghani and Zaigham Khattab. The answers they gave ranked amongst the fullest and most helpful that we’re received to date. • If I’m the owner/director of an SME, how much of my time will membership of the HPL take up - especially in terms of joining-up? The most interesting and compelling aspect of HPL is that there is no additional time investment required by time-constrained SME owners. SME owners/management teams spend almost all their time on business development, operational execution and visibility. As a Team Player in HPL, they will continue to spend time on all the same things, except now, they will be able to increase the outcomes from each activity manifold without incremental effort. How? First, with regards to business development, they will have immediate access to the customer base of each of their fellow team members, which means a ten-fold increase in customer outreach. Then they will have access to the 110 other Team Players (SMEs) as well as to the 11 Team Owners (the large

corporate entities), some of whom might be potential customers. By eliminating the time required to search for all these customers, the HPL actually frees up time for SME owners - enabling them to spend more time on physically selling to this new customer universe. Finally, each Player is operating with 10 other team mates with whom it collaborates by executing ideas to acquire new customers, create new markets, and sell more to existing customers – resulting in more efficient use of their time (more with less!). Second, with regards to operational execution, SMEs spend a considerable amount of time looking for the right supplier

Omer Ghani

at the right price at the right time. Through the supplier portfolio of the League and the supplier base of all the team members, each Player will now have access to better-priced and better-quality services without having to look for them, or negotiate for them, or even develop transactional processes for them. In HPL, finding the ideal supplier will be

achieved at a fraction of the time compared to doing it alone. Resulting in freed-up time. Finally, SMEs spend a lot of time getting media to provide visibility for their brands, but on most occasions, they are not able to do so because of resource limitations. HPL delivers continual, rich and relevant visibility, through HPL Media, without the need to invest time or money. This is high impact and further alleviates the time resource constraint. At the joining-up stage, the League manages the process of team formation. Once teams are formed, the League has an activity calendar in place to foster collaboration and get the Team Players to start working with each other. Initially, it’s fair to say that SME owners/CEOs will indeed need to invest time in team formation and developing collaborative projects. The amount of time invested varies between eight to 12 hours in total over a period of four to six weeks. The payoff of choosing the right team members is significantly greater than the time invested. • What are the financial rewards of HPL League membership and how will these be accrued? The League is a business performance accelerator - delivering faster and more profitable growth. Team members will achieve outcomes of cost savings, revenue enhancement access to capital, and visibility (which drives revenue, capital and talent). Cost savings are delivered through HPL’s portfolio of suppliers as well as the portfolio of suppliers of each team member, by providing goods and services at preferential pricing. Suppliers are eager to engage with HPL due to the aggregated demand of teams. Access to an engaged customer base of each team member as well as collaboration amongst team members, will enable customer acquisition at negligible incremental cost. So each team member will enhance revenues exponentially and cost-effectively. Finally, capital providers are focusing on identifying high performance SME’s where they can deploy their capital. HPL is the platform that is aggregating 121 of the best companies in the country engaged in exponentially growing their businesses. It is expected that capital providers will engage with League companies to provide funding. HPL Media will deliver visibility to teams. Visibility enhances awareness and brand equity, both of which lead to increased

June 2013



HPL believes that any player or owner should stay in a team and in the League only if there is business advantage being delivered through participation.

customer acquisition and therefore, revenue. Teams will not accrue costs for this visibility. • What are the criteria that allow my own company’s performance in its team to be measured and then combined with the other ‘players’ in the team to give an overall result? (In other words, what have you established as the measurable dynamics?). The Player Performance Index tracks the performance of each SME. This index is a composite of a set of financial and nonfinancial metrics that captures a 360 degree view of the business. The financial metrics are reported by each Player directly to the League, while non-financial metrics are generated through surveys and polls against specific KPIs. On the day the game starts, each Player will have the same index value that will be based on the base financial metrics on that date. Thereafter, each Player will report the periodic growth in its financial metrics while the League will conduct the surveys to establish improvement in non-financial metrics. These will then be complied to compute the new Index in each period. All metrics are provided by each Player to the League under a tight confidentiality agreement and are never reported in public. The Player Performance Index of all 11 Players in a team are then added to compute the Team Performance Index. It is the Team Performance Index that determines the ranking of each team and is publicly reported.

• When do you envisage the HPL going ‘live’? September 2013. • What are the requirements for joining the HPL? Is membership via a contractual arrangement? Yes, becoming a player or a team owner is via a contract.

to identify the remaining sub-categories as well as SME’s who could be potential Players. The League then recruits the potential Players, subsequent to which they all collectively choose who will be part of the team. This way, all the team members are choosing companies that add value to their respective businesses and they all get along with each other, ensuring a collaborative environment for the long term. The team formation is based on the insight that industry players know best which sub-categories should be included in their teams and what sort of companies will be suitable for maximum advantage. The League does all the heavy lifting in bringing everyone together. In the long term, the SMEs have to work together to drive advantage, so self-selection addresses this very well. Team Owners have identified which sort of themes they would like to be associated with and during the team formation process, they get involved with the team players in building the teams.

• How is each team built and the balance between businesses decided on? Do you purposely select mutually-dependent firms in each team? Each team is built around one specific business theme. A theme can be in an industry vertical (like Retail), or be composed of companies from different verticals but serving one customer requirement (like Lifestyle). Teams currently under • How long is the competitive ‘season’? formation are Retail, Energy Efficiency and The Championship is over four years, with Sustainability, Outsourcing, Generation Z the HPL champion being the team that (products and services for children), Lifestyle delivers the maximum increase in business performance over this period. and Health and Wellness. Within each theme there are 11 subAt the end of years 1, 2 and 3, an annual categories based on skill complementarity. champion is also announced which is the By including only complementing sub- team that has delivered the maximum categories, the League ensures there are no increase in business performance during competitors within a team. that year. The team formation process is a selfformation process. This means that once a • How easily can I sever connections with the theme has been developed, usually by one HPL if I choose to do so? or two or three companies that join first, Two months’ notice without assigning any then the League works closely with them reason.


• Do you aim to represent SMEs of every size and shape, or is there a dominance of any one size of business? Because the team formation process is a self-formation process driven by the players themselves, we expect to have a good mix of SMEs of various sizes. • Again, do you aim to represent every industry sector, or does one style of industry predominate? The fundamental principle to form a team is that once formed, the team should deliver advantage to each team member by being engaged and collaborating with other team members. Therefore, teams are based on business themes - a theme could be across one specific industry (like Retail, and consist of companies only from the retail sector) or across industries (like Lifestyle, which consists of companies from different sectors). • What level of exposure will my business receive as a result of participating in the HPL, or if I’m in a winning team, for example? Visibility is a key business driver. HPL Media is being formed to deliver maximum visibility to each participant, however, the visibility will be generated only if it’s newsworthy. So a Team, or Team Player or Team Owner that is doing creative, innovative, interesting, inspiring and motivating activities will receive continual coverage and visibility. • Will you both be dedicated full-time to the HPL, or do you currently hold other full-time positions? Yes we are fully dedicated to launching and running HPL. Supported and assisted by all our colleagues in the HPL management team.

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June 2013



Using Trade Credit Insurance Late or non-payment of receivables can be a powerfully destructive force in the life of an SME. While so many businesses go to the time and trouble to protect plant and property, in the GCC less than 0.006 per cent of eligible transactions are protected by any type of credit insurance. Yet receivables can account for 40 per cent or more of a company’s assets - and in many of the world’s most developed economies, it’s standard practice to protect that precious share with Trade Credit Insurance (TCI). How does TCI benefit an SME and play a vital role in protecting cashflow and capital? We spoke to acknowledged expert Shabnam Ansari, Head of Strategic Planning and Special Projects at Nexus Insurance Brokers.


he UAE has invested heavily Small and Medium Enterprises (SMEs) in world-class infrastructure, comprise the backbone of the UAE’s including roads across the economy. For example, it’s estimated that country, seamless seaport in 2011, 78 per cent of the UAE’s GDP was amenities at Jebel Ali, and exported to the Middle East, Africa and state-of-the-art airports and cargo hubs in Asia region, mainly through SMEs. Against Dubai, Abu Dhabi and Sharjah. Due to these the back drop of the UAE being a trading virtuous developments and its strategic hub, and the significance of the SME sector, location between Asia, Europe and Africa, it’s crucial for development of the UAE’s the country offers optimum advantages economy to support the trading activities of for international trade. As a result, the SMEs. This will best be done via benchmark UAE has emerged as a dynamic hub for trade instruments and risk mitigation tools global commerce, with an unmatched - amongst which, Trade Credit Insurance has infrastructure that offers impeccable an extremely important role to play. connectivity for businesses worldwide. Consequently we have witnessed 75 per What is Trade Credit Insurance? cent of Fortune 500 companies establishing Many SMEs are not able to continue their their regional headquarters in the country. upward drive because they have suffered


heavily due to bad debt, stemming out of inadequate credit management of their portfolios. Even a single financial default can disrupt the success of an SME - clouding the company’s outlook for the foreseeable future. How best to take proactive action to prepare any SME which is highly vulnerable to such disruptions in its business life cycle? Usually the largest or the second largest item on a trading company’s balance sheet is the outstanding receivables. In spite of this, it’s quite normal to witness businesses protecting their tangible assets such as property and plant, while at the same time neglecting their receivables which, at times, can represent 40 per cent or more of their current assets. Trade Credit Insurance (TCI), also known as business

credit insurance, export credit insurance or simply credit insurance, is one of the many risk management tools employed by businesses to protect their trade receivables from non-payment or delayed payment. TCI in effect shields both the cash flow and the profitability of an SME. While TCI is often known for protecting foreign trade (and in this capacity it’s often known as Export Credit Insurance), there is also a large segment of the market that uses TCI for safeguarding domestic accounts receivable as well. What kinds of risks are insured?

TCI basically protects businesses against two broad categories of risks: 1) either a buyer does not pay, or 2) a buyer pays very late. A buyer may not be in a position to pay after he has been declared bankrupt or insolvent, if applicable and according to the prevalent bankruptcy laws of any country. Similarly a buyer may opt for a bankruptcy protection arrangement, which permits deferred payments for an extended period. Both instances are covered under a TCI policy. In addition to the commercial risks, TCI also provides coverage against political risks which are defined as financial losses resulting directly from government or political activities in an overseas country (such as government moratorium, nontransfer risks, cancellation of import licence and occurrence of war or revolution). TCI, in a nutshell, also covers the insured against government acts that make it impossible for the buyer to pay. Acts such as war, cancellation of import license or a whole host of government led changes that change the rudiments of the buyer-seller relationship. TCI policies can include a wider range of cover, depending on the circumstances. Such policies are flexible and allow the policyholder to cover the entire portfolio or just the key accounts. The most common type of cover is so-called Whole Turnover Cover, which covers all buyers of the policy-holder. Why do SMEs need Trade Credit Insurance?

SMEs need TCI for a variety of reasons, some of which are mentioned below: Protection against default TCI insures business receivables that in turn provide the businesses with confidence to provide better terms to

Shabnam Ansari, Head of Strategic Planning and Special Projects at Nexus Insurance Brokers

the buyer(s) and hence it facilitates a win-win situation for the TCI policy holder and their client(s). The seller is assured of payment and therefore no adverse interference with their cash flow is expected. The buyer(s) on the other hand, receives better, easier and longer payment terms. By insuring the receivables against non-payment or late payments, SMEs ensures to protect its cash flow and its profit against default. Sales Growth For an SME, TCI underpins the confidence to escalate business development knowing payments are assured. Business expansion can be done through greater penetration with existing clients and/or initiatives to discover new markets altogether, which, in the absence of TCI, were not possible earlier. Without insurance many trade transactions have to be concluded on a pre-paid or cash basis, or not at all. Having such coverage in place therefore permits an SME to sell more goods on credit terms, take advantage of peak sales periods, and develop new product lines or territories with greater peace of mind. It’s because of these reasons that TCI is known to contribute towards increased sales growth to existing and new customers. Improved cash flows Without adequate protection provisions, late payments or non-payments pose a considerable threat to future liquidity of an SME. When an SME insures its receivables against non-payment or late payments, it is basically ensuring its cash flows, since now it can sell on credit, discount its receivables and greatly benefit its cash flows.

Managing credit and hedging risks TCI can act as good financial instrument to hedge risks. Most insurance companies that underwrite TCI policies do so for numerous clients, guaranteeing huge customer debts in many countries globally. Hence they are able to manage and retain a database of hundreds of thousands of companies around the globe with data related to payment experience, financial updates, seller experiences, countries risks etc. When an SME insures its outstanding receivables, the credit insurance company is therefore able to use all this needful knowledge to extend, reduce or decline credit for that SME. This in turn greatly benefits an SME in managing its own credit portfolios, since now an SME is able to find out more about the creditworthiness of its own customers by researching the database provided by the insurer. As a result, the SME is now able to oversee its credit exposures far better than would be possible in the absence of such information. Bank loans It’s ironic that in spite of SMEs’ significant contribution to the UAE’s GDP - estimated to be over 80 per cent - less than 4 per cent of total bank loans are able to find their way into the SME sector. (Although the trend is changing and we have been witnessing greater interest by banking industry in the SME sector in recent years). The fact is, it’s natural for SMEs to be considered as a higher risk, on the basis of the view that small operators have a higher probability of failing. Many risk-averse banks are still providing credit only with stringent conditions attached to SMEs and at times even refuse loan facilities to the SME sector. One of the major reasons is that an SME can’t offer the solid collaterals or hard assets that could be offered to banks as security. In the presence of TCI, banks are more willing to provide finance since the TCI policy can be considered as one of the risk mitigation tools. When TCI covers the accounts receivables of SMEs, the trade debt is transformed as collateral, which can help SMEs to obtain bank loans or influence the size and terms of the bank loan available to them. What are other important aspects of a TCI Policy? TCI as a risk mitigation tool In order for TCI to act as a true risk management tool, it has to function as a

June 2013


MANAGING RISK global scale service – spreading far beyond the normal insurance risk management arena. The key success factors for TCI are the use of sophisticated financial analysis and data management techniques for debts all across the globe, along with local knowledge and research competencies. To evaluate the financial position of buyers worldwide, credit insurance companies have teams based in each of their strategic international locations, with regular evaluation and inspection capabilities. In order to further mitigate risks, other insurance techniques are also employed such as: • Dilution of risk by risk sharing and reinsurance mechanisms • Avoidance of moral hazard and adverse selection • Adequate spread maintenance both locally as well as regionally • Dynamic risk management • Risk sharing agreements • Debt collection. Cost Factors affecting premium for TCI Just like any other insurance policy, TCI is priced on the basis of standard actuarial techniques. Premium is usually charged monthly, and calculated as a percentage of sales for that month or as a percentage of all outstanding receivables. TCI is sold mostly on a whole turnover basis and premium rates are generally given as a percentage of the company’s turnover (including financially sound and weak customers). The cost of a TCI policy is directly linked to the risk any business is exposed to and is related to the amount of turnover that the SME would want to insure. Therefore the premium rate for TCI for any SME would reflect the average credit risk of the insured portfolio of buyers for that particular SME. The premium for one SME would be different from that of another due to factors such as the customers’ locations, the business’ track record in credit management, the nature of customers, the trade sector in which the SME trades, etc.

Bespoke Trade Credit Insurance TCI policies can never be structured based on a product-focused approach. Rather, thay have to be need-based - stemming out of, and suitable to, the needs of any SME. In principle, this makes every TCI policy unique for each customer. Having said that, some trade credit insurers do offer standard policies, but they are not always aimed at the SME market. Although these standard TCI policies are usually structured with low administration, and competitive pricing, such a standard policy may or may not be suitable to an SME depending on the trade to be insured. It’s always advisable to investigate the particular circumstances and needs of the company. The result should be a custom-made policy at a

TCI is one of the many risk management tools employed by businesses to protect their trade receivables from non-payment or delayed payment. corresponding premium. Hence, the role of a well-respected and trusted expert, who can structure a TCI policy while keeping in view the SME’s specific needs and credit portfolios, can never be over-emphasized. Here in the region, it’s always a good idea to consult an unbiased expert with the ability to help and support SMEs by giving objective, need-based advice and able to structure fully bespoke TCI cover (for example, the company I work with, Nexus Insurance, is a leading expert in the field). Outlook for TCI in GCC region UAE as an ideal launch pad for TCI The UAE is seen as the ideal launch

NEXUS Group - Nexus Insurance Brokers is one of the Largest Financial Advisors in the region. offering a composite suite of insurance, savings and investment products to both Corporate and Individual clients from a range of international and domestic product providers. Nexus has around 500 staff members including over 370 qualified professional consultants supported by a cadre of over 100 dedicated and qualified support staff in the Middle East region, offering a broad range of licensed products from regulated providers. With over twenty years’ experience in the GCC (Gulf Cooperation Council), Nexus operations are located in Dubai, Abu Dhabi, Qatar, Lebanon, the Kingdom of Bahrain and Kuwait in order to underpin a professional and high-quality level of service to our clients.


pad for TCI in the Middle East due to its accelerated GDP growth, its perfect geographical positioning, its stable economy and political environment making it a thriving trade hub. In the GCC, TCI accounts for only 0.006 per cent of business in UAE despite there being a phenomenon potential for this type of risk protection. Much more ground is required by national drivers of good business management. Role of the Banking Industry Bank financing has been weak for some time in the UAE and last year it only arose by 3.3 per cent during 11 months of the trading period. However, recent appetite for credit protection has increased as banks seek and can access the safety of insurance before they extend lines of credit. Future of TCI in the region The growth in TCI reflects the UAE’s premier position as a regional and international hub for import and reexports. In the backdrop of increased global insolvencies (expected increase this year by eight per cent) and inadequate momentum of recovery in Europe, there is no reason why credit insurance in GCC shouldn’t experience a boom going forward. According to reliable industry sources, with an estimated market size of TCI in the UAE to grow by 50 per cent within next two years in terms of volume of transactions covered, it is expected that the value of TCI insurance will reach around USD 50 million (AED 183m) by the end of this year. Conclusion TCI provides its clients with the ability to guard against bad trade debt and, once in place, this instrument encourages better and enhanced trade between buyers and sellers. Banks view this instrument positively and provide its holders with better terms knowing the risk is shared between major financial entities in the background. Buyers receive better terms as the seller is confident of receiving their dues. UAE is a hub of business in the region and without TCI-style instruments, the ever-needed confidence in underpinning business risks for SMEs involved in trading activities would be lacking. TCI therefore is a vital cog in the business merry-go-round, with comprehensive benefits for SMEs and many advantages that can be primary catalysts for profitable growth.

June 2013



So long to the silo Is your business broken into ‘silos’ – departments that don’t talk or communicate with each other, where the lack of contact undermines your best efforts to win business or handle customers effectively? We asked biz-strategy’s Rob Haden for advice on how to keep those vital lines of contact open…



ilos. Now there’s a word to get our cognitive juices flowing in a business context. What comes to mind when you think of a silo? Maybe it’s a picture of one of those tall, often cylindrical buildings that are used to keep grain, corn and wheat dry and fresh. Those sorts of silos do a useful job for the farmers who use them: they protect the contents within. In business, however, a silo rarely does a useful job – rather than being protective, a business silo is often obstructive. The term ”silo” has only negative connotations: we use it to indicate that people are trapped in their departments, only looking inwards, disconnected from, and rarely communicating with, people outside their part of the business. Maybe the communication within the silo is good, maybe not. Communication with other departments (we might call it cross-silo communication) is usually poor or non-existent. Now, you might be in a small business and therefore be thinking that this concept of silos does not apply to you. How could it? You’ve got five people in your organisation, so surely that means that by definition you won’t have silos? This is where you might have to examine your thinking a little. I would suggest that if you have five people in a company, all doing their own thing and not communicating with other people, you have silos. Obviously, not very big silos, but silos nevertheless! John Donne (pronounced Dun if you haven’t come across him, British poet, 1572 to 1731) once said, “No man is an island unto himself”. My response would be, “You’re probably right, John. However, one person can definitely be a silo!” How silos come about – look for the warning signs

It may be interesting to think about how silos might come about in a business. Here’s a (not exhaustive list) upon which you might like to reflect in case silos have crept into your business without you really noticing. • Design flaw: when you set up your business it was set up on three floors, or on a number of different sites, so

silos have been inadvertently built into the design. • Evolution: you started in a single office, with a single culture, everyone behaving similarly. Then you expanded into different buildings and each building started to develop its own culture and set of acceptable behaviours. People started to resent the fact that, “They don’t do it like we do – they’re wrong and we’re right!” • Acquisition: you’ve grown your business by buying other businesses, with different cultures to yours, and again each part of

Rather than being protective, a business silo is often obstructive.

the business thinks their culture is right and the other cultures are wrong. Separation: the different parts of your business are geographically removed from each other, perhaps in different parts of the world, with the added complication of differences in national or regional culture. Different systems: different parts of the business have acquired or are using different software, hardware, processes and systems. Once again a battle ensues as each part of the business tries to convince the other parts that their choices are the right ones. Leaders not aligned: the leaders of the business have different values or objectives. Since values drive behaviour, if leaders have different values, this means they will behave differently from each other. As people tend to often copy their leaders, this will mean that whole parts of a company will start to behave differently from other parts. In addition, if leaders’ values differ to a great degree, behaviours that are acceptable in one part of the business

will not be acceptable in another part, and vice versa. With respect to differences in leaders’ objectives, it’s pretty clear that if the leaders in an organisation think they should be marching their people to different destinations, then there should be no surprise when people don’t end up in the same place! Instead, staff members are left wondering where their colleagues have got to! • Competitiveness: you might argue that competition between departments is a healthy thing that helps people to bond and keeps everyone sharp. You might be right; it’s the degree of competitiveness that may become an issue. People want their team (department) to win and by definition for another department to lose. In some cases, it’s not uncommon for one department to actively sabotage another to make sure their own department wins! When people go to such lengths to win at their colleagues’ expense, it’s clear that they have lost sight of something fundamental to the success of their business: namely, that all the people in the organisation are on the same team. By this point you will probably have come to the conclusion that your business is: a) not siloed (in which case, great – you’re obviously doing a lot right in terms of cross-departmental communication); b) siloed to some degree or has just started to show signs of being so (in which case great – you’ve caught it in time and can take steps to do something about it); c) is most definitely siloed and, on reflection, probably has been for some time and you’ve just realised to what degree it’s been happening (in which case, not so great, but at least you’re now acknowledging it and can proactively respond). So what can you do if you have the problem of silos? The solutions are based on common sense and might start with the use of very little financial resources. What may be required is an investment of time and a bit of creativity.

June 2013



Making the changes

I once worked on a project with a water company and the problem was this. The people in the call centre (who were the first point of contact for a customer when that person had a problem) worked in isolation from the people out in the field who had to put the problem right by, for example, mending leaks in customers’ water pipes or digging up roads to find out why a sudden flood had happened. The people in the call centre had to schedule the field workers’ time, so that they (the workers) had enough of it to do the job and also to allow travel between jobs. Interestingly, these people were in contact with each other (so not completely siloed) but their method of communication did not lead to quality interaction. The call centre team would fire out work sheets to the people in the field, who would pick them up on their laptops. The field workers would complain that the call centre staff did not allow them enough time to get jobs done, and the call centre staff could complain that the field workers did not get the job done on time. Looked at from the outside, with a helicopter view, with all the people involved clearly visible, it was obvious that each group did not understand what the other group did. On the ground, immersed in the situation and with no clear line-ofsight between the participants (one group inside siloed in a building and the other outside siloed by mother nature), they literally could not see what each other did, how they did it, or how they related to each other. The answer was pretty straightforward, with a little creativity thrown in. The people on either side who complained the loudest (or, put another way, were the most passionate about the situation) were invited to spend time physically exploring what the other team did (it was the selection of the loud people that we thought was a little bit creative, in case you hadn’t spotted it!). They then fed back to their own teams what they had discovered. It worked far better than we had hoped for. The loud people came back armed with lots of useful insights and changed by what they had seen and heard. Maybe for the first time they understood what really went on in the other team. And because they were changed but still loud, they felt


obliged to tell their colleagues what they had learned – loudly! The project then was taken in-house, and the exchange procedure was adopted as policy, affecting the culture of the organisation in a small but significant way.

The solutions are based on common sense and might start with the use of very little financial resources.

Rob Haden, Director of Strategy and Executive Coach at biz-group FZ LLC

One of the keys to breaking down silos, as illustrated by that story, is that you have to promote an increase in understanding between the people in the silos, by whatever means you are able to dream up that is cost effective and works for the people involved. Spreading the word: internal marketing

Often people in one department complain (like the people in the water company) that they do not know what other people do, let alone understand them as people. It still surprises me how many times I have asked leaders if their organisation has a database, easily accessible to all staff, of pictures of their staff with their job details attached, so everybody can get to know what everybody else does.

In some cases there’s a good reason for not having pictures of people all in one possibly easily-hacked place. However, in most cases companies simply have not thought about this as a simple but effective way of letting people know who their colleagues are and what they do – especially if they are spread globally. When we write an e-mail or make a call to someone we haven’t met, we very often make up a picture of the person in our heads. Why not give your staff the right picture to work with? Having a “rogues gallery” of your staff may not be pretty (we all know what passport photos look like!) but it can be extremely advantageous! Some companies are taking this idea further by producing videos of their staff talking not only about their work, but also their hobbies and interests outside of work. Great idea – the more people know about others the more likely they are to discover ways to interact together that work for all concerned. Having said all of that, let’s end by talking about the people at the top of an organisation and the role they can play in ensuring an organisation is and remains silo-free. These people have to take the lead in ensuring that the risk of silos is minimised. They do this by having in place a set of values which they live, breathe, promote, recruit by, performance-manage by, trumpet loudly and write on every wall of every building and every piece of corporate paper (physical and electronic). Okay, that’s over the top – but I hope you get the message. Values drive behaviour and the people at the top have to demonstrate, reinforce, encourage and reward the right behaviour so that you or I could go into any part of their organisation in any part of the world and see and hear people behaving and communicating in the same effective way. This is not to say that staff do not have a responsibility for ensuring the walls of silos are broken down – of course they do, because behaviour is a choice. They can choose to lock themselves in their silos and reinforce amongst themselves that they are right and the rest of the world is wrong. Or they can choose to reach out, “to boldly go” where no member of their staff has gone before: into the department on the other side of the car-park.

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June 2013


Getting finance

Getting the funding you need It’s a truism that with only 4 per cent of bank funding going to the SME sector, raising finance when you’re an SME owner or director is no easy business. We asked Hisham Al Saghbini, from Hult International Business School, to review the options and see if there’s light at the end of the financing tunnel…


MEs play a crucial part in economies. There’s no doubt that there is a large contribution to be made by small and medium businesses, specifically those involved in sales to international markets. In fact, they are, perhaps, seen as the most important drivers for innovation. That’s good news, because many researchers suggest that there is a complex two-way relationship between growth and innovation. SMEs constitute 95 per cent of all businesses in Dubai and contribute 30 to 35 per cent of the UAE’s GDP. Furthermore, SMEs are a primary catalyst in job creation. The latest figures available - from the UK show that the majority of new jobs


created in the UK are created by small businesses. Large businesses contribute less that 35 per cent to new job creation compared to 65 per cent for small businesses. A recent research programme conducted locally at the UAE academy – a subsidiary of the Abu Dhabi Chamber - suggests that existing small businesses contribute 50 per cent of new jobs created, whilst new business startups contribute 26 per cent. The number of Licenses of Small Businesses issued in Dubai escalated in the last year to more than 15,000, according to the emirate’s Department of Economic Development (DED). In 2012, the UAE was placed 34th in the World Bank’s 2012 Ease of Doing Business ranking for Small and Medium Businesses. This ranking depends on a

number of factors, such as the relative ease at trading across borders and the attractive feature of not paying corporate or income taxes. There are areas, however, where the countries in the region, including the UAE, are surprisingly lagging behind. These include the regulatory role of the government in enforcing contracts; and resolving insolvency. The funding challenge

One of the major obstacles that face SMEs worldwide is funding. If the UAE is to continue to thrive, it is critical that entrepreneurs are able to start, finance and grow a business without any unnecessary impediments.

In Banking terms, investing in startup is classified as too risky, which leads to very high interest rates on loans, some in excess of 20 per cent. Many aspiring entrepreneurs in the UAE cannot afford to get started in the first place, because of high set-up costs. In the UK, where I come from, it takes about £100.00 to register a small Enterprise and it takes a couple of hours to process the application. In the UAE, however, it takes a minimum of AED18,000 in licensing and admin fees plus, of course, the tenancy costs which ranges between AED 30,000 to AED 60,000. Although breakeven is crucial for survival, making profits shouldn’t be the main concern at this stage. Financial success at this stage doesn’t only depend on the availability of the financial resources, but also the decision making criteria used to choose the suitable sources of funding. Traditionally, finance is used to fund working capital and investment, but interestingly, of those seeking finance, most SME employers seek debt finance

(40 per cent seek loans and 35 per cent seek overdrafts) similar to those currently using finance. Only around one to two per cent of those seeking finance seek equity finance. Whilst many SMEs use a credit card, a lower proportion actually seeks a new credit card. By looking at the graph on the following page, one can see that the wide variety of different types of finance available reflects the diversity of SME characteristics and their specific finance needs which vary based on the level and stage of business. Examples of these sources are: Bank Loans and overdrafts, Trade and Equity Financing, Government grants and projects. In fact, these researches also show that 78 per cent of businesses who prepare a detailed business plan which critically assesses the financial resources manage to breakeven in their first year of operation. Securing a bank loan at the startup stage is really difficult. In fact, SMEs receive less than four per cent of total bank loans issued across the Emirates. In banking terms, investing in a startup is classified as too risky, which leads to very high interest rates on loans, some in excess of 20 per cent. Of course, in technical terms, there are no collaterals as SMEs don’t necessarily have tangible fixed assets as yet. Having said that, many banks and financing firms in Dubai and Abu Dhabi are becoming increasingly interested in SMEs and are trying to foster growth in this sector. National Bank of Abu Dhabi has financed around AED 367.3 m of funding to Abu Dhabi chamber members that are SMEs. This amount is loaned in competitive rates in a matter of days. Other banks followed suits with the largest contributors being Gulf Finance, EIB and Mashreq. Bank loans are often considered among the riskiest and most expensive of all sources of funding. A recent survey indicated that banks continued to be the key providers for trade finance in the UAE. Trade financing

Another important method is Trade financing. This has become increasingly

June 2013


Getting finance

2007 60%



50% 43%



27% 21%

20% 10% 10%



9% 4%




1% 2%



Business expansion/ growth


2% 1%

2% 1%

3% 2%

Training staff development

Management Buy Out


0% Working capital/ cashflow

Capital equipment or vehicles

Buying land or buildings

Improving buildings

Research & Development

Buying another business

Reason for seeking finance (BIS, 2011)

common in the UAE, and most local and international banks offer services to small and medium-sized enterprises. The process depends on allowing SMEs to trade in the market via banks, which in turn guarantee payments through letters of credit to sellers and will offer “document against payment” and “document against acceptance” services. One of the biggest companies providing such a service is Dubai World, a holding company wholly owned by the Emirate of Dubai which owns entities in over 100 cities internationally. Dubai World’s portfolio is focused on transport and logistics, dry docks and maritime, urban development, investments and financial services, and energy and natural resources. Furthermore, there has been much debate between Government, finance providers, SMEs and their representative

organisations on the availability of finance and what can be done to increase it. Governments play an important role in supporting and financing SMEs. In the UAE, the government is the main player in this sector. Thanks to the high oil prices, the government can afford the financial burden. However, it knows very well, that it will be in trouble in the future if oil prices go down. Especially if we take into account the lavish welfare system in the country. This explains the series of initiatives and efforts to lure citizens into the private sector, and appealing to their entrepreneurial instincts is one way to do this. These government initiatives represent the best and safest sources of funding for SMEs. Perhaps Khalifa Fund and Dubai SME and other state-backed bodies promoting entrepreneurship play an essential role in

Hisham Al Saghbini, MPD, MA, BSc, Cert Acc, Cert ICT, Cert Bus Professor of Quantitative Analysis & Decision Making, Hult International Business School. Professor Saghbini specialises in Quantitative Analysis and Decision Making for Business. He is also an active academic researcher in Middle Eastern Studies and Business Analysis. Professor Saghbini is a full time Professor at Hult International Business School in London UK and is a fellow at the Royal Statistical Society and a member of Political Studies Association U.K., for which he publishes regular articles that reflect his interests. His most recent publication is a book titled “Introduction to Quantitative Research Methods for Business.”


the process. These bodies don’t only offer financial services, but also advisory and counselling services. Such programmes are building momentum. The Khalifa Fund has financed 375 projects worth a total of AED 700 million since it was founded. It is now committed to financing at least AED150-200 million a year. Another important project in the UAE is the Mohammed Bin Rashid Establishment for small and medium sized enterprises development (MBRE), one of the institutions run by the Dubai Department of Economic Development, which aims to support and finance projects of young entrepreneurs.100 projects will be financed every year. In conclusion, there is a high number of people who want to set up businesses, but there’s a huge gap between their aspirations/intentions and the actual delivery of setting up a business. More so with the young than any other age group. That gap is not only about skills and confidence, but also access to finance. However, this sector is needed for growth. It creates jobs. It is estimated that it creates around a 1.5 million jobs each year. There are many initiatives to support it. However, ultimately, it depends on entrepreneurs’ ability to research, plan and carefully choose the right paths, strategically, financially and also emotionally.

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June 2013


Getting finance




Networking is a powerful tool for leveraging the capabilities of your SME. It’s a useful strategy for building strong connections, impressing potential investors and even getting finance! Networking guru, Dr. Ivan Misner, reveals how…

“The richest people in the world look for and build networks, everyone else looks for work.” - Robert Kiyosaki.


t first, this quote might sound like an exaggeration but – the truth is that business professionals often undermine the power of networking. Networking, over the years, has emerged to become an effective instrument – from getting referrals, marketing products, meeting new people to landing a new job. This is true especially in the case of an SME – working with limited resources, networking empowers SMEs to build great connections and take their business to the next level.


While networking is about interacting with new people, making contacts and building relationships, there is a lot more to it than meets the eye, as Dr. Ivan Misner explains. Founder and Chairman of BNI, one of the largest business networking organisations in the world, Dr. Misner has also been called ‘Father of Modern Networking’ by CNN. Speaking to the Dr. Misner, we lay down top ten tips on networking to get finance for your SME: 1. Farming vs. Hunting

First and foremost, it is important to understand the basic concept of networking. What is networking? A definition on describes networking

– just like good effective networking. Additionally, it is crucial to remember that the correct mind-set to adopt while networking is more of ‘sowing seeds of friendship’ rather than that of tracking down a potential investor and asking him to invest in your business right away. 2. Creating a deep network

as, “Developing and using contacts made in business for purposes beyond the reason for the initial contact.” However, Dr. Misner’s simple yet compelling definition of networking is ‘building deep rooted relationships’. He says: “Networking is like interviewing. You have two ears and one mouth, and you have to use them proportionately. It is essentially like farming where you have to cultivate strong relationships and not hunting.” While hunting is usually a faster process where you get instant results, farming takes time to show its results

Mark Victor Hansen, an American inspirational and motivational speaker, says, “Entrepreneurs have two basic assets : their creativity and their relationships.” This is something that is applicable to networking. Without building a strong relationship with a potential investor, entrepreneurs or business owners, most of the time, aren’t able to get finance. Closely connected to his definition of networking in Point One, Dr. Misner continues that networking is more about the quality of relationships versus the quantity. “For instance, in California you see several eucalyptus trees which are uprooted every time the strong winds come in. This is because their roots aren’t deep enough. Relationships, much like these trees, need to be deep connections versus just surface level contacts.” How many of us are guilty of a huge pile of business cards stacked somewhere across our office desk? The reality is that the number of business contacts aren’t as important as the quality of relationship you share with them. Dr. Misner explains, “It’s not just about what you know or who you know, it’s actually about how well you know each other?” Furthermore, he emphasises the importance of reaching a comfort level with the opposite person. “The last question I usually ask is ‘what are the challenges you face in your business?’ and, if they answer that question, it shows that I have attained a comfort level with them,” advises Dr. Misner. 3. Understanding cultures

Networking across the world could be perceived differently; do cultural aspects influence the way we network? The answer is no, according to Dr. Misner. “Understanding culture is always helpful in the process of networking but I strongly feel that different places, races,

people, cultures, etc. have one thing in common – the language of referrals. We, as entrepreneurs, speak the language of referrals and trust is a vital factor in the process. While the way you build trust may vary from culture to culture, it remains a shared value in all cultures. No country or culture says that trust is not important.” Similar thoughts are also reflected by American entrepreneur and CoFounder of LinkedIn, Reid Hoffman in his popular quote, “One of the challenges in networking is everybody thinks it’s making cold calls to strangers. Actually, it’s the people who already have strong trust relationships with you, who know you’re a dedicated, smart, team player, who can help you.” 4. Unique Selling Proposition (USP)

What’s one fundamental thing that an SME owner should be prepared with at an event? Dr. Misner says, “The USP of your business is something that you should have ready with you while networking. It is key to have an understanding of what your business does and how it is different from what others do.” In his book, Networking like a Pro, Dr. Misner explains, “Your USP is basically a brief description of the purpose of your business, stated in the most succinct and compelling way possible in order to get others to understand the unique value of what you do. A good USP simply tells people what you do, in a manner that gets them to ask how you do it.” 5. Don’t restrict the people you network with

At events, one of the commonly raised questions is ‘who do I network with?’ and quite often people come with a decided list of prospective clients, investors or senior executives they want to approach. However, this might not be the best style of networking. “People often have assumptions about what a great connection would be like. The truth is that the only question you need to ask is – are they good at what they do? It doesn’t matter if they are in the same industry as you or not. They don’t have to be doing something relevant to you to help you. You never know if they

June 2013


Getting finance

are connected to someone that could which saw an increase from 500 to 5000 potential investors, everyone is asking invest in your business or get you a groups over the e-commerce explosion. them for something and you don’t want referral. The biggest mistake is restricting “I don’t think it is an ‘either-or’ question. to do the same. The right way would be the people you network with.” It is essentially the combination of both to create a relationship and schedule to meet at a later stage to discuss your It is important to go into a business – face-to-face networking and online business idea. mixer or any other networking event with networking. Social networking is great an open mind to interact with people from for building your brand. However, SMEs any industry or background. As the popular often come across as desperate for sales on 9. Giver’s gain notion ‘Six degrees of separation’ suggests, social media sites and desperation doesn’t In order to get, you have to give. This you are only six people away from being get referrals. It is definitely important to is very a natural human instinct that is give time to engage in conversation.” introduced to your contact of choice. seen in networking too – this is what Additionally, by networking with Dr. Misner’s most important concept of ‘Giver’s gain’ explains. people within the same industry, you “One thing that most businesses don’t are limited to only a certain social group. get is the concept of ‘Giver’s gain’ – you By interacting with new people, you can have to find ways to help other people.” create a diverse networking group with Dr. Misner explains in his book, “The higher chances of getting finance in first word in Giver’s Gain is givers. This different ways and from different sources. is important. It signifies that the act of 6. The networking model – VCP giving is the first and most important One of Dr. Misner’s top tips is his part of the principle. It does not, however, networking model – Visibility, Credibility mean that every act of giving will be and Profitability (VCP). He explains in immediately rewarded by the recipient. his book, “The VCP Process is part of the On the contrary, the idea driving Giver’s foundation of relationship networking. Gain is, paradoxically, the principle of You start by being visible – that is, by giving without the expectation of an being at networking events and getting immediate return.” Dr. Misner has countless examples of acquainted with a potential referral Dr. Ivan Misner, Founder and Chairman, BNI situations where helping out a business partner. Credibility comes after you’ve contact has yielded benefits in the long had dealings with the person and become known to him as someone who does good run. This could be as simple as telling work and can be trusted. Profitability “Interestingly, SMEs actually get this someone about an event relevant to them comes last, after you and your networking better than major corporations. Big or introducing them to a business contact partner have established a history of companies usually rely on advertising, they have been trying to reach! helping each other succeed in business.” online campaigns and cold calling but He adds: “The VCP process needs to SMEs understand the power of personal 10. Follow up – get that money! be done in chronological order. Another interaction. While advertising is not bad The last but perhaps the most important key thing is to follow a referral networking at all, it is also important to have a plan step is following up. It is important to for your ‘word of mouth’ aspect.” model versus a sales model.” maintain a regular relationship with “For instance, during a talk, I asked business contacts and continue to assist a crowd of 900 people – how many of 8. Impress your investors them in any way. you are here to sell? Almost everyone Dr. Misner gives two top tips to keep in Jeff Hoffman says in his article, Network raised their hand in agreement. My next mind while meeting with your potential the Hell Out of People: Six Expert Tips, on question was – how many people are here investors:, “The most important part of this to buy? No one raised their hand. This • Ask questions rather than doing all the regular communication is to make sure highlights that there is a clear networking talking – The right way to approach you are acutely aware of their needs, not disconnect. Everyone wants to sell but investors is by asking them questions just yours. Helping important people there is no one interested in buying. Due like – what kind of investment are they achieve their goals makes you far more to this disconnect, most companies in the looking for? What kind of values do valuable to them. Ask them what they region don’t even reach the visibility stage.” they believe in? For example, if they are trying to accomplish and how you are looking to invest in technology but can help. And then do it when you can.” 7. Social media networking you aren’t a tech startup, telling them SMEs looking to build a relationship With the social media constantly evolving, about your great technology idea might with their potential investors should actively follow-up and try to set up a has online networking taken over the not be very fortuitous. traditional networking? Dr. Misner • Don’t pitch them anything the first meeting face-to-face after a few days and explains that the Internet and social time – One of the worst mistakes then explain their business idea in detail. media have helped accelerate business would be to pitch your business idea As Dr. Misner says in his book, “But for a mixers and events. He gives the example in the first meeting. That is almost like true networker, meeting people is only the of his business networking group, BNI, direct selling and not networking. With first step in a long, continuing process.”


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June 2013



The first priority Your business’ premises can all too easily be a source of worry, frustration and wasted resources – but they can also give you the leverage to expand, exploit IT capabilities and build market presence. What are the factors that make the crucial difference? SME Advisor reviewed the latest surveys and asked three SMEs whether serviced offices can provide a powerful catalyst for excellence and growth.


very business location basically serves two main functions: it gives you a physical ‘place’ in relation to the rest of the world - in your city, town or community - and provides a ‘workspace’ for you, the people you work with and any equipment, plant or machinery you may use. Let’s think about location first. One hundred years ago, the great hotelier Henry Hilton said that only three things matter: ‘location, location, and location’. Yet in today’s cyber-dominated workspace, many people might take the view that location itself is no longer a prime factor in choosing an office: perhaps, the argument goes, location is irrelevant because you can start your company


anywhere and reach employees and customers at any time of day via email, text, voice and video. Yet the latest research shows that nothing could be further from the truth - location is still fantastically important, especially with the smaller business or startup. Location matters tremendously because it determines whether your business has access to the resources needed to grow. In a survey released only four weeks ago, the US management guru Peter S. Cohan found that there are in fact six key dynamics as to how location can play a major role in business development. The survey - 6 Ways Your Startup’s Location Can Boost Your Bottom Line - highlighted the following benefits that a prime location can bring:

diverse community in an industrial estate or suburban location, for example? 4. Move to where people want to live. SMEs stand a better chance of attracting the best of the full range of talent if their location is an easy commute. This makes it easier for you to persuade potential staff to join you without changing their commuting patterns. 5. Stay close to investment capital. Investors often like to be close to the businesses they invest in. That’s why it can be helpful to locate near the offices of venture capitalists that specialise in your industry. Investors like to be able to share a meal with the SME’s owner/directors or drop in to give a pep talk without the hassle of a long journey.

1. It’s important to be near ‘pillar’ companies. A pillar company is publicly traded, provides capital and talent to startups and small firms and even buys their products. You have to ask whether there are businesses of this kind in the area you’ve selected, and - most importantly - whether the local talent pool will give you the skills you need. For example, if you’re a technology business and you’re near pillar companies like an Oracle or a Cisco, you’re just a stone’s throw from people with the experience your business needs. 2. Tap local universities for ideas and talent. In order to build market share, you need to get the best ideas and talent. Locating your company near universities with precisely this kind of top talent will give you a powerful start - and a cluster of talented people willing to work on a part-time basis. Also, when these people graduate, they are tailor-made for your business. 3. Work where others share your values. An entrepreneur’s choice of where to locate often flows directly from where he or she wants to live. And that choice can depend on whether he or she shares the values of the local startup community. Are you going to find a sufficiently inspiring,

6. Be near your mentor. If you need advice on how best to run your business, it’s wise to be near a deep pool of mentors who can help you remove the impediments to growth. Again, these mentors are more likely to be based around the major hubs - and you won’t want a long drive to reach them for quick advice when it’s needed most. The moral of the story is: it pays to be in a cosmopolitan, central setting where you’ll find like-minded businesses and a rich pool of talent. In other words, be where the successful businesses are. Of course, this raises issues such as – • Cost • Availability • Size and configuration of units • Suitability for cabling and IT connections, etc.

UK-based, it has frequently conducted surveys on the role of the office environment and its impact on the life of a growing business. SME Advisor spoke to Peter Groves, the FSB’s Head of Commercial Liaison. Peter commented that: “The interesting factor to emerge is that whenever a business encounters ‘pressure points’ in the course of its trading history, the premises that the business works in always become a primary concern. For example, when an SME is ‘ticking over’, our surveys show that the top concerns of business owners are (in this order) – 1. Trade credit arrangements 2. Cashflow 3. Staff competence in key roles 4. Market conditions 5. Cost and scale of premises However, when a business is entering a ‘pressure point’ - either raising finance for growth, entering a new market, or downscaling as a result of financial pressure, the role of the premises goes to the top of the list, eg – 1. Cost and scale of premises 2. Cashflow 3. Trade credit arrangements 4. Market conditions 5. Staff competence in key roles Time and again, we see that the role of the business premises is incredibly important. When a business wants to grow, the premises is a challenge because you need to find more space at an affordable price and with the right configuration. When a business is struggling, the overheads associated with an inappropriate premises can kill it completely.”

It’s truism that these same issues will appear The role of the ‘serviced office’ and re-appear throughout the life of the Peter Groves’ comments emphasize the business and not only in relation to whether importance of flexible working options or not it moves to a prestige, central location. when it comes to business premises. The As the business grows and changes it will ability to move quickly and seamlessly continually confront these same constraints isn’t just a feature on everyone’s Disaster of price and availability. We can say, in fact, Recovery Plans - it’s an economic necessity. that these are core issues surrounding the Does this mean, then, that a Serviced Office quest for a suitable ‘workspace’ for you and - which of course you won’t have to furnish the people you work with. and fit out and which will have preferential contractual terms - is a good option? The office you have is central to the way On the face of things, it has obvious you work advantages. Firstly, it can facilitate your move The Federation of Small Businesses (FSB) to a prestige central location, because the is the world’s largest SME network, with serviced office provider - not you - has paid all more than 200,000 active members. the big, up-front development or rental costs.

June 2013



Secondly, it means that you have a very good chance of finding a close match for your needs, whether in terms of bigger, better space, office configuration or IT compatibility. To see how a serviced provider itself sees the benefits, we spoke to the acknowledged world leader, Servcorp. A global business, Servcorp believes a serviced office has the following advantages • It’s fully furnished and equipped. • You’ll have an unbranded reception area, where your business comes first (Note: this overcomes one of the traditional objections to serviced offices, where in the old, branded style of reception, your business could be perceived as ‘guesting’ in a serviced block - with all the temporary and fragile implications that might bring). • Superfast internet connection monitored 24/7. • Cisco IP phone supported by a global network. • Dedicated receptionist managing all your calls to your serviced office. • On-hand support team. • Fully-equipped meeting facilities and AV equipment. • Flexible leases, no long-term contracts. It’s worth pointing out, too, that a company with the scale of Servcorp can provide a choice of the most central locations. Yet how important have these factors been in practice, when it comes to delivering on the all-important day-to-day needs of SMEs? For example, do SMEs take the view that a premium location is in fact a priority? What’s more, do the options that Servcorp provides tick all the right boxes? Let’s ask the experts – the SMEs themselves!

SME Advisor spoke to Dubai-based SME, TSS Capital. The company takes the view that: “Of course, having a prime location is crucial for our business; selecting the right location can build your business in the right way. It’s one of the factors that we look for, alongside having good service and a professional receptionist.” Similarly, another SME, Virtual Human Resources, agrees, saying: “Yes, a prime location is important, alongside other factors such as good IT, good communication, space, workable equipment, and facilities like a coffee machine.” Does Servcorp deliver against these needs? Abu Dhabi-based Northern Trust


is in no doubt: “It’s important to be in a building and location with a good reputation, as it positively enhances the perception, and reflects the quality, of our brand. Servcorp’s locations in Abu Dhabi, Dubai and Riyadh meet our high expectations in this regard. We also look for knowledgeable staff with a service mentality, good office furniture and a clean and organised office environment. We have all these with Servcorp.” What about whether or not the Serviced office environment has played a helpful role during key times in the business’ growth and transition? Has it, for example, helped conserve resources and facilitated ‘bridge-

There are in fact six key dynamics as to how location can play a major role in business development.

above conventional office solutions? For Virtual Human Resources, for example, traditional arrangements proved slow and frustrating: “Previously, setting up DEWA, IT, du has been really time consuming.” This view is echoed by TSS Capital when they say that (a serviced office): “Definitely saved time and expense because we don’t have to think about hiring extra people.” By contrast, they now enjoy: “Good service, very good reception, professional people, and everyone is a call away - which is great.” It’s noticeable that throughout the above comments, there’s a high premium on the role of the serviced office helping a business at a crucial stage in its development - at the very time when the company’s focus is turned to issues such as the cost and availability of office space. Moreover, a prestigious, central location is paramount and this has been delivered by the choice of serviced offices. Serviced offices score highly, then, against the criteria defined by both Peter S. Cohan and the Federation of Small Businesses. Clearly, there will always be companies who prefer to fit and furnish an office themselves and feel a greater sense of ‘ownership’ with privately-rented (or purpose-built) office space. The fact remains, however, that in terms of the trends influencing today’s SME marketplace, the serviced office can be a highly effective tool for maximizing presence and market positioning while reining in an all-toofamiliar tight budget and preparing for the next stage of development.

building’ from one income level to the next? TSS Capital’s views were very frank on this: “It’s not a permanent solution but it definitely does help. The good thing is that if you’re in a time of crisis, when people know you’re with Servcorp, you have a power asset to help you continue and grow… We do plan to expand, but we look to continue for one more year because it does save money, even though the price has gone up recently, and we’re happy to be here.” Virtual Human Resources add that: “We’re at a critical stage at the moment. We can either grow One last point… or shrink at this stage. Our intention is to What advice do the SMEs we spoke to grow to 10 people in two years’ time.” have for the owners/directors of other TSS Capital definitely see the relationship businesses looking for new premises? with Servcorp as having leveraged their Virtual Human Resources recommend rapid development. For example, when that they look for: “Growth capability asked if working with Servcorp had find a space that you can grow into. Costbeen a catalyst to the business’ growth, effective and with a good location. Check professionalism and the level of staff on systems reliability, otherwise this can satisfaction, the reply was that: “Yes, indeed, cause your business to fail; and general because of the reputation they have and support is also vital.” the level of professionalism the team has Meanwhile, Northern Trust believe that: to offer. We were originally located with a “The key criteria include flexible office space, different service provider elsewhere, and both in quantity and adapting the space the level of staff did not compare.” to requirements, knowledgeable staff with a service mentality, a good working Going head-to-head: who wins? environment and a convenient location Has working with a leading Serviced Office with a good reputation.” provider saved time and money over and So - where will your business go to next?

Dy n Organic

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wth Starts o r G at c i C



Our services include Corporate Governance, Business Establishments (Franchises, Small and Medium Enterprises), Market Due Diligence, Joint Ventures, Corporate Policies, Corporate Restructuring, Product Restructuring and Intellectual Property. Office Wing D-709, Dubai Silicon Oasis (DSO) Authority Building PO Box 444854, Dubai, United Arab Emirates Tel: +971 4 372 4422, Fax: +971 4 372 4423 Email: Website:

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June 2013



Are you


Talent managers across the region are exposed to the challenges of day-to-day talent management. Experts from the Ashridge Business School help put things into perspective…

“Your business doesn’t run people, the people run the business.”


alent can truly make or break any

organisation, and managing talent effectively could be classified as one of the top concerns for HR practitioners and senior officials in the Middle East. Rapid changes in technology, global business trends and our economic outlook have contributed to the dramatic change in working styles. Key skills have undergone transformation – skills that were useful previously, may not be applicable in today’s world and much less in the future. This trend is reinforced by Tower Watson’s Global Talent Management Survey 2012 where 72 per cent of respondents cited that they had problems attracting critical skill employees. HR and talent managers from the region were presented with an opportunity to


address these concerns, at a recent event, Working strategically with talent – challenging myths to deliver business success, hosted by the Ashridge Business School. Since the conventional approach towards talent has changed, the way talent managers interact with talent also needs to be reshaped. This emerged to be the theme of the event which highlighted that organisations should rethink the way they identify and develop their future leaders. For instance, while hiring an employee, it is a common practice to look at their resume and make a decision based on their performance in the past. However, this might not be the best approach. Ashridge Business School experts, Lindsey Masson and Howard Atkins, explained that it is more important to determine what an employee can do for you in the future. They provided several other similar situations and valuable solutions for each.

Even with limited resources, SMEs are more creative. For instance, they often learn about recruitment best practices from networking with one another, exchanging experiences, and learning through that interaction.

June 2013


Workspace connected team. “This is something that large corporations, in fact, struggle with but it is easier within SMEs,” said Lindsey. Small business owners should try and maintain such informal communication practices to enhance their working environments. 3. What can an SME do with limited resources?

Lindsey Masson, Director of Executive Coaching, Ashridge Business School

Talent Management for SMEs With great insights from the event and thoughts from the Ashridge Business School experts, Lindsey and Howard, here are the top four aspects that SME owners need to consider when managing talent:

Large corporations, more often than not, have a sizeable budget at their disposal, which they use towards developing and deploying talent. SMEs, not having similar resources, have little to work with. However, limited resources lead to innovation and creative ideas. This is absolutely the case with SMEs; working with what they have, they look for alternative and ‘out of the box’ ideas to deal with their issues. “Even with limited resources, SMEs are more creative. For instance, they often learn about recruitment best practices from networking with one another, exchanging experiences, and learning through that interaction,” commented Howard.

1. What is talent?

The first and foremost task is understanding the definition of talent and its evolution over time. Talent is perceived differently in different parts of the world, explained Lindsey during the session. “Talent can be defined as the potential to take the organisation forward and deliver its strategy. This is a very broad definition that you could widen or narrow down according to your organisation,” said Lindsey. She further added that while performance is definitely a factor in the process of talent management, it is not the overriding factor. A few other factors, also considered, are agility, motivation, and the desire to learn.

4. What happens when the owner leaves?

Working with a small team could have its downside. Howard explains that SMEs could become over-reliant on certain people within the organisation, especially the senior management. This is the case because a lot of knowledge

Howard Atkins, Associate Consultant, Ashridge Business School

is withheld by a handful of people in an SME. This could lead to a serious business risk. In order to eliminate this kind of business risk, it is essential that SMEs facilitate knowledge-sharing all across the organisation. Two steps to achieve this, as Howard suggested, are: broadening responsibility through action learning and succession planning – if the owner takes a step back, where will the SME go? It is important to determine who the next leader might be and train employees so that they are ready for any such transition.

The six popular myths according to the School’s research: Myth one: Current skills and performance give you a good idea of future success.

Myth two: Focusing in a small elite of ‘talent’ will give you best return on investment.

Ashridge Reality: Learning agility and adaptability are true indicators of future success

Ashridge Reality: A broad definition of talent is essential in today’s world.

2. Informal vs. formal processes

Contrary to the prevalent inclination to deal with employees with stringent and professional processes, the event brought to light the key role that informal processes play in managing talent. It stressed that, at the end of the day, businesses were made up of the dynamics between human beings in the workplace and, having strong relationships led to the creation of better working teams. In the case of small businesses, this is something that comes naturally to them as everyone knows everyone. SMEs can benefit from having a small but well-


Myth three: Formal processes matters more than informal processes.

Myth four: Talent Management follows strategy.

Myth five: Talent is a commodity like any other.

Myth six: Gen Y will grow up and start behaving like “us” soon.

Ashridge Reality: Informal processes will always play a key role in how talent is developed and deployed, particularly in the Middle East.

Ashridge Reality: Talent management informs and shapes strategy.

Ashridge Reality: Optimising talent requires a different approach to optimising a commodity.

Ashridge Reality: We need to design our organisations and talent processes in a way that takes into account the aspirations and drivers of Gen Y.

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June 2013



Raising the Bar

Target setting can help your business move a step closer to its business goals. Sub-Editor Rushika Bhatia spoke to Martin McGuigan from Aon Hewitt to find out more…


unning a business is quite similar to your morning workout on the treadmill – you have to keep moving in order to stay at the same place. If you slow down, you fall back and if you want to move ahead, you have to move faster. One of the key similarities, however, is that you set a target for your workout on the machine which helps you map your progress. It’s no different with an SME.


Target setting is key to understanding where your business is going and how well your business is doing at the end of a certain time period. Although very obvious, many small businesses underestimate the significance of this process. More than 80 per cent of businesses do not properly monitor their company’s goals as revealed by the fourth annual Staples National Small Business Survey.

“Unless you have a way to measure your success, there is no way to gauge how well you are doing at the end of a time period,” explains Martin McGuigan, Head of Reward Consulting at Aon Hewitt Middle East. He adds: “Target setting is essentially a way of taking your biggest corporate ambition and breaking it down into smaller bite-sized chunks. For instance, you could break it down by product, market or the customers you are trying to reach and so on. These smaller targets, however, need to be realistic and your employees should have a reasonable chance of achieving them.” Target setting for SMEs

“I think this process is especially pivotal for SMEs, more importantly for the people who are backing them, and for the people that are trying to back them, financially or otherwise,” says McGuigan. Setting targets encourages the implementation of a system where SMEs have a goal and a way to measure their progress towards it. This reflects that the business has the strong grasp of its overall bigger picture – an appealing factor for current and potential investors. McGuigan adds: “Banks and other investors want to see a track record of improvement and target setting ensures that you are making progress towards your goals. It’s much better than saying ‘our business did okay last year’ which lacks definition.” Another crucial reason for SMEs to implement target setting is their size. “If you are dealing with a major corporation, the behaviour of one employee may not make a huge difference. But, if you have four people in your SME and one of you is not doing well, it has a huge impact.” Although, all team members in an SME may seem busy, performance target setting reveals their actual contribution to the organisation. Where is target setting applicable?

In departments like sales and production, targets come rather naturally. It’s very instinctive to measure the number of units sold, the amount of profit made, production time, etc. On the other hand, in departments like marketing, design, security, and many others, this may not seem as intuitive. McGuigan explains that target setting is equally important across all departments of the business.

He says, “The basic idea behind the process is – are you able to deliver good work? There are a number of qualitative aspects that go into a business, it’s not just about quantity. So, it is not just about the money making departments but also the ones supporting that process.” He gives the example of a security guard who could have a simple target such as being on time. If he his late more than five times, he may be fired. “Even at a very basic level, for less mentally intensive jobs, you need to have targets. The most important thing, though, is for them to be measurable,” he continues. Implementing the process

When it comes to the actual process, McGuigan lays down five quick tips for SMEs.

Unless you have a way to measure your success, there is no way to gauge how well you are doing at the end of a time period.

1. Don’t over complicate it It is important to keep your business goals simple. If you find yourself setting 50 goals, then you are definitely doing it the wrong way. Having about four or five goals for the year is ideal. Another aspect is to breakdown goals and ensure you are addressing every operational and functional level. 2. Quality not quantity This is self-explanatory and business owners need to ensure that their goals aren’t just about the quantitative aspects of the business. Everything that goes into the process of achieving the firm’s central goal should be measured even if it is not monetary.

their disposal. In order to have an efficient target setting and monitoring system in place, having the right information is significant. While many SMEs use basic Excel spreadsheets to manage information, they can also utilise very affordable business software available online. A good example of such software is the Rebus software which enables employers to keep track of employee workflow and, consequently performance. Businesses can benefit from: • Accurate records of time spent by an employee on each project • Precise cost of the jobs by tracking realtime costs • A common platform for both paperbased document trails and online data • Fully itemized invoices • An ongoing percentage countdown on performance against budgets In addition, external resources like articles, online information and expert advice can prove useful at little or no cost. 4. Being SMART This is an old acronym but still an incredibly useful one. SMART, which stands for specific, measurable, attainable, relevant and time-bound is a great procedure to have in place. Measurable targets are the key here. For instance, if you say I want my employees to be happy – what is the definition of happy? However, if you have an employee engagement survey, then you have a quantifiable measure for your employee satisfaction and happiness. 5. Communication is key This is one of the most critical aspects of the process. Targets have to be communicated all across the organisation; there is absolutely no point if the small business owner is the only one who understands the targets. Employees that know what they have to contribute will be able to deliver what is expected from them. When is the right time?

3. Using resources effectively This is probably one of the key factors for SMEs as they have limited resources at

Martin explains that one of the typical conversations you come across in an organisation is:

June 2013



Boss: “You haven’t been doing a good job.” Employee: “But you didn’t tell me what you expected out of me!” Martin adds: “However, if targets are set at the beginning of the year, this wouldn’t be the case. Hence, the right time to set goals would be during quarter four of the previous year so that when you start in the first quarter of the next year, you are going in with your targets outlined. This also gives the firm more time to cascade these goals throughout the organisation.” For SMEs the right time is before the business actually starts. It is easier to have a system in place when the business is small. As and when the business expands, the target setting system grows along with it. This is supported by an interesting excerpt from the Dubai SME’s Corporate Governance Code for Small and Medium Enterprises: Guide to Execution which states, “Target setting may pose a problem for the smaller SMEs in that it presupposes the existence of a monitoring system. Implementing a sophisticated monitoring system (such as monitoring carbon dioxide emissions, for example) could divert value resources away from the business end of engagement. However, even smaller companies easily monitor more basic KPIs such as those relating to health and safety. But it should be remembered that it is more cost-efficient to set up monitoring systems while the company is still relatively small than it is when the company has reached a certain size. In other words, growth companies should consider setting up basic frameworks early on, as they would then expand and evolve naturally as the company grows.” On the contrary…

On the flip side, several companies may look at this process as an administrative chore and something that takes time and resources away from other business aspects. “Well this is one way to look at it,” says McGuigan, “but there are many different reasons for actually measuring people. It adds value to the firm and its shareholders. Additionally, you might identify people you want to train, give a bonus to, promote and invest in.” He adds: “If you take last year’s targets and add 10 per cent to them, then it is an administrative chore and you are not actually thinking about what you, as a business, are trying to deliver. Target setting is time well spent. It should be seen as


Martin McGuigan, Head of Reward Consulting at Aon Hewitt Middle East

Even at a very basic level, for less mentally intensive jobs, you need to have targets. The most important thing, though, is for them to be measurable.

quality aren’t affected at the cost of one another. Senior level management need to set clearly defined yet realistic targets. 2. Understanding the ‘why’ aspect “It is essential to give employees the rationale behind doing it in order to motivate and engage them,” says McGuigan. Targets should have the question of ‘why’ answered alongside the ‘what’ and ‘how’.

3. Ensuring it is a continuous procedure “We encourage a closed offsite meeting where you analyse what you want to do in the next year or next three years. You don’t a strong management tool and you are want to focus on just one year but the bigger getting something out of the process.” picture; you need a long term perspective. SMEs should be wary of some of the Breakdown the absolute strategy of the challenges of the target setting system. company and make it meaningful for each Some of the top ones are: department and employee. It is not about 1. Maintaining a balance between quantity tracking the performance last minute at and quality the end of the year but throughout the year One of the crucial aspects of setting goals and it is a continual process,” concludes for employees to ensure that quantity and McGuigan.

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SME Funding Fundamentals June 13, 2013 Dubai Knowledge Village, Conference Centre, First Floor 8:30 a.m. to 1:00 p.m.

Session Highlights: � Funding 101: How to navigate the funding maze � Finding the right funding: What works for your business � Assessing the funding potential of your business model � How to attract investment: What is on the investor shopping list? � Funding ‘do’s’ and ‘don’ts’: Avoiding common pitfalls � Top trends for the future of funding in the UAE Event agenda: 8:30 – 9:30 9:30 – 10:45 10:45 – 11:15 11:15 – 11:30 11:30 – 1:00

Registration, coffee and networking Panel discussion and Q&A Expert speed table Coffee break and networking Expert speed tables

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June 2013



The new opportunity:

introducing Al Maryah Island

Abu Dhabi’s new financial Free Zone is bring positioned as a serious competitor to the DIFC, the Qatar Financial Centre, the Bahrain Financial Harbour and Saudi’s King Abdullah Centre. What are the timeframes and legalities that business owners need to be aware of before they plan their move to Al Maryah Island? Legal expert Stephen Forster at Al Tamimi offers the following guidelines.


t was announced at the end of April that the President of the United Arab Emirates, His Highness Khalifa Bin Zayed Al Nahyan had passed a Federal Decree creating a financial free zone in Abu Dhabi. The Decree was subsequently supplemented by a Cabinet Decision that named Al Maryah Island (formerly Sowwah Island) as the designated Free Zone. The initial announcement was very much an outline, rather than a detailed paper, although it was stated to be issued pursuant to a Federal Law of 2004 regarding Financial Free Zones. This is the same Law under which the


Dubai International Finance Centre was established. That initial announcement has since been supplemented by an announcement of the Executive Council of Abu Dhabi on the first of May filling in a good many of the details. The Global Market Place Abu Dhabi

According to the latest announcement, it appears that the new financial free zone, to be called the Global Market Place Abu Dhabi (“GM-AD”) (although some translations have named it as “Abu Dhabi World Financial Market”) is to have its own

100 per cent foreign ownership

Companies set up in the GM-AD can be 100 per cent owned by non UAE Nationals and there is a 50 year tax exemption on the profits of companies and their employees arising out of their operations there. There is also a customs duty exemption. The Abu Dhabi Government is obviously trying to make it attractive to carry on business there. The announcement is silent on the types of laws that will be introduced in the GMAD and whether they will be based upon the civil code as are the laws of the UAE or whether they will be based upon common law such as English law. On the basis that the aim of the GM-AD is to be a global financial hub it is very likely to be the latter due to its pre-eminence in international financial transactions. There is also a hint in the fact that the announcement refers to “trusts” in its list of activities and trusts are only known under common law legal systems and not civil law systems. The announcement is also silent on the language of the proposed new laws. Again, because of the international nature of English and the fact that most common law lawyers are English speaking regulatory structure. In line with other free zones in Abu Dhabi it is to have its own Companies Registrar for the registration and regulation of companies established within the GM-AD. However, in keeping with its focus on financial matters it is also to have a Financial Services Bureau which will be the Financial Regulator supposedly along the lines of the Financial Services Authority in the United Kingdom, and a two tier court system with a Court of First Instance and a Court of Appeal with the judicial system being overseen by a Chief Justice. It is apparently intended that the GM-AD will enter into Memoranda of Understanding with the other judicial authorities in Abu Dhabi regarding the enforceability of the decisions of its Courts outside the Free Zone. As you would expect, the activities listed in the announcement as being the proposed activities of the GM-AD are very heavily weighted to financial matters and things ancillary thereto. These include in all their various forms financial and banking services (including Islamic Banking), funds and fund management, securities and foreign exchange broking and trading, quite a heavy emphasis on commodities and commodity trading, insurance and re insurance as well as legal and accounting services.

If the laws are in English then it is almost certain that the Courts will operate in English rather than Arabic. This will all enhance the international nature of the GM-AD. rather than Arabic speaking, if the laws are to be based on common law then they are almost certainly to be in English. This is reinforced by the fact that the regulations of all the other Free Zones in Abu Dhabi are in English. If the laws are in English then it is almost certain that the Courts will operate in English rather than Arabic. This will all enhance the international nature of the GM-AD. ‘On shore’ and ‘off shore’ ramifications

As yet, no dates have been officially announced for the actual commencement of operations of the GM-AD although both

2015 and possibly a rather ambitious end of 2013 have been mentioned in the press. One thing that will also need to be considered, however, is the position of businesses that have already established themselves on Al Maryah in Sowwah Square or have bought plots of land on Al Maryah to develop buildings for their own use but whose business is “on shore” with the rest of the UAE. Normally a company established in a free zone may not carry on business with the rest of the UAE without using an agent registered on shore in the UAE. This will obviously cause some issues for those businesses. However, the Federal Law under which the GM-AD is organised contains a provision allowing the Cabinet to pass a resolution to suspend this prohibition for up to four years as a transitional period and it will be interesting to see whether the provision is exercised. Alternatively, companies already established in what has become the GM-AD might be given the option to opt out of being part of the free zone which is an approach taken by the Qatar Financial Centre. The other side of this of course is that those businesses who have established themselves to carry on activities on Al Maryah Island such as the shops and restaurants in the Galleria Shopping Mall in Sowwah Square will no longer need to have a local Emirati National holding at least 51 per cent of the shares or being a National Sponsor if it is a branch as they will be able to be 100 per cent owned. All in all, based on what we know so far, Abu Dhabi appears to be putting together a well thought out and attractive regulatory regime as an important part of its Vision 2030 Strategic Plan and its attempt to diversify away from a carbon based economy. It seems to be positioning the GM-AD as a serious competitor to the Qatar Financial Centre, the Bahrain Financial Harbour and the King Abdullah Centre in Saudi as well as the DIFC. Financial trading is a 24 hour phenomenon and the Abu Dhabi Government sees the GM-AD as being an ideal location to cover that period when the Asian markets are winding down but before Europe has fully got into its stride. The proof of the pudding is always in the eating but when Abu Dhabi puts its mind to doing something it generally does it well so we should expect the GM-AD to be a success.

June 2013



Positive signs for Q2 2013 For business owners – DED’s recent survey offers a valuable snapshot of Q2 performance. The service and retail sectors are also signalling strong growth, which reaffirms Dubai’s reputation as a resilient and vibrant economy,” commented His Excellency Sami Al Qamzi, Director General of DED. “Rising confidence among SMEs and exporters also shows that the combined effort of the government and the private sector to achieve sustainable economic development is producing the desired outcomes,” added Al Qamzi. The survey revealed that overall business expectations are on an upward trend with 91 per cent of firms reporting either improvement or stability in business conditions in Q2 2013. Also, 86 per cent of the businesses are upbeat about sales and profits.


MEs in the region are feeling confident about themselves and are quite optimistic about the near future. This was reflected in the quarterly business confidence survey conducted by the Department of Economic Development (DED). Furthermore, the survey also reported that businesses in Dubai are confident of growth trends continuing to the second quarter of 2013. While optimism runs across the whole economy, it is particularly high among SMEs and exporting firms as reflected in the composite Business Confidence Index. “Economic activity in Dubai is on a firmer ground, especially with key sectors such as tourism, logistics and aviation flourishing and real estate on a recovery path.

Overall business expectations are on an upward trend with 91 per cent of firms reporting either improvement or stability in business conditions in Q2 2013.


Other key highlights of the survey included: • Sales Revenue: 55 per cent of businesses expect higher sales revenues and 30 per cent expect stable sales in Q2 2013. • Price: 80 per cent of respondents expect prices to remain largely stable and 13 per cent plan to raise their prices in Q2 2013 as they return to the pre-discount season price levels or renew orders at higher prices. • Sales Volume: 54 per cent forecast an increase during Q2 2013 and as a result, 49 per cent of the firms are also planning to increase their purchase orders to ensure adequate stocks to meet the expected demand. • Capacity expansion: 55 per cent of the companies said they will invest in capacity expansion during the next 12 months. This proportion is slightly higher among larger companies. • Technology: 40 per cent of the respondents plan to invest in upgrading technology over the same period. • Profits: 54 per cent expect improved profits in the next quarter, mostly from engaging in new projects or contracts but also from margin optimisation. • Business environment: 21 per cent of firms expect no challenges impacting their operations. In comparison with 32 per cent in the first quarter of 2013, this indicated a high level of satisfaction in doing business in Dubai. For the remaining respondents, the topmost challenge reported in the current quarter is increasing competition, which nevertheless should stimulate efficiency and innovation. Other challenges, as perceived by respondents, are the levels of government fees, increasing rental cost and cumbersome business regulations. • Employment: 23 per cent of businesses plan to increase and 75 per cent plan to maintain their employment count during the next quarter.

UK – UAE’s top source market Visa’s survey highlights the levels of spending in different areas and sectors across the region.


isa cardholders spent USD 4.7 billion on their cards while visiting the UAE in 2012, a 17.1 per cent increase compared to the previous year, according to data issued by Visa Inc. The results collated by company’s VisaVue® Travel data service in its latest Tourism Outlook UAE report also indicated that the total number of transactions increased by 20 per cent year on year, reinforcing UAE’s strong reputation as a shopping destination for international tourists. The top ten source markets – the United Kingdom, Russia, Saudi Arabia, United States, China, Qatar, Angola, Kuwait, India and France – accounted for 62.6 per cent of total tourism spend, according to the latest data. The data revealed that the United Kingdom continues to be UAE’s top source market with British Visa cardholders spending USD 540.4 million on their Visa cards in 2012, up 10.4 per cent on the previous year. Russia came second with its visitors spending USD 444.6 million on their Visa cards, 29.8 per cent more in 2012. Saudi Arabia jumped ahead of the US to take third spot in 2012, with its visitors spending USD 420.4 million on their Visa cards, an increase of 28.8 per cent, followed by tourists from the US and China. Qatar entered the top 10 league for the first time in 2012, experiencing a 56.9 per cent increase in tourism receipts from their Visa cards to USD 196.9 million. Spending divided across different categories Retail: During 2012, Visa cardholders spent USD 1.4 billion in the retail category (up 25.2 per cent), USD 75.3 million in restaurants (up 27.6 per cent), and USD 15.1 million

The United Kingdom continues to be UAE’s top source market with British Visa cardholders spending USD 540.4 million on their Visa cards in 2012, up 10.4 per cent on the previous year. in fast food restaurants (up 122 per cent). Tourism receipts in accommodation category remained robust, with spending by Visa cardholders in the UAE reaching USD 1.1 billion (up 19.6 per cent over last year). Seasonal tourism flow: The Visa cardholders recorded the highest value of tourism receipts in January (up 36 per cent to USD 485.1 million), November (up 6.6 per cent to USD 479.3 million) and December (up 13.5 per cent to USD 463.2 million). Outbound travel: Outbound travel also rose significantly during 2012, with Visa cardholders from the UAE spending USD 2.5 billion internationally in 2012, a 12.2 per cent jump year on year. The top five tourism destinations where UAE Visa cardholders spent the most were the UK (up 16.7 per cent to USD 402.3 million), the US (up 13.6 per cent to USD 273.4 million], Germany [up 16.3 per cent to USD 138.4 million], France [up 11.7 per cent to USD 124.7 million] and Saudi Arabia [up 26.6 per cent to USD 120.4 million].

June 2013



Dubai – top choice for new retailers Being ranked 4th amongst the world’s hottest retail markets, Dubai continues to make its presence felt globally.

Dubai ranks in 4th place amongst the world’s hottest retail markets with 25 new retailer entries during 2012.

L - R: Fuad Sharaf, Senior Director – Property Management, Majid Al Futtaim Properties; HE Hisham Abdullah Al Shirawi, Second Vice Chairman, Dubai Chamber of Commerce and Industry; Nicholas Maclean, Managing Director of CBRE Middle East


ubai is the most important international retail destination globally, second only to London, according to the 2013 edition of ‘How Global is the Business of Retail?’ released by CBRE. Dubai and London maintained a significant lead over the other locations in the top five – Paris, Moscow and New York. This year’s report also looked at the world’s ‘Hot Markets in 2012’ in order to enhance the overall understanding of cross-border retailer activity. The report found that retailers expanded into a wide range of markets in 2012, with 81 per cent of cities seeing at least one new retailer enter the market. Of the existing top five internationally representative cities, Dubai is now the highest ranked target market for new retailers. According to the report, Dubai ranks in fourth place amongst the world’s hottest retail markets with 25 new retailer entries during 2012, including American retailer Franklin & Marshall, Italian polo heritage brand Galvanni and Cheesecake Factory. Hong Kong takes the lead position, attracting significantly more new retailers than any other city with a total of 51 new retailers. His Excellency Hisham Abdullah Al Shirawi, second Vice Chairman, Dubai Chamber of Commerce and Industry said: “Dubai’s mature retail market is essentially driven by the growth in tourism, economic recovery and significant capital flow. Following the projected numbers by the Dubai Government of 20 million visitors by 2020, Dubai continues to offer an enticing opportunity for


international retailers looking to establish a presence abroad.” Although mature markets dominated retailers’ expansion plans last year, five emerging markets made the top 20. Kiev was in second place with 39 new entrants, with Sao Paulo (25), Iasi (19), Muscat (17) and Ho Chi Minh City (15) also important targets. This is the second year that Kiev has been ranked in the top three globally. The findings also revealed that Riyadh witnessed an increase in the overall retailer representation moving up one place from last year to 14th position. Notably Muscat broke into the top 20, ranking in 16th place. This is due to the recent opening of Muscat Grand Mall and increasing interest in the Sultanate from international brands in categories such as Coffee & Restaurants and Speciality Clothing.

Top ranked international retail destinations

New York






Keeping pace with e-commerce For businesses looking to extend their presence online, the rapid growth figures of e-commerce in the MENA region come as a blessing. be especially important now, as internet usage in the region has grown by a staggering 1,500 per cent since 2000, up from 1.2 million users in 2000 to 18.7 million in 2010. Ihab Ayoub, Visa General Manager for Middle East and North Africa, said: “E-commerce is one of the key drivers for the economy in today’s closely connected global environment, and is rapidly expanding here in the

The extent of the untapped potential in the e-commerce market was revealed when Visa Inc. released, in a 2013 IMRG report, that the MENA region represented the fastest growing e-commerce region worldwide.


-commerce has been gaining momentum in the region, and businesses have been persistently trying to capitalise on this opportunity. However, lack of available information and market data has prevented businesses and the government from effectively evaluating the potential for e-commerce growth and development in the region. The extent of the untapped potential in the e-commerce market was revealed when Visa Inc. released, in a 2013 IMRG report, that the MENA region represented the fastest growing e-commerce region worldwide. The MENA region held the leading position with an estimated 45 per cent year-on-year increase – from USD 10 billion in 2011 to USD 15 billion in 2012. Business owners can gain further insights about the existing levels of e-commerce performance and potential through Visa’s new in-depth study of the e-commerce market across the MENA region. The comprehensive study provides a worldwide comparison of key markets and is set to play a major part in benchmarking the e-commerce performance and the future growth potential across MENA. Available to businesses and the government, the report will be a valuable tool in understanding significant trends in the region and to map out future e-commerce strategies. This will


GCC. We are delighted to announce this new report to provide the private and public sector in the MENA region with a detailed and robustly researched overview of the e-commerce environment.” Ayoub added: “Visa has been a pioneer in e-commerce and has always strived to make it safe, reliable and convenient. Through initiatives such as this, Visa is continuing to support and drive the e-commerce industry across the Middle East.” The report is in partnership with the UK body for e-Retail, the Interactive Media in Retail Group, who provided the data. In addition, it is supported with commentary from the International Omni Retailing Members Association and Dubai-based online shopping mall –

STATS MENA is thefastest growing e-commerce region worldwide with

45% year-on-year growth


The ‘unstoppable entrepreneur’ Entrepreneurs and small business owners are determined to succeed, and are confident of overcoming any obstacles that come their way.

78 per cent of Middle Eastern entrepreneurs reported that given the chance they would do it all over again.

Kory Thompson, Country Manager UAE at Regus


MEs in the Middle East remain undeterred by challenges and have high entrepreneurial spirit, according to new research commissioned by Regus, a provider of flexible workplaces. Furthermore, 78 per cent of Middle Eastern entrepreneurs reported that given the chance they would do it all over again. The research also revealed that entrepreneurs in the region regard lack of access to credit (75%) as the biggest deterrent to setting up a business today. Some of the other challenges they face are the state of the economy (70%), red tape (69%), lack of government support, and market domination by large corporations as serious hindrances. Kory Thompson, Country Manager UAE at Regus says: “Thank goodness for the ‘unstoppable


entrepreneur’. Who knows what state the economy would be in if they decided to play safe and downsize like a lot of their larger and arguably better resourced competitors? Despite the best efforts of the government they still face challenges.” SMEs are engines of growth accounting for up to 99 per cent of businesses and 40 to 50 per cent of GDP [1] . Globally, 50 per cent of all jobs are generated by SMEs [2], yet, in spite of this, they attract just a tiny proportion of overall investment across the G20 [3]. Regus’ Kory Thompson adds: “Entrepreneurial firms will need to remain nimble to navigate choppy waters and succeed. The lack of institutional support means that business owners will continue to increasingly favour flexible working in order to avoid lengthy leases and free up their working capital so they can concentrate on growing their business. Already globally, more than half of entrepreneurs are using flexible working locations for most of the week, compared with 39 per cent for those that do not own their businesses.”

Top challenges for entrepreneurs


Middle East

Lack of access to credit



Red tape



Lack of government support



Current economic conditions



Market domination by large corporations



[1] Brown S. Harris K, Toward an Understanding of Consumer Perspectives

on Experiences, Journal of Services Marketing, 24, 2012 [2] Ernst & Young [3] Ernst & Young

Women in family businesses Women are an integral part of the society, and more so, of a family. However, they also have an important role to play in family businesses. This was the theme of a recent roundtable organised by Tharawat Family Business Forum, an independent non-profit membership network of family-owned enterprises in the Arab World.

During the event


ver 80 per cent of all businesses in the MENA are family-owned and family-run, and have a great impact on the region as key pillars of the economy. Therefore, examining the impact of women as family members, managers and owners is crucial to understand the factors that influence the sustainability of family firms. Members of family businesses from across the North Africa, Levant and GCC region attended the roundtable and discussed the multiple roles played by women in family owned businesses. The session provided them with an opportunity to exchange their experiences and share thoughts on the subject. With a goal to start a constructive dialogue on the subject, the event focused on finding a better understanding of the realities facing female family members in the region. The attendees from leading regional businesses explored the variety of roles that women play with relation to the family business, be it as managers, owners or family members and custodians of family harmony. Keynote speaker, Hana Al Rostamani, Head of Strategic Planning at the First Gulf Bank, UAE and a Director at Al Rostamani Group explored the impact of women on family business sustainability, and identified a direct

and an indirect relationship of women with their family firms. Noor Sweid, Managing Director Strategy at DEPA, UAE, discussed the importance of women as custodians of family harmony. She said that women have to be aware of the fact that they do play a crucial role in mediating between parties within the family and that in order to be effective in that role, they have to ensure that they have a fulfilled and balanced personal life. Strongly supporting the initiative, Essa Al Ghurair, Vice-Chairman of UAE conglomerate Al Ghurair Investment LLC, and Chairman of the Tharawat Family Business Forum said: “As wives and mothers, on a daily basis women deal with a multitude of tasks requiring good sense, patience, understanding and, not least, hard work. What better qualities could you ask of an employee or a manager? At home, women have to juggle all their responsibilities simultaneously in order to keep it running smoothly. A multitude of studies have shown women in business to be less confrontational than men, better able to find consensus and more skilled at handling human resources. To deny women their rightful place in business is to deny business a wealth of talent, and we cannot afford to do that!� Farida El Agamy, General Manager of Tharawat Family Business Forum said that the session’s goal was to start a dialogue, and map the concerns and hopes of women involved in family businesses. She declared that as part of its programme Tharawat would further focus on this area and develop concrete next steps to take up some of the issues raised during the roundtable.

June 2013



Nurturing technological talent An app creation competition provided the right platform for young developers to showcase their aptitude and skills.


s technology has been an emerging force in day-to-day businesses, there is a huge urge to nurture young talent and encourage new creative ideas. This was the case at the recent ‘Midnight Developer Challenge’, a student app development competition within the region. The regional competition, launched in December 2012, saw more than 1000 students from more than 25 countries participate over a three month period. The young developers received advanced technical training and coding sessions from Microsoft and Nokia experts through virtual sessions and webinars, gaining exposure to the latest mobile and app development technologies. At the end of competition, a team of students from the UAE won the second place in the Game category, with their app called Camagotchi – a social game where players raise and take care of their

Being Innovative Technology-savvy entrepreneurs in the region can now benefit from the newly opened innovation hub. The in5 innovation hub was launched recently by Dubai Internet City (DIC), the Middle East and North Africa’s largest ICT community. With the aim to support the development of the ICT startup ecosystem in Dubai, the centre was


The winning team of Camagotchi

camel. Microsoft Middle East and Africa (MEA), together with Nokia, announced the winners. The team received several prizes including USD 5,000 in cash, a Nokia Lumia 920 Windows Phone, an Xbox gaming console for each team member and having the app published on the Windows Store. Meanwhile, the first place in the Game category was awarded to a student team from Pakistan – winning an all-inclusive trip to Dubai, USD 10,000, a Nokia Lumia 920 and XBOX Kinect for every team member. “The young app developers in the UAE who participated in the ‘Midnight Developer Challenge’ have

officially launched under the patronage of His Highness Sheikh Majid Bin Mohammed bin Rashid Al Maktoum, who was present at the event to meet with entrepreneurs and unveil the centre’s new branding. The innovation hub bolsters entrepreneurship by providing infrastructure, support and a dynamic working atmosphere to entrepreneurs from the early stages of idea creation to idea implementation and the commercial launch of the product or service. The hub will grant selected entrepreneurs

all produced really creative ideas. The winning teams have transformed their idea into a new mobile app on the Windows Store, and can now earn profits from downloads and find fame with Windows Phone users,” said Amintas Lopes Neto, Academia and Startups Lead, Microsoft MEA. “Developing on the Windows platform will open many doors for young people looking for a future career in technology, or an opportunity to start their own tech business. It’s exciting to discover young technology talent in the UAE and the region, and we look forward to seeing more achievements from these entrepreneurs in future.”

with five key benefits which include setup and logistics support, mentoring, training, networking opportunities and access to funding. Malek Al Malek, Managing Director of Dubai Internet City and Dubai Outsource Zone said: “The volume of entrepreneurs setting up businesses in the region continues to grow year on year. According to our latest industry report, Role of Entrepreneurship and SMEs in the Development of the ICT Industry commissioned in partnership with Frost

& Sullivan, startups in the MENA region have grown in number by more than eight times since 2005. Starting any business can be fraught with uncertainty. in5 seeks to provide entrepreneurs in the areas of ICT, mobile and digital media with the infrastructure and support needed to launch their ideas, and to compete in the global marketplace.” Last month, Rihla Prime, the Middle East’s first online luxury travel club, became in5’s first success story having secured an investment of USD one million.

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Security threat to small businesses Small businesses are prime targets for cybercriminals accounting for 31% of all attacks.

At the Bloomberg New Energy Finance Summit

Zayed Future Energy Prize winner receives international recognition The winner of the Zayed Future Energy Prize in the SME category was named Bloomberg New Energy Finance Pioneer 2013.


ased in California, d.light design was one amongst the top 10 companies recognised by Bloomberg New Energy Finance (BNEF) as ‘Pioneers’ - gamechangers leading the curve in clean energy and related sectors. The company received the international acclaim at the sixth annual BNEF Summit held in New York in the presence of industry and government leaders. The event also saw the attendance of the members of the Zayed Future Energy Prize, the world’s preeminent award for innovation in renewable energy and sustainability, as part of their outreach campaign in the United States. At the Zayed Future Energy Prize award ceremony earlier this year, d.light design was awarded USD 1.5 million for its pioneering solarpowered lighting solutions that are distributed to the community in the developing world, especially Africa. The company’s small-scale, distributed renewable energy solutions provide households and small businesses in Africa with reliable, affordable and safe access to off-grid light and power. Donn Tice, Chief Executive Officer and Chairman, d.light design, said:


“We believe that everyone deserves access to energy. Winning the Zayed Future Energy Prize has enabled us to accelerate distribution of our lifechanging technologies, which have empowered millions to enjoy the freedom and improved quality of life that comes with access to reliable, affordable off-grid light and power.” Candidates for the BNEF Pioneers awards were assessed against three key criteria: potential scale, innovation and momentum, and judged by a panel of industry experts, which was supported by Bloomberg New Energy Finance’s analysts and technology specialists. The Zayed Future Energy Prize is a USD four million prize awarded annually to companies, schools and individuals that have made significant contributions to the future of energy, sustainability and climate change. In five years, the Prize has rewarded 21 innovators and impacted communities across the world. Submissions for the sixth edition of the Prize will close on August 5, 2013. Winners will be announced at the Zayed Future Energy Prize awards ceremony scheduled to be held on January 20, 2014, as part of the annual Abu Dhabi Sustainability Week.

Symantec Corp.’s Internet Security Threat Report, Volume 18 (ISTR) revealed a 42 per cent surge during 2012 in targeted attacks compared to the prior year. Designed to steal intellectual property, these targeted cyberespionage attacks are increasingly hitting the manufacturing sector as well as small businesses. Small businesses are attractive targets themselves and a way in to ultimately reach larger companies via ‘watering hole’ techniques. “This year’s ISTR shows that cybercriminals aren’t slowing down, and they continue to devise new ways to steal information from organisations of all sizes,” said Justin Doo, Security Practice Director – Middle East at Symantec. “The sophistication of attacks coupled with today’s IT complexities, such as virtualisation, mobility and cloud, require organisations to remain proactive and use ‘defence in depth’ security measures to stay ahead of attacks.” Small Businesses are prime targets Targeted attacks are growing the most among businesses with fewer than 250 employees. Small businesses are now the target of 31 per cent of all attacks, a threefold increase from 2011. While small businesses may feel they are immune to targeted attacks, cybercriminals are enticed by these organisations’ bank account information, customer data and intellectual property. Attackers hone in on small businesses that may often lack adequate security practices and infrastructure. Web-based attacks increased by 30 per cent in 2012, many of which originated from the compromised websites of small businesses. These websites were then used in massive cyber-attacks as well as ‘watering hole’ attacks. In a watering hole attack, the attacker compromises a website, such as a blog or small business website, which is known to be frequently visited by the victim of interest. When the victim later visits the compromised website, a targeted attack payload is silently installed on their computer. The Elderwood Gang pioneered this class of attack; and, in 2012, successfully infected 500 organisations in a single day. In these scenarios, the attacker leverages the weak security of one business to circumvent the potentially stronger security of another business.


Technology at your fingertips As technology penetration in the region deepens, we see another app making its way into the Dubai market.


or technology enthusiasts, a new app launched in Dubai will offer its users hundreds of two-for-one offers with in levels of convenience. The app, TWOFORONE GO, has a variety of offers including savings on dining, entertainment, golf, spa treatments and more. The convenience is highlighted through by the fact that everything is direct to customers’ smartphones, with no cumbersome books, print-outs or paper vouchers. This also makes it environmentally safe and user-friendly. The ‘All-Inclusive’ collection is priced at just AED 199 for a full 12 months, and the app offers a rolling membership throughout the year with great new offers added every week.

The easy-to-use app has filter and sort functions, which enable customers to make the most of their TWOFORONE GO mobile vouchers: view a map to find the best offers around town and discover hidden gems; get directions and information on each outlet; mark your favourites and create a personal voucher list; and spread the word about a great deal with direct links to Facebook, Twitter and e-mail. “After the success of the TWOFORONE GO mobile voucher app in Scandinavia, we are delighted to launch the concept here in Dubai,” said Robert Meza, CEO of TWOFORONE GO. “There is a high proliferation of smartphone users here in Dubai, and consumers are very savvy when it comes to making savings. As the

Is technology affecting your employees’ productivity? Application control can help in safeguarding your business against potential security threats. Employers can kill two birds with one stone by restricting the launch of third-party applications. On one hand, this will enhance the security of their corporate workstations, while on the other hand, it will help increase employee efficiency. 57 per cent companies, however, do not use any specific tools for application control as reported by a survey conducted by Kaspersky Lab in collaboration with B2B International in November, 2012. Cybercriminals have several ways of infecting a system. For instance, passing malware off as a popular application


– when an employee tries to run the application, the whole infrastructure is compromised. Therefore, to prevent such incidents, companies need to develop and enforce security policies specifically addressing the installation and launch of applications; but not all are doing so. According to the survey, a majority of companies have no means of controlling applications and 17 per cent of companies have no interest in using new application control technologies or aren’t even aware of them. Likewise, when it comes to connecting external devices and data carriers, only 44

very first smartphone voucher app in the region, we are offering our customers a unique, easy-to-use service, that’s not only convenient but great value, too. With two-for-one vouchers for all types of leisure activities, including food and beverage, spas, golf and much more, it’s the chance to save money while having fun with friends and loved ones.”

per cent of companies pay enough attention to this issue and deploy device control tools, while 17 per cent of companies aren’t aware of device control tools or have no interest in using them. Meanwhile, malware distributed through USB carriers is a continuous threat. In 2012 alone, Kaspersky Lab security solutions prevented more than three billion local infection attempts. Moreover, giving employees total freedom to connect any external device to the corporate network increases the probability of data leakage. Why should you implement application control? The use of endpoint controls can be beneficial to any business. Application control provides additional protection from malware and restricts the use of leisure applications such as games or torrent clients. Control over portable external devices prohibits

unauthorised connections, lowers the probability of data leakage and helps prevent workstation infection through inappropriate devices. Finally, web control allows either a total ban on, or time limitations on visiting, certain websites. This can stop employees from wasting time on sites which are not work related, and can also add extra protection against malware and fraudulent websites. The Kaspersky Endpoint Security for Business platform incorporates all three control technologies into the Endpoint Controls feature. This enables businesses to tackle all the issues described above, offering many important benefits. The controls are easy to configure and are centrally managed, allowing administrators to create and apply flexible security policies simultaneously across any number of corporate endpoints.


A step across the border Most people today would relish the prospect of travelling to an international destination. That’s true for the majority of SMEs as well. Damien Sheehan, Head of Commercial UAE and Global MNC MENA at DHL Express, tells us why such international exploration is becoming increasingly attractive to SMEs. “People who don’t travel cannot have a global view, all they see is what’s in front of them. Those people cannot accept new things because all they know is where they live.” – Martin Yan


echnology and e-commerce have accelerated the pace of global expansion, and businesses are increasingly going across the borders in an attempt to bolster long-term growth. While such diversification of business activities is commonly seen with large corporations, SMEs can have huge benefits of following in the footsteps of their counterparts. A report released by IHS and DHL Express, Internationalisation – a driver for business performance, showed that international trade is a key driver of small business success. For SME owners who are still uncertain,


the statistics speak for themselves. The report highlighted that 26 per cent of the international SMEs were top performers versus 13 per cent of the domestic-only SMEs. Speaking to Damien from DHL, we learn more about the top benefits and challenges of the Internationalisation of SMEs. What is an international SME? First things first – how is an international SME defined? It’s when the firm conducts business activities that go beyond its home base – the region in which it is located explains Damien. The common informal understanding of an international firm versus a multinational, transnational and global firm is best defined as follows: International firm: Mainly categorised as import and export activities. Multinational firm: These firms have investments and maintain a presence in

foreign countries. They produce their goods and services in accordance to the needs of the individual markets. Transnational firm: Such firms have a distributed model in terms of dividing the decision making power across their different offices around the world. Global firm: Although these firms have investments in foreign markets, their products and services remain the same across all the countries. The IHS and DHL Express study reveals that subcontracting, commercial cooperation and technical cooperation are the most common international activities that small businesses are involved in. What gives an international SME the edge over a domestic SME? Damien lays down the top five benefits that international SMEs can enjoy:



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Damien Sheehan, Head of Commercial UAE and Global MNC MENA at DHL Express

• Building strong foundations in emerging markets which offer more growth and demand • Access to an additional pool of resources, suppliers, business partners and cheaper prices • Exposure to new technological developments and innovative products and services. • Exchange of knowledge resources such as technical know-how • Availability of foreign currency All the aspects above play an important role in shaping the overall business and help boost growth. This view was supported by 31 per cent of SMEs that cited the main reason for their international activities was linked to long-term business growth, according to the study.

What are some major challenges that an SME should be aware of? Having mapped the positive side of things, it is only fair to assess what are some roadblocks in the process of internationalisation. Again, Damien has a few key aspects that SMEs should look into. • Businesses should be wary of cultural differences and need to understand the sensitive areas of the new culture. • Changes in regulation and market conditions can pose difficulties for SMEs. • With no strong business contacts in a new country, SMEs will have to start from scratch and build a business network. • Entering foreign territories could result in added pressure for an SMEs operations at home and probably result in a distraction from current activities. • Employees need to be properly briefed before such expansion so that they are prepared to take on added responsibility. In addition, one of the major challenges posed is the language barrier that can significantly affect the way business is done internationally. This is supported by the study – Reducing the Impact of Language Barriers – by Forbes in association with Rosetta Stone Business. It reports that 32 per cent respondents strongly agree and 52 per cent agree that “workers are more productive when managers or executives communicate with them in their native language” while 62 per cent cite “miscommunications contribute to inefficiency” as the most significant consequence of such language barriers. What does an SME need in this process? According to the IHS and DHL study, the three challenges for export growth are “lack of

Reasons to increase international activities


Access to new markets


Access to know-how and technology


Access to cheaper raw materials


Diversification of product / service portfolio


Access to capital

11% Additional production capacity


Access to labour force


High labour costs in the domestic market


More flexible regulation Source: IHS survey – 2012


knowledge of foreign markets”, “high customs duties” and “establishing contacts with foreign partners/customers.” “Businesses should have a strong understanding of the market they are looking to enter. They should measure the challenges and potential ways of overcoming them. For instance, foreign markets have different languages, cultures, customs, and market structures,” said Damien. He further explains that research is the absolute key to deal with such differences and very often companies do not realise that entering a new market can be very difficult without due diligence. While market research is of utmost significance and can determine how well an SME clicks in a foreign market, it comes at a cost. So, how does an SME bear these, often significant, costs? Damien explains, “There is a cost involved in the process but I think firms in the UAE have an advantage as they have access to some of the top events and networking sessions in the region. Additionally, UAE is very well connected with the rest of the world and often attracts international players.” What is the concept of an SME being ‘born global’? SMEs that operate internationally right from inception are termed ‘born global’. According to the IHS and DHL report, 27 per cent of all SMEs have more than one international activity and this figure rises to 31 per cent for SMEs with less than five years of trading. It adds that a few reasons behind this are improvements in technology, communications and logistics. Damien said: “Companies that start international operations since the beginning or in their early years definitely have an edge. They also get more adjusted to the process and settle in faster.” What kind of potential does an SME in the UAE have? According to DHL’s Global Connectedness Index, the UAE is the most connected country in the Arab World based on factors such as international flows of trade, capital and information. It is no secret that the UAE has a strong international presence and reach. The country offers great infrastructure, technology, connectedness and easy access to foreign markets. These facilities definitely help an SME in the UAE to take their business to the next level.

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SME Advisor Middle East June 2013  

SME Advisor Middle East June 2013

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