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wo of our articles feature Elvis Presleyinspired headlines this month, the first section being our CEO chat (Pg. 18) featuring LINKVIVA CEO, Niousha Ehsan. The FinanceME Business Vision Awards winner gives great insight into how she put the brakes on her business’s rapid growth to make sure it had the right policies in place for future expansion, and how she learned to hire the right people through trial and error. On the topic of business growth, the news is still abuzz with the new UAE bankruptcy law and what it will entail exactly. Mention of it is made throughout this issue as it is touched on in a couple of our features, namely our Raising capital (Pg. 26) and IPO (Pg. 22) pieces. It is discussed a bit more in our News analysis (Pg. 05) with Emilio Pera, Partner and Head of Financial Services, KPMG, and Usman Khakwani, Head of Business Banking, Noor Trade, looking at how struggling businesses will be able to restructure their debt and continue operations. In other legal news, our Legal focus (Pg. 14) has input from Saad Maniar, Managing Partner, Crowe Horwath UAE, who discusses the extension of the deadline for compliance with the new Commercial Company’s Law to 30 June 2017. Our Chalk talk (pg. 16) saw us sit down for a chat with Bill Keffer, GM, JW Marriott Marquis, Dubai. Hailing from Tennessee, he has travelled through the US, Asia, the UK, and has been in Dubai since 2009. He tells some great stories about seeing famous comedians in their early years, a Japanese dishwasher who speaks perfect English, and the value of hiring millennials. On a greener note, our Start-up section features Qatarbased, fully organic and vegan café, Evergreen Organics (Pg. 42). Founder, Ghanim Al-Sulaiti, discusses the challenges of trying to set up the business. He looks at the potentially prohibitive costs of starting a business in Qatar, as well as struggling with the nonexistent organic supply chain. Finally, using social media to leverage an SME’s business entails more than the occasional Facebook post or tweet. Business owners have to know which platforms to use to engage with their audience, as discussed by Ashwin Gedam, Vice President, Global Marketing and Communications, Xpress Money and Maan Dalghan, PR Director, Quill Communications, in our Facetime section (Pg. 38).
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I hope you enjoy this issue!
Jessica Combes Read my blog at: http://www.cpifinancial.net/blog/author/112/jessicacombes Follow us on Twitter: @FinanceMidEast and on Instagram: @finance_middle_east
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FEATURE Show me the money!
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FAST FACTS Second SME investment workshop held in Oman
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CASE STUDY Body beautiful
TOP TIPS Why your SME should ‘pop up’
36 FACETIME Cowabunga!
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OPINION Family-owned businesses called on to back SMEs
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NEWS ANALYSIS Final draft of bankruptcy law approved
OPINION Improving the bank-SME relationship LEGAL FOCUS Relief as Commercial Companies Law deadline extended
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CHALK TALK Bill Keffer
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CEO CHAT Viva, LINKVIVA
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FACETIME The art of being social
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BEHIND THE SCENES Behind the scenes: Rolina Lofranco-Palis and Maria Chona Lofranco LAST WORD Preparation, planning, and obliterating poverty
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NEWS ANALYSIS
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Final draft of bankruptcy law approved The new law will allow companies struggling financially to restructure their businesses and continue operations
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he final draft of the federal bankruptcy law was approved by the UAE Cabinet, at the beginning of September this year. Under the existing legislation, business owners facing financial difficulties could face jail terms, causing many to skip the country leaving behind approximately AED 5 billion in debt, which has been a major obstacle in doing business in the UAE. Emilio Pera, Partner and Head of Financial Services, KPMG in the UAE, said the new law will enhance the UAE’s business environment by boosting its investment climate. Businesses facing financial difficulty can now restructure, rather than go under, which will not hurt investors as much as it did before. He added that the ease of doing business in a country is one of the key indicators that potential investors will consider in a global market that is increasingly competitive as companies struggle to regain pre-crisis growth levels, with the maturity of the legal framework an important contributor to this indicator. Continued investment into this market should boost economic growth, further enhancing the attractiveness of the UAE as a global investment destination.
“In the recent past we have seen individuals skip the country to avoid jail sentences when they can’t meet financial obligations, resulting in businesses going under and leaving investors out of pocket. This legislation will enable restructuring or structured unwinding of businesses facing financial difficulty which will not only enable them to continue to constructively contribute to the economy, but also protect investors,” said Pera. The UAE has approximately 300,000 SMEs, with about 100,000 being eligible for banking services, according to advisory and analytics firm Cedar Consulting, with the current total exposure of banks to SMEs in the country accounting for about five per cent of total lending, while their contribution to bank deposits is around six per cent. Noor Trade’s Head of Business Banking, Usman Khakwani said the news of a UAE bankruptcy law has been a breath of fresh air for many businesses in these challenging times. “Given that SMEs are the major source of GDP growth outside of the non-oil sector, it is pertinent to have this safety net in place for the betterment of all stakeholders involved such as SME,
buyers and suppliers, banks and other related parties. It may be inferred that a bounced cheque will no longer mean a criminal offence in the UAE”, he said. Khakwani added that the impact should be positive towards the growth of UAE, as this will allow businesses who fall under the criteria of being in financial distress to restructure their finance and continue their operations, making it a win-win situation for all involved stakeholders. Pera said that the bankruptcy law is not something for a business to consider unless they are already facing severe financial trouble. For a business that is operating profitably in the market, the law will help attract investors as it provides reassurance that their investment will be protected even if the business fails. “It will also give SMEs confidence when setting up their business in the UAE, and a certain level of comfort in the market. As of now we know that the law could be enacted as soon as the end of the year. SMEs that are struggling right now could look at the possibility of staying afloat until the law is enacted, in order to potentially save their business,” said Pera. WWW.FINANCEMIDDLEEAST.NET
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SECOND SME INVESTMENT WORKSHOP HELD IN OMAN
BAHRAIN TO HOST FINTECH EVENT FOR ENTREPRENEURS
Oman’s Islamic Bank, Bank Nizwa, recently sponsored a workshop aimed at empowering more than 150 prospective SME owners with new investment opportunities. Organised by the Ministry of Commerce and Industry, the event included interactive panels with participation of industry experts from the public and private sector. Dr. Ashraf Al Nabhani, General Manager Corporate Support at Bank Nizwa, outlined the bank’s role in the development of local entrepreneurs, saying that SMEs play a very important role in the Sultanate’s economic growth and account for as much as 90 per cent of the corporate sector. “Given the nurturing environment created for them by the Omani government, we are working tirelessly to help them excel. Our participation in this initiative comes as part of our commitment to support the development of a strong SME sector through Shari’ah-compliant solutions and skill-building seminars,” said Al Nabhani. He added that the Islamic finance instruments offered to SMEs will drive SME growth and guide small businesses through every stage of business development.
Business consultancy ME Global Advisors, with the support of the Bahrain Economic Development Board (EDB), will introduce E-Squared at this year’s World Islamic Banking Conference (WIBC), a venture designed to bring together key players and investors from the GCC region to Bahrain. This year the WIBC will introduce a platform for entrepreneurs to explore new fintech opportunities in Bahrain and contribute to the investments in the fintech sector, helping increase the competitiveness of the country's economy. The conference will address the issues faced by GCC governments, such as the need to spur youth employment, an ecosystem of innovation and entrepreneurship, and economic diversification. Khalid Al Rumaihi, Chief Executive of the EDB, said the fintech sector is rapidly growing and developing globally, and the GCC region's economic diversification efforts create tremendous opportunities for development and growth. It is also a sector in which Bahrain's value proposition is particularly strong, building on a wellestablished financial services sector, well-educated and bilingual workforce, competitive operating environment, and excellent digital connectivity.
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FAST FACTS
DUBAI HOLDING PARTNERS WITH DUBAI FUTURE ACCELERATORS Dubai Holding, the global investment holding company, announced its role as a founding entity in Dubai Future Accelerators, the programme by Dubai Future Foundation, that facilitates public-private partnerships that expedite its delivery through design, innovation and entrepreneurship. Under the directives of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, Dubai Holding together with Dubai Future Foundation, is investing AED 1 billion in projects and companies of the programme over the course of five years. Ahmad Bin Byat, Vice Chairman and Managing Director, Dubai Holding, said this is very exciting for the company, which is hosting and collaborating with entrepreneurs in the global tech industry to deliver enhanced experiences to its customers and the wider community. From nearly 2,300 applications submitted to the programme, 31 start-ups that focus on block chain technology, digital personalisation, robotics and virtual reality, were shortlisted to work with the founding entities, with four working with Dubai Holding in the 12-week long first phase.
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The recent Sharjah Foreign Direct Investment Forum, organised under the patronage of His Highness Sheikh Dr. Sultan bin Mohammed Al Qasimi, Member of the Supreme Council and Ruler of Sharjah, highlighted the crucial role that SMEs play in the UAE economy. Among the issues examined by the panelists were how the SME sector was well-entrenched in the UAE economic landscape thanks to its banking, finance and regulatory structure and how ease of doing business was a factor associated with an economy’s high proportion of smaller businesses. According to Robin Butteriss, Managing Director, Deloitte Corporate Finance Ltd., SMEs diversify the economy, allowing greater job absorption and job creation, with approximately 50 per cent of the GCC’s population employed by SMEs in the UAE. This is higher than the proportion of people employed in this sector in the US and Europe. “Ease of doing business and penetration of SMEs have a direct correlation, making the UAE and Sharjah stand out amongst its peers in the global index of doing business. Economic diversification, innovation, job creation and entrepreneurship are the key factors that have helped the growth of SMEs across the GCC,” said Butteriss.
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TENMOU TO HOST MENA ANGEL INVESTOR SUMMIT Tenmou, Bahrain’s first ‘Business Angels’ organisation, in partnership with the Economic Development Board (EDB) will host the third Middle East North Africa (MENA) Angel Investors Summit in November 2016, with more than 40 start-ups expected to attend. Attendees will have the opportunity to present their business ideas, exchange deal-flow, learn best practices and raise awareness related to angel investment in the MENA region. “At Tenmou we are committed to build a robust support eco-system and position Bahrain as the entrepreneurial hub for the MENA region. Our strategic partnership with the Economic Development Board has helped us to further develop this cooperation between angel investors and venture capitalists over the years,” said Hasan Haider, CEO of Tenmou. He added Tenmou has previously witnessed several deals being signed and start-ups connected with industry leaders and angel investors from around the world. Last year, more than 300 angel investors and entrepreneurs from the Middle East, North Africa, Europe and the US Silicon Valley participated in the MENA Summit. Regional agreements worth more than $4 million were signed as a result of the Summit last year.
316 NEW HOTELS
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PROJECTS ALREADY UNDERWAY IN UAE
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PROJECTS IN THE PIPELINE IN SAUDI ARABIA
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PROJECTS UNDERWAY IN QATAR Source: The Middle East and Africa Hotel Construction Overview report by TOPHOTELPROJECTS
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FAST FACTS
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SMES: THE LIFEBLOOD OF THE UAE ECONOMY
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TOP TIPS
BUILD BRAND EXPOSURE
From a marketing perspective, pop ups are a powerful way to build brand exposure. Even if you have a loyal in-store and online following, temporary stores unlock access to a brand new batch of potential customers. Maybe you’ve got a creation like beard oil that works wonders for facial hair, but doesn’t quite sell itself. Or perhaps you put together ultra-organic juice detox programmes, where tastings are the key to winning business. Whatever you’re peddling, pop-ups are a powerful way to engage with new customers and physically demonstrate the value of your product. The end goal? Get people hooked!
TEST PRODUCTS IN NEW MARKETS If you’re toying with the idea of
launching a debut location or opening another branch, popups can be a great way to test the waters. You’ll gain insight into how a locale responds to your presence, and can use data to determine whether or not investing in a permanent lease is worth your while. They’re also a ‘no strings attached’ way to test a new product line, and ascertain if pop up response is positive enough to justify further investment.
Why Your SME Should ‘Pop Up’ Over the past few years the concept of pop up stores has enjoyed a sharp revival and Shahzad Bhatti, Founder, Share This Space, discusses how ‘popping up’ could work fiscal magic for your SME
CREATE A SENSE OF EXCLUSIVITY Humans are intrinsically programmed
to want what they cannot have. Referencing the works of Professor Robert Cialdini’s principle of scarcity, the fleeting nature of pop ups means that temporary retailers enjoy bigtime allure. This switches customers into spontaneous mode, and prompts purchases based on the fact that they could be missing an exclusive opportunity.
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BIG OPPORTUNITIES FOR SMALL BUDGETS For SMEs without the capital to invest in a bricks and mortar presence, pop ups are a fantastic way to reap the benefits of a tangible store, without the burden of long-term commitments. Remember to advertise ahead of time on social media to maximise impact. If you’re an established business, platforms like Facebook, Instagram and Snapchat are a powerful (and free) way to get people chatting.
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OPINION
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MEs are still subject to substantial financial, business, and regulatory challenges, according to a report, The Emergence of the Giant–The Role of SMEs in Bolstering Employment in the GCC, released at the end of September by online recruitment company BLOOVO.COM. The report puts finance rejection rates as high as 75 per cent for most GCC countries, with a mere two per cent of total bank lending across the GCC being allocated to SMEs. Abdul Baset Al Janahi, CEO of Dubai SME, the government body set up to promote small businesses, has suggested that family-owned businesses could provide a solution to these challenges by investing in SMEs, adding that the private sector has abundant capital that can be channelled into supporting start-ups. He added that entrepreneurial development requires strategic and financial support from the private sector, over and above the efforts of governmentbacked initiatives. “There is abundant capital [in the region], as well as abundant talent. What needs to be done is to combine that talent with capital. Entrepreneurial talent should be able to identify and access the right source of required capital,” he said.
Family-owned businesses called on to back SMEs Abdul Baset Al Janahi, CEO, Dubai SME, discusses how the private sector can play a role in building smaller businesses
Should this suggestion take off, Al Janahi said what would set it apart from other sources of finance, such as the Khalifa Fund, is that this financial support would apply to all SMEs, both local- and foreign-owned, because every small business deserves investment. He added that in order to qualify for this kind of assistance business owners will need to demonstrate passion, creativity and genuine, innovative ideas. These are the features that differentiate their start-up and qualify it for further support. The UAE Banking Federation issued a statement at the end of September that, under the rescue initiative
announced in March this year to support struggling SMEs, debts worth AED 7 billion held by 1,700 companies had been restructured. This has reduced the number of small business owners fleeing the country, rather than risk facing jail for non-payment of debts. BLOOVO.COM Co-Founder and President Iyad Abu Hweij said that part of why SMEs struggle to raise conventional debt-based finance is due to the risk-averse nature of lenders, adding that there is no way to fail safely because of current financial laws. “Fortunately, measures like the soon-to-be implemented UAE bankruptcy law will lead to a more facilitative and
mature financial environment for SMEs,” he said. Al Janahi added that the new bankruptcy law will boost SME confidence and spur growth in the sector. This law, coupled with the proposed introduction of VAT, could improve SMEs’ relationships with banks and financial institutions because SMEs will have to have their books kept up to date, which will allow banks to conduct a thorough evaluation of the business. This will compel the non-SMEfriendly financial institutions to evaluate a business and its strengths, rather than evaluating individuals and requiring personal guarantees from business owners.
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OPINION
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tatistics show how important small and medium enterprises (SMEs) are to the global economy. According to the International Finance Corporation, SMEs account for 66 per cent of permanent, full-time jobs in developing countries. The European Commission says that SMEs created 85 per cent of all new jobs in the European Union between 2002 and 2010. In the UAE, SMEs generate around 60 per cent of the country’s non-oil GDP and make up around 95 per cent of all registered companies, according to the UAE SME Council. Despite their contribution to regional economic wellbeing, the region’s SMEs clearly face considerable challenges. In May this year, Dubai SME, an arm of the emirate’s Department of Economic Development (DED), identified a ‘major gap’ in funding for SMEs. Meanwhile in Bahrain in July, it was reported that around
Improving the bank-SME relationship Philippe Fanjere, VP Europe, Middle East and Africa, Maestrano, looks at how innovations in ICT could allow the region’s banks to become trusted advisors to its SME customers 200 Bahrain-based SMEs faced closure, with funding and lack of access to good business advice cited as key challenges. If the region’s SMEs are facing a cash and knowledge deficit, why aren’t the region’s banks stepping in to fill the gap? Banks often have existing relationships with
company owners, they have money to lend and they know how to manage a balance sheet. Yet, 80 per cent of start-up owners surveyed by the DED in May this year said they were self-funding. The issue appears to be one of trust and the SMEs’ cases are not helped by reports that those skipping
the country (UAE) last year owed around AED 5 billion. Lending decisions are based on data and the numbers an SME owner shows to a bank need to demonstrate that the company does not represent a risky investment. Banks need a clear picture of a company’s turnover, its liabilities and
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If the region’s SMEs are facing a cash and knowledge deficit, why aren’t the region’s banks stepping in to fill the gap?” – Philippe Fanjere, VP Europe, Middle East and Africa, Maestrano
whether or not it is, or could be, operationally profitable. To give banks this level of insight into their business, SMEs need business management software that allows them to log key company data, analyse it and present it in a clear, easy-to-understand format to potential investors and lenders. SMEs wanting to set up such systems have historically had only one option, however: to undertake on-premise deployments of hardware and software. Such deployments are costly, complex and often do not achieve the desired results. Thanks to advances in technology, a solution is on hand in the form of cloud computing.
With the cloud, or ‘software as a service’, model, deployment headaches are done away with almost entirely. Instead, SMEs can simply subscribe to software that has been designed and written with their specific needs in mind. SMEs no longer need to procure expensive hardware and software, install it and maintain it. Now, software sits in dedicated data centres run by specialist companies and is accessed through broadband internet connections. SMEs pay predictable monthly subscription fees and can simply add or subtract users and features as needed. Data remains the property of the customer and is protected by layers of physical and virtual security.
For those that use cloud computing, the model works, but there is still limited, although rapidly growing, awareness of it amongst the wider SME community. Banks, because they already have relationships with SME customers, have a unique opportunity to partner with cloud providers and raise awareness of the cloud model amongst their customer base. Banks even have the option of offering these solutions carrying the bank’s branding as part of their overall SME offering. This is not to say that financial institutions are suddenly going to transform into resellers of ICT solutions. Rather, they have a relationship with SMEs and are offering
their clients something that is of genuine benefit to them, along with lending and advisory services. By offering a broader portfolio of relevant services, banks can position themselves as trusted business advisors to SMEs, rather than just providers of loans. If banks are successful in encouraging uptake of cloud services amongst their SME customers, they will gain greater insights into those customers’ businesses and be able to better advise and support them. Banks will be able to lend with more confidence, their SME customers will be more likely to succeed and the bank, in the end, is more likely to get its money back.
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LEGAL FOCUS
Relief as Commercial Companies Law deadline extended Saad Maniar, Managing Partner, Crowe Horwath UAE, advises businesses to take advantage of the extension period to comply, as failure to abide by the new law may attract harsh penalties
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s you may recall, on 1 July 2015 the new UAE Commercial Companies Law (CCL) came into force, replacing the previous act that was issued in 1984. The updated regulation marked the culmination of six years of legislative process during which there had been much debate about which aspects of the previously existing companies legislation should change, particularly with regards to foreign ownership restrictions and initial public offering (IPO). The existing rules on foreign ownership have not yet been amended, but will be considered separately as part of an investment law to be issued later. The UAE Government announced a one-year period, from June 2015 to June 2016, for existing companies to adjust their previously existing legal positions to bring them in line with the New Commercial Companies Law. However, at the beginning of June 2016, many companies had not complied. While announcing the extension of the new deadline, which has now been set for 30 June 2017, UAE’s Minister of Economy, Sultan
Al Mansouri, acknowledged that the extension was granted after companies reported facing difficulties in getting various approvals to comply with the new law, particularly with regards to amending the articles of associations, holding general assemblies and adjusting existing legal positions to bring them in line with the New Commercial Companies Law. No doubt the new requirements caught most of the businesses in the country, particularly SMEs, off guard. Particularly regarding matters to do with shareholder arrangements and existing constitutional documents, preparation of accounting records, management and directorships and share pledge regulations, to name a few. With regards to accounting, the new CCL requires all UAE companies to apply international accounting standards and practices. The previous Companies Law required compliance with internationally accepted accounting practices, which had generally been interpreted to mean International Financial Reporting Standards (IFRS). There have never been national general
accepted accounting principles (GAAP) in the UAE. Companies with public accountability must use full IFRS, while small- and medium-sized entities may use the IFRS for SMEs or full IFRS. In connection with Initial Public Offering, the New CCL does introduce a number of significant changes. Currently, the existing rule of the float requirement is 55 per cent, which is a very high percentage. The existence of this rule is thought to have deterred some companies from listing on the two UAE markets, the Dubai Financial Markets and Abu Dhabi Exchange. A notable change introduced by the New CCL is the abolishment of the minimum capital requirement for setting up a limited liability company (LLC) in the UAE. It amends Article 227 of Federal Law No.8 of 1984 which provided that the minimum share capital of a limited liability company must be no less than AED 150,000 divided into equal shares of minimum value of AED 1,000 each. Under the new law, prospective business partners seeking to establish a limited liability company will have the freedom to determine the capital requirements of
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Companies with public accountability must use full IFRS, while small- and medium-sized entities may use the IFRS for SMEs or full IFRS.” – Saad Maniar, Managing Partner, Crowe Horwath UAE
their new company and there will be no minimum par value for the company’s shares. The law provides that the limited liability company must have a “sufficient capital… to achieve the objective of incorporation”. Currently, the UAE is in the process of enacting and implementing a broad range of laws and policies including the Commercial Fraud, Foreign Investment, Arbitration and Anti-dumping laws. The Commercial Companies Law however, has proved to be one of the most challenging laws the UAE Government has passed, “taking over 20 years of consultation and involving numerous departments and stakeholders across all seven emirates,” Al Mansouri revealed. In total the law contains 378 articles divided into 12 chapters, regarding the general provision of companies, individual companies, limited liability companies, public joint stock companies, private joint stock companies, companies and special organisations, conversion and mergers and acquisitions, expiration, foreign companies, inspection of companies, sanctions and transitional and financial provision.
Al Mansouri said the UAE is pursuing its vision to be among the best countries in the world by 2021, by focusing mainly on SMEs and innovation, which are the key drivers of growth and entrepreneurship. “As part of this goal and the continued growth of the economy, small and medium size enterprises and innovation are a strategic priority for the Ministry moving forward,” he said. Around 94 per cent of UAE companies are SMEs–estimated to be 350,000–and these contribute to over 60 per cent of the national gross domestic product (GDP). SMEs in the country are defined and classified based on unique thresholds, including employee headcount and turnover, and secondly, the sector in which the enterprise belongs to, such as trading, manufacturing, or services. As per the SME definition, within the trading category, a small business is any enterprise with less than or equal to 35 employees and turnover of less than or equal to AED 50 million while a medium business is any enterprise with less than or equal to 75 employees and turnover of less than or equal to AED 250 million.
Any enterprise with greater than 75 employees or turnover greater than 250 million is considered large. Within the manufacturing category, a small business is any enterprise with less than or equal to 100 employees and turnover of less than or equal to AED 100 million, while a medium business is any enterprise with less than or equal to 250 employees and turnover of less than or equal to AED 250 million. The services category defines a small business as any enterprise with less than or equal to 100 employees and turnover of less than or equal to AED 25 million while a medium business is any enterprise with less than or equal to 250 employees and turnover of less than or equal to AED 150 million. The Minister, however, reiterated that the new laws were intended to protect investors from risks, combat illegal and harmful activities, develop the business environment, increase competitiveness, and enhance corporate governance by ensuring the proper implementation of international best practises in the country’s businesses and financial markets.
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15 10/12/16 1:17 PM
CHALK TALK
BILL KEFFER
The GM of the JW Marriott Marquis, Dubai, talks about washing dishes, The Comedy Store, and the value of millennials in the workplace
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’ve been in the hospitality industry since I was 12 years old. My first job was as a dishwasher at a BBQ restaurant in my home state of Tennessee, and I worked all through high school as a server and a cook. I grew up in a pretty humble family, so I learned pretty quickly about hard work and business ethics, and if I wanted something, I had to set myself goals and go after it.
That first job taught me a lot at a very young age about responsibility and making commitments. I learned early on the valuable lessons that, unfortunately, I do not see a lot of people, including my kids, learning today. Millennials did not have the opportunity to work from age 12, it’s against the law. I take pride in hiring young, energetic people that
think differently. I’m not saying we need to get rid of non-millennials, but the blend of generations is where businesses get their strength. I moved to California for university. I had a few thousand dollars saved, found a place to live, got enrolled in school and got a job as a bartender at the Sheraton in Universal City, my first hotel job. I was a bartender at the Comedy Store for a couple of years.
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Those were great years; I got to see Eddie Murphy, Robin Williams, and other celebrities in the very early stages of their careers. A great opportunity came up to help open the new Four Seasons in Beverly Hills. That was my first experience of the top-tier, fivestar, luxury market and it’s a job I really enjoyed. I returned to Tennessee to finish my education in Constitutional Law and Philosophy. In retrospect, my legal studies were very valuable as a portion of job entails reading and dealing with contracts. One thing education taught me is the ability to organise myself over a specific period of time to achieve a specific target. Most of my people are collegeeducated but the degree doesn’t really matter. I feel that a degree really just shows that you’re teachable. In Tennessee I got my first job with Marriott, as a bar manager. After that, I had the opportunity move to Fort Lauderdale, Florida, and I was fortunate to get a position with the Mariott Harbour Beach Resort. I oversaw all the restaurant operations. During that time I met my wife so that is always a special place to me. I then moved to New York City to work at the Mariott Marquis. It is our largest hotel in the company, and our highest revenue-producing hotel. It was a five-year job which taught me more than my entire education. It’s a 2,000-room hotel which was always busy. In the five years I was there, occupancy never dropped below 97 per cent. There is no downtime and to this day the hotel still operates that way–it is a very busy, well-oiled machine. I decided to explore international opportunities in Shanghai, Singapore and Sapporo, Japan. I knew nothing about Japan when I was interviewed,
and the hotel was smaller than what I was used to. The thought of living overseas was exciting and I convinced my wife to make the move with our 18-month-old son. I got to my first meeting with the team and realised nobody spoke English. In the entire hotel about 10 people spoke English, and none of them worked for me. So that was an interesting challenge. I was doing my rounds through the hotel and I walked past the dishwasher. I said hello and he replied in perfect English. I found out that he was a language student at Sapporo University and spoke about seven languages, including Russian. The next day he was in a suit and he became my executive assistant, and he still works for me in Japan. The next opportunity came to move Seoul, South Korea, a dynamic city with an unbelievable workforce. It was my first experience with a really big spa operation and 13 different F&B outlets. We were there for threeand-a-half years and during that time we had two more children. Next we relocated to London and within a year my children all had British accents. The problem with that job was I had three young children and a great wife and I was one the road five nights a week, and I did a bit of soul searching. The global financial crisis was at its peak in 2008, and the writing was on the wall that we were headed for troubled times. I wanted to make sure I put myself in a position where I could choose what to do next. One thing that was missing from my CV was the fact that I have never been a GM. I had a conversation with my wife and decided to take the plunge and try for a GM position. Timing is everything. During this personal transition phase, Marriot was
in talks with Emirates Airlines about a hotel they had in the Marina–the Marriott Harbour Hotel–and they were looking to hand it over to an international operator for conversion. In 2009 I interviewed for the position and I was hired. In 2011 it got Hotel of the Year for the entire company, and that is something I’m very proud of. While I was GM at the Harbour, the project for the JW Marriott Marquis was on the table. I got involved with our corporate team to work on some of the early concepts for the restaurants and some of the features for the hotel. In 2012 the hotel opened officially. It was a really quick opening without any challenges or issues, which is unusual for a hotel this size. We opened with 800 rooms and the plan was to phase in the other tower as business in Dubai picked up. His Highness Sheikh Mohammed bin Rashid Al Maktoum, VicePresident and Prime Minister of the UAE and Ruler of Dubai came to visit the hotel. He visited it with Sheikh Ahmed bin Saeed Al Maktoum, President of the Department of Civil Aviation, CEO and Chairman of The Emirates Group and Chairman of Dubai World. Sheikh Mohammed was pleased with what he saw and the next day we were told we were going to start work on opening the second tower. In October 2014 we opened the full complement of 1,608 bedrooms. I’ve worked in almost every major market in the world. Dubai has been one of the most comfortable places I’ve lived and one of the most exciting markets to work in. I give everyone the same advice I’ve given for the last 20 years. Work hard, go the extra mile, do what you need to do, be committed, and do business the right way.
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17 10/9/16 1:36 PM
CEO CHAT
VIVA, LINKVIVA Niousha Ehsan, CEO, LINKVIVA, talks about the value of a business coach, nurturing her team, and winning the Most Improved Company category at the FinanceME Business Vision Awards
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I believe as an SME it is difficult to attract the right talent. My mistake was originally hiring junior members because that was within my budget. – Niousha Ehsan, CEO, LINKVIVA
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he only frustration that Niousha Ehsan, CEO of event management and activation agency LINKVIVA, was that her business' rapid growth left little time to put the correct infrastructure in place. “By not having the right infrastructure in place, two things happened. It harmed the business because as a result of that lack of direction and clarity, we had a high staff turnover. And as a business owner, you always have to take quick action. I have seen business owners drag challenges on much longer than they need to. If I see something wrong, I take action immediately; it may work, it may not work, but I take it and test it, then adjust my course accordingly,” she said. In 2014 she hired a growth coach, taking LINKVIVA from business that was growing really fast, but didn’t know where it would be in six months, to a company that, by the end of the year, had clarified each department’s objectives, their targets, where the company needed to be. Knowing what she knows now, Ehsan said that if she had to do it all over again, she would start from the bottom up, setting the correct business operations, such as HR and IT, in place immediately. “I think many SMES just get going in the hopes of finding their way, and they lose so much time and money
doing that. Create your business plan, look at it, test it, see if it works and is accepted in the market, check if it’s financially feasible, then put your targets in place and monitor them regularly,” she said. Ehsan and her partner acquired the Tecom-based company in 2003. They came up with a health and fitness event called ‘The Weight Loss Show’ which became an official Dubai Shopping Festival event. From there the team was approached by other exhibitors and sponsors to handle their events, and they slowly started doing corporate events, working off referrals only. That was how the team of four conducted the business until 2011. “That year we decided to start expanding the business; we put an expansion plan together and we started growing. We have doubled our turnover every year since 2011. In 2014 we reached the point where we had a big office and around 20 employees,” she said. Finding and hiring the right people was something Ehsan said she learned the hard way. In 2011 when she started the hiring process, it was more of an emotional decision made if it felt ‘right’, which was very costly because emotions are not always correct. Now she said the key is being clear on what is expected in that role for people to succeed, and if they fit the company culture.
“LINKVIVA has a culture of always going above and beyond. A candidate has to be ambitious and willing to do what it takes to succeed. It’s easy to say you’re ambitious but not really want to do what is necessary for success. I have an amazing team, not because I tell them to work hard, they want to and this is what the client sees. That is my first condition,” she said. Ehsan ensures she has a clear deliverable that is expected from each team member. She then sends candidates away to prepare a presentation of an action plan of how they will achieve those targets. Spending more time pre-hiring is so much better than wasting time at a cost to the company. “I believe as an SME it is difficult to attract the right talent. My mistake was originally hiring junior members because that was within my budget, but if I had to do it all over again and if I wanted to be where I am today two years ago, I would always advise hiring at director level, give them the right incentives that give a sense of ownership,” said Ehsan. She added that company owners hire people and expect so much from them, and when they do not perform or something goes wrong, they call them in and shout or get angry, and deplete that person’s energy. “So isn’t it funny how you can have someone who is so energetic and cont. overleaf
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CEO CHAT
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excited to change the world come in, and then you drag them down and still expect them to perform? If you see potential in people, allow them space, let them make mistakes and to learn from them. So many business owners, by micromanaging, stop their team,” she said. Ehsan highly recommends coaches and mentors because being in an environment where a business owner can be coached by someone who can see things from a different perspective and guide the business accordingly, although costly, is beneficial in the long run. She added that if someone had suggested paying for a coach in 2011, she would have been fearful of making that investment. But doing so would have shortened the period of growth and made it much more effortless. For a business owner thinking of getting a coach, Ehsan said it is important to get referrals from other people they’ve trained, because there are so many coaches in this part of the world. “I pay AED 200,000 a year for my coach and it is probably the best investment I’ve ever made in terms of the money it has saved the business, as well improving our company’s turnover. Not only am I getting coached, but I also involve my core team, and we’re all aligned in a certain mindset. That contributes to us creating a great place to work, where people do not really need to be told what to do, they do it because they want to, and that is what I’m most proud of,” she said.
FUNDRAISING AND CASH FLOW By the end of 2014 Ehsan had launched a financial incentive programme, targets, financial reporting; they had HR and IT departments, and they hired a CFO. “We restructured the business by ensuring we’re always cash-flow rich.
Niousha Ehsan believes that by creating a space that empowers and incentivises others, magic can happen.
We needed to manage the risk between the client and the supplier. So we have great payment terms with our suppliers which correlate to the payment terms with our clients. But as the company keeps growing we’ve put in place an expansion plan that will allow us to scale up, and maybe then we would look at fundraising,” said Ehsan. She added that LINKVIVA became a great place to work. From a company that had a high staff turnover it won the Most Improved Company of the year at the FinanceME Business Vison Awards. “I believe that is because we stopped to make sure we got our infrastructure right. Today we have systems and processes in place that
a multinational company would have and that is very promising because the foundation is set for the company to grow tenfold,” she said. The advice Ehsan would give any SME is to hire a CFO as soon as possible, because she said that was one of the turning points in her business. While an SME owner is really good at what they do, they cannot also be good at HR, and IT, and finance. The reporting received is extremely important, because a company has to be protected just in case something happens. “You cannot always rely on the bank, because you may need something much faster than the bank will even process it for you,” she said.
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OPENING THE DOOR TO A WORLD OF OPPORTUNITIES. At HSBC, our unique global network in over 60 countries, where 90% of the world’s trade and capital flows originate, provides you with immediate access to a world of opportunities wherever your international business takes you. So when entering a new market, you will not do so alone, our in-depth knowledge of your business will go with you. Our local experts on-the-ground will help you set up working relationships with new partners quickly, easily and confidently. Smoother global expansion. One of the benefits of partnering with a bank that has both the expertise and in-depth understanding of your business, to support your ambitions globally. Find out more at www.business.hsbc.ae/network
Issued by HSBC Bank Middle East Limited U.A.E Branch, P.O.Box 66, Dubai, U.A.E, regulated by the Central Bank of the U.A.E for the purposes of this promotion and lead regulated by the Dubai Financial Services Authority. CRN 160471. Š Copyright HSBC Bank Middle East Limited 2016 ALL RIGHTS RESERVED. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of HSBC Bank Middle East Limited.
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SHUTTERSTOCK.COM/ZAOZAA19
IPO
PUBLIC DOMAIN
Steven Drake, PwC Middle East Partner and Capital Markets Leader and Mazen Boustany, Partner at Baker & McKenzie Habib Al Mulla, discuss what a business owner should consider when weighing up the decision to go public
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ew regulations being formulated by officials in the GCC and MENA capital markets are set to strengthen regional capital markets, according to a statement from advisory firm, EY, adding that procedures to strengthen capital markets and attract investment continue to be implemented; once general market sentiment improves, the backlog of IPO candidates will begin to emerge.
Once the going-public decision has been taken, business owners should be aware that going public is a once-ina-lifetime transformational event for their companies, said Steven Drake, PwC Middle East Partner and Capital Markets Leader. “It forever changes how the companies go about doing business, and changes the lives of their owners, employees, investors and other stakeholders. Therefore, great care
should be taken to ensure diligent planning and preparation to pave the path for a successful IPO,� he said. Mazen Boustany, Partner at Baker & McKenzie Habib Al Mulla, said that an IPO constitutes a real paradigm shift for owners of companies as they will first need to put their finances in order, they will no longer be the sole decision makers and controllers in their businesses, and they will be subject to a lot of transparency a disclosures.
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This new law will enable family businesses and SMEs to access the UAE capital markets without having to give up control of their companies.” – Steven Drake, PwC Middle East Partner and Capital Markets Leader
An IPO can be beneficial for both the business owner and the investors, provided all eventualities are taken into account.
Drake added that while business owners cannot control market volatility, growth and timing, they can initiate planning sessions early in the process in order to more swiftly take advantage of favourable market conditions, which includes asking themselves why they want to take their businesses public. This answer will drive the IPO strategy, choice of stock exchange, timing and offering structure. As part of this exercise, business owners should also consider the type of investors they would like to attract, as this will also influence the choice of stock exchange and offering structure. Even though going public is by no means a simple process, there are advantages for companies to do so, which include access to capital to fund business growth. “These companies can use publicly traded shares as a currency for acquiring other businesses or to retire debt.
In addition, employee stock option plans, using publicly traded shares, are usually established to attract and retain key management and talent employees by encouraging their commitment and long term motivation. Listing successfully the business on the right market can also raise its international profile with investors and peers, as well as its brand awareness,” said Drake. On the other hand, shareholders will benefit from a number of protective regulations including transparency and disclosure regulations imposed by regulators and the markets, and they will also benefit from the protection of the regulators in the event of any abuse of the management of the business, said Boustany. He added that an SME will have to improve its management structure if it decides to go public otherwise the regulators should not allow it to go public, and it will not be attractive to investors. Therefore a strong and robust corporate governance framework is a necessity prior to going public. As the company prepares for an IPO, it must expand and enhance its management team and capabilities and ensure it has adequate experience and technical expertise relevant to the company’s business and industry as well as adequate public company experience, said Drake, adding that the company should also prepare its
management team to begin acting like and functioning as a public company, both internally and externally. “In order to achieve this, companies assess their management teams’ effectiveness and implement more effective management decisionmaking processes. In addition, companies run management training in relation to requirements applicable to public companies to facilitate more effective discussions during the management and board meetings,” said Drake.
TRANSPARENCY According to Drake, companies are usually required to submit two to three years of audited financial statements and interim reviewed financial statements; financial statements will have to be submitted annually as well as quarterly or semi-annually, within the reporting timelines, relevant for the market. He added that as part of the listing document, a company will also need to disclose, amongst others, its corporate governance and risk management frameworks, risk factors affecting its business and prospects, related party transactions, material contracts and management team biographies. Going public allows shareholders to partly exit and maintain control depending on the stake sold through IPO, and they can take comfort cont. overleaf
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IPO
cont. from pg. 23
knowing that their businesses will continue in operation after their exit or partial exist, as a public company is expected to function on stand-alone basis independent of its founding shareholders, added Drake. Boustany added that there are few risks for an investor in a public company as it should not be held liable for any aspect of the business once it has exited it; however it should obviously be aware of the pricing at which it exits compared to its initial investment. Investors should note that they will certainly face significant IPO execution costs, such as fees relating to underwriting fees, legal and accounting advisors, and exchange listing fees. Once the company becomes publicly owned, the owners become accountable to all of the company’s shareholders and the company may be under constant pressure to balance short-term demands for growth with long-term strategies, said Drake, adding that in some markets, the company’s existing shareholders cannot sell their shares during a specified time following the IPO, known as the ‘lockup’ period. Drake added that being a public company usually enhances the visibility of its shareholders and they also tend to achieve enhanced liquidity by having their shares listed on a stock exchange and may obtain greater shareholder value, as the value of public companies tends to be higher than that of comparable private companies due to increased liquidity, available information, and having readily ascertainable values. Shareholders may, over time and subject to certain restrictions, sell their stocks in the public markets. They could also use their publicly traded shares as collateral for securing personal loans or settling obligations.
Once the decision has been made to go public, there a number of requirements a business has to meet and steps to take to prepare. “The company should consider its group structure and which entity or group of entities will be listed and any tax and accounting structuring issues. The selection of the IPO market is critical as this will determine the stock exchange listing and corporate governance requirements, tax regime and market practice for executing the IPO and acting as a public company,” said Drake. He added that the company should also assess its corporate governance arrangements (including board composition and committees) and any changes needed to comply with the regulatory requirements and relevant market practice. Assessment of existing systems and processes, including IT systems, financial reporting systems, management reporting, budgeting and forecasting processes as well as risk and compliance systems and controls is also needed to identify potential weaknesses/opportunities for improvement in advance of the IPO. “Under a number of international regulations, a company must have an operating history of at least three years before being able to go public as going public must be a reward to the founders of the business that would like to cash out,” said Boustany.
NEW COMMERCIAL COMPANIES LAW The new Commercial Companies law issued in 2015 will allow businesses in the UAE to float as little as 30 per cent of their shares compared to the current level of 55 per cent, which Boustany said is a welcome development in line with international best practices as it allows the founders of businesses to retain control of their businesses, despite of offering a certain percentage of the shares to the public. The previous
threshold of 55 per cent was detrimental to a lot of business owners and was preventing them from going public. He added this development could definitely bring a lot of business to the markets once the sentiment improves. “This new law will enable family businesses and SMEs to access the UAE capital markets without having to give up control of their companies, while at the same time providing more comfort and transparency to potential investors. In the global sense, this change in the minimum floating threshold is more aligned with many of the world’s largest exchanges, and will allow the UAE to become a stronger competitor with the global capital markets. In the long term, this may lead to more interest in IPOs in the UAE especially from the Middle East region,” added Drake.
PREPARE FOR THE IPO PROCESS • Consider carefully the advantages and inconveniences of going public. • Be ready for a lot of scrutiny, transparency, and making disclosures. • Have a management team in place that does not include the business owner or the founder or any of their family circles. • Have all the accounts in order. • Have a strong and robust corporate governance framework in place.
Source: Mazen Boustany, Partner at Baker & McKenzie Habib Al Mulla
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SHUTTERSTOCK.COM/GIANNA STADELMYER
RAISING CAPITAL
Business owners, when considering fund raising, need to consider whether they want to repay a loan or relinquish part of their ownership.
SHOW ME THE MONEY! It is important for a business owner to consider when and how to raise capital, and with the final draft of the bankruptcy law finalised, their options will potentially increase
S
ME lending in the UAE accounts for only about four per cent of total bank lending. This is significantly lower in countries such as Saudi Arabia, Kuwait and Oman, at two per cent, while Bahrain and Qatar are at one and 0.5 per cent, respectively. Owing to this, the venture capital industry is fast emerging as one of the key sources of funding for
SMEs in the GCC region, according to a recent report by Al Masah Capital, and is encouraging for the SME sector, which has had limited funding options. Banks in the UAE offer high-interest cash loans, which are repayable on a monthly basis, which works out to more than 18 per cent a year on a straight line, according to Vishal Mahtani, CEO, Price Global Group, who said that
unless a company has a forecast of over five per cent returns a month, it may not be the best option to look at. “Unlike the days where SMEs had to be dependent on friends, family or close associates to raise funds as the banks would rarely lend to them, times have now changed. Funding options now range from new age concepts like crowd funding to angel investors,
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Unlike the days where SMEs had to be dependent on friends, family or close associates to raise funds as the banks would rarely lend to them, times have now changed.” – Hassan Safi, Founding Partner, METIS Management Consultancy
venture capital, grants, peer-topeer lending, non-banking financing institutions and the traditional HNIs,” said Hassan Safi, Founding Partner, METIS Management Consultancy. The most suitable fundraising option for a business will depend on what the business does and what stage of its growth it is at. According to Chantalle Dumonceaux, Co-Founder, angel investment platform WOMENA, early and late stage investors have different processes, criteria, and motivations, as do small business lenders and equity investors. She added that an SME owner should consider bootstrapping if they have a business that can grow on its own cash flow slowly, supports the needs of the founder and their family, and isn’t scalable–both venture capital firms and angel investors will look for exponential growth, where there is a large market for the product offering. When approaching venture capital firms or angel investors, the business will need to demonstrate consumers want what the business is offering, barriers to entry prevent competitors from accessing the market, and that outside capital will allow rapid growth. “Look to bank lenders and private equity if you have an established company with revenues and your
company isn’t necessarily scalable, but has demonstrated its place in the market and it’s growth potential,” said Dumonceaux. Just because a business owner is at a stage where they can approach investors for capital, doesn’t always mean that they should. They need to be aware of the right time to consider fundraising and Dumonceaux said there is not a one-size-fits-all answer. She added that business owners should ask themselves if their company can grow organically without outside funding, if the benefits of raising outside capital outweigh the drawbacks, if they are selling something that investors will want, or whether they need to develop the product or get more customers before they’ll look at it. “If you’ve established that you do need the capital, that the benefits outweigh the drawbacks and investors want what you’re selling, then I would say the time is as right as it will ever be! Fundraising almost always takes longer than the entrepreneur expects it to so raise more than you need,” she said. Usually, a business reaches a plateau in its growth cycle, as the company runs out of cash, said Mahtani and at this point, management looks for new ways to expand market share, but this involves additional support
for marketing, staffing and expansion of existing facilities. This is the point at which a business should look for funding. Safi added that one thing to remember is that there is high competition for fund raising as there are thousands of SMEs trying to raise funds and fighting for a limited available pool of money. In the pursuit of running a business, sometimes SMEs drift from the core fund raising strategy, so it is advisable that they set their fund raising strategy at the onset of the business and build it in the overall business plan.
DEBT, EQUITY, VENTURE CAPITAL Debt financing involves borrowing money to be repaid with interest, while equity means raising money by selling shares of the company, said Mahtani. “You have to decide whether you want to pay back a loan, or give away a bit of your company. The advantage of going via the debt route is that the lender does not have a claim to equity in the business, and your ownership is not diluted. The advantage of equity is that you do not need to pay back a loan with interest,” he said. More specifically, the drawback of debt is having to repay the loan and the interest in a disciplined and timely cont. overleaf
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manner. Any lapses in this could result in the lender or bank taking over the collateral offered against the loans given. Hence, instead of being able to use all the profits of the business for future growth, the SME will have to plan to repay the loan on time, said Safi. “The downside of equity is you give up part of your business ownership, which may also dilute your authority in the business. If your business takes off well, you will be bound to share a portion of the profits with the equity investor. Over time, distribution of profits through dividends to the other shareholders could exceed the amount of money that you would have repaid on a loan,” Safi said. For early-stage venture deals, Dumonceaux suggested the use of convertible notes, which is debt that converts into equity upon a specified event and/or a specified date. “They’ve been in use for a long time so the legal documents are fairly standard, greatly cutting your legal costs. It also cuts negotiation time by leaving the terms to be decided in the follow-on financing.” She said. Venture capital is financing that investors provide to start-up companies and small businesses that are believed to have long-term growth potential. For start-ups that do not have access to capital markets, venture capital could work out best in a situation where the business owner has almost no money and only an idea, is unsure of how the project will go, and wishes to get funds for the business idea, said Mahtani. Safi added that in the case of startups where cash inflow is irregular, venture capital funding is helpful as any money that comes in can be directly reinvested into the business without worrying about bank loan repayment or interest dues. “From an SME owner’s perspective it significantly reduces personal risk.
Unlike with a bank loan, an entrepreneur would be required to offer collateral of personal assets guarantees and this could be detrimental in case the business does not kick off as planned. Another major advantages of venture capital investors is that they have a very strong network in the industry and this will support your business growth and also give you guidance to build your business strategy,” said Safi.
BANKRUPTCY LAW The final draft of the bankruptcy law that decriminalised bounced cheques has recently been approved and is expected to be implemented as early as the end of the year, which will have an impact on bank lending to SMEs. “The UAE bankruptcy law has just recently been approved by the UAE Cabinet and will likely come into effect sometime next year. From an investor standpoint, we believe this law will help boost the UAE economy and will improve the overall business confidence and enhance the attractiveness of UAE,” said Safi. He added that it is believed the law will force banks to enhance their due diligence process while dealing with SMEs, though it is still too early to comment on the specifics of the law and how it will alter the banks willingness to lend to the SME sector. Dumonceaux added that the criminalisation of bounced cheques burdened business owners, investors, government administrators, and banks by forcing banks to be risk averse and have smaller portfolios, and only lending when they were certain the borrower would never bounce a cheque. It prohibited borrower companies from taking risks that allow for fast growth and diversification, assuming they borrowed at all, given the difficulties. “This is a welcome change and a big step in the right direction towards the UAE continuing to grow as a
global business and innovation hub. Assuming the change is implemented well, I expect banks to lend more liberally, companies to borrow more liberally, take bold risks, and the economy to grow and diversify faster,” said Dumonceaux.
TIPS FOR SMES TO PREPARE FOR FUNDRAISING • Evaluate your funding options by looking at your company from a detached perspective. • Do your homework about anyone you plan to approach. There are great and not-so-great investors and oftentimes there is no way to know which is which except by word-of-mouth. • Carefully prepare and practice your pitch and presentation. Cater each pitch to your audience. • Make yourself visible in the ecosystem before you plan to apply. Trusted pre-existing relationships make a big difference to your chances of closing funding. • Find a champion. Once you have a respected lead investor, others follow relatively quickly. The buzz your lead investor creates around your deal by speaking on your behalf will do more to close it than you would be able to if you were having twenty meetings per week.
Source: Chantalle Dumonceaux, Co-Founder, WOMENA
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TENDERS
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Governments are welcoming tender applications from SMEs in a bid to stimulate employment and contribute to economic growth.
LOVE ME TENDER With Dubai Expo 2020 and 2022 FIFA World Cup Qatar fast approaching, both events giving SMEs a chance to apply for tender opportunities, certain requirements have to be met in order to increase their likelihood of success
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n June this year, Dubai SME and strategic procurement company, Tejari, signed a Memorandum of Understanding (MoU) that businesses registered with Dubai SME will now be automatically enrolled as potential suppliers to Expo 2020
Dubai, while Qatar Development Bank (QDB) and Qatar Shell will announce six new specific tender opportunities for Qatari-owned SMEs to join Qatar Shell's supply chain, in an effort to boost the private sector. Small businesses were invited to register
their interest by 7 June 2016 and the successful SMEs will be announced in December 2016. The tendering process can seem quite daunting to many SMEs but by having a clear understanding of the do’s and don’ts, and demonstrating they cont. overleaf
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TENDERS
The government procurement process has been designed to enable SMEs to bid for tenders, aligning with the country's plans to support the private sector and its entrepreneurs.� – Alex Menghi, Engagement Manager, Value Partners
cont. from pg. 29
are able to meet the tender criteria and offer a competitive bid, they can compete with larger organisations on a level playing field, said Stephen Armitage, Managing Partner of consulting firm UAE Business Solutions.
EXPO 2020 AND FIFA 2022 It was recently revealed by the Dubai Expo 2020 organiser team that 20 per cent of direct and indirect spending on the event will be allocated for SMEs, with contracts worth more than $1.36 billion to be awarded to local and international SMEs. Minister of State for International Cooperation and Director-General of Bureau Expo Dubai 2020, Reem bin Ibrahim Al Hashemi, said 2,418 of the 6,196 suppliers registered on the government’s e-sourcing portal are SMEs and that of the 787 contracts awarded by Expo 2020 to date, 320 have been won by SMEs.
She added that the integration of SMEs into the delivery of Expo 2020 Dubai is set to continue to stimulate employment, strengthen existing industries, improve SME competitiveness, and ultimately contribute to sustainable economic growth. Applying for the Expo 2020 tenders does not require any industry or free zone specific criteria, according to Alex Menghi, Engagement Manager of consulting firm, Value Partners, but there are some requirements SMEs and suppliers should complete in order to be eligible for a tender. After successfully registering on the Expo 2020 e-portal, the Bureau shall review and send an invitation to participate in a specific tender to appropriate users that have been activated on the system. Then the supplier must submit a bid, which may include a Request for Information (RFI), a Request for Quotation (RFQ),
among other forms. All responses to any invitation to participate in a tender must be submitted on or before the closing date as specified on the system. He added that there are no general criteria that businesses have to meet to qualify for Qatar Shell tenders, only that a business should send to the Contracting & Procurement department their capabilities and offering or register online on their SQS (Supplier Qualification System), and in return, if there are vacant applicable tenders and Shell is interested in the opportunity, SMEs will be invited or notified and given more details about the requirements to bid for the tenders. Many tender opportunities are available for SMEs for the upcoming 2022 FIFA World Cup Qatar. A new platform was launched, the Supreme Committee for Delivery & Legacy (SC), which has the aim of delivering proposed tournament venues and projects for the 2022 FIFA World Cup Qatar.
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“The government procurement process has been designed to enable SMEs to bid for tenders, aligning with the country's plans to support the private sector and its entrepreneurs,” said Menghi.
ADVANTAGES AND RISKS There are number of advantages to awarding tenders to SMEs over larger companies, namely flexibility to adapt to changes in the market quicker than their larger counterparts, as well as generally offering lower costs, in terms of labour and overheads, said Menghi. “The potential for decentralised supply opportunities exists where SMEs are local suppliers that are closer to areas of distribution or have relatively better information on distribution points which provides them with comparative advantages against the large companies,” he said. However, it is also important for an SME owner to review the deliverables of the tender, to understand the risks inherent in the tender, and to know how they will will mitigate them, said Armitage, adding that these risks can be categorised as financial, strategic, operational, or compliant. He added that some government tenders now require a performance bond to be issued which can represent a substantial amount of working capital, which tie up cash for the duration of the contract. Setting up these bonds also incurs a cost. “Insurance policies will also need to be considered to cover public indemnity as well as employee cover if working on the tendering organisation’s premises. A full cash flow forecast covering revenues and all costs associated with the tender should also be prepared, factoring the tendering organisation’s payment terms into the cash flow forecast to ensure the tender does not impact liquidity negatively,” said Armitage.
HOW SMES CAN INCREASE THEIR LIKELIHOOD OF WINNING A TENDER • Improve transparency by being passionate about what you do
Gulf governments aim to award their tenders to companies that can satisfy the technical and financial aspects of the requirements. SMEs can show passion and commitment by being transparent in their proposals.
• Leverage government commitments
SMEs should leverage the system that governments have already put in place to encourage them to bid for public contracts. The new guidelines that governments are setting include funding and providing insurance coverage for SMEs plus sub-dividing of larger contracts into lots, where possible, to enable SMEs to bid for these opportunities.
• Focus on national identity and vision
The drive of value for money through improved national procurement is a goal that all governments are looking after. The development of SMEs is very important to the national economy and public procurement. National SMEs can leverage that factor to gain an advantage over larger non-national companies by presenting their national growth vision.
• Be selective
SMEs should not go for every contract that sounds vaguely promising. They should streamline their efforts and focus on a few contracts that they have a realistic chance of winning. They should validate the opportunities against their business strategy prior to taking a decision on whether to go for it or not.
• Start small and demonstrate your strengths
SMEs have the ability to be flexible and to react swiftly. They are capable of offering competitive prices which will allow them to flourish with opportunities which are price sensitive, and they should demonstrate their abilities by showing where they were able to offer value for money in previous projects.
Source: Alex Menghi, Engagement Manager of consulting firm, Value Partners
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CASE STUDY
BODY BEAUTIFUL Jenny Whitehorn, Marketing Director EMEA, The Body Shop, expains how the company builds business partnerships, values people, and does not compromise business values
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he Body Shop first entered the UAE in a franchise partnership in 1983 and entered the Kuwait market a few years later, in 1987. The business has expanded since then in a number of franchise partnerships across the Middle East, in all the different markets. The franchisees operate through all the brand’s products, its marketing campaigns, and most importantly, complies with the company’s values, according to Jenny Whitehorn, Marketing Director EMEA. The most recent markets to open were Egypt and Morocco, and with the recent lifting of sanctions, Iran could feature in the brand’s future as well. “Iran is a fascinating country and is on many companies’ and retailers’ horizons, which is very exciting. However, for any new market, finding the right partner and going through the registration process, and the business of running a cosmetics brand with the
huge value set that comes with it can take time. So it definitely will not be something that is immediately round the corner,” she said. The Body Shop operates on different levels of local partnerships, she said. When the brand runs a campaign, the team will try to find a global partner who is present in every location, though that is not always possible. The values team will approach the next closest partner that the global partner recommends, so there is always someone on the ground for the duration of a campaign. Whitehorn said previous partnerships have included a women’s refuge, local police forces, and there are always agencies or NGOs that the company can partner with. Another example of a partnership is the brand’s community fair trade agreement. “We have not had a fair trade agreement here, in the GCC.
But if we found an ingredient or something of interest here, then we’d love to have that from this region. We have partnerships in India and Nepal, and maybe in the future we could have an agreement here regarding packaging or technology, as opposed to a plant ingredient,” she said. She said a consideration after finding a partner, opening up a market and completing the registration process, is finding the right locations in the right malls, adding that real estate in this region has really fierce competition. But the marketing side is a really interesting historical part of the company, because it will adapt some, not all, of its images and brand messaging to try to run as much of a global business in the Middle East as everywhere else. “If there is an interest in diverse images or models, or something that really plays to the culture of this region, we adapt to that. In fact, some products have their origins
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The Body Shop values its fair trade agreements that allows ethical sourcing of ingredients.
here, such as kajals, our black carbon eyeliner, and some of our fragrances are inspired by the region,” added Whitehorn. She said that certain imagery is easier to have approved in some countries than in others, adding that Saudi is probably still the toughest market, but some instances the imagery can be pushed a little bit. The brand has always been about more than just selling products and franchisees are contractually bound to be involved in The Body Shop’s values and campaigns, she said and the company just needs to make sure the campaigns are right for the market place, right for the partners, and right
for the customers so that they will respond positively. “Consumers are more careful about where their money goes. If one product is more expensive, they want to know why. Some consumers want to know if a product is vegan or vegetarian. We are transparent about our brand. If we make a mistake, we’re not afraid to say we got it wrong,” she said.
TALENT RETENTION Even from the earliest days, the people that company founder, Anita Roddick, met were entrepreneurs that drove innovation. The qualities and characteristics required of the people
hired include being true to the values that they uphold, and they have to be service- and customer-oriented. The Body Shop has a commitment in terms of enriching its people, which includes paying a fair wage, because laws change and the company wants to keep abreast of them. Furthermore the company has a development programme for its staff around the world in terms of training, leveraging online training tools technological changes. It is also generous with the products given to staff when they join the company, added Whitehorn. “We want them to use the products and to be honest–it’s important that they are themselves when they’re on cont. overleaf
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CASE STUDY
Consumers are more careful about where their money goes. If one product is more expensive, they want to know why. We are transparent about our brand.” – Jenny Whitehorn, Marketing Director EMEA, The Body Shop
cont. from pg. 35
the shop floor. They need to be able to say that a product does or doesn’t suit a customer, and they should not be afraid of selling the right product to the right age group. Whether a customer is 20-plus or 40-plus, they have to have that honest conversation with consumers about what the best product is for them,” she said. She added that while a staff member on the shop floor may be required simply to apply make-up, they may also be required to discuss quite complex topics, such as the company’s values and campaigns, or any new technology it is using. The Body Shop has implemented a personal development scheme called Learning Is of Value to Everyone (LOVE), where each member of the company is given GBP 100 to put towards personal development, whether that means learning a new skill or doing something to improve their well-being, said Whitehorn. Whitehorn said the team tries to encourage its staff in each of the markets, even the CEO, to be in stores and on the shop floor wherever possible. Over Christmas the executive group visits stores where they compete to see who can get the longest till receipt, or who can sell the most, which she said is not always easy for them, because they
find themselves on the till, or on the shop floor and serving customers, completely out of their element. She added that the company constantly trains and develops its staff because the focus is on the retention of talent in all of its offices around the world staff turnover rates are low. “That focus on staff retention and training is a really important part of our DNA as a company. It’s not easy, because every beauty retailer is after the right talent, because more of the service proposition in retail is about providing a personalised service,” she said. She added that the company has experienced many periods of change, including the passing of the founder in 2007, but each of these periods has given the business a chance to adapt, and many businesses do not adapt in times of change. “The pace at which the world is changing is getting faster and we need to have that agility to adapt and keep up. To keep the brand relevant, particularly with the younger generation of consumers who are constantly on their phones, means adapting to digital platforms such as Facebook, Instagram or Snapchat. That is the only way we are going to reach them accordingly,” she said.
CAMPAIGN HERITAGE
One of the Body Shop’s earliest and most disruptive campaigns was against domestic violence, which was very difficult to get approved and launched in the region. At the time, we felt it was the right thing to do as it is a global issue. We brought it to the partners here and they were very reluctant at the beginning, until some members of the team said ‘This [domestic violence] happens here as well’. As fortune would have it, and also because of the way the Body Shop is usually just ahead of the curve or on the crest, some quite famous people started coming forward saying they had been in domestically violent relationships, and the campaign suddenly became talked about. It just took a little bit longer to make sure we had the phraseology and the imagery right. Another example of such a campaign was about trafficking young people, the company’s biggest campaign launch ever. We had to remove certain words and the campaign became about stopping the ‘exploitation’ of people, and we worked with our partners so they felt comfortable, but also that the campaign wasn’t being compromised. We had amazing TV shows in Kuwait, billboards, and the campaign led to spokespeople fully endorsing it. Source: Jenny Whitehorn, Marketing Director EMEA, The Body Shop
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SCENT FROM NATURE The Body Shop has launched a collection of five eau de parfum, inspired by some of the planet’s most precious natural scents. The essence of each botanical is recreated without harm, allowing the plant to live on. Headspace technology involves cocooning the plant, flower or wood in a glass sphere, and creating a vacuum where the fragrance compound emitted by the plant can be sampled. The essence is then recreated and incorporated into a bottled fragrance, leaving nature untouched, while recreating the scents of some of the rarest plant species that are blended with natural essences and extracts.
NIGRITELLA
The Apls, Nigritella, the fragrance from Vanilla Red of on fusi a Switzerland, is Orchid, tuberose and vanilla.
BOWHANTI
Bowhanti, the scent created from the Wacapou tree is combined with a blend of patchouli and incense to produce a spicy fragrance inspired by the French Guianan tropical rainforest in Amazonia.
SWIETENIA
Mahogany flower combined with orange flower and bigarade leaf result in a scent inspired by Bangalore, India.
WIDDRIN
KAHAIA
GTONIA This scen tc and vetive ombines Clanwillia r m in the We inspired by Cederb cedarwood, sage stern Cap e e, South A rg Mountain rang e frica.
The Kahaia flower inspired the Bora Bora, Polynesia scent, and is combined with Jasmine Sambac and Benzoin. The Kahaia bush only emits its scent at night. WWW.FINANCEMIDDLEEAST.NET
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CASE STUDY
COWABUNGA! Nickelodeon and Viacom Consumer Products are looking at developing localised content for its TV channels and its products in conjunction with its expansion in the Middle East region
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lobal entertainment brand Nickelodeon and Viacom Consumer Products (NVCP) and partner Entertainment Retail Enterprises are excited about bringing regional SMEs into their business to enhance local culture offerings. NVCP and Entertainment Retail Enterprises recently officially opened the newest Nickelodeon Store, in Dubai Mall and are looking forward to further expanding its entertainment options in the UAE. “For us as a content producer it is really important to get really close to the local cultures, to have in our channels the look, feel and the flower of the local characters. So both in Nickelodeon and in our other brands, we want to have local content in any kind of format, the look and feel that is appropriate and can be successful. For example in one of our new channels, Comedy Central, we have lots of local content because we want to be part of the comedy scene here in Dubai, which is really big. I did not know we had a lot of stand-up comedians and venues in the region. We want to develop the Arabic comedy culture and to be part of it and have it on our channels,” said Raffaele Annecchino, President and Managing Director of VIMN Southern & Western Europe, Middle East and Africa. NVCP has already worked with a number of SME players in the region and currently has over 25 local licensees for
its consumer products division. These are everything from small family run businesses that are experts in apparel to footwear or stationary. “We are always open to innovative ideas that can naturally lend themselves to an interpretation of our characters. If an SME here in the region has a great idea/product/concept that they feel could work for any of our characters off the screen, we are always open to do business. We are actively working in that space to build our local partnerships,” said Mark Kingston, General Manager and Senior Vice President, Nickelodeon and Viacom Consumer Products EMEA and International Promotions & FMCG Viacom International Media Networks. NVCP are also actively investing in the regional music scene by partnering with festivals, and promoting concerts through their channels.
REGIONAL ASPIRATIONS Viacom’s major focus over the next year is on developing and creating not only more local content on its channels, and more regionally focused consumer products, but also looking at expanding its existing hospitality options into the region. These options include a possible Nickelodeon hotel and theme parks. Both of which the company is currently actively working on. “From a business perspective we are taking advantage of the fact that
it is a great moment to be part of the media scene in the Middle East. We are taking advantage of the fact that pay TV is growing heavily. We are now at 15 per cent penetration, but the projection of growth in the pay TV is really high over the next five years. I cover all southern and western Europe, Africa and the Middle East, and the Middle East is now a really key market,” said Annecchino. The company has launched five pay TV channels in association with OSN and MTV; two are Nickelodeon, and two are Nickelodeon junior, both 100 per cent in Arabic made by a local team based in Dubai. The company launched Comedy Central six months ago, also 100 per cent in Arabic. From a consumer products perspective NVCP sees the UAE in particular as a growth market and has a strategy to grow the market significantly over the next three to five years both from a physical consumer product perspective in terms of doing more experiences and taking its characters off-screen into the physical space be it though stores, recreation opportunities like theme park partnerships, or hotel partnerships. The company has just opened its first Nickelodeon hotel in the Dominican Republic and there is a Nickelodeon experience hotel in Mexico, this is something the company is potentially interested in bringing into the UAE.
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“We have a global partnership with a hotel resort chain called Prisma group and we are looking to expand that relationship in other key markets. We are actively looking in the theme park space [in the region] and hopefully in a sort time we will be able to announce some exciting plans in that space as well,” said Kingston. As Nickelodeon we have tours, such as the Dora tour, and the SpongeBob tour all over shopping malls in the region, including in Saudi and Lebanon. We try to penetrate with our TV channels all over the MEA region. NVCPs consumer products are across the whole of the Emirates, in Saudi and in Egypt.
Despite the challenging economic climate currently, the company is looking at opportunities potentially to expand the store footprint or expanding into other opportunities across the Emirates. “We like to say we are relatively recession resilient; ultimately when people are having to cut back on big ticket purchase items like a new car or a holiday, they are always going to want to treat their kids. So effectively we provide that opportunity to treat and spoil kids and we do find that we aren’t 100 per cent recession resilient, but we are perhaps more recession resilient than other industries,” said Kingston.
SMEs interested in working with NVCP for content and consumer product development should email editorial@cpifinancial.net
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Viacom has invested heavily in the region for quite some time and has invested significantly as a long term strategy. The company began by working from a consumer products point of view for a number of years through various different partners, and has a strong partnership with MBC who represents its consumer products interests in the region, as well as being a free-to-air broadcaster. NVCP’s consumer product sales in the region are going from strengthto-strength as the Nickelodeon brand builds with its key affiliate partners.
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FACETIME
THE ART OF BEING SOCIAL Ashwin Gedam, Vice President, Global Marketing and Communications, Xpress Money and Maan Dalghan, PR Director, Quill Communications, look at how SMEs can use social media to leverage their business and how to address some of the challenges faced
A
recent report was conducted by Orient Planet Research to examine how popular social media sites can enable SMEs operating in the Arab world to build brand awareness. Social Media as a Business Tool for SMEs in the Arab World found social media channels such as Facebook, YouTube, WhatsApp and LinkedIn are becoming major
business enablers for small and medium enterprises (SMEs). The perception of social media is that it is more social and it is more about engagement, said Ashwin Gedam, Vice President, Global Marketing and Communications, Xpress Money, adding that what really works for SMEs is how they can manage social media to open up to a set of influencers
and build a community, which will talk about them and take their message forward. Maan Dalghan, PR Director, Quill Communications, said SMEs had a much easier time of it before social media because they were able to grow their business without anyone noticing, and consumers would only hear about an SME once it was growing.
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“Now with social media you hear about a business from the moment it starts, because as soon as someone has experienced their service or product, they will talk about it. SMEs have to be careful about what they say and how they differentiate themselves,” said Dalghan. He explained that once an SME starts using social media, there is no going back because anything anyone posts is there for good. People can always find and track what has been posted. SMEs do not have the same luxury as bigger brands of getting away with a mistake on social media, because they simply do not have the huge number of fans around the world. Once they make a mistake and the reputation is compromised, it will be very difficult for them to fix it. Therefore it is essential SMEs understand the reality of their size, not to over promise, and to be very honest with their audience. “A common mistake for SMEs, especially in this region, is one month after opening they want to be the biggest. It does not work this way. They try different things and make false claims and that is why many close early. If you go back to their mission and values, they promised more than they could deliver,” said Dalghan. Dalghan suggested a more suitable approach would be for the SME to talk with their audience and relay the message that they are offering a better solution for one particular gap in the market, rather than competing with a leading brand head-on, which will help them to attract the right audience. “An online audience can be divided into three groups–fans, neutrals and haters. The fans will love you no matter what; the haters will hate you no matter what, while comparing you to other brands even if they hate them as well. The key is to get the neutrals. Once you get the neutrals, you have two thirds of the audience.
This is where haters start moving with the flow, becoming neutrals and eventually fans,” he said. He added it is important for an SME owner to have a solid brand identity and to understand they do not need to use all the social media platforms. If the business is B2C, they should use Facebook. If the business relies heavily on imagery then Instagram would be more suitable. Businesses offering B2B services should consider using Twitter or LinkedIn.
ARABIC CONTENT One of the major considerations and SME owner should give to their business’s online presence is the use of Arabic content, though Gedam said it also depends on the internet penetration. Internet penetration in the UAE is almost at 100 per cent, with 70-80 per cent of people accessing social media platforms through hand held devices. He added that when looking at the different markets in the GCC, the Arabic content will be higher in Saudi Arabia than the UAE, owing to the UAE having a greater expat population. It therefore makes sense for the UAE to have a lot of bilingual, if not Englishonly content. When considering Arabic content, Dalghan said SMEs could set themselves apart by taking account different Arabic dialects and accents. “If you break down the numbers as about 1.2 million UAE nationals, about 400,000 Egyptians, 250,000 Jordanians, and 150,000 Lebanese, that is approximately two million Arabic speakers. That is a fair share of consumers to talk to in their own language. If an SME is focused and has a service that will appeal to a specific demographic and they can use the right dialect of Arabic, that will be something their audience can better relate to,” he said. Gedam added that the relevance of the content is key.
A business can have tonnes of content being thrown out every day, but if it does not strike an interest then it is pointless because it will not get any engagement, which is what drives social media tools. Dalghan added SMEs need to be different because that is their only chance to survive. They cannot compare themselves to bigger brands at all; they need to be very clear about relaying the message of what they are doing better than others. Once they have mastered that particular service offering, they can move onto something else.
HOW SMES CAN STAND OUT ON SOCIAL MEDIA Know your audience
It is important to identify the consumers to build a community. People do not join a group just because they have to; they join because there is interest and they feel they will get something back.
Engage and listen
Pople will share their views, though possibly not on the same platform. A business may publish a post on their blog, but a response could come via Twitter. Invest the time to engage properly.
Analyse the data
Know who is engaging with a business, when, and what gets the community to talk and express themselves, and which topics are raising questions. A business may need to pay to push certain content, a budgetary consideration that would be more of a worry for an SME than a bigger brand.
Have sharp customer service
SMEs have to handle customers very carefully because social media has given people the power of expressing their opinion publicly.
Source: Ashwin Gedam, Vice President, Global Marketing and Communications, Xpress Money
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BRAND
CROSS-COUNTRY COURIER Mark Agalo-os, Vice-President for Middle East, LBC Express Inc., discusses about the brand’s growth in the UAE, partnering with RTA, and expanding across the GCC
solutions provider to the Philippines, covering 236 destinations across the globe, including the Middle East, Asia Pacific, North America, Europe and Oceania. “LBC is publicly-listed company in the Philippine Stock Exchange with over 1,200 branches in the Philippines wholly-owned by the company. With our branches, agents, and partners, we have a network base in over 5,000 locations across the globe. In the GCC, we have partnered with local companies and individuals,” he said.
FOCUSING ON THE UAE
Mark Agalo-os
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BC Express, Inc. was first a familyowned business enterprise in the Philippines back in 1950 and has since established presence in over 25 countries including the Middle East, according to Mark Agaloos, Vice-President for Middle East, LBC. He added that today LBC is one of the world’s leading courier and cargo
The company first set up in the UAE in 2008, during a global recession, owing to its strategic location and stability which made it the premier trading hub in the region. LBC started with a limited budget in a relatively small branch in Karama, with few trucks offering door-todoor service for care packages, boxes, and parcels. The company now serves between 500 and 600 customers every day and has expanded its service capabilities by partnering with over 500 agents located in the UAE.
“LBC operates three branches in the UAE and services the entire Emirates through a fleet of 30 vehicles. On a daily basis, we load two to three 40-feet containers. We cover five countries and operate nine branches in the region, including three in the UAE, three in Kingdom of Saudi Arabia, one in Kuwait, one in Qatar and one in Bahrain, in addition to an agent network base in 1,000 locations throughout GCC countries,” said Agalo-os. He added that LBC Express Inc. is registered as a branch of a foreign company in the UAE and has a local partner who assists in working around licenses and other requirements to ensure that the company abides by the rules and policies within the Emirates. In March this year, LBC inaugurated its Al Quoz warehouse that is now 100 per cent operational, serving as the central office of LBC UAE covering Dubai, Abu Dhabi, and Sharjah operations, while it also serves as the regional office for the LBC Middle East Operations. In an effort to better serve its customers, LBC is looking to move
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Our operations in the Middle East started in UAE and a large share of our growth is yielded from here.” – Mark Agalo-os, Vice-President for Middle East, LBC Express Inc.
its call centre operations to Dubai for more efficient customer handling and better response rates. “The country continues to position itself as key gateway to connect the East and the West. Our operations in the Middle East started in the UAE and a large share of our growth is yielded from here. We envision continuous growth in the UAE, as more opportunities are made available to our target market. Locating the LBC Regional Office in the UAE will allow us to leverage market opportunities by forging business ties and associating with big-ticket brands in the country including reputed government institutions and blue chip companies,” said Agalo-os. He added that there are further regional expansion plans with the management team exploring opportunities to expand more aggressively in the UAE and in the KSA, while operations in Kuwait, Qatar and Bahrain are moving to improve accessibility and reach through strategic partnerships and agent relationships. “All these plans of expansion will be implemented within the year and our goal is to ensure that we have penetrated the current countries
where LBC is present before we proceed with other countries,” he said.
PARTNERSHIPS AND PRODUCTS LBC has recently partnered with Smart Shelter to launch a cargo and courier service which allows UAE residents to courier parcels and to send cargo to 236 destinations across the globe while at selected RTA smart bus shelter locations. LBC, in cooperation with FGB, is providing its customers easy instalment payment scheme, at zero per cent interest for cargo services. “These new services were designed to cater to the needs of every resident. From document processing required for job transfers and other work requirements, faster and more efficient delivery services, and money remittance, our service offerings are more accessible and convenient for customers,” said Agalo-os While promoting the LBC brand was not difficult as it has 60-plus years’ heritage, Agalo-os said the biggest challenge was being in fierce competition with other providers that offer services at lower prices, but without a network as extensive as LBC’s. Therefore customers have still opted to choose LBC.
With issues on price hikes and rising costs, the company is currently undertaking certain steps to improve its current processes and reduce costs while improving asset utilisation, efficiency, and productivity. “We have upgraded our vehicles to have GPS to ensure that daily vehicle utilisation is maximised. Our increased number of agents become our delivery arm for box distribution. In addition, our third party partners also allow us to handle deliveries and pick-ups of cargo without the need for purchasing vehicles,” said Agalo-os.
FIVE WAYS A COMPANY CAN GROW ITS BRAND INTERNATIONALLY 1. Focus on the customer. 2. Build a strong team. 3. Keep your processes streamlined. 4. Develop strategic networking. 5. Invest in innovation.
Source: Mark Agalo-os, Vice-President for Middle East, LBC Express, Inc.
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START-UP
OVERLY ORGANIC
Ghanim Al Sulaiti, Founder, Evergreen Organics, opens up about the challenges starting a vegan café in Qatar, while trying to find the right suppliers
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he idea for Qatar-based Evergreen Organics, a vegan café and juice bar, first came to founder Ghanim Al Sulaiti in September 2014 while he was in Paris. Having switched to vegan lifestyle around 2013, he spent the following two years travelling to over 20 countries to see and meet people who were living vegan and running sustainable businesses. He added that the café is also a way of trying to change the way people do business in Doha and the rest of the Middle East, and to show it’s not about making money. “If we just wanted to start a business, we definitely wouldn’t open a vegan and organic café and we wouldn’t open it in the middle of Qatar. Everyone thought it was a big risk because the market simply wasn’t obvious. It’s our tradition, religion, and our culture to eat meat and dairy. However, I really believe the Middle East is the best place for people to go vegan, especially Doha, Qatar which has such high rates of obesity, diabetes, and pollution,” said Al Sulaiti. The first challenge was sourcing organic suppliers for everything from the food, to businesses willing to use recycled paper for the café’s printed materials. Finding businesses willing to create furniture out of recycled materials was equally difficult. He added that it was a complete contrast to the US or the UK where the organic market and recycling markets, the ecofriendly and sustainable supply chains are already developed. “We had to visit a lot of farms in Doha and convince them to help us.
We’ve also reached out to a couple of farms in Dubai, Saudi, and Lebanon. We are working with suppliers to get all our raw produce, such as the nuts, seeds and legumes. We have suppliers in Cambodia and London, but our longterm goal is to be 100 per cent local and regional–it’s just not possible at the moment,” said Al Sulaiti. Al Sulaiti tested the market with a small kiosk at a food festival in April. He sold a couple of cold-pressed juices, kale chips and some raw cheese cake and it was a hit, making it one of the most successful booths at the festival. That is when he felt the Doha market was ready for the café.
Business set up
Having no previous experience, Al Sulaiti asked questions about setting up his business but eventually had to find information through trial and error. “People who have the knowledge will keep it a secret. I just had to keep going back to people and asking. Even today, I’m still learning things. I think doing business in Doha can also be very tricky because people will pay contractors without knowing actual market prices or requirements. I could easily be trapped in a cycle of paying contractors and not opening the café because my focus is elsewhere, while being told I need to meet all these extra requirements to open the café. I think we got stuck worrying about the branding and packaging and about everything being perfect,” he said.
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Al Sulaiti said Doha is one of the most expensive places to create a brand and open a business, owing to the fact that most residents in the country is well-off, which is being exploited through long, expensive administrative processes. He cited the example that a business owner needs to hire their staff, but cannot allow them to work until a certain number of administrative requirements are met. During this time, salaries still have to be paid, which he was doing five months before the business opened. The café’s official opening at the end of September this year saw approximately 150 people arrive, twice the number that the café can seat. “I knew there were people who were interested in eating vegan, or eating healthy in general, but I never imagined the impact on the Qataris and the expats. It wasn’t just one audience, it was everyone from children to parents to families,” he said. Al Sulaiti would like to see the café established in Doha before expanding to a take away and delivery service. He would like the business to grow and is looking at other projects in the organic produce sector.
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TECH FOCUS
ENSURE YOUR DATA IS NOT TAKEN HOSTAGE Raj Samani, VP & CTO, EMEA, Intel Security, discusses ransomware remediation strategies that can be implemented in companies of all sizes
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fter slowing slightly in mid-2015, ransomware has regained its rapid growth rate. According to the June 2016 McAfee Labs Threats Report, total ransomware grew 116 per cent year-over-year for the period ending March 31. Total ransomware rose 26 per cent from Q4 2015 to Q1 2016 as lucrative returns continued to draw relatively low-skilled criminals. An October 2015 Cyber Threat Alliance analysis of the CryptoWall V3 ransomware hinted at the financial scale of such campaigns. The researchers linked just one campaign’s
operations to $325 million in victims’ ransom payments. This spurt in ransomware attacks can be attributed to three key reasons. The first driver is the syndication of the activity into ransom as a service with offers of revenue sharing to operatives facing the target recipients. The second driver is the development of polymorphism in ransomware generating a unique threat signature for each attack. And the third driver is the increasing sophistication within the malware, widening the scope of damages.
With Middle East organisations becoming a target for ransomware attacks, it is incumbent on the C-suite to take action and ensure that their data and organisations are not held ransom. Ransomware attacks occur in five stages–distribution, infection, communication, encryption and demand. So it is only logical that there should be prevention and remediation strategies for each of these stages. At the distribution stage the biggest threat is users who let the ransomware on their endpoints. People are the weakest link.
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With Middle East organisations becoming a target for ransomware attacks, it is incumbent on the C-suite to take action and ensure that their data and organisations are not held ransom.” – Raj Samani, VP & CTO, EMEA, Intel Security Organisations can build a ‘human firewall’ by making sure that all employees from the CEO down understand both how ransomware works as well as the ramifications of an attack. Another proactive method of protecting a network from ransomware attack is to keep ransomware from reaching the endpoint in the first place. Business owners should consider web-filtering technology. Many ransomware strategies take advantage of vulnerabilities in the operating system or in applications to infect an endpoint. Having the latest operating system and application versions and patches will reduce the attack surface to a minimum. Spam filtering and web gateway filtering are great ways to stop ransomware that tries to reach the endpoint through malicious IPs, URLs, and email spam. Using an ‘application control’ method that offers centrally administered whitelisting to block unauthorised executables on servers, corporate desktops, and fixed-function devices, can dramatically reduce the attack surface for most ransomware. Limiting privileges for unknown processes can be done by writing rules for host intrusion prevention systems or access protection rules. The first way to side-step the infection stage is by not enabling macros in documents received via email. Microsoft Office turns off auto-execution of macros for Office documents by default. Office macros are a popular way for ransomware to infect your machine, so if a document asks you to enable macros, do not do it. It is also advisable to make yourself ‘weaker’ when working; that means not giving yourself more login power
than you need. If you allow yourself administrator rights during normal usage, consider restricting this. Surfing the web, opening applications and documents, and generally doing a lot of work while logged in with administrative rights is very dangerous. If you get hit with malware while you have fewer rights, you will reduce your risk because malware will also execute with fewer rights, which will reduce the threat’s attack surface. Writing access control rules against targeted file extensions that deny writes by unapproved applications complements host intrusion prevention systems rules with a similar strategy. Block unapproved processes from changing files by writing rules for host intrusion prevention systems or access protection.
COMMUNICATION STAGE At the communication stage, writing rules to block malicious domains is a standard capability of network firewalls. For those with proxy and gateway appliances, these technologies can be configured to scan for known ransomware control server traffic and block it. Most ransomware cannot continue operations if it cannot retrieve the public encryption key needed for asymmetric encryption. Ransomware can be addressed at the encryption stage by backing up and restoring files locally. By creating a storage volume and running archival differential-based file backups to that storage volume, remediation is as easy as removing the ransomware, going back in time with the backup to a point before the ransomware affected the files, and restoring all the affected files. This can be done today by network administrators
who could either use external storage volumes with good archival backup utility or partition a local drive or run the backup utility against that. Many ransomware variants will look for access to files on storage other than the boot volume—such as file servers, and additional volumes—and will encrypt everything they can find to inflict maximum damage. Consider limiting operations allowed on shared volumes. Finally, at the ransom demand stage, files kept in a recent backup offsite and ‘air gapped’ can be restored. An ‘air-gapped’ backup is not connected to the computer or the network anywhere. For an individual this could mean doing a back up to an external hard drive. When the backup is done, the drive is unplugged and kept in a drawer, away from any computers. That way ransomware cannot detect the backup and damage it. Consider using a ‘bare metal backup’ utility, which not only backs up user files, but also lets you erase all storage volumes, in case the machine is stolen, and get you back to a usable state with all your applications and data restored. Ensuring your organisation’s precious data is not ripe for the taking is a daunting task, especially with the steady rise of ransomware as an attack vector. By adopting a planned approach involving both end users and IT administrators, and implementing integrated security solutions that protect, detect and correct, businesses in the region can avoid the unplanned downtimes and losses associated with such malware attacks.
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BEHIND THE SCENES
Mars & Venus
Rolina Lofranco-Palis, Co-Owner, and Maria Chona Lofranco, Salon Manager, Mars & Venus
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CO – SALON N A FR LO A N O H C IA R A M S & VENUSmains MANAGER, MreAyoRur salon re
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TO SEE MORE FROM OUR DAY ‘BEHIND THE SCENES’ WITH MARS & VENUS, VISIT WWW.CPIFINANCIAL.NET FOR OUR VIDEO INTERVIEW, AS WELL AS A SLIGHTLY MORE IN DEPTH ARTICLE. WE ARE ON INSTAGRAM: @FINANCE_MIDDLE_EAST, TWITTER: @FIANNCEMIDEAST, AND FACEBOOK: HTTPS://WWW.FACEBOOK.COM/FINANCEMIDDLEEAST/
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What global trends and forecasts actually mean for investors
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Investing during turbulent times: Navigating a tricky environment
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Supported by the Dubai International Financial Centre, 2016 welcomes the first edition of the WEALTH Arabia Summit. Introducing the region’s first platform to cater specifically to the high net-worth individual and/or their most trusted representatives in wealth management. The WEALTH Arabia Summit is the premium forum bringing the region’s highest earners, leading single and multi-family offices and solution providers together. An exclusive, invitation-only event, the WEALTH Arabia Summit offers delegates intimate environment for focused discussion on key drivers shaping the future by providing actionable investment advice from the world’s leading experts. 86% of HNWIs are still interested in growing their wealth rather than consolidating assets.
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LAST WORD
Preparation, planning, and obliterating poverty Promoth Manghat, CEO, UAE Exchange, discusses finance, business failure, and Mohandas Karamchand Gandhi WHAT DOES YOUR CURRENT ROLE INVOLVE ON A DAY-TO-DAY BASIS? I am responsible for strategy, innovation, collaboration and engagement among the teams, along with protecting customers’ trust in us and our overall performance. I represent the brand and the organisation to the media, regulators, and partners. On a dayto-day basis, I work closely with the leadership team and find time to engage with middle management and frontline staff.
WHAT PLANS DO YOU HAVE FOR THE BUSINESS OVER THE NEXT 12 MONTHS?
have to accommodate meetings with unannounced visitors in my schedule.
WHAT IS THE MOST CHALLENGING ASPECT OF WHAT YOU DO? People management within the organisation seems to be the most challenging. Getting the best from them every time to achieve the desired results isn’t easy, because aligning someone’s thought process to the vision of the organisation is ongoing. It is only through constant engagement/interaction with the team that they can be guided and directed towards the ultimate goal.
For the next 12 months, our priority list includes an ambitious plan for complete digitalisation of our products and services, and our internal processes. We have partnerships to deal with our organisation’s foreign exchange, bank settlements, and cash management, as well as strengthening compliance processes, and enabling better risk mitigation against money laundering and terrorism financing. We have a budget of $150 million earmarked for 2015-16 to accelerate our growth in the fintech space.
DESCRIBE YOUR BIGGEST FAILURE IN BUSINESS.
HOW DO YOU PREPARE FOR THE DAY AHEAD?
Prioritisation has been the most important lesson in the last year. Unless we prioritise and focus on the right ideas, we would not be able to achieve our desired results. We needn’t wait for perfection to be achieved every time, which could delay the entire process.
I have a well-defined plan for the day, which is prepared the day before. Preparation for meetings, conferences or presentations is done ahead of time. There are times when I sometimes
We have previously launched products that were ahead of their time. But they were not successful as they weren’t received well in the market. That was disappointing as the time and energy invested in the project did not bear fruit. But I am blessed with a high-spirited team with whom I re-strategise as per market trends.
WHAT'S THE MOST IMPORTANT LESSON YOU'VE LEARNED IN THE LAST YEAR?
Promoth Manghat
What is the one quality a potential employee should have? A positive attitude is the most important quality we look for in an employee.
What movie or novel character do you most identify with? I am inspired by real life heroes, the most prominent being Mohandas Karamchand Gandhi.
What would you most regret not having done by the end of your life? I presume my regret would be not having done a bit more.
If you ruled the world, what would you change? I feel man should be a free spirit devoid of any barriers and have his independence of thought. If we could bring that freedom to our thoughts, then the change for good will automatically take place.
What super power would you like to have? I would erase poverty and illiteracy from the world.
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