Ruwad-En-jan2011

ENTREPRENEURS

WINNERS OF INTILAAQAH 2010 AWARDS

GLOBAL BEST PRACTICES SOCIAL NETWORKING SITES

EVENT

SME EXHIBITION & CONFERENCE 2011

FOR THE NEXT GENERATION OF BUSINESS LEADERS

Ruwad Founding Members:

JAN-MAR 2011

10 TOP

THREATS TO THE SUCCESS OF SMALL BUSINESSES IN OMAN An Alam al-Iktisaad Wal A’maal

P r e s e n t a t i o n

Jan-Mar 2011

From The Editor’s Desk FUNDING WOES Recently I was talking to a young entrepreneur about his experience on raising funds for business. The entrepreneur said that though many organizations in the business of providing loans to the small and medium enterprises (SMEs) highlight their achievements in the sector’s development, the reality is far from true. It is very difficult to generate funds for most of the SMEs, according to the young Omani.

CONCEPT Akshay Bhatnagar

MARKETING Business Head - SBU Kush Gupta

CONTENT Khalfan Al Rahbi Ghalib Abdullah Al Fori Turki Al Balushi

Marketing Team Jisha Velluvan

DESIGN Art Directors Sandesh S. Rangnekar Minaal G. Pednekar Designers Khoula Rashid Al Wahaibi Aliya Saif Al Wahaibi Senior Photographer Rajesh Burman Photographers Motasim Abdulla Al Balushi Sathya Das Production Manager Govindaraj Ramesh

CORPORATE Chief Executive Sandeep Sehgal Executive Vice President Alpana Roy Vice President Ravi Raman Senior Business Support Executive Radha Kumar Business Support Executive Zuwaina Said Al-Rashdi Distribution United Media Services LLC

Ruwad Strategic Partner

“We approached commercial banks for loan. In return, they asked for a property security with a 200 per cent value of the loan amount. We approached another bank known for supporting SMEs but the experience with them was worse.

We wasted our precious time in having various rounds of meetings with their representatives and arranging a long list of documents they needed. For months they kept on promising that everything is fine and our application was under process. But after a never ending wait, we came to know informally through our own sources within the bank that our application was not acceptable because we didn’t meet the criteria set by the bank. Their representatives were not even aware of the bank’s terms and conditions! We have a good track-record and our work has been appreciated by many prestigious organizations. We are doing business with Government bodies and leading private sector companies.

We want to scale up and do business activities which are a rarity in Oman but the extremely strict rules and regulations of the financial institutions are not friendly enough to SMEs like ours,” says the entrepreneur.

Many of you may have undergone a similar experience. What is the solution?

Voice your opinion in the rightful manner. That’s exactly what Tawasul is working on. Helping the development of advocacy in the society and making the communities form and raise their opinion in a civilized manner to bring the desired policy change. Ruwad profiles the founder of Tawasul and two other SMEs who have not only won Intilaaqah Awards in 2010 but are also leading the GenNext of entrepreneurs in Oman.

Do share your feedback with us!

Published by United Press & Publishing LLC PO Box 3305, Ruwi, Postal Code - 112 Muscat, Sultanate of Oman Tel: (968) 24700896, Fax: (968) 24707939 Email: publish@umsoman.com All rights reserved. No part of this publication may be reproduced without the written permission of the publisher. The publisher does not accept responsibility for any loss occasioned to any person or organisation acting or refraining as a result of material in this publication. Alam Aliktisaad Wala’mal accepts no responsibility for advertising content.

Copyright © 2011 United Press & Publishing LLC Printed by Oman Printers Correspondence should be sent to: Ruwad, United Media Services PO Box 3305, Ruwi 112, Sultanate of Oman. Fax: (968)24707939

Akshay Bhatnagar akshay@umsoman.com

CONTENTS NEWS . . . . . . . . . . . . . . . . . . . . . . . . . .2 SUCCESSFUL ENTREPRENEURS . . . . . .9 Next Generation Entrepreneurs EDUCATION . . . . . . . . . . . . . . . . . . .17 Gulf School of Business GLOBAL BEST PRACTICES Marketing that Connects . . . . . . . . . . . . . .18

ASK THE EXPERT . . . . . . . . . . . . . . . .22

COLUMNS William R. Crew . . . . . . . . . . . . . . . . . 6 Nicole Bassit . . . . . . . . . . . . . . . . . . . 8 Nasser Salim Said Al Rashdi . . . . . .16

An Alam al-Iktisaad Wal A’maal Presentation

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FOR THE NEXT GENERATION OF BUSINESS LEADERS

NEWS

SME EXHIBITION & CONFERENCE 2011 IN FEBRUARY OVER 150 SME RELATED BUSINESSES WILL PARTICIPATE IN THE THIRD SME EXHIBITION AND CONFERENCE AT MUSCAT Trifoil Expo, the organiser of Small & Medium Enterprises Exhibition & Conference for the last two consecutive years, facilitates networking platforms once again this year by organising the Third SME Exhibition & Conference 2011. Trifoil has identified the SMEs as one of the key focus areas, as micro, small and medium enterprises have been instrumental in giving a new facelift to the Omani business landscape.

Trifoil is a growing company with experienced people in the business of organizing exhibitions and industry trade & commercial fairs in Oman. Trifoil has developed a formidable reputation for original thinking and attention to details. SMEs, the backbone of the economy, will defy the global financial crisis because of lower operating costs and sufficient liquidity in their hands, according to the organizer of the upcoming exhibition and conference which will be held during 13-15 February, 2011, at the Oman International Exhibition Centre, Seeb.

Ashraf Marei, General Manager, Trifoil Expo, said: “SMEs from all over the world, serves as the essential contributors towards sustainable development and economic diversification of their respective countries. Today, Oman opens golden opportunities to the global business communities of the world. The business activities in the region are increasing at a record pace by the day.

The flexibility of opening up a business in the Sultanate made it hot favourite amongst SMEs.” The Exhibition and Conference will serve as a platform to explore business opportunities, networking, interact, form alliances, enhance export and import, exchange expertise, consultation with industry experts, seek management and financial services and display innovative products, technology and services. This SME exhibition will be visited by large number of members of the SME community of the Sultanate and the region. There will be over 150 SME related businesses showcasing their products, services and innovative ideas. SME Conference will be held on the first day of the event, targeted at more than 100 delegates who will listen to the top speakers

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in this field. The theme is “Creativity & Innovation for Small & Medium Enterprises.”

“Finally, we are ready to tackle this frontier and we invite all businesses in all sectors from all over the Sultanate to come and explore opportunities this region has to offer to SMEs”, says Nor Azmi Sulong, the Business Development Manager of Trifoil Expo.

Companies at the exhibition will be from the areas of franchising, tourism, investment opportunity, investment zones, garments & textile, arts & handicrafts, food trade, banking & finance, legal & accounting, education, design and design-related, business consultancy and many others.

The organizers are inviting all SMEs across sectors from the region to come and exhibit at the exhibition as well as to attend the conference. Main supporters and contributors of SMEs in the region have already extended their support as a main sponsor of the event. For booking of the exhibition stalls or any other information, contact Trifoil Expo or email to trifoil@ omantel.net.om.

is the strategic partner for the event

FOR THE NEXT GENERATION OF BUSINESS LEADERS

NEWS

LET THE GAMES BEGIN! GET READY FOR THE SEVENTH EDITION OF OER CEO GOLF, THE MOST HAPPENING EVENT OF THE YEAR…

T

here are a few occasions in the crazy hustle of corporate life when CEOs get to leave the brainstorming of the boardroom and settle in for some quiet relaxation. But for Oman’s lead honchos, OER CEO Golf 2011 has other plans.

The seventh episode of the country’s elitist leisure golfing event will be a day of recreational reckoning that will pit CEOs in a battle of guts, grit and glory on the greens.

Muscat Hills Golf and Country Club plays host, while Nawras Business Solutions is presenting the corporate networking event of the year.

Ray Stopforth, Director of Golf (and a PGA Professional) – Muscat Hills Golf and Country Club, says, “We are proud that the OER CEO Golf has chosen Muscat Hills Golf & Country Club to host this prestigious event. Events such as this give Muscat Hills greater exposure to Golfers and Non Golfers throughout the Middle East.”

According to Markus Golder, Business Segment Director, Nawras, “We are enthusiastic about supporting activities that appeal to our customers and events that help to spread the excitement and innovation of the Nawras brand to an even wider audience,” says Markus Golder, Business Segment Director. Adding to the power-packed performances on the greens, will be the debut of the INFINITI high-performance range of cars from the renowned Suhail Bahwan Automobile stable. INFINITI is the associate presenter. “This marks INFINITI’s entry into OER CEO Golf and we are happy to showcase our line of performance driven vehicles,” says Bibhudendu Pattanaik, Head of Marketing –

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INFINITI, Suhail Bahwan Automobiles LLC. The official timekeeper of the event is ROLEX from Khimji’s Watches. “We are very happy to be part of this prestigious event. It is the best event in Oman. We wish all players the best of luck and hope that they play hard to win a Rolex,” says Madhursinh Jesrani, General Manager, Khimji Watches.

Sandeep Sehgal, CE of United Media Services says, “With each edition of CEO Golf we strive to incorporate new and exciting elements in the game and this time it is no different.”

And, indeed this edition of CEO Golf has lots to keep you on your toes. The action will tee-off with a round of rapid-fire Power Play Golf, followed some light-hearted SNAG. Participants will also get to see a pro in action – world renowned Trick Shot specialist, Jeremy Dale. It’s no less than a redcarpet cultural extravaganza in the evening featuring electrifying performances by the UK-based, all-girl string quartet, Asteria.

Rounding off the event is a gourmet banquet and glittering awards ceremony with an array of exciting prizes.

Publicity partners are Times of Oman and Al Shabiba; Media sponsors include Hi, and Al Youm Al Sab’e; prize partner is Samsung.

Category partners are Signature (Luxury) and AXA (Insurance), Reach (Activation), Oman Printers & Stationers (Printing), OUA (Beverage), Infoline (Call Centre) and Aggreko (Energy). Prize partners include Samsung, Micromax Mobiles, Damas, Millennium Resort, Shangri-La’s Barr Al Jissah Resort & Spa, Travel City and Graphic International Centre.

FOR THE NEXT GENERATION OF BUSINESS LEADERS

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WHY DO OMAN’S SMALL BUSINESSES FAIL

BY WILLIAM R. CREW

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aving worked with small businesses in Oman for the past 15 years, Intilaaqah has seen a lot of small businesses succeed and fail. This experience, “lessons learned” as we call them, helps to improve the business support services Intilaaqah provides to SMEs throughout the country.

These lessons are also of value to not only existing small businesses but also to first time entrepreneurs, giving all of them examples of the types of mistakes which lead to failure, and of course, the actions needed which will lead to success. One can view these reasons as the largest risks, or threats to small business success.

If all SMEs adopted plans and strategies, processes and procedures, which reduced these threats, then the probability of success for these SMEs would increase. And that’s one of Intilaaqah’s core values — helping increase the probability of success.

All entrepreneurs want to make a million rial in sales in the first year of operations 6

The top ten threats to success are below, with an explanation of how the average SME can manage this risk.

1. Lack of business planning skills: Business planning is NOT an art. Neither is it a science. Business planning is the focused attention to the details. Successful entrepreneurs spend a lot of time “sitting, thinking, and visioning” about what they want to accomplish with their business idea. They then document this into a detailed business

plan, which becomes their guiding document and road map to success.

2. Lack of entrepreneurial focus on the core business: Successful entrepreneurs are those who are able to devote the time and energy to personally managing or taking a significant role in the management of the small business. There is no substitute for working day to day in the management of the small business, to being able to focus on the core business.

3. Unrealistic sales projections: All entrepreneurs want to make a million rial in sales in the first year of operations. But how realistic is this? Determining the most realistic sales projections (sales for the first 12 months of operations, for example) is of great value to every entrepreneur and small business. Based upon market analysis, customer interviews, competition analysis, the sales projections must be attainable. Successful entrepreneurs also know what their break-even sales level is (that is, the minimum amount of sales needed to pay all expenses, bank debt, and provide a return to the owners), and know what their break-even sales level is on a monthly, weekly, or even daily basis. This is the level of realism which successful entrepreneurs bring to their sales projections.

4. Inadequate competition analysis: Successful small businesses know exactly why customers buy from competitors, and exactly what it will take to change this behaviour and draw customers away from competitors and

Jan-Mar 2011

COLUMN

bring them to the entrepreneur’s business.

Successful competition requires knowing the key decisions customers make when making their purchases-for example, price, quality or service. They furthermore identify which of these areas they are best prepared to turn into a competitive advantage for their small business.

5. Lack of industry specific skills, experience: Many small businesses fail because the entrepreneur decided to enter a market or industry in which he/she did not have a significant amount of experience or knowledge. We cannot hope to be successful if we do not understand the details of exactly how a specific industry or market works.

Successful entrepreneurs are those who have worked in the same industry in which they now want to start a small business. There is no substitute for first hand experience. Working within the industry, a successful entrepreneur will see an opportunity, a demand which is not being met, and realize that with proper planning, he/she can meet this demand.

In essence, success means we “play to our strengths” to what we know, now; not what we want to learn at some point in the future.

6. Insufficient working capital management: Working capital is a fancy term for the cash in the business. Cash is the blood of the small business; when it drains out the health of the business is seriously endangered.

Successful entrepreneurs ALWAYS know how much cash is in the business, and ALWAYS know what are the cash demands or expenses which must be paid in the next week or month.

Success means realizing that when we invest our cash in inventory we have begun a cycle.

The cycle begins and ends with cash. Our cash is transformed into inventory, which then must be sold, and if we sell the inventory for cash, then the inventory once more becomes cash and the cycle is complete. But how long

our cash is invested in inventory (from cash payment for inventory or raw materials to the cash in hand, or collected from a debtor) is the key determinant of success or failure. The best entrepreneurs know this cycle, and how many days its take to complete.

7. Inadequate financial reporting: Without proper financial reports there is no indication of how good or bad a business is doing.

There is no way to determine a plan if there is nothing to base it one. Adequate reporting means control and knowledge of the small business’ current state of affairs. There is no substitute for the entrepreneur’s ability to read simple financial statements (balance sheets and income statements).

8. Mingling personal and business funds: Successful entrepreneurs know how to keep separate business and personal accounts.

One cannot gauge the status of the business, as a business, if the entrepreneur sees it as another personal bank account. Serious entrepreneurs strictly keep personal and business accounts separated.

9. Lack of a diverse client base: “Don’t put all your eggs in one basket”. Relying on one big contract or firm for most of your sales is incredibly risky. Management of your number one client changes, competitors enter the market, etc. Any small business with sales of 25 per cent or more from one client or contract, is at risk.

10. Borrowing more money than necessary: Successful SMEs know exactly the right amount they need to borrow to get to the next stage in the life of the business. Borrowing too much requires more cashflow than can be generated, and eventually destroys the business.

The author is General Manager of Intilaaqah.

We cannot hope to be successful if we do not understand the details of exactly how a specific industry or market works 7

FOR THE NEXT GENERATION OF BUSINESS LEADERS

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ENTREPRENEURIAL ERA

BY NICOLE BASSIT

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ntrepreneurs have become such a phenomenon currently that so much has been reported regarding this matter. Yes, majority of small businesses have grown and constitute a fairly large percentage in our society and have shown tremendous support to our economy in terms of growth and expansion. Oman has already witnessed the transformation of business owners with an increasing number of women entrepreneurs coming up with excellent business concepts and ideas that have been put into action, and have seen so many businesses that have been thriving in the country. However, with the economic changes that our society is undergoing, we still come to the point of approvals and legal permits being of a hindrance when laying down the foundations of a business. There have been continuous efforts to promote and encourage SMEs to expand and develop, however the matter of work permits, visa clearances, and other such legalities related to the compliances of a business have constantly been overlooked.

Business procedures So much is revealed during the early stages of setting up a business that most people have little familiarity with realistic situations. Certain things aren’t appropriately communicated during initial correspondence with some government bodies, only to find later on, and after

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fulfilling all the necessary requirements, that permits and visa clearances become banned, nor are potential entrepreneurs aware or notified of the activities that are prohibited. However, in order to obtain necessary approvals for establishing a business, a person must go through physically setting up the business in order to receive all the mandatory approvals, from actual renting of an office/shop, to putting up the signboard, and other related expenses. When that is completed, entrepreneurs unfortunately face unexpected additional requirements.

Particularly, and as an example, certain business activities are stopped, even after an entrepreneur physically establishes his/her office.

It is crucial for an entrepreneur to be fully aware of the essential resources necessary before setting up a business. If an entrepreneur has thoroughly performed his/her background research, minimal obstacles will be encountered, but such things are out of our control. No one has a clue when a decision has been made to ban a certain type of business activity nor when a specific gender become less eligible to acquire visa clearances.

Investing in People Nevertheless, the cycle of society keeps changing. This actually is a very positive thing. Women as well as men are given numerous opportunities to develop their

businesses through various local and international funding programmes. But without the back up of proper knowledge and awareness, how could an entrepreneur succeed?

People are the key and without their inputs, most businesses will fail.

Continuous training support is crucial in updating one’s personal knowledge and capabilities. Acquiring new tools to be used in jobs, becoming more aware of the techniques that should be used; avoiding negative habits are all ways through which a person can develop his/her interpersonal skills. These skills are extremely important in becoming successful and independent. So keeping that in mind, developing human skills should be formed at a higher level through practical training in order to upgrade one’s expertise. A small recommendation to the readers and parties involved would be to create an online accessible channel where local investors can not only obtain all the required information online, but also apply for the essential permits under a one-stop agency. This means that a one-stop agency can provide business owners with the crucial documents and information representing all the other government bodies involved in the process of establishing a business.

The author is Executive Director, Creative Minds.

Jan-Mar, 2011

SUCCESSFUL ENTREPRENEURS

NEXT GENERATION ENTREPRENEURS Due to lack of suitable and challenging job options or driven by the urge to do what they are passionate about, they chose to become an entrepreneur. And despite odds, they have survived to create a niche for themselves. It is still early years for them but they have proved that the next generation of entrepreneurs in oman is no push over. Akshay bhatnagar profiles the three winners of Intilaaqah awards 2010 who are the role models for any budding entrepreneur.

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FOR THE NEXT GENERATION OF BUSINESS LEADERS

SUCCESSFUL ENTREPRENEURS

THE KNOWLEDGE SOLUTION PROVIDERS

Rayan Al-Kalbani

Yaqoub K. Al-Mahrooqi

Executive Director, email kalbani@mets-oman.com

Project Leader, email mahrooqi@mets-oman.com

Based out of Knowledge Oasis Muscat (KOM), Rayan and Yaqoub are among the brightest knowledge-based small entrepreneurs in the Sultanate. Winners of TKM- Ernst & Young Big Business Idea Competition (BBIC) in 2008 and Shell Intilaaqah in 2010, provide services in the fields of environmental biotechnology, chemical/ biological analyses and education & awareness building.

A master in organic biochemistry from Germany, Rayan worked in Sultan Qaboos University as a research assistant and lab instructor for some time. But later on couldn’t find a job to suit her qualifications. She turned entrepreneur in 2008. Yaqoub, a master in chemistry from England, also joined hands with her in the venture. “I shared my idea to start the business of a private lab and bio remediation solutions which was my subject for the research work in SQU with KOM. I attended workshops in KOM to learn about business planning and management. We knew from our experience that there is a need for our services in the market. The KOM also encouraged us and we took off in June 2008,” says Ryan.

Yaqoub adds, “We are the knowledge providers. We collaborate with certified labs in Europe and provide full solutions to the clients. We undertake comprehensive studies instead of just doing analyses. Recently we have started doing the environment

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chemistry as well. It involves monitoring of soil, water, air and noise”. The company has worked for large corporates including Petroleum Development Oman (PDO), Oman Cement Company and Aromatics Oman, etc. apart from the ministries. On being probed on the key challenges in their business, they say, “Environment awareness in Oman is low. The related laws are not very strict. But the growing stress on environment friendly practices augurs well for us. Our business is increasing through referrals from our clients. We also participate in industry events to update our knowledge and create awareness about our services.

We are also developing new revenue streams. ” But it has been a tough journey for them like many other SMEs. “We have got support from different organizations but it is not very comprehensive. Funding has been a major issue for start-ups like us. The money that have we received from BBIC and Intilaaqah, RO5,000 each is not sufficient. We have taken a term-loan from Sharakah. But our needs are more, say for example, many of our instruements cost upwards of RO15,000 each,” they says.

Mazoon Environmental & Technological Services LLC Tel 968 24155377 Fax 968 24155376

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FOR THE NEXT GENERATION OF BUSINESS LEADERS

SUCCESSFUL ENTREPRENEURS

THE SOCIAL BUSINESSMAN Not many think of turning entrepreneur by becoming a social businessman. But Khalid thinks differently. Others start their business to generate profits but his goal is to make a meaningful difference to the society. The onus is not on how much surplus money has been created but the focus is on job creation, resource & strategic leadership development, better communication and advocacy practices.

Khalid studied political science abroad on a Ministry of Higher Education scholarship. On returning back to Oman, he became a lecturer in Majan University College before joining US Embassy as a political analyst.

Thereafter the entrepreneur bug hit him and he founded Tawasul, a think tank, in 2008-2009. But what exactly is Tawasul and what are its objectives? “In August 2008, we decided that the environment comprising the government, private sector and the civil society say NGOs is ready for a think tank like Tawasul. We do two things – research and training specific to linking the government, private sector and the civil society. We do research in social responsibility and investment areas. We focus on how an average citizen could contribute to the country’s advancement,” says Khalid.

“I along with my friends had this idea for 10 years but we had this viewpoint that the market and society in Oman were not ready for such kind of a venture. We had seen the kind of difference think tanks were making to the societies abroad.

Take US, for example, one-fifth of gross domestic production (GDP) contribution comes from the civil society. They do it by creating jobs and training for groups that are under privileged,” says Khalid.

On the operations of the organization, Khalid says, “Think tanks tap the intellectual persons or institutions that are operating in the country. We outsource the research reports that have to produce a set of practical solutions. Every year we produce three such papers. The training we provide is very intensive and focuses on building strategic leadership. We give training in advocacy. This entails how NGOs can ask for a change in the policy in a civilized manner. If the advocacy is not done rightly it could lead to negative aspects in the society. So

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Khalid Alsafi Al Haribi Managing Director, Tawasul Telefax 968 24614418, Mobile 99643213 email khalid.haribi@tawasul.co.om overall our focus is on nurturing advocacy, strategic leadership, communication and resource development.”

Most entrepreneurs find it difficult to generate funds for their profit oriented businesses. And how one can expect to raise funds for a social business? “Apart from taking contributions from individuals who believe in our cause, we also knock on the doors of social investment funds of the local and international public and private organizations. But it is not easy. My recommendation to every budding entrepreneur is to keep the overheads at the minimum level,” says Khalid.

FOR THE NEXT GENERATION OF BUSINESS LEADERS

SUCCESSFUL ENTREPRENEURS

THE IRON LADY You won’t come across many Omani female architects in the Sultanate. Ibtihaj is an exception. She is made of a different mettle. A passion to do different things made her graduate in architecture from the American University of Sharjah in 2002.

“Currently three to four institutes offer a course in architecture in Oman but during those days there was none,” she says. But that didn’t deter the daughter of a military officer.

In 2003, she joined the projects department in the Ministry of Education. Her job profile involved revising the designs submitted by the consultants for schools, training centres, accommodation for teachers & staff etc. She also prepared tenders, followed up on the progress of the project design, sometimes looked into the financial matters, etc. Few years on the job and she started feeling lack of opportunities to learn new skills and broaden her horizon. She quit the job in early 2009 and joined an engineering consultancy firm in a senior administrative position for a short stint.

“With five years of work experience, I became eligible to start my own business as an architect. Setting-up of my business firm in July 2009 was not an easy decision. There were challenges like economic slowdown, lack of enough all round experience and the responsibility towards my employees and most importantly, maintain a balance between the personal and business commitments as my job involves long working hours when we have a tight deadline to meet,” she says.

But she has no regrets. In the last year-and-a-half, her firm Engineering District has worked on a number of residential and commercial projects. “Being an entrepreneur I have an opportunity to do things which I was not able to do earlier.

Like managing complete design process and dealing with construction related issues, etc. The learning curve has become steeper with new challenges. I prefer to work on few projects at a time and give my full attention to them to maintain quality control,” she says.

She has made a good beginning but the going has been far from a smooth sailing. “In our line of business we get most of the work through word of mouth publicity. And it takes time to build the trust. The market is dominated by companies that have been in the trade for a long time and have strong relationships. Secondly, many clients tend to negotiate very hard on our fees,” she says.

Arch. Ibtihaj M. Al Kindi Managing Director, Engineering District Tel 968 24511085 Fax 968 24511086 email:engineering_district@yahoo.com

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“But the good part is that people are changing and demanding better designs which is a good sign or us. We could leave our mark by doing good work and meet their changing needs,” she adds.

FOR THE NEXT GENERATION OF BUSINESS LEADERS

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ROLE OF SMEs NASSER SALIM SAID AL RASHDI

O

man’s SME sector contributes to 60 per cent of GDP and employs 70 per cent of the local work force. However, loans to small businesses constitute only 5 per cent of the total local banking credits. Set up with small investment, often by one person or a small group of people, SMEs play an invisible role in making giant industries run smoothly by manufacturing their basic industrial products. There are various programmes initiated by the government to encourage the Omani youth to start up businesses and impart necessary skills for making their enterprises a success.

The Government has developed various industrial zones considering the need for Oman to diversify from its predominantly oil based economy. Currently, the oil and associated products constitute 50 per cent of GDP. In the recent years, a number of heavy manufacturing units have been set up. To support these industrial enterprises, to provide for downstream ancillary products, and other services, there is abundant scope for growth of SMEs. In the coming years, as the country moves along sustainable industrial development, the role of small and medium industries in meeting the domestic demand for industrial products and consumer durables is bound to

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increase. Oman Chamber of Commerce & Industry (OCCI) conducts various exhibitions and business forums for SMEs to showcase their products and services, specially customised for the needs of the sector. The SME conferences provide an insight of the global market to the SMEs where innovative business practices can contribute to the sustainable business models. Besides, Oman Development Bank has conducted a comprehensive study which revealed about 48,000 small and medium enterprises in all sectors with number of employees not exceeding 50. The following are the critical success factors for a successful SME model:

• Find and retain high value customers by providing personalized marketing and service and highest customer satisfaction.

• Create an environment which replicates your passion with sense of ownership and commitment through hard work and dedication.

• Think globally, though your business is strictly local. This would facilitate understanding the international best practices, products and services.

• Operate from the business plan. Need for effective budgeting, book keeping and comparison of budgets with actual at least on a quarterly basis.

• The financing and mentoring are the pressing issue which requires joint efforts by governments, financial institutions and enterprises, to enhance innovation in financial systems, products and services, and to improve the sustainable development of SMEs in Oman.

• Ensure thorough costing is made for the products considering all components of the variable, fixed costs and breakeven point. Feasibility study and first hand market survey is essential for a successful venture.

• While improving sales and productivity, always find ways and means of reducing the overhead costs.

• Constantly innovate on the new product or processes, changing customers’ needs, while maintaining high quality on the existing products.

• Effective use of technology, especially in marketing, public relations, customer service and business development.

The author is a board member of the Fund for Development of Youth Projects

Jan-Mar 2011

EDUCATION

EMBEDDING THE SPIRIT OF ENTREPRENEURSHIP GULF SCHOOL OF BUSINESS (GSB) PROGRAMMES ARE TAILOR-MADE TO FOCUS ON MANY OF THE FUNDAMENTALS OF ENTREPRENEURSHIP, SAYS DR. PREMA SESHADRI, DIRECTOR AWARD PROGRAMMES, GSB

Recently, GSB established a partnership with U21Global, a premier online graduate school, to provide a high impact programme in practising management with the energy of face-to-face (f2f) learning blended with the power of technology. The programme is one of immense depth and is designed to enhance the very spirit of entrepreneurship by providing entrepreneurs with a handson learning environment that emphasizes practical application to complement the latest theoretical developments in their fields. GSB in conjunction with U21Global offers four distinct programmes leading to one diploma and three certificates in postgraduate programmes. These programmes address the critical areas that are involved in entrepreneurship or intrapreneurship.

Entrepreneurship is all about creating something different, with value, by devoting necessary time and effort, and by assuming the accompanying financial, psychological and social risks. The results yielded at the end should be monetarily and personally satisfying.

Besides personal satisfaction, entrepreneurship should make significant contributions to national income and generate a higher rate of employment and exports. To achieve this, the entrepreneur needs to understand the critical role of entrepreneurship in smaller businesses since it promotes competition and hence challenges the economic power of larger firms. Moreover, it provides opportunities for innovation and creativity. The opportunity to work in an unstructured environment, that is so typical of small organizations, affords enormous scope for learning and career growth.

GSB’s programmes are tailor-made to focus on many of the fundamentals of entrepreneurship. Subjects like developing new enterprises, performance measurement and management facilitate entrepreneurs to rethink the aspects which are sidelined by many emerging organizations leading to underperformance.

By the end of the programme, participants learn to manage individuals and groups to get the most and best out of them.

Change is inevitable in any organization. Participants learn skills to effectively implement changes in their businesses. Strong marketing is the mainstay for the success of any business.

Entrepreneurs need to understand the importance of “trying to do something different” instead of trying to compete on a productto-product basis with large firms. Providing the same goods to the same customers through the same channels at the same prices, is not smart thinking! The prospective entrepreneur learns that his relatively smaller firm has to provide specialized few-of-a-kind products and personalized services, without the benefits of mass production and mass distribution. The most successful small businesses use technological advances to allow them to compete with larger firms in the marketplace. The combined programmes of GSB and U21Global make available the skills and methods needed to make an enterprise survive and grow.

Advertorial

Entrepreneurship is the name of the game today with more and more young people wanting to do away with routine jobs and willing to start off something on their own and become their own boss. They are also willing to learn any skill they are likely to need to succeed in their chosen career. There is a general emphasis the world over on the setting up of small and medium industries. The Sultanate of Oman has a diversified economy with natural gas and several non-energy business sectors, such as tourism, fishing, light manufacturing, and agriculture expanding rapidly. With an economy that is the freest in the region, a stable government and low taxes, Oman provides the perfect platform for entrepreneurial ventures that would serve diversify the Omani economic base and strengthen it. To facilitate this new scenario in Oman, Gulf School of Business (GSB) was born to provide a golden opportunity to the wannabe professionals to be job providers rather than be job seekers.

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FOR THE NEXT GENERATION OF BUSINESS LEADERS

GLOBAL BEST PRACTICES

MARKETING THAT CONNECTS SMEs CAN TAKE ADVANTAGE OF THE GROWING SOCIAL NETWORKING SITES (SNS) TO ESTABLISH AND GROW THE BUSINESS

S

ome time back, Gee Ranasinha posted a comment on www.smallbizpod.co.uk. It read: “I run an outsourced marketing services company, and have been active on Twitter since the beginning of this year. A few months ago I mentioned on Twitter that I had updated my company website with a short promo, illustrating the impact of integrating video within a company’s website. Four days later, our company had an enquiry from a firm in the US (we’re based in France) and about a week after that we had supplied them with a video promo for their own website – and received the payment. It turned out that my Twitter post had been ‘re-tweeted’ by one of my followers, which eventually was brought to their attention.

“I believe that social media can indeed work for SMEs, but much depends on the nature of your business and how much effort you make, as it can easily eat up your day. I am careful with whom I connect on my social media accounts, and try to contribute as much as I can to topics, threads, etc. without giving any sales spiel. I’d like to say that social media is working for our company, but then I’m yet to repeat the Twitter example.”

Take another example taken from a prominent business magazine in India. The story read: ‘Deepak

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Srinath and Uday Disley, both 34, had no background in investment banking till they floated Viedea Capital Advisors in Bangalore two years ago. But for financial backing they had from the Microsoft MD Rajan Anandan and immense personal faith in their business model, they had little support infrastructure to lean on. Funnily enough, this wasn’t a problem— LinkedIn made up for their shortcomings.

‘The duo recently advised a Mumbaibased digital media firm, which was

on the lookout for a strategic investor.

They zeroed in on three potential suitors from the media space in Europe with the help of LinkedIn’s networks. The Bangalore boys who arranged capital for Indian tennis star Leander Paes’s sports startup and advised industrialist Rajeev Chandrasekhar’s buyout of Axis-IT&T, among others, say it would have taken them a decade to reach the present level of networks and relationships had their approach been conventional. “Even now, more than half of our business development happens through this social networking site. Investment

Jan-Mar, 2011

banking, as you know, is a relationshipdriven business,” says Srinath.’

We can always debate on the pros and cons of the usage of online social networks such as facebook, LinkedIn and twitter etc. but the above two cases prove that if tapped properly they can really work for the entrepreneurs. Whether it is promoting products, taking customer feedback, engaging customers and employees, recruitment of new employees or bringing in partners or generating funding, SMEs can take advantage of the growing social networking sites (SNS) to establish and grow the business. The influence of SNS are increasing day by day.

If we look at the user base of facebook in Oman, there are over 200,000 users in the Sultanate according to www. socialbakers.com. Six months ago it was just over 150,000 which shows the fast pace at which fb is penetrating the market. Apart from individuals, number of business entities are also using fb to push their business. A good example of this is Fruitesca, positioned as Oman’s first juice bar, located at Bareeq Al Shatti in Shatti Al Qurum.

Its fb account is liked by over 2400 users of fb. It helps Fruitesca to share the latest updates with its customers and promote the bar with minimal marketing investment. There are many more such kinds of cases in Oman where SMEs have harnessed the power of SNS to their advantage.

The University of Maryland’s Smith School of Business looked at the relationship between social media and

Social Media Sources and Usage (n=89)

Have a company page on a social networking site like facebook or LinkedIn Post status updates and/or articles of interest on sites like LinkedIn or facebook

75% 69%

Build your network through sites like LinkedIn

57%

Monitor positive/negative feedback about your organization on social networks

54%

Have a blog on your areas of expertise

39%

Tweet about your areas of expertise

26%

Use Twitter as a customer service channel Other

small businesses and found that the technology adoption rates in the U.S. have doubled in the past year from 12 per cent to 24 per cent. The data comes straight from the university’s Small Business Success Index report and is based on a telephone survey of 500 small business owners. Adoption rate calculations are compared against a baseline report conducted in the previous year.

The study concludes that nearly one in five small business owners are integrating social media into their business processes — facebook and LinkedIn were the most popular sites. In fact, 45 per cent of surveyed respondents even believe their social media initiatives will pay off financially in 12 months or less. As the graphic above details, the small business owners who are using social media are primarily engaging in social media through company pages (75 per cent) and status updates (69 per cent) on facebook or LinkedIn. What’s

16% 8%

especially intriguing is that a much smaller percentage of respondents — just 16 per cent — are using Twitter as a customer service channel. Another interesting notion is that small business owners now believe social media can help them on the lead generation front, and that is the primary motivating factor for engaging in these new customer service channels. So while half of surveyed respondents found the time it takes to use social media sites more daunting than expected, 61 per cent are still putting in the hours and making active efforts to identify new customers.

Clearly social media has become a valuable tool for small businesses, but we’re especially curious to see how Twitter adoption rates fluctuate over the time. While we expect more small businesses to use Twitter as a customer service channel in the year ahead, as it stands, Facebook and LinkedIn have become the predominant platforms for small business owners.

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FOR THE NEXT GENERATION OF BUSINESS LEADERS

ASK THE EXPERT

HOW TO CHARGE MORE FROM OLD CLIENTS? In order to book orders I took assignments with a very low profit margin in the beginning. Today my business has grown and a higher quality standard is expected from my company.

As a result my expenditure has gone up but I’m not able to charge more from my old clients as they are not willing to pay more. I don’t want to discontinue doing business with them as they provided the initial push to me and at the same time I don’t want to work with negligible profit margin. How do I manage the situation and convince them to pay more?

First of all, let me assure you that you are not in a unique position. This is a classic case, for almost all entrepreneurs all over the world. Most businessmen starting out a new enterprise build up their business with lower margins, and this is a perfectly acceptable strategy to access new clients and gain market share.

As the business grows, you will have increased overheads, and in the case of certain businesses, your success will require you to improve your product and service quality, which will lead to increased costs and therefore a case for increase in prices.

In such cases, one has to be careful not to lose the old client business. You have to remember that these older clients had a strong role in your success and there has to be a reward for their continued loyalty. However I agree

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that this has to balance with your commercial proposition since this is a business at the end of the day, and not a charity.

Rajeev Singh, Partner

My suggestion is that you will need to follow a twofold strategy. First of all, I assume that you do not have open ended contracts or orders with all your clients. In other words, that there is a fixed time duration for each order. This would naturally mean that every new order can be at a different rate. If the old orders were quite some time ago (one or more years ago), then I recommend that you establish a clear case for increases in the new prices (this can be on better product and service quality, increased cost of your own purchases, inflation, etc.).

My second suggestion is that this price increase with all old clients should be done after you have a clear and open discussion with these clients. Explain to them that they are important to you, and you appreciate the role they have played in helping you build their business.

Use this opportunity to also confirm that they are generally satisfied with your products and services, and then request that you now need their support in improving your business to deliver better products and services, which will naturally result in somewhat higher prices than in the past. I also suggest that you can consider offering a small discount to your older or loyal clients, which is a reduction in prices to a new client.

Please email your queries on entrepreneurship to akshay@umsoman.com and they will be answered

by Rajeev Singh of Ernst & Young