QR 10
JULY-AUGUST 2014
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Empowering your business in Q4
PRESENTING PARTNER
p18
LEAD STRATEGIC PARTNER
IN THE ZONE
Choosing the right office location
INSPIRING ENTREPRENEURSHIP The Enterprise Challenge Qatar 2014
GOING PUBLIC The role of the IPO
WE DON'T JUST WORK WITH THE BEST SUPPLIERS. WE ALSO WORK WITH THE BEST LOCAL SUPPLIERS. At Shell, we seek out ways to support Qatar's National Vision 2030 - in social, human, environmental and economic development. This includes helping Qatari entrepreneurs and encouraging growth by sourcing materials and services from local suppliers. At our state-of-the-art Pearl GTL plant, the need for large amounts of hydrochloric acid within the production process is met by Qatar Vinyl Company (QVC), a world–class chemicals and materials manufacturer. It’s just one example of Shell’s commitment to ‘local content’ in everything we do. To register your interest in becoming a supplier to Qatar Shell, please contact Qatar.Shell.Vendors@shell.com
@Shell_Qatar
Pearl GTL at Ras Laffan is the largest Gas-To-Liquids plant in the world.
ADVISORY BOARD Private Sector Qatar is pleased to introduce you to top industry champions who will be bringing added value to the publication. These key Ć‚IWTGU YKNN PQV QPN[ UJCTG VJGKT YQTNF ENCUU GZRGTVKUG DWV YKNN CNUQ QHHGT KPUKIJVU QP NGCFGTUJKR OCPCIGOGPV CPF ITQYVJ UMKNNU VJTQWIJ VJGKT EQPVKPWCN EQPVTKDWVKQP VQ VJG OCIC\KPG +V KU YKVJ ITGCV FGNKIJV VJCV YG YGNEQOG VJG HQNNQYKPI NGCFKPI RGTUQPCNKVKGU
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Dr. Ivan Misner (QWPFGT %JCKTOCP $0+
Vikram Shroff &KTGEVQT 4GICN )TQWR &WDCK
Raed Al-Emadi %JKGH 1RGTCVKPI 1HĆ‚EGT Silatech.
George M. White, Ph.D. #UUQEKCVG 6GCEJKPI 2TQHGUUQT QH 'PVTGRTGPGWTUJKR %CTPGIKG /GNNQP 7PKXGTUKV[ 3CVCT
Hamad Mohammed Al-Kuwari /CPCIKPI &KTGEVQT 3CVCT 5EKGPEG Technology Park.
Wael Sawan /CPCIKPI &KTGEVQT CPF %JCKTOCP Qatar Shell.
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MANAGEMENT Dominic De Sousa Chairman Nadeem Hood Group CEO Georgina O’Hara Group COO EDITORIAL Group Director of Editorial Paul Godfrey paul.godfrey@cpimediagroup.com +971 4 440 9105 Group Managing Editor Melanie Mingas melanie.mingas@cpimediagroup.com +971 4 440 9152 Associate Editor Victoria Connolly victoria.connolly@cpimediagroup.com ADVERTISING Group Director of Sales Carol Owen carol.owen@cpimediagroup.com +971 4 440 9110 Commercial Director - Business Division Chris Stevenson chris.stevenson@cpimediagroup.com +971 4 440 9138 Sales Manager Jason Bowman jason.bowman@cpimediagroup.com +971 4 440 9154 Media Sales Executive Emma Hughes emma.hughes@ cpimediagroup.com +971 4 440 9120 Event Sponsorship Manager Gill Fairclough gill.fairclough@ cpimediagroup.com +971 4 440 9120
FROM THE EDITOR
Because there is no more plain vanilla... 1PG QH VJG OQUV RQYGTHWN HCEVQTU KPĆƒWGPEKPI VJG UWEEGUU QT PQV QH VQFC[oU RTKXCVG UGEVQT DWUKPGUUGU KU YJGVJGT VJG[ CTG TGCRKPI VJG DGPGĆ‚VU QH NKHG RQUV FKIKVCN TGXQNWVKQP This is the revolution that says that now, your business can have full mobility, and enjoy total replicability of data across every device in the company. This is the revolution that says you can manage the data package that each and every one of the team is using, maximising your cost control and accurately assessing who is doing what. If you doubt that ‘connectivity is king’, keep in mind that now, there is absolutely no TGCUQP YJ[ GXGT[ OGODGT QH UVCHH CETQUU Ć‚XG QT DTCPEJGU ECPPQV CEEGUU RTGEKUGN[ VJG UCOG FCVC CETQUU CNN QH VJGKT FGXKEGU YJGVJGT YQTMKPI KP VJG QHĆ‚EG QT QWV KP VJG Ć‚GNF 6JGTG KU PQ TGCUQP YJ[ VJG UCNGU VGCO ECPPQV UGG VJG OCTIKPU VJCV VJG[ need to achieve on a sale to any particular customer, why they cannot see the entire JKUVQT[ QH DW[KPI RCVVGTPU CV C INCPEG CPF PQ TGCUQP HQT VJGO VQ NQUG EQPVCEV YKVJ VJG prospect and go to back to base to check what their manager recommends. 5KOKNCTN[ KH [QWT Ć‚GNF TGRTGUGPVCVKXGU CTG FGNKXGTKPI IQQFU VQFC[oU VGEJPQNQI[ YKNN NGV [QW RWV CP CRR QP VJGKT OQDKNGU VJCV YQTMU CU C RQTVCDNG ECUJ TGIKUVGT QT HQT VJCV matter, will let them take and scan credit cards instead of cash. So there are no lost UCNGU QRRQTVWPKVKGU DGECWUG PQ QPG ECP UC[ JG QT UJG FKFPoV JCXG VJG TKIJV EJCPIG This nimbleness and agility is part of being able to offer each and every customer C DGURQMG UGTXKEG C XKVCN GNGOGPV QH UWEEGUU KP FC[U YJGP nVJGTG KU PQ OQTG RNCKP XCPKNNCo +V IQGU JCPF KP JCPF YKVJ VJG EQPXGPKGPEG CPF ĆƒGZKDKNKV[ QH ENQWF DCUGF systems, to which still, all too few SMEs are active subscribers. More importantly again, it enables your business to function with equal success in each and every environment: it means that strategic initiatives that once required massive infrastructure support HQT KPUVCPEG VJG FGEKUKQP HQT VJG &QJC JGCF QHĆ‚EG VQ UVCTV GZRQTVKPI VQ &WDCK are immediately supported by the right raft of accounting and export software, all available on a ‘software as a service’ basis. Will your business be one of the new generation of companies able to synthesize all its data and build fresh approaches to relationship marketing? Able to take advantage of VJG EQUV GHHGEVKXGPGUU QH C n$TKPI ;QWT 1YP &GXKEGo EWNVWTG! 1T YKNN KV EQPVKPWG OWEJ CU KV CNYC[U JCU WPVKN VJCV KU CNN KVU EQORGVKVQTU CTG FQKPI VJKPIU FKHHGTGPVN[! Enjoy this issue of Private Sector Qatar.
DESIGN Head of Design Glenn Roxas Production Manager James Tharian Distribution Manager Rochelle Almeida Data Manager Rajeesh Melath
Paul Godfrey Senior Editor
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CONTENTS
02 ADVISORY BOARD A high-powered panel of industry leaders who bring world-class expertise to the publication. 03 EDITOR’S NOTE Paul Godfrey on reaping the rewards of life post-digital revolution. Factfile 08 $ QHZ VHFWLRQ ŵOOHG ZLWK GHWDLOHG and graphic information on the key market trends that will help your SME move upwards and forward. Empowering Growth 14 THE ENTERPRISE CHALLENGE Qatar Shell and Bedaya Centre sign a MoU to launch the 2014 edition of this landmark event. 18 COUNTDOWN TO Q4 Find out why it’s never too late to start successfully planning your Q4 delivery strategies…
Strategic planning is the intentional and deliberate process of reviewing the business for new ideas and business decisionmaking. p18
Enterprise 24 QUALITY BENCHMARKING IN QATAR’S SME SECTOR Simon Hodges, CEO, Alchemy Network Middle East, presents a practical guide to understanding the international benchmarking standards… 28 OUTSOURCING – A GOLDEN OPPORTUNITY? Prakash Parab, Director HR Solutions, Dulsco, shares his expert knowledge on this subject.
CONTENTS
With SMEs, business is often more personal, close working relationships are the key to their success. p32
“Unlocking the potential of capital markets is key to achieving growth, innovation and job creation LQ D GLYHUVLŵHG DQG UDSLGO\ expanding economy.” p40
An entrepreneur must study both the current real estate climate as well as past, and likely future, trends. p52
Analysis 32 WHO’S RESPONSIBLE? SMES AND THE ROLE OF CSR Associate Editor Victoria Connolly investigates on the increasing relevance of corporate social responsibility for SMEs.
Business Toolkit 52 THE LOCATION MAZE Does it really matter where your business sets up home? Associate (GLWRU 9LFWRULD &RQQROO\ LGHQWLŵHV the options to consider in choosing the right location for your business.
36 THE NATIONAL TOURISM STRATEGY 2030 – PUBLIC AND PRIVATE ENTERPRISE WORKING TOGETHER The Qatar Tourism Authority is leading the way with a powerful series of initiatives uniting public and private sector enterprise to achieve the goal for national development. We explain KRZ VWDNHKROGHUV VWDQG WR EHQHŵW
56 EVERYTHING YOU NEED TO KNOW ABOUT ‘BOOTSTRAPPING’ We present a detailed overview of the challenges and opportunities…
Business Opportunities 40 FROM IDEAS TO GROWTH Using the IPO platform to fund SME expansion. We explore the critical cash needs of the SME space. 44 HAMAD INTERNATIONAL AIRPORT A new standard of connectivity and commercial potential. We take a look at the potential opportunities that Qatar’s new international airport can bring for the private sector. Trade and Finance 48 CURRENCY HIGHS AND LOWS The Western Union Business Solutions team gives us their highly researched update on the currency movements for the month of August.
60 THE ART OF LEADERSHIP Are you leading your SME to success – or just hoping for the best? Senior Editor Paul Godfrey investigates. . 64 WHAT’S YOUR EXIT STRATEGY? Planning what you want to get from the business in the future is the best way of focusing your strategies on the present. We explain a selection of exit options. Downtown 68 FLAVOURS OF DOHA In the following feature we present a variety of stand-out restaurants that will make your Doha experience worthwhile. 74 APPS FOR BIZ Trendy mobile apps to help make your business more productive.
What does the future hold for your SME? p.8 Home is where the (investor’s) heart is p.10 In focus: Qatar p.11 Does your cloud have a silver lining? p.12
FACTFILE
FACTFILE
WHAT DOES THE FUTURE MOBILITY LEVELS HAVE INCREASED BY 25% OVER THE LAST DECADE AND A FURTHER 50% GROWTH BY 2020 IS PREDICTED 50%
} iÀ Ã> ià > ` >À} Ã Ü i ivviVÌ Ûi Þ running a networked enterprise
60%+
of CEOs expect 15-50 per cent of their earnings growth in the iÝÌ x Þi>ÀÃ Ì V i vÀ ÌiV }Þ i >L i` LÕÃ iÃÃ Û>Ì Ã
1.3 BILLION
People on business & social networks today
66%
of employees would consider a pay cut in iÝV > }i v À > Ài yiÝ L i Ü À } i Û À i Ì
8
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FACTFILE
HOLD FOR YOUR SME? 50 BILLION CONNECTED DEVICES AND “INTERNET OF THINGS” BY 2030 55% 40%
executives worry that their organisations will not keep pace with technology change and lose their competitive edge
7.3 BILLION
number of smartphones tablets and PCs in use by 2020
59%
of workers already have the right technology to work anywhere
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SOURCES: McKinsey study, 2013 | IDC | Regus Great Big Survey 2012 | Shaw and Ivens | PwC Global Mobility Effectiveness Survey 2012 | PwC Talent Mobility 2020 and beyond | Cisco Internet Business Solutions Group
empty desks at any one point in time
9
FACTFILE
HOME IS WHERE THE (INVESTOR’S) HEART IS
WHEN IT COMES TO SOURCING AND SPENDING CAPITAL, EMEA INVESTORS PREFER TO STAY ON HOME SOIL. COLLIERS INTERNATIONAL PROVIDES THE DATA IN ITS 2014 SURVEY RESULTS While encompassing a huge area that also takes in part of one of the world’s most economically troubled regions, the outlook for EMEA investors in 2014 is strong with most of the capital raised in the region staying there, and a growing appetite for real estate transactions in both safe haven markets and emerging locations. Investments over Q1 – Q3, 2013 surged 53% on the previous year, according to data from Jones Lang LaSalle analysing the hotel industry alone. In comparison to other regions (see graphic) EMEA investors are
considered the most active. The trend is nothing new. In 2012, hotel investors were the most active real estate investors and today there are more than 450 hotels in the Middle East pipeline, with many more tipped for announcement in the UAE further to the positive Expo2020 announcement. Taking this into account, on a global scale UK investors are the largest group looking into the region over the coming 12 months. At the time of going to press the total transaction volume for 2013 looked set to tip $13.54bn.
Surprising statistic Despite all the talk about Dubai and Doha, the most surprising statistics to come from 2013 was the rise of Bahrain as an investment and development destination, but it was the strongest performer in the region according to STR Global, with occupancy up 69.5% and a leap in ADR of 30.4%. In March Manama alone posted a growth I ADR of 14.6% to US$217.34, the biggest growth in the region and supported by RevPar gains the following month of +121.1% $103.10.
EMEA Investor Focus
77% EMEA
7% US 6% ASIA 5% OTHER 4% UK 1% LATAM
72%
of EMEA investors believe a disproportionate amount v V>« Ì> >Ã y Üi` Ì ‘safe’ markets
MEA hotel data: November 2013 (US$) Middle East / Africa Middle East / Africa Middle East North Africa Southern Africa
10
OCC% 2013
2012
ADR 2013
2012
REVPAR 2013
2012
% Change from Nov 2013 OCC ADR REV PAR
64.6 70.7 43.9 67.5
65.7 67.2 60.7 66.8
180.88 231.28 76.63 127.22
169.34 221.95 85.85 129.87
116.78 163.57 33.60 85.85
111.27 149.19 52.08 86.76
-1.7 5.2 -27.7 1.0
6.8 4.2 -10.7 -2.0
4.9 9.6 -35.5 -1.0
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FACTFILE
IN FOCUS: QATAR
LAST MONTH MARKED THREE YEARS SINCE THE AWARD OF THE QATAR 2022 WORLD CUP. HOSPITALITY BUSINESS LOOKS AT THE DEVELOPMENT OF THE HOTEL LANDSCAPE SINCE Hotels Historic Supply
Luxury Upper Upscale Upscale Upper Midscale Midscale Economy Independent Total
Pipeline Projects Sep-08
Sep-09
Sep-10
Sep-11
Sep-12
Sep-13
3 3 3 3
5 3 5 2 1
6 4 5 2 1
6 7 7 2 2
8 10 9 1 3
8 10 9 1 3
28 40
27 43
28 46
31 55
35 66
In Constr.
Final Planning
Planning
Pre Planning
5 3 6
4
1 1 1
2 1 1 1
1 1 4 19
37 68
2 6
3 7
5
Rooms Historic Supply
Luxury Upper Upscale Upscale Upper Midscale Midscale Economy Independent Total
Pipeline Projects Sep-08
Sep-09
Sep-10
Sep-11
Sep-12
Sep-13
851 959 679 920
1,648 959 922 784 180
2,018 1,359 921 783 180
2,014 1,863 1,281 783 291
2,875 3,012 1,773 200 399
2,875 3,012 1,880 200 399
5,988 9,397
5,848 10,341
6,066 11,327
6,280 12,512
7,002 15,261
7,239 15,605
In Constr.
Final Planning
Planning
Pre Planning
1,337 1136 1315
1098
158 63 232
263 215 130 347
220 219 937 4944
737 1835
500 1173
955
Current Room Supply and Pipeline 9000 8000 7000 6000 5000 4000 3000 2000 1000 0
Pre planning
Final Planning
Planning
In Construction Existing
Luxury
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Upper Upscale
Upscale
Upper Midscale
Midscale
Independent
11
FACTFILE
DOES YOUR CLOUD HAVE A SILVER LINING? C
L
O
U
D
C
O
M
P
U
T
I
N
G
F
O
R
E
C
A
S
CLEAR
T
CLOUDY
23.5%
5.3 ZETTABYTES
IT cloud services compound annual growth rate (CAGR)
)NQDCN ENQWF VTCHÆ‚E
1.2 ZETTABYTES )NQDCN ENQWF VTCHÆ‚E
59.7% OF REVENUES Software as a service (SaaS) category - public IT cloud services
2/3 OF ALL WORK LOADS will be processed in the cloud
$47.4 BILLION
Estimated industry size
57%
17%
IT product spending for IT cloud services
$107 BILLION
Expected industry size
Middle East and #HTKEC ENQWF VTCHÆ‚E growth rate (CAGR)
SOURCES: IDC | Cisco’s third annual Global Cloud Index | Cisco Global Cloud Index: Forecast & Methodology, 2012-2017
What  does  this  mean  for  your  SME? There’s no doubt that cloud services have become ‘the next ELJ WKLQJ¶ DV WKH VWDWLVWLFV DERYH VXJJHVW :LWK VLJQL¿FDQWO\ ORZHU LQIUDVWUXFWXUH FRVWV DQG IHZ SK\VLFDO FRQVWUDLQWV WKH FORXG KDV QXPHURXV EHQH¿WV ,W UHGXFHV WKH QHHG IRU D VRSKLVWLFDWHG ,7 WHDP WKHUHE\ KHOSLQJ 60(V IXUWKHU ORZHU their costs. The classic advantage of the cloud, however, is LWV DELOLW\ WR DOORZ \RX WR FRQQHFW ZLWK \RXU DSSOLFDWLRQV IURP DQ\ZKHUH LQ WKH ZRUOG :LWK WKH UDSLG DGYDQFHPHQW RI WHFKQRORJ\ DQG IDVW SDFHG PRELOLW\ FORXG VHUYLFHV DUH QR ORQJHU D OX[XU\ ± WKH\ DUH DQ DEVROXWH QHFHVVLW\
12
What  are  the  industry  experts  saying? :KHQ 60( $GYLVRU UHFHQWO\ LQWHUYLHZHG OHDGLQJ H[SHUW <DVVHU =HLQHOGLQ &(2 H+RVWLQJ 'DWD)RUW KH VDLG ³:LWK FORXG VHUYLFHV 60( RZQHUV FDQ UHGXFH WKHLU RYHUDOO ULVNV E\ SD\LQJ EDVHG RQ D SUHGLFWDEOH PRQWKO\ VXEVFULSWLRQ PRGHO ,Q DGGLWLRQ FORXG WHFKQRORJ\ HQDEOHV DQ 60( WR GHSOR\ VHUYLFHV IDVWHU DQG G\QDPLFDOO\ SURYLVLRQ DQ\ DGGLWLRQDO FDSDFLW\ DV DQG ZKHQ QHHGHG 0RUHRYHU FORXG EDVHG VHUYLFHV DUH VLPSOH WR DGRSW DQG PRUH DFFHVVLEOH DV WKH\ DUH RYHU WKH ,QWHUQHW ´
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The Enterprise Challenge p.14 Countdown to Q4 p.18
EMPOWERING GROWTH
EMPOWERING GROWTH
THE ENTERPRISE CHALLENGE FOLLOWING THE SUCCESS OF â&#x20AC;&#x2DC;THE ENTERPRISE CHALLENGE QATARâ&#x20AC;&#x2122; 2013, QATAR SHELL AND THE BEDAYA CENTRE WILL EXPAND THE ENTREPRENEURSHIP PROGRAMME TO UNIVERSITIES AND SCHOOLS IN DOHA AND THE NORTHERN COMMUNITIES OVER THE NEXT THREE YEARS.
Sheikh Thani Al Thani, Deputy General Manager, Qatar Shell and Raed Al Emadi, Vice-Chairman, Bedaya Centre and Silatechâ&#x20AC;&#x2122;s %JKGH 1RGTCVKQPU 1HÆ&#x201A;EGT NCWPEJ n6JG Enterprise Challenge Qatarâ&#x20AC;&#x2122; 2014.
14
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EMPOWERING GROWTH
The Enterprise Challenge Qatar programme encourages the spirit of entrepreneurship among young people by equipping them with practical business skills to develop their business acumen, team work, and strategic thinking. The programme is made up of two parts comprising the Ethical Business Challenge, which tests participantsâ&#x20AC;&#x2122; ability to balance the economic, environmental and social performance of their company. The Business Simulation element familiarises students with general business concepts from inception through to trading, finance, sales, marketing and production. As part of its Corporate Social Responsibility programme, Qatar Shell supports enterprise by offering opportunities to local businesses to become suppliers of choice for its operations and encouraging interest in entrepreneurial activity among youth. Similarly, Bedaya identifies, develops and supports young entrepreneurs to succeed in the business environment. The Bedaya Centre for Entrepreneurship and Career Development was established in September 2011 and is a joint initiative between Qatar Development Bank and Silatech. Since its establishment in 2012, The Enterprise Challenge Qatar programme has rapidly expanded, with a growing number of institutions, businesses, schools, and mentors getting involved. Last year, a total of 430 students took part in the programme. One year on, Bedaya and Qatar Shell have once again formed a partnership and signed a three-year Memorandum of Understanding to expand the programme in order to reach a larger group of universities. This yearâ&#x20AC;&#x2122;s edition is expected to attract around 700 students from nine universities and 12 schools from across Qatar. Commenting about the agreement, Raed Al Emadi, Vice-Chairman of Bedaya and Silatechâ&#x20AC;&#x2122;s Chief
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15
EMPOWERING GROWTH
THIS YEAR’S EDITION IS EXPECTED TO ATTRACT AROUND 700 STUDENTS FROM NINE UNIVERSITIES AND 12 SCHOOLS FROM ACROSS QATAR. Signing the historic agreement.
16
Operations Officer said: “We are extremely pleased to expand our partnership with Qatar Shell on The Enterprise Challenge Qatar initiative that promotes the entrepreneurial spirit among young people. The future of Qatar is enterprise, and a youth adept in business will help foster a thriving private sector and ensure its sustainability for future generations. Therefore, when we invest in young people through initiatives such as The Enterprise Challenge Qatar, we invest in Qatar’s future as a knowledge-based society.”
The Enterprise Challenge Qatar programme is delivered through a series of intensive mentoring sessions and workshops, delivered by around 100 volunteer mentors who have themselves been trained by Bedaya and Qatar Shell. The mentors, 80 per cent of which are Qataris, will deliver workshops on Business Ethics and Business Principles in addition to training the students on the Business Simulation. Sheikh Thani Al-Thani, Deputy Managing Director of Qatar Shell, echoed the sentiments: “At Qatar
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EMPOWERING GROWTH
Bedaya and Qatar Shell ‘Enterprise Challenge Qatar’ team.
“THE FUTURE OF QATAR IS ENTERPRISE, AND A YOUTH ADEPT IN BUSINESS WILL HELP FOSTER A THRIVING PRIVATE SECTOR AND ENSURE ITS SUSTAINABILITY FOR FUTURE GENERATIONS.” www.privatesectorqatar.com/en
Shell, we recognise that cultivating entrepreneurship begins with investing in young minds. We are proud to closely work with our partner Bedaya to widen the horizons of young people to appreciate and consider the value of entrepreneurial endeavours. Seeking to help nurture the business leaders of the future, The Enterprise Challenge Qatar is part of our investment in Qatar’s future and in a sustainable economy.” The Enterprise Challenge was created by Mosaic, a UK-based notfor-profit organisation established by HRH the Prince of Wales in 2007, which offers a range of mentoring programmes aimed at fostering opportunities for young people. Qatar Shell is the founding partner of Mosaic in Qatar, and
together with Bedaya, has worked to bring The Enterprise Challenge to Qatar. The student training sessions will commence in September. Prior to that, a series of training sessions are now being hosted to train around 100 volunteer mentors who are set to coach the 700 school and university students expected to participate in this year’s challenge. Subsequently, the programme will run throughout October and November, with the universities finals competition taking place during the Global Entrepreneurship Week (17-23 November), followed by the schools finals competition in December. The winners of The Enterprise Challenge Qatar 2014 will be announced during November and December.
17
EMPOWERING GROWTH
COUNTDOWN TO
Q4
“I HATE 4TH QUARTER”. SOUNDS FAMILIAR? IT’S A SCARY TIME OF YEAR, THE DREADED FOURTH QUARTER (Q4). A TIME WHEN ENTREPRENEURS REALISE THAT THEIR GOALS HAVEN’T BEEN ATTAINED, QUOTAS NOT MADE, AND BUDGETS NOT ADHERED TO. YET SMEs ARE BY DEFINITION QUICK, AGILE AND NIMBLE - AND THE CHALLENGE OF Q4 CAN JUST AS EASILY RESULT IN A TIME OF CELEBRATION, ACHIEVEMENT AND AMBITIONS MET. ASSOCIATE EDITOR VICKI CONNOLLY EXPLAINS WHY IT’S NEVER TOO LATE TO START SUCCESSFULLY PLANNING YOUR Q4 DELIVERY STRATEGIES… 18
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EMPOWERING GROWTH
Business owners traditionally dread the Q4 and view it with trepidation and a “coulda, woulda, shoulda” frame of mind. With the right approach to business planning however, the fourth quarter should be one of rejoicing, breathing a sigh of relief because goals were reached or are within sight, quotas are on track and business owners are SUHSDUHG DQG FRQ¿GHQW DERXW WKH YLVLW from the accountant. Okay, so maybe that is in the perfect world. That’s not always the way it is in the real world, where desired quotas are not met; where clients drag their feet on signing contracts (or decide not to sign at all); where contracts get cancelled midstream and where business plans didn’t get written or implemented. As a business heads towards Q4 (and while it may be too late to achieve all of the goals set for the year), it is never too late to review its performance and set a revised, more strategic plan for the future. So what are the key Q4 activities that will ensure an entrepreneur steers an SME in the right direction?
BUSINESSES SHOULD START BY REVIEWING THEIR YEAR - MONTH BY MONTH - TO SEE WHAT OBSTACLES WERE ENCOUNTERED AND HOW THE BUSINESS RESPONDED. www.privatesectorqatar.com/en
19
EMPOWERING GROWTH
Q4 IS ALSO A GOOD TIME FOR SMEs TO REVIEW OR PREPARE THEIR PLANNING AND SEEK INVESTMENT FROM VENTURE CAPITALISTS OR OTHER EXTERNAL SOURCES.
Failing to prepare is preparing to fail While Q4 may be too late to achieve all of the goals set for the year, it is never too late to evaluate plans. Businesses should start by reviewing their year - month by month - to see what obstacles were encountered and how the business responded. Was there a contingency plan in place; was an entrepreneur’s reaction to unexpected events proactive or reactive? A well thought-out, comprehensive strategic plan will take into account the various scenarios that a business may face and how to respond appropriately. Although there will always be the unknown, by reviewing the past, a business may see a pattern emerge that will enable them to draft a blueprint that includes solutions to problems that could occur. Planning for the future Q4 is also a good time for SMEs to review or prepare their planning and seek investment from venture capitalists or other external
20
sources. Working with the business plan, firms should review their performance and adjust their overall strategy and tactics for the future. In addition, resellers should invest in research and development in order to introduce new brand features to the market and substantially expand market coverage by adding new sales outlets. Suppliers should continue their efforts to improve product reliability, production scheduling and capacity utilisation. Both parties should continue to invest in technology and procedures to streamline the supply chain. Study the market Q4 is also a good time for entrepreneurs to consider expanding their business strategy; study the market, financial, and operational data to determine how to better meet customer needs, improve economies of scale, add to the bottom line and surpass the competition. Resellers can explore licensing opportunities and the development of strategic alliances
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EMPOWERING GROWTH
STRATEGIC PLANNING IS THE INTENTIONAL AND DELIBERATE PROCESS OF REVIEWING THE BUSINESS FOR NEW IDEAS AND BUSINESS DECISION-MAKING.
with other resellers. SME Strategic planning isn’t just what pops out of people’s heads in water-cooler or break room conversations (even though those ideas can certainly help). Strategic planning is the intentional and deliberate process of reviewing the business for new ideas and business decision-making. It’s important that there is a process behind the ideas and discussions. Strategic planning and the re-evaluation of business performance during Q4 allows an organisation to set a course, detour when necessary, but build momentum with intention. It is the company that takes the time and effort to strategically plan for their organisation’s well-being that will be in the race for the long haul. A business will never have a “perfect” plan. A strategic plan is an active document that can be updated as the business changes and grows. As a familiar saying goes: “A good plan today is better than a perfect plan tomorrow.” Every strategy, every game plan needs to be adaptable. The market and the environment change, and a
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company must be able to read those changes and recalibrate strategy to fit a fluid situation. The business environment is littered with the wreckage of companies who couldn’t adapt and didn’t survive. Q4 is the perfect time to reset goals and objectives. Plans can be adjusted; attitudes can change; Entrepreneurs must remember the good that has occurred during the trading year, it will help SMEs to develop a plan that is focused on the positive aspects of the business and how owners and managers can and will move it forward. There is nothing more stressful than Q4 for an SME owner and it is defiantly a love/hate relationship. Entrepreneurs love the pressure of Q4 with calendars jammed with big meetings, daily texts with updates on the largest deals and strategizing meetings with sales teams; yet at the same time there is too much to accomplish and not enough hours in the day. When it comes to the love/ hate relationship SMEs have with Q4 the answer is simple: you have to be in it to win it.
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Quality benchmarking in Qatar’s SME sector p.24 Outsourcing – a golden opportunity? p.28
ENTERPRISE
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QUALITY BENCHMARKING IN QATAR’S SME SECTOR SIMON HODGES, CEO, ALCHEMY NETWORK MIDDLE EAST SHARES WITH US A PRACTICAL GUIDE TO FULLY UNDERSTANDING THE INTERNATIONAL BENCHMARKING STANDARDS AND HOW YOU CAN USE THEM TO SUPERCHARGE THE SUCCESS AND GROWTH OF YOUR SME.
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There is an enormous amount written about the benefits resulting from the introduction of a quality benchmarking approach within a business but, because of the perceived need to introduce accompanying systems, it is often seen as an initiative suitable only for large companies. However, benchmarking can benefit small businesses too and if you are the owner of such a business, the article will provide you with a simple approach that you can take as a low cost introduction to the process but will help improve your bottom line! For medium-sized companies, the adoption of formal international benchmarking standards can provide a real competitive advantage but only if implemented in a way that supports your business plan. Therefore also set out below is some practical advice that might help you to develop your business into one that operates to international standards but also one that achieves a sustainable growth path. An introduction to quality benchmarking systems There are a great number and variety of quality benchmarking systems, but the main ones are arguably the ISO 9000 family or the EQFM excellence model. There are many published comparisons but to my mind the fundamental difference between the two systems is that ISO 9000 adopts an audit driven approach while the EFQM system relies on a selfassessment approach. In addition, many countries also have their own national standards monitored by national authorities such as DIN in Germany and BSI in the UK. Here in Qatar, the objectives of the economic development section of the National Vision 2030 support the use of international benchmarking that reflects the traditions of the country. There can be no doubt that both approaches deliver real benefits to organisations of almost any
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ENTERPRISE
HERE IN QATAR, THE OBJECTIVES OF THE ECONOMIC DEVELOPMENT SECTION OF THE NATIONAL VISION 2030 SUPPORT THE USE OF INTERNATIONAL BENCHMARKING THAT REFLECTS THE TRADITIONS OF THE COUNTRY.
size. However, if the driver is to solely gain a degree of international respectability the process of obtaining certification will result in accreditation but the resulting system will not benefit the business and the investment will largely be wasted. Quality benchmarking for small businesses It is widely assumed that benefits accruing from quality benchmarking can only be achieved from the introduction of expensive systems. This is simply not true and to understand why, it might be helpful to look at what benchmarking is. Wikipedia describes benchmarking as the process of comparing one’s business processes to best practice adopted by other companies. To achieve this management, one should identify the best firms in their competitive set and compare the results and processes of these companies to their own results and processes. Small businesses operating in this part of the world benefit from having access to a circle of family and friends that can form the majority of their customer base. While in many cases this creates a stable business, the reality is that real growth remains a dream largely due to the fact that the day-to-day issues become all consuming. To achieve significant growth in your business, a constant pipeline of new customers has to be achieved and once obtained, these customers must be kept for as long as possible. Understanding your marketplace will help you to outperform your competitors by giving you the ability of improving the way your business operates and this is what quality benchmarking should mean for the small business. Four Low cost steps to benchmark a small business 1. Identify organizations that are leaders in your competitor set Take a look at the businesses in your
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industry operating in all areas of Qatar even if your business does not operate there. Consult with your customers, suppliers, trade associations, and magazines and determine which competitors you admire and are therefore worth closer study. 2. Look at these “best practice” companies to identify leading edge practices Review the publicly available information about your chosen competitors such as websites and advertising and/or use industry groups such as local chambers of commerce and trade associations where it is often possible to agree to mutually exchange information beneficial to all parties in a benchmarking group. 3. Identify areas you can improve Use the information you have obtained using the above techniques and take an honest look at your own organization to identify areas where improvements would benefit your business. 4. Implement new and improved business practices Take the leading edge practices and develop plans on how you intend to achieve these standards in your business so that you gain real value from the process. Then, measure the results to make any adjustments that might be required. Adopting quality benchmarking systems in medium sized businesses For those companies that have achieved sustainable revenues above QAR 5 million and within the ownership structure there is a strong desire to significantly grow the business, the introduction of more formalised quality benchmarking systems could be a critical element to success. However, please note that the ability of being able to benchmark
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A QUALITY MANAGEMENT SYSTEM IS ONLY OF VALUE IF IT PROVIDES INFORMATION THAT IS USEFUL IN ALLOWING THE MANAGEMENT TEAM TO MAKE BETTER DECISIONS.
your business against international standards is really only a minor reason why introducing these systems can be so important. For many business owners taking their business to the next level is a harder step to take than setting it up in the first place as it takes them into areas of corporate governance that they are not familiar with. Oddly there is a real fear that establishing governance systems will result in a loss of control over their business means that although the desire for growth is real the confidence to make the real changes that are necessary is not there and, as a result, many businesses simply stall at this level of activity. However, successful and busy businesses trying to rapidly grow can ironically fail because the communication lines become stretched leading to an organisation that constantly makes avoidable mistakes, which are frustrating to the owner, managers, employees, suppliers and most importantly customers. The result is that sometimes the business simply begins to slowly die in a way that is often undetectable until it is too late and the company runs out of money. The way to avoid this happening is to introduce corporate governance systems in which quality benchmarking systems play an important part. Five steps to successfully introduce quality benchmarking systems There are numerous consultancies operating in Qatar that can help you with the technical aspects of implementing appropriate quality benchmarking systems in your business but set out below are five steps you can take to ensure your business gets the full benefit from their introduction. 1. Communicate your business plan Take a look at your business plan and ensure that the communication
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of it provides clear instructions to your employees about what they are expected to do. Good communication is one of the hardest business activities to get right and a common mistake is that the strategy is clear to the business owner but to no-one else, which leads to a wide range of interpretations usually based on previous experiences. The approach here is to communicate, communicate again and then communicate again! 2. Establish a risk management process Understand what issues could prevent success and ensure your quality system addresses as many of those issues as possible. Although risk management processes are usually put in place to prevent failures in business, I believe their real benefit is in providing confidence both internally and externally that the business plan is achievable. 3. Establish an information culture A quality management system is only of value if it provides information that is useful in allowing the management team to make better decisions. In many circumstances, your employees understand the issues better than anyone else and you should encourage them to tell you what is happening. Once a decision is made the results should be clearly communicated. 4. Establish measureable targets The targets set for the system must be capable of measurement so that you can monitor progress against the business plan. In particular introduce KPIs for your employees which encourage the use of the system and appropriate behaviours. 5. Establish a leadership body To monitor the information provided by the quality benchmarking system, establish a leadership body made up of a variety of skill sets so it has the ability to use the information provided by the system to ensure the achievement of the business plan.
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ENTERPRISE
OUTSOURCING A GOLDEN OPPORTUNITY?
An increasing number of SMEs are looking to delegate a large portion of their operational procedures to external companies, in other words, outsource key functions to trusted partners. While this allows SMEs to concentrate on their core business activities, does it take away from the companyâ&#x20AC;&#x2122;s culture? And, what effect does it have on the cost of operations? We asked Prakash Parab, Director, HR Solutions, Dulsco, to address these critical questions and share his expert knowledge on the subjectâ&#x20AC;Ś
 Prakash  Parab,  Director,  HR  Solutions,  Dulsco
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What  functions  can  an  SME  look  WR RXWVRXUFH SURÂżWDEO\" SMEs are the lifeblood of any economy. Adequate support is required for WKH 60(V WR Ă&#x20AC;RXULVK DQG WKH ULJKW kind of support will therefore have an impact on the overall economy. 7RGD\ RQH RI WKH NH\ FKDOOHQJHV IDFLQJ 60(V LV QRW RQO\ EHFRPLQJ FRPSHWLWLYH EXW DOVR PDLQWDLQLQJ WKH level of competitiveness in the market. 2XWVRXUFLQJ KDV EHFRPH D NH\ VWUDWHJLF decision for SMEs to maintain their FRPSHWLWLYH HGJH 2XWVRXUFLQJ KDV EHFRPH LQFUHDVLQJO\ DWWUDFWLYH IRU PDQ\ RUJDQLVDWLRQV DQG ZH EHOLHYH WKDW RXWVRXUFLQJ LV RQH RI the key trends that will shape the future of HR. Dulsco is one of the pioneers in the industry when it comes to HR RXWVRXUFLQJ 6RPH RI WKH RWKHU IXQFWLRQV which are commonly outsourced SURÂżWDEO\ LQ WKH PDUNHW DUH SD\UROO SURFHVVLQJ PDUNHWLQJ LQIRUPDWLRQ WHFKQRORJ\ DQG FXVWRPHU VHUYLFH Experience shows that, when HIIHFWLYHO\ LPSOHPHQWHG RXWVRXUFLQJ FDQ GHOLYHU PDMRU EHQHÂżWV IURP UHGXFLQJ FRVWV DQG LPSURYLQJ TXDOLW\
FRQWURO DQG FRPSOLDQFH WR FUHDWLQJ the environment for a host of service delivery innovations. +RZ FDQ DQ 60( HQVXUH EHVW SURGXFW VHUYLFH DQG TXDOLW\ ZKHQ outsourcing  certain  operational  SURFHVVHV" Remember, your business may be SURÂżWDEOH EXW LI LVQÂśW FDVK ULFK \RX DUH into deep trouble. Cash is always the top priority! +RZ FRVW HĚ&#x2020;HFWLYH FDQ WKLV PHWKRG EH" 7RGD\ D KXJHO\ GLYHUVH UDQJH RI 60(V GHOHJDWH NH\ EDFN RIÂżFH IXQFWLRQV WR WUXVWHG SDUWQHUV DOORZLQJ WKHP WR focus their resources on core business DFWLYLWLHV 7KLV KHOSV WKH RUJDQLVDWLRQ WR JURZ LQ WKH ORQJ UXQ ,QGHHG HQJDJLQJ ZLWK DQ HIIHFWLYH RXWVRXUFLQJ SDUWQHU has proven to be a critical component LQ WKH VXFFHVVIXO XS VFDOLQJ DQG H[SDQVLRQ RI PDQ\ ZRUOG UHQRZQHG companies in recent years. :KDW DUH WKH EHQHÂżWV RI RXWVRXUFLQJ"
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ENTERPRISE
A genuine outsourcing partnership will facilitate a continuous stream of improvement that will, costeffectively and measurably, outperform any internal backRIÂżFH IXQFWLRQ 7KH PRVW REYLRXV EHQHÂżW WKDW RXWVRXUFLQJ FDQ RIIHU LV GHPRQVWUDEOH FRVW DQG WLPH VDYLQJV 7KLV LV DFKLHYHG WKURXJK VFDODELOLW\ DQG Ă&#x20AC;H[LELOLW\ VWDQGDUGLVDWLRQ DQG FOHDUO\ GHÂżQHG SULFLQJ PRGHOV 7KH RXWVRXUFLQJ VHUYLFH \RX choose should be customised to provide you with access to the NQRZOHGJH H[SHUWLVH DQG FDSDFLW\ you need - when you actually need LW (IIHFWLYH RXWVRXUFLQJ PHFKDQLVP is not just a process but should be viewed as a relationship â&#x20AC;&#x201C; one that should provide you with access to evolving industry knowledge, best SUDFWLFH DQG EULJKW QHZ LGHDV Outsourcing has been endorsed DV RQH RI WKH PRVW LQĂ&#x20AC;XHQWLDO WUHQGV in the management of human UHVRXUFH DFWLYLWLHV 7KH ORJLF IRU outsourcing HR practices covers a SOHWKRUD RI EHQHÂżWV ZKLFK LQFOXGHV monetary savings, boosted ability to focus on core issues, and an ability to claim improved and quantitative VHUYLFH OHYHOV 5HFUXLWPHQW VHOHFWLRQ and training are among the most RXWVRXUFHG +5 SUDFWLFHV Do  you  think  outsourcing  KHOSV OHYHO WKH SOD\LQJ ÂżHOG EHWZHHQ VPDOO ÂżUPV DQG ODUJHU enterprises? <HV RXWVRXUFLQJ GHÂżQLWHO\ GRHV bridge the gap between small RUJDQLVDWLRQV DQG ODUJH ÂżUPV 7KH FRPPRQ FKDOOHQJH IDFHG E\ 60(V in comparison to larger enterprises LV OLPLWHG UHVRXUFH DYDLODELOLW\ %\ DGRSWLQJ RXWVRXUFLQJ 60(V become competitive and are able to compete effectively with the larger HQWHUSULVHV $OWKRXJK 60(V PD\ not match the business outputs realised by multinationals, they are not far behind as indicated by WKH FXUUHQW PDUNHW WUHQGV 7KH 60(V QHHG WR EXLOG XS WKHLU LPDJH by favourably responding to the
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market scenario for which outsourcing FDQ FRPH WR WKHLU UHVFXH 2XWVRXUFLQJ FDQ EH D JDPH FKDQJHU IRU 60(V ZKR can match their level and walk at par ZLWK ODUJHU HQWHUSULVHV What  are  ways  to  ensure  that  the  RXWVRXUFLQJ DJHQF\ LV DOLJQHG with  the  cultural  values  of  the  business?  For  instance,  are  they  following  the  best  practice  SURFHGXUHV \RXœYH VHW LQ SODFH IRU your  SME? 7KH RXWVRXUFLQJ SDUWQHU VHOHFWHG must understand the business model RI WKH 60( DQG FRPPXQLFDWH KRZ WKH\ DUH JRLQJ WR GHOLYHU WKH UHVXOWV ,I WKH\ XQGHUVWDQG WKH 60(œV PRGHO well they can sustain and deliver the GHVLUHG RXWSXW LQ WKH ORQJ UXQ %H\RQG XQGHUVWDQGLQJ WKH QDWXUH RI WKH 60(œV business, the outsourcing partner must understand and be compatible with the corporate culture irrespective of the 60(œV VL]H $OVR WKHUH VKRXOG EH D FRUH team from the outsourcing company ZKR LV WUDLQHG ZLWK DOO WKH GRœV DQG GRQœWV ZLWK UHJDUG WR WKH 60(œV EXVLQHVV RSHUDWLRQV $ UHIHUHQFH FKHFN RQ WKH outsourcing agency would be better which would help gain insights on their FXVWRPHUœV UHODWLRQVKLS ZLWK WKHP What  are  key  factors  to  FRQVLGHU EHIRUH VHOHFWLQJ DQ outsourcing  firm?  What  are  the  evaluation  criteria/selection  SURFHGXUHV IRU FKRRVLQJ DQ RXWVRXUFLQJ SURYLGHU" When selecting an ideal outsourcing partner certain parameters if kept LQ PLQG ZLOO KHOS WKH 60( JR D ORQJ ZD\ 7KH WUDFN UHFRUG RI WKH outsourcing partner must be good enough in terms of meeting quality, SULFH DQG ORJLVWLFDO FRPPLWPHQWV After including the costs of doing business with the outsourcing partner, the question needs to be asked if they DUH VWLOO D FRVW HIIHFWLYH SUHIHUHQFH 7KH RXWVRXUFLQJ SDUWQHU PXVW PHHW WKH 60(œV SURGXFW TXDOLW\ VWDQGDUGV DSDUW IURP EHLQJ FRQVLVWHQW 7KH WUDGH regulations with the country where WKH 60( ZLVKHV WR RXWVRXUFH PXVW EH
IUHH IURP DQ\ SUREOHPV DQG VKRXOGQÂśW DIIHFW WKH RSHUDWLRQV 3D\PHQW DQG delivery terms including Service Level Agreements (SLAs) must be FDUHIXOO\ HYDOXDWHG 7KH RXWVRXUFLQJ SDUWQHUÂśV WLPH WR PDUNHW PXVW EH Ă&#x20AC;H[LEOH DQG VKRXOG EH EHWWHU WKDQ WKH 60(ÂśV FRPSHWLWRU 7KH SRWHQWLDO RXWVRXUFLQJ SDUWQHU must have the technological setup apart from a seamless information and communication systems which should LQWHJUDWH ZLWK WKH 60(ÂśV SURFHVVHV 7KH EHQHÂżWV DQG OLPLWDWLRQV RI GRLQJ EXVLQHVV ZLWK WKH RXWVRXUFLQJ SDUWQHUÂśV ORFDWLRQ PXVW EH FDUHIXOO\ HYDOXDWHG Does  mobility  play  a  crucial  role  in  facilitating  connectivity  EHWZHHQ D EXVLQHVV DQG LWV RXWVRXUFLQJ ÂżUP" 'R \RX think  we  will  see  an  increase  in  outsourcing  with  the  rise  in  mobility? Yes, mobility is key and everything today needs to be done on a real time EDVLV )DVWHU UHVSRQVH WLPHV FUHDWH PRUH URRP IRU H[WUD VHW RI DFWLYLWLHV WR EH SHUIRUPHG 6R PRELOLW\ ZLOO EH instrumental in the growth of the RXWVRXUFLQJ LQGXVWU\ Do  you  foresee  outsourcing  being  able  to  help  SMEs  in  LQWHUQDWLRQDO JURZWK DQG expansion? Outsourcing with the right partner FDQ SXW 60(V LQ WKH VDPH OHDJXH DV RI PDQ\ ZRUOG FODVV EXVLQHVVHV $ business-focused outsourcing partner will support strategic introductions that may evolve into new business UHODWLRQVKLSV 2XWVRXUFLQJ LV WKH QH[W VWHS WR LQFUHDVH SURGXFWLYLW\ LQ a given short span of time as it boosts LQWHUQDWLRQDO FRPSHWLWLYHQHVV ,W LV D ERRQ IRU 60(V WR FXUE FRVWV EROVWHU relational ties, serve customers more effectively, free up limited resources and leverage capabilities of foreign partners WKURXJK RXWVRXUFLQJ RSHUDWLRQV You have greater security in your business continuity and the ability to scale up in tandem with your EXVLQHVV JURZWK 60(V FDQ WDLORU WKHLU
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outsourcing requirements to meet the VSHFL¿F QHHGV HYROYLQJ RYHU WLPH WR DJUHHG NH\ SHUIRUPDQFH LQGLFDWRUV DQG VHUYLFH OHYHO DJUHHPHQWV
THE ACID TEST
We asked Vikram Shroff, Director, Regal Group Holdings, to share his thoughts on outsourcing and its practical aspects. Vikram is an SME owner and leading expert in the SME sector.
As an SME, do you look at outsourcing CU C RTQƂVCDNG UQNWVKQP! 9JCV CTG UQOG HWPEVKQPU YKVJKP [QWT DWUKPGUU VJCV [QW EWTTGPVN[ QWVUQWTEG QT NQQM VQ QWVUQWTEG KP VJG PGCT HWVWTG! 1P VJG ƃKR UKFG CTG VJGTG EGTVCKP HWPEVKQPU VJCV [QW VJKPM OQUV FGƂPKVGN[ YQPoV YQTM KH QWVUQWTEGF! Absolutely! Currently in one of our divisions we outsource the logistics and storage while another division has QWVUQWTEGF KVU ƃGGV OCPCIGOGPV + VJKPM UGPUKVKXG CTGCU UWEJ CU ƂPCPEG CPF accounts should not be outsourced as that is required to get a pulse of the EQORCP[ QP C FC[ VQ FC[ DCUKU *CU QWVUQWTEKPI JGNRGF [QWT 5/'oU QXGTCNN DQVVQO NKPG! &GƂPKVGN[ s CU NGUU ECUJ KU VKGF WR KP PQP UVTCVGIKE KPXGUVOGPVU UWEJ CU ECTU CPF UVQTCIG URCEG 6JGTGHQTG VJCV ECUJ ECP DG WUGF VQ RWTEJCUG OQTG RTQFWEV CPF CNNQY WU VQ UGNN OQTG VQ QWT ENKGPVU &Q [QW VJKPM QWVUQWTEKPI JGNRU NGXGN VJG RNC[KPI ƂGNF DGVYGGP UOCNN ƂTOU CPF NCTIGT GPVGTRTKUGU! ;GU KV FQGU 'XGP NCTIG ƂTOU VGPF VQ QWVUQWTEG OCP[ CURGEVU QH VJGKT QRGTCVKQPU HTQO +6 VQ GPVKTG QHƂEG HCEKNKV[ OCPCIGOGPV 'CEJ EQORCP[ PGGFU VQ HQEWU QP RWVVKPI VJGKT VKOG CPF OQPG[ QP VJGKT EQTG EQORGVGPEKGU CPF NQQM to outsource parts of their business to CPQVJGT EQORCP[ YJQUG UVTGPIVJ KU 6*#6 RCTV QH VJG DWUKPGUU &QGU OQDKNKV[ RNC[ C ETWEKCN TQNG KP HCEKNKVCVKPI EQPPGEVKXKV[ DGVYGGP C DWUKPGUU CPF KVU QWVUQWTEKPI ƂTO! &Q [QW VJKPM YG YKNN UGG CP KPETGCUG KP QWVUQWTEKPI YKVJ VJG TKUG KP OQDKNKV[! + VJKPM UQ CU YKVJ VJG YQTNF KU UJTKPMKPI KP VGTOU QH VTCFG CPF YJGP [QW OCMG C ECNN VJG ECNN EGPVTG QRGTCVKQP KU RTQDCDN[ QWVUQWTEGF %WUVQOGT GZRGTKGPEG JCU
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What are the challenges of outsourcing? &KDOOHQJHV LQ RXWVRXUFLQJ QHHG WR EH NHSW LQ PLQG EHIRUH YHQWXULQJ LQWR RXWVRXUFLQJ SURFHVVHV RI WKH RUJDQLVDWLRQ 7KH OLPLWDWLRQV LQFOXGH ODFN RI PDQDJHULDO FRQWURO DV LW PD\ EH GLI¿FXOW WR PDQDJH H[WHUQDO KLUHV DV FRPSDUHG WR RZQ HPSOR\HHV 7KH ODFN RI TXDOLW\ FRQWURO FDQ DIIHFW WKH EXVLQHVV DV IDXOW\ SURGXFWV FDQ GHQW WKH RUJDQLVDWLRQ¶V LPDJH 7KH RXWVRXUFLQJ SURYLGHU VKRXOG EH VWDEOH DQG LI LW JRHV EDQNUXSW TXLFN DFWLRQ KDV WR EH WDNHQ WR NHHS WKH 60(V EXVLQHVV SURFHVV UXQQLQJ 6RPHWLPHV HYHQ WKRXJK FRVW UHGXFWLRQ LV WKH VROH FULWHULD IRU RXWVRXUFLQJ LW PLJKW EH DQ H[SHQVLYH SURSRVLWLRQ IRU 60(¶V 'DWD VHFXULW\ DQG RWKHU HWKLFDO LVVXHV PD\ SRS XS LI WKHUH DUH QR SURSHU XQGHUWDNLQJV VLJQHG E\ WKH 60( DQG WKH RXWVRXUFLQJ SDUWQHU (DV\ FRPPXQLFDWLRQ PD\ DOVR VHHP D GLI¿FXOW\ GXH WR WLPH ]RQH GLIIHUHQFHV .HHSLQJ WKHVH FKDOOHQJHV LQ PLQG 60(V FDQ VSHDUKHDG LQWR WKH PDUNHW E\ DGGUHVVLQJ WKH OLPLWDWLRQV WKH ULJKW ZD\ When you outsource, do you also outsource the responsibility for delivering the project correctly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Who’s responsible? SMEs and the role of CSR p.32 The National Tourism Strategy 2030 – public and private enterprise working together p.36
ANALYSIS
ANALYSIS
WHO’S RESPONSIBLE?
SMES AND THE ROLE OF CSR
Corporate social responsibility may sound like the preserve of the big, successful corporates, but it’s becoming increasingly relevant for SMEs looking to anchor their role in the local community or wishing to develop business concepts DURXQG D PLFUR ŵQDQFH model. Associate Editor Vicki Connolly investigates...
So, when it comes to CSR, does size matter? Corporate social responsibility (CSR) is largely associated with big companies. They attract more media attention, DUH XVXDOO\ PRUH KLJK SUR¿OH DQG therefore tend to be more focused on protecting and enhancing their reputation with the wider public and their stakeholders. Larger companies are usually better-resourced and more able to invest time and resources in CSR; but does this mean that a commitment to CSR is a strategy
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only available to large, established and resource rich organisations? Are smaller businesses being left behind when it comes to bringing sustainable and socially responsible goods and services to the market? They may not know and use the term CSR, but SMEs, with their close relations with employees and direct access to the local community, often have a naturally responsible approach to business. For most SMEs, the process by which they meet their social responsibility is likely to
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ANALYSIS
early as the nineteenth century. Visionary business leaders in the aftermath of the Industrial Revolution built factory towns in the U.K. and in the United States, such as Port Sunlight near Liverpool (founded by William Lever in 1888 and named after the brand of soap made there) and Pullman on the outskirts of Chicago (founded by railroad car manufacturer George Pullman, also in the 1880s). These towns provided workers and their families with housing and other amenities when many parts of the newly industrialised cities were slums. The motivations of these compassionate industrialists were mostly intrinsic, but there was an element of self-interest in early CSR activity. Industrial and social unrest was common in the big cities; the founders of factory towns hoped to reduce labour problems by looking after their workers and improving the standard of living for all.
remain informal and intuitive, driven by their closeness to the market and the close working relationships they have with stakeholders. So what is CSR and why should SMEs invest time and effort into it? Morevoer, does an effective CSR strategy look the same for all businesses regardless of size and access to resources? CSR beginnings… The idea that businesses have social obligations was obvious at least as
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TODAY, FEW SUCCESSFUL ENTREPRENEURS START BUSINESSES SOLELY WITH THE INTENT OF MAKING MONEY. FOUNDERS OF START-UPS OFTEN HAVE A SOCIAL AGENDA WHEN SETTING BUSINESS GOALS AND OBJECTIVES.
CSR & SMEs What does the concept of corporate social responsibility mean for SMEs? Very simply, the same motivations for attention to CSR apply regardless of organisation’s size. There can be intrinsic motivations and more instrumental, “business case”, motivations. However due to the different characteristics of SMEs, there are some important differences in motivations and CSR practices between SMEs and larger organisations. SMEs are generally managed by their owners, who are also often their founders. Today, few successful entrepreneurs start businesses solely with the intent of making money. Founders of start-ups often have a social agenda when setting business goals and objectives. This close involvement of owners and founders means that commitment to purpose is much
33
ANALYSIS
WITH SMES, BUSINESS IS OFTEN MORE PERSONAL, CLOSE WORKING RELATIONSHIPS ARE THE KEY TO THEIR SUCCESS.
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easier to create and support than in larger organisations. Indeed, they may not call it CSR, but SMEs for this reason can be more socially responsible than their larger counterparts as their commitment to a business model based on corporate responsibility comes straight from heart of the organisation. With SMEs, business is often more personal, close working relationships are the key to their success. Internally, employees are likely to all know each other and be wellknown to management. While it is not unknown for large companies to refer to employees as “family”, this term is more evident and arguably more authentic when used in the SME context. This may well mean that the gap between employees and managers is smaller with more dayto-day contact between all levels of the businesses hierarchy. 3HUVRQDO UHODWLRQVKLSV DOVR ¿JXUH externally, with SMEs often deeply involved in their local communities. They may contribute substantially in terms of providing employment and they may also rely heavily on business relationships with customers and suppliers and others based in the local community. Again, for this reason, SMEs can prove to be more socially responsible than big corporates. SMEs can be expected to invest in the local community to a much greater extent proportionately than larger companies, with contributions ranging from protecting jobs, to skills development, to infrastructure improvement. In terms of access to resources smaller organisations are likely to be less well-resourced than big companies. One beneficial consequence of this might be that while they give attention to the substance of CSR, SMEs are less likely to focus on “decorative” and resource draining trappings, such as CSR communications. It is likely to mean that fewer funds are available to invest in
initiatives that might be socially or environmentally beneficial, especially if the economic pay-off is less obvious or longer term, and so the focus must be on channelling CSR activity in the right direction. There are also fewer people to give time to CSR and so finding the correct people with a targeted skill set is often critical. For example, SMEs increasingly find that they are part of a value chain where a large company downstream (for example, a major brand or a retailer) is demanding attention by suppliers to sustainability and social responsibility. The argument for CSR in SMEs While reputation is important for any business, there are typically greater risks for large companies. Consider the Rana Plaza tragedy of April 2013, where over 1,100 workers died when an eight-story commercial building collapsed in Savar, a sub-district in the Greater Dhaka Area, the capital of Bangladesh. What keeps the CEO of a large branded clothing company awake at night is the possibility of the brand being exposed as having sourced its garments from a factory with unsafe labour conditions, with its labels found amongst the ruins of the factory (as happened to many major brands in Rana Plaza). Such pressures are less for an SME however, pressures on the larger corporates will inevitably translate into pressures on their suppliers, which will undoubtedly include SMEs. While size matters, not least in what gets done and to what scale, SMEs have many of the same reasons for engaging in CSR as the large companies have, both in avoiding downside risk and in exploiting upside opportunities. In many cases, they may also be more intrinsically, if not better motivated, to give CSR attention as they are closer to the communities that not only deserve, but also demand a sustainable, responsible business model.
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ANALYSIS
THE NATIONAL TOURISM STRATEGY 2030 PUBLIC AND PRIVATE ENTERPRISE WORKING TOGETHER
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ANALYSIS
Strong tourism is one of the most advantageous tools for building a GLYHUVLĹľHG HFRQRP\ DQG DOVR HQVXUHV WKDW WKH ULJKW GHPRJUDSKLF PL[ LV D FRUH SDUW RI WKDW HYROYLQJ VRFLHW\ IURP 'D\ 2QH 7KH 4DWDU 7RXULVP $XWKRULW\ 47$ LV OHDGLQJ WKH ZD\ ZLWK D SRZHUIXO VHULHV RI LQLWLDWLYHV XQLWLQJ SXEOLF DQG SULYDWH VHFWRU HQWHUSULVH EHKLQG D FRPPRQ QDWLRQDO GHYHORSPHQW JRDO $VVRFLDWH (GLWRU 9LFNL &RQQROO\ H[SODLQV KRZ VWDNHKROGHUV VWDQG WR EHQHĹľW
Qatar has developed rapidly in terms of its economic performance and global profile. While the oil and gas resources of the region have long been recognized as the driving force behind the countryâ&#x20AC;&#x2122;s economic development, Qatar is ambitiously evolving its economy into one based upon knowledge, diversity and entrepreneurship. While retaining its heritage and transitions, the country is going through a period of rapid transformation in order to position itself as a unique business and leisure destination. Launched on February 23, 2014, The Qatar National Tourism Sector Strategy 2030 aims to establish Qatar on the world tourism map and promote the culture, values and traditions of its people. The Qatar Tourism Authority (QTA) is a government body whose mission is to plan, regulate, develop and promote sustainable tourism in Qatar with the aim of driving forward economic growth and social development as part of QNV 2030. QTAâ&#x20AC;&#x2122;s role therefore includes promoting Qatar as a quality destination for family
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A RANGE OF POLICIES AND REGULATIONS, INVESTMENTS AND TRAINING INITIATIVES ARE NECESSARY TO BENCHMARK ALL TOURISMRELATED ACTIVITIES AND TO CONTRIBUTE TO SUSTAINABLE DEVELOPMENT...
entertainment, business, culture, sports, health and wellness, ecotourism, and education, with the Authority serving as the key overseer of the tourism industry in Qatar. The  importance  of  tourism  for  Qatarâ&#x20AC;&#x2122;s  sustainable  economic  development The development of the tourism sector involves many stakeholders ranging from governments, who contribute through policy intervention, infrastructure development and regulations, to various key players and investors in the private sector. Stakeholders include the numerous small, large. local and foreign enterprises that provide supplies and services such as hotels, restaurants, transport, local guides, and various leisure and entertainment services. This wide range of interest presents a dilemma; on one hand, it shows that tourism creates profitable cross sector relationships in the economy and therefore, is more likely to contribute to economic diversification. On the other hand, the wide range of stakeholders
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ANALYSIS
“TOURISM IS A VITAL PILLAR IN QATAR’S DEVELOPMENT EFFORTS AND A KEY DRIVER OF SOCIO-ECONOMIC GROWTH IN THE COUNTRY”
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and activities in the industry adds to the challenge of creating a sustainable, regulated tourism sector. A range of policies and regulations, investments and training initiatives are necessary to benchmark all tourism-related activities and to contribute to sustainable development, without which economic diversification will only ever be successful in the short term. A prominent feature of tourism is its potential to create backward and forward alliances that are both strong and diverse. Tourism in Qatar as a sector would appear to be more than capable of stimulating broad-based economic activity supporting the objective of the government to encourage an economy based upon a diverse network of relationships between bodies in the public and private sector. In effect, such strong bonds encourage a multiplier effect that can generate broad benefits at the national level as well as employment and business opportunities at local level. “Our aim is to have the tourism industry contribute a total of 5.1 per cent of GDP by 2030, up from 2.6 per cent today,” said Hassan Al Ibrahim, director of strategy at the Qatar Tourism Authority. “USD 40 to 45 billion of investments by the government and the private sector will make this vision a reality.” The FIFA World Cup in 2022 will be a phenomenal showcase for Qatar and the country is under pressure to deliver a legacy for the tourism and events sectors. “The strategy strives to fully capitalise on Qatar’s tourism potential and represents the aspirations of the Qatari people for the future of their country,” said His Excellency Issa bin Mohammed Al Mohannadi, chairman of the Qatar Tourism Authority. The QTA has a clear vision of Qatar as a world-class hub
with deep cultural roots and is ambitious in its plans to place the country on the world tourism map, allowing people from around the world to discover and appreciate what it has to offer via its unique culture and heritage. “Tourism is a vital pillar in Qatar’s development efforts and a key driver of socio-economic growth in the country” said Al Mohannadi. In 2013, Hotel occupancy rate rose from an average of 58 percent to 67 per cent, despite there being a 4.5 per cent increase in the number of rooms available. Total revenue in four and five-star hotels increased by QAR 155.9 million with a staggering 20 per cent increase in revenue at fivestar hotels alone and while evidence success that visitors originate from Saudi Arabia and other Gulf nations, the tourism authority is seeking to widen the range of markets by setting up eight new outpost offices in key markets, in addition to the development of existing offices in London and Paris. “Our target is to attract seven million visitors to Qatar from all over the world by 2030,” said Al Ibrahim. The government of Qatar recognizes that while currently the foundations of the country’s wealth, oil and gas resources are finite and in order to maintain the current rate of economic and social development they must diversify their economy to develop other sectors, one of those being tourism. By supporting and promoting well-planned tourism projects, the National Tourism Sector Strategy 2030 not only supports the diversification of the economy but also shields Qatar from market fluctuations that can negatively effect economic growth and with a target of USD 10.7 billion to be generated from tourism in 2030, the strategy places much greater emphasis on the private sector in the economy with an increased role for entrepreneurship and SMEs.
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From ideas to growth p.40 Hamad International Airport p.44
BUSINESS OPPORTUNITY
BUSINESS OPPORTUNITY
FROM IDEAS TO GROWTH USING THE IPO PLATFORM TO FUND SME EXPANSION
Almost uniquely in the GCC, Qatar has a powerful platform to support the release of HTXLW\ ŵQDQFH IRU 60(V WKH 4( 9HQWXUH 0DUNHW 7KLV JUHZ RXW RI WKH UHFRJQLWLRQ WKDW 60(V QHHG LQYHVWPHQW ŵQDQFH ZKLFK WKH\ DUH XQOLNHO\ WR ŵQG IURP UHWDLO EDQNV DQG ORRNV WR QRXULVK D QHZ JHQHUDWLRQ RI ,32 DFWLYLW\ $VVRFLDWH (GLWRU 9LFNL &RQQROO\ UHSRUWV RQ WKH FULWLFDO FDVK QHHGV RI WKH 60( VSDFHÅ&#x2122;
40
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BUSINESS OPPORTUNITY
High-growth small and medium sized enterprises are the key to innovation, job creation and economic development, but they can often struggle to access the capital needed to fund the expansion that is vital to the growth of a diversified entrepreneurial economy. Equity finance has a fundamental role to play in enabling high-growth SMEs to achieve scale, as part of a muchneeded diversification of the funding ecosystem. The pivotal role of small businesses in the economic development of Qatar is widely recognised. It is from Small and Medium-sized Enterprises (SMEs) and especially those able to achieve very rapid expansion that economic growth and job creation will emerge. Yet this vast potential is often not fully realised, because too few companies are accessing the capital they need to grow. In particular, there is enormous scope for greater use of equity capital. The ‘SME’ term masks a wide variety of companies, from sole traders to substantial firms employing hundreds of people. Most of these would not require the sizeable injection of growth capital that would justify an approach to the capital markets. Yet SMEs in general and particularly those with high growth potential, make a crucial contribution to the economy and economic development.
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THE ‘SME’ TERM MASKS A WIDE VARIETY OF COMPANIES, FROM SOLE TRADERS TO SUBSTANTIAL FIRMS EMPLOYING HUNDREDS OF PEOPLE. The whole ecosystem of the financial services sector in Qatar is now growing in its awareness of the needs of small and medium sized companies and taking the very first steps in tailoring products towards them. At the same time, the flow of quality research into these firms must be maintained and even increased. This role - traditionally carried out by brokers - cannot be sustained purely by the spread between buy offers and sell offers on the volumes currently traded. Unless investors or companies want to start funding the research themselves, the brokers will need to make up for shrinking margins by increasing the volume of trade. Initiatives This drive for growth is exactly what Qatar National Vision 2030 is all about. The government of Qatar, as part of its 2030 strategy, is starting to recognise the need for the building and incubation of new, dynamic, market-changing businesses. From software to biotechnology, and from business services to innovations spun out of Qatar’s growing portfolio of world-class universities, there is enormous potential to create marketleading Qatar-based businesses. If this potential is to be realised, and those firms are to continue to grow as strong independent companies, it is essential that they are given access to the capital that they require to grow. There is risk involved, and
41
BUSINESS OPPORTUNITY
UNLOCKING THE POTENTIAL OF CAPITAL MARKETS IS KEY TO ACHIEVING GROWTH, INNOVATION AND JOB CREATION IN A DIVERSIFIED AND RAPIDLY EXPANDING ECONOMY.
returns may be some way down the line, so it makes sense that this capital comes through the issue of equity, an approach that also aligns the interests of entrepreneurs and investors. Unlocking the potential of capital markets is key to achieving growth, innovation and job creation in a diversified and rapidly expanding economy. Qatar Financial Markets Authority (QFMA) was established as an independent regulatory authority to supervise the financial markets and firms that are authorized to conduct activities related to securities in or from the State of Qatar. The QFMA has been developing its regulatory infrastructure, based on internationally recognized models of best practice and standards for the capital markets with the main objective being the creation of a world-class capital market that focuses on four strategic aims. These are: Â&#x2021; 7R SURWHFW LQYHVWRUV Â&#x2021; 7R HQVXUH IDLU DQG HIILFLHQW financial markets Â&#x2021; 7R HQKDQFH WUDQVSDUHQF\ proficiency as well as awareness and market integrity Â&#x2021; 7R OLPLW PLVOHDGLQJ LQIRUPDWLRQ and deceptive conduct affecting financial products and services. The QFMA has issued the Offering and Listing Rule Book in relation to Securities of Small and Medium Enterprises (the â&#x20AC;&#x153;Regulationsâ&#x20AC;?). The Regulations reflect the awareness of the QFMA of the important role that Small and Medium Enterprises play in the national economy and that giving the opportunity to SMEs to list their shares in the capital market will provide such businesses with the funding mechanisms to help them expand and reach out to new markets. In February this year Qatar Exchange (QE) and Enterprise
42
Qatar (EQ) announced a project to help small and medium enterprises to get listed on the QE Venture Market, the market designated for trading of SMEs shares in the Qatar Exchange. The agreement aims to support SMEs by providing listing requirements which are more flexible compared to those of the Main Market in relation to minimum capital requirements, shareholders, number of shares required to be offered for public subscription and financial history of the company. The project also aims to increase awareness of the on-going planning and development of the Venture Market, reflecting its importance to the QE. Designed  with  SMEs  in  mind The QE Venture Market is designed with smaller companies in mind, operating under a more flexible listing and disclosure regime. Its objectives are mainly to allow SMEs to raise capital more easily and cost efficiently than would be the case on the main market, while retaining the trust of the investor base through a structured regulatory framework. The new agreement between The Qatar Exchange and Enterprise Qatar aims to provide entrepreneurial SMEs with a bespoke route to the market allowing them to tap into locally based financial resources, in what is intended to be a flexible regulatory setting more suited for SMEs. This can provide a powerful platform which seeks to give all interested parties what they want - and SMEs the injection of financial support which is ultimately so crucial.
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BUSINESS OPPORTUNITY
HAMAD INTERNATIONAL AIRPORT
A NEW STANDARD OF CONNECTIVITY AND COMMERCIAL POTENTIAL
Qatarâ&#x20AC;&#x2122;s new showcase airport is a powerful testimony to the stateâ&#x20AC;&#x2122;s commitment to being the strategic hub between east and west and it further positions the aviation sector in WKH *&& DV EHLQJ DPRQJ WKH ĹľQHVW DQG PRVW modern in the world. Associate Editor Vicki Connolly assesses the project that is nearly one third the size of Doha itselfâ&#x20AC;Ś
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It took nearly ten years and US$ 16 billion to build, but Hamad International Airport is now fully operational. With the countryâ&#x20AC;&#x2122;s namesake carrier, Qatar Airways, transitioned from the old, Doha International Airport, the massive much-anticipated project ÂżQDOO\ IHHOV FRPSOHWH ,Q -XQH the airport unveiled its enormous shopping emporium. In addition to the shopping centre, highlights include an upscale spa, two boutique hotels, squash courts, and a public mosque capable of accommodating up to 500 worshippers. The airport is most easily recognized by the passenger terminalâ&#x20AC;&#x2122;s LPSUHVVLYH JODVV URRI D UHĂ&#x20AC;HFWLRQ RI
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BUSINESS OPPORTUNITY
the propertyâ&#x20AC;&#x2122;s extensive blue lagoon and is a testament to the countryâ&#x20AC;&#x2122;s GHWHUPLQDWLRQ WR GH¿QH LWVHOI DV DQ LQWHUQDWLRQDO KXE IRU ERWK LQWHUQDWLRQDO tourists and business travellers. Qatar Airways boasts that their new EDVH RIIHUV FRPIRUW FRQYHQLHQFH DQG choice. They believe that these are the things that matter most to todayâ&#x20AC;&#x2122;s WUDYHOOHU DQG DV VXFK KDYH PDGH WKHP WKH NH\ FRQVLGHUDWLRQV DW WKH KHDUW RI the airport. Their mission is to provide a customer experience that not only RIIHUV WKHVH TXDOLWLHV EXW DOVR FHOHEUDWHV WKHP :LWK DQ DQQXDO FDSDFLW\ RI million passengers as well as public VSDFHV IRU DUW H[KLELWLRQV D 9,3
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THE AIRPORT PROJECT ALLOWS QATAR TO STRIKE OUT BEYOND THE DESERT AND THE GULF, TO NEW MARKETS IN OTHER COUNTRIES AND OTHER CONTINENTS.
terminal inspired by Arabian sailboats DQG DQ DTXDWLF WKHPHG PRVTXH DIWHU D GHFDGH RI FRQVWUXFWLRQ DQG RFFXS\LQJ VTXDUH NLORPHWHUV URXJKO\ D WKLUG RI WKH VL]H RI 'RKD FLW\ LWVHOI GRHV WKH airport have what its takes to launch 4DWDU¶V QDWLRQDO YLVLRQ RI D GLYHUVL¿HG knowledge-based economy onto the world economic stage? 7KH ¿JXUHV DUH LPSUHVVLYH GHVLJQHG to promote trade and play a central UROH LQ 4DWDU¶V QDWLRQDO HFRQRP\ WKH QHZ IDFLOLW\ LV FDSDEOH RI KDQGOLQJ WKH DQWLFLSDWHG PLOOLRQ SDVVHQJHUV D \HDU WZR PLOOLRQ WRQQHV RI FDUJR DQG WDNHRII DQG ODQGLQJV 7KH DLUSRUW LV XQGRXEWHGO\ DQ HVVHQWLDO SDUW RI WKH stateâ&#x20AC;&#x2122;s national development strategy DQG WKH UHOHQWOHVV SXUVXLW RI 4DWDU WR EH WKH VWUDWHJLF PHHWLQJ SRLQW RI WKH (DVW DQG WKH :HVW :LWK RQH RI WKH \RXQJHVW Ã&#x20AC;HHWV LQ WKH VNLHV DQG D FXWWLQJ HGJH QHZ KXE 4DWDU $LUZD\V FXUUHQWO\ Ã&#x20AC;LHV D Ã&#x20AC;HHW RI DLUFUDIW WR RYHU GHVWLQDWLRQV across six continents and to appreciate WKH VWUHQJWK RI WKH VWDWH¶V ORFDWLRQ LQ WKH EXVLQHVV ZRUOG RQH RQO\ QHHGV WR ORRN DW a map. The country sits at an important FURVVURDGV EHWZHHQ (DVW DQG :HVW EXW LQ WHUPV RI VKRUW WR PHGLXP GLVWDQFH it is also relatively isolated. The airport project allows Qatar to strike out beyond WKH GHVHUW DQG WKH *XOI WR QHZ PDUNHWV in other countries and other continents. ,QFUHDVLQJ DYLDWLRQ FDSDFLW\ LV WKHUHIRUH a key component in Qatarâ&#x20AC;&#x2122;s national VWUDWHJ\ IRU JURZWK )RU WKH KHDG RI 4DWDU¶V DPELWLRXV QDWLRQDO FDUULHU WKH PXFK DZDLWHG development couldnâ&#x20AC;&#x2122;t have come soon enough. ³,W JLYHV XV XQOLPLWHG RSSRUWXQLWLHV ´ VWDWHV 4DWDU $LUZD\V &(2 $NEDU DO %DNHU ³'RKD ,QWHUQDWLRQDO $LUSRUW ZDV YHU\ FRQJHVWHG ,W ZDV RYHUFURZGHG :H FRXOG QRW JLYH WKH VWDQGDUG RI VHUYLFH ZH ZRXOG SUHIHU RXU SDVVHQJHUV WR KDYH RQ WKH JURXQG ´ :LWK D UHFRJQLWLRQ E\ WKH 4DWDUL government that aviation plays a wider UROH LQ HFRQRPLF GHYHORSPHQW RQH which not only directly creates jobs but also supports trade and provides the VWDELOLW\ UHTXLUHG WR GHYHORS WRXULVP Qatar continues to watch and learn
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BUSINESS OPPORTUNITY
HAMAD INTERNATIONAL AIRPORT NOT ONLY PROVIDES QATAR WITH A BEAUTIFULLY CONSTRUCTED WINDOW ON THE WORLD, BUT ALSO ALLOWS THE REST OF WORLD INTO THE REGION TO VISIT, EXPLORE AND DO BUSINESS. from other aviation projects in the region, in the hope that it will develop strategies and facilities to not only compete but also to out perform them. With huge developments in both Dubai and Abu Dhabi already well underway, WKH QHZ 0LGÂżHOG 7HUPLQDO &RPSOH[ DW Abu Dhabi International Airport is set to open in 2017, and will have a capacity of 30 million passengers per year alone. So the abiding question is, with so much capacity in the region will there be enough tourism and trade to go around? According to the International Air 7UDQVSRUW $VVRFLDWLRQ 4DWDU $LUZD\V and other Middle Eastern carriers are currently gaining more passengers than any other region and with the Gulf hubs EHLQJ VLWXDWHG MXVW HLJKW KRXUV Ă&#x20AC;\LQJ time from two-thirds of the worldâ&#x20AC;&#x2122;s population, they are well placed to tap into many new and emerging markets. It is not therefore necessarily a case of Gulf States competing with each other, but rather, that together they are competing with the rest of the world. With the region being positioned EHWZHHQ WKH Ă&#x20AC;RXULVKLQJ PDUNHWV RI Asia, Africa and Latin America, Gulfbased airlines are equipping themselves with the long range, modern aircraft that many other of the worldâ&#x20AC;&#x2122;s carriers simply do not have. 7KH :RUOG &XS HĚ&#x2020;HFW :LWK 4DWDU 7RXULVP WKH RIÂżFLDO JRYHUQPHQW ERG\ RXWOLQLQJ D 4$5 ELOOLRQ 86 ELOOLRQ LQYHVWPHQW programme ahead of the countryâ&#x20AC;&#x2122;s
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KRVWLQJ RI WKH IRRWEDOO :RUOG &XS WKH SURMHFWHG ÂżJXUHV IRU YLVLWRUV WR WKH UHJLRQ DUH DPELWLRXV 7RXULVW DUULYDOV LQ 4DWDU DUH H[SHFWHG WR ULVH DW DQ DQQXDO rate of 1.9 per cent between now and 2022 and the governmentâ&#x20AC;&#x2122;s commitment to infrastructure development has proved to be a major incentive for long term investment by leading hospitality SURYLGHUV +RWHO URRP FDSDFLW\ LQ 4DWDU LV H[SHFWHG WR JURZ DW DQ DQQXDO UDWH RI SHU FHQW RYHU WKH QH[W ÂżYH \HDUV KLWWLQJ 4$5 ELOOLRQ 86 ELOOLRQ E\ XS IURP 4$5 ELOOLRQ 86 ELOOLRQ LQ $V ZRUOG FODVV SURMHFWV gives rise to new economic opportunities in the region and with tourist arrivals H[SHFWHG WR UHDFK DV D PDQ\ DV PLOOLRQ E\ 4DWDU ZLOO VHH D WUDQVLWLRQ IURP a predominantly business-led visitor SURÂżOH WR D VWURQJHU EXVLQHVV OHLVXUH PL[ ZLWK WKH IRRWEDOO :RUOG &XS D PLOHVWRQH marker for the hospitality and tourism industry. Hosting the tournament is undoubtedly a source of pride and honor DPRQJ WKH HQWLUH UHJLRQ ,W LV H[SHFWHG WR UDLVH DZDUHQHVV RI 4DWDU DQG WKH *XOI region and change perceptions about the area amongst those who have yet to H[SHULHQFH LW ÂżUVW KDQG With an ambitious vision of an economy based upon diversity and knowledge and a private sector built upon a foundation of entrepreneurship and innovation, Hamad International Airport QRW RQO\ SURYLGHV 4DWDU ZLWK D EHDXWLIXOO\ constructed window on the world, but also allows the rest of world into the UHJLRQ WR YLVLW H[SORUH DQG GR EXVLQHVV
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Currency highs and lows p.48
TRADE & FINANCE
TRADE & FINANCE
CURRENCY HIGHS AND LOWS THE TEAM AT WESTERN UNION BUSINESS SOLUTIONS GIVES US A PREVIEW OF WHAT TO EXPECT FROM THE THREE MAJOR CURRENCIES IN THE MARKET. FIND OUT WHATâ&#x20AC;&#x2122;S IN STORE FOR THE USD, EUR AND GBP FOR THE MONTH OF AUGUST.
USD Itâ&#x20AC;&#x2122;s been all year in the making but the JUHHQEDFN ¿QDOO\ ¿QGV LWVHOI RQ WKH EULQN RI D PHDQLQJIXO XSWXUQ $PHULFD¶V EXFN LV KRW RII D IUXLWIXO -XO\ ZKHQ LW SRZHUHG WR PXOWL ZHHN KLJKV RYHUDOO DQG PXOWL PRQWK SHDNV YHUVXV WKH (XUR 6HQWLPHQW EULJKWHQHG RQ -XO\ DIWHU )HGHUDO 5HVHUYH &KDLU -DQHW <HOOHQ ODLG WKH JURXQGZRUN IRU DQ HDUO\ UDWH KLNH LI WKH HFRQRP\ FRQWLQXHG WR VKRZ VLJQV RI LPSURYLQJ KHDOWK 7HVWLI\LQJ EHIRUH D FRQJUHVVLRQDO SDQHO 0V <HOOHQ VDLG ODVW PRQWK WKDW LI IDVWHU MRE JURZWK OHG WR D TXLFNHU GHFOLQH LQ WKH MREOHVV UDWH WKH EDQN PLJKW KDYH WR PRYH VRRQHU DQG PRUH
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UDSLGO\ WR UDLVH UDWHV $W ODVW FKHFN WKH MRE PDUNHW ZDV RQ its best winning streak since the late V 7KURXJK -XQH WKH 86 HFRQRP\ KDG DGGHG DW OHDVW MREV ZKLFK GURYH XQHPSOR\PHQW WR D à \HDU ORZ RI 8QHPSOR\PHQW LV QRZ RQ WKH EULQN RI WLSSLQJ EHORZ VL[ SHU FHQW D OHYHO WKH )HG LQ -XQH IRUHFDVW ZRXOGQ¶W PDWHULDOLVH XQWLO QH[W \HDU $ MREOHVV UDWH EHORZ ZRXOG VHUYH DV D ELJ YRWH RI FRQ¿GHQFH LQ WKH JUHHQEDFN DV LW ZRXOG EULQJ WKH )HG FORVHU WR DWWDLQLQJ LWV JRDO RI PD[LPXP HPSOR\PHQW $OWKRXJK WKH 86 HFRQRP\ FRQWLQXHV WR UHFRYHU DW DQ XQHYHQ UDWH FRQGLWLRQV ORRN PXFK EULJKWHU WKDQ WKH\ GR LQ WKH (XUR]RQH ZKLFK FRQWLQXHV WR EH UHVWUDLQHG E\ KLJK XQHPSOR\PHQW DQG ORZ LQÃ&#x20AC;DWLRQ 7KDW DGGV XS WR (XUR ZHDNHQLQJ GLYHUJHQFH
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TRADE & FINANCE
for both growth and central bank policy. The European Central Bank in June stepped up monetary stimulus while the Fed this year has increasingly dialed down on its monetary support to the improving US economy. Meanwhile, the Fedâ&#x20AC;&#x2122;s QE bond buying programme, which has been positive for growth but negative for the Dollar, is on course to end in October. Consequently, the recent foundation of strength the greenback has formed could have the trappings of a durable upswing. A stronger Dollar is a boon for American importers who buy their goods from overseas. As forecasts look sunnier for the greenback, however, uncertainty remains high, leaving the dollar vulnerable to setbacks. Meaningful liftoff of the US currency may have to wait until the Fed sketches a more hawkish outlook and Treasury yields take notice and rise. Upcoming Critical Events August 1: US July Non-farm Payrolls August 1: US July ISM Index Manufacturing August 13: US July Retail Sales August 20: FOMC Releases July 29-30 Meeting Minutes August 28: US Q2 GDP revision
Economic Indicators 3-month deposit: 0.24% GDP: -2.9% (ann.) Q1 Â&#x2DC;y>Ă&#x152;Â&#x2C6;Â&#x153;Â&#x2DC;\ Ă&#x201C;°£¯ Ă&#x2022;Â&#x2DC;i Unemployment: 6.1% June /Ă&#x20AC;>`i `iwVÂ&#x2C6;Ă&#x152;\ 1- Â&#x2021;{{°{ LÂ&#x2C6;Â?Â?Â&#x2C6;Â&#x153;Â&#x2DC; >Ă&#x17E;
EUR The fallout has happened, now what? The European Central Bank (ECB) threw the proverbial â&#x20AC;&#x2DC;kitchen sinkâ&#x20AC;&#x2122; at the markets in June and the fallout
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from that historic monetary policy announcement helped to take the Euro to 8-month lows against the US Dollar, two-year lows against sterling and 5-month lows against the yen during the month of July. So what comes next? The economic situation for August does not look too much altered from July. Monetary policy is not widely expected to be altered at the next ECB meeting on August, despite calls from the IMF to embark upon quantitative easing measures. The central bank has been relatively clear in its policy communique and economic data from July is not generally seen as something that will have altered the outlook from policy makers. The ECB has said that it will wait XQWLO DIWHU WKH ÂżUVW WUDQFKH RI OHQGLQJ has gone out at the beginning of December before assessing whether or not to embark upon additional extraordinary policy measures. That means investors will continue to cling to all economic data as they determine whether or not more policy measures will be required at the beginning of next year. With that in mind, growth remains uneven and weak. Surveys on the manufacturing and service sectors did show some signs of improvement in the month of July, but so far quarterly growth for Q3 is estimated at a poor 0.4% with the manufacturing sector in France still contracting. 2Q LQĂ&#x20AC;DWLRQ WKH (&% KRSHV WKDW the liquidity injections expected later in the year will increase demand and help lift prices. There have already been some signs of bottoming in +,&3 ÂżJXUHV 6R DV ORQJ DV FRQVXPHU prices remain steady and potentially improve, there will be little reason for the ECB to take more policy action anytime soon. The rate of unemployment seems to have also steadied and in some places is even falling. On balance, the Eurozone economy seems to be treading water and it will take time for the Central
49
TRADE & FINANCE
Bankâ&#x20AC;&#x2122;s policy measures from June to impact real economic data. In the meantime, there are some external factors and internal events that could have a bigger immediate impact on the Euro. Clearly geopolitical risk has been heightened and the damage it could make on EXVLQHVV VHQWLPHQW ÂżJXUHV KDV \HW WR be revealed. Given the degree of offsetting events and economic data in the Eurozone, the Euroâ&#x20AC;&#x2122;s direction over the course of August could be a matter of default, meaning it could be subject WR PRYHPHQWV RXWVLGH RI LWV VSHFLÂżF realm as investors focus on the greater uncertainties of when the UK and US will embark upon tighter monetary policy. Upcoming Critical Events August 01: EUR July Manufacturing PMI August 04: EUR June PPI August 05: EUR July Services PMI and June Retail Trade August 07: EUR ECB Monetary Policy Committee Meeting August 13: EUR June Industrial Production August 14: EUR Q2 GDP August 17: EUR June HICP August 18: EUR June Trade Balance August 28: EUR August Business Climate Index
Economic Indicators 3-Month Deposit Rate: 0.11% GDP (annual rate): 0.90% Â&#x2DC;y>Ă&#x152;Â&#x2C6;Â&#x153;Â&#x2DC; Â>Â&#x2DC;Â&#x2DC;Ă&#x2022;>Â? Ă&#x20AC;>Ă&#x152;iÂŽ\ ä°xä¯ Unemployment: 11.6% Trade Balance: EUR 15.4 billion
GBP The Poundâ&#x20AC;&#x2122;s run to multi-year highs came to an abrupt end in July as the recent string of strong UK economic data began to fade. At the same time, signals from the US turned more
50
ON BALANCE, THE EUROZONE ECONOMY SEEMS TO BE TREADING WATER AND IT WILL TAKE TIME FOR THE CENTRAL BANKâ&#x20AC;&#x2122;S POLICY MEASURES FROM JUNE TO IMPACT REAL ECONOMIC DATA. hawkish. As a result sterling suffered its biggest weekly decline in months against the US Dollar to hit onemonth lows. The question for August is whether this is the beginning of a sustained fall or just a temporary levelling out. The Bank of England may hold the key to the answer. The Financial Policy Committeeâ&#x20AC;&#x2122;s announcement regarding new measures to combat housing market risks was one of the key talking points RI -XO\ EXW LW ZDV LQĂ&#x20AC;DWLRQ GDWD ZKLFK really caught the eye. Sterling edged closer to six-year and two-year peaks against the US Dollar and Euro, respectively, helped largely by data VKRZLQJ D VLJQLÂżFDQW LQFUHDVH LQ %ULWLVK FRQVXPHU SULFH LQĂ&#x20AC;DWLRQ Âą D rise which limits the room the BoE has to keep interest rates at record lows for longer. However, UK economic data on wage growth, manufacturing, retail sales and house prices painted a more dovish picture while minutes from the %2(ÂśV -XO\ PHHWLQJ FRQÂżUPHG WKDW no members currently see the need to consider earlier rate rises. Perhaps the PRVW VLJQLÂżFDQW GHYHORSPHQW LQ -XO\ however, came from the US where the Federal Reserve began talking about the possibility of raising interest rates sooner. The US Dollar strengthened putting pressure on the pound despite another strong UK GDP report. 'DWD LQ WKH ÂżQDO ZHHN RI -XO\ IURP abroad may dictate currency volatility in the early part of August. Markets ZLOO ZDWFK IRU 86 *'3 ÂżJXUHV DQG WKH
latest US non-farm payrolls report as ZHOO DV LPSRUWDQW LQĂ&#x20AC;DWLRQ GDWD IURP (XURSH +RZHYHU WKH %R(ÂśV ,QĂ&#x20AC;DWLRQ Report on August 13 could be the make-or-break moment of the month for the Pound. In November the report FDXVHG VLJQLÂżFDQW PRYHPHQW LQ WKH sterling exchange rate. In February BOE Governor Mark Carney used the report as the moment to launch the bankâ&#x20AC;&#x2122;s second version of forward guidance which sent the pound soaring to new highs. If the BoE uses Augustâ&#x20AC;&#x2122;s report as an opportunity to tell markets that over the coming months they will start to see some members of the Monetary Policy Committee voting for higher interest rates, then Sterling could potentially add yet another leg higher to its incredible climb since last year. New multi-year highs for sterling is a real possibility. But if a still dovish Mark Carney delivers a somewhat disappointing UK economic JURZWK DQG LQĂ&#x20AC;DWLRQ RXWORRN WKHQ WKH Poundâ&#x20AC;&#x2122;s slide in July may turn into a more sustained fall in August. Some analysts are already predicting that itâ&#x20AC;&#x2122;s now â&#x20AC;&#x153;game overâ&#x20AC;? for Sterling. Upcoming Critical Events August 05: GB July Services PMI Survey August 07: BOE Interest Rate Announcement August 13: GB June Wage Growth August 13: GB June Unemployment Ć&#x201A;Ă&#x2022;}Ă&#x2022;Ă&#x192;Ă&#x152; ÂŁĂ&#x17D;\ " +Ă&#x2022;>Ă&#x20AC;Ă&#x152;iĂ&#x20AC;Â?Ă&#x17E; Â&#x2DC;y>Ă&#x152;Â&#x2C6;Â&#x153;Â&#x2DC; Report Ć&#x201A;Ă&#x2022;}Ă&#x2022;Ă&#x192;Ă&#x152; ÂŁÂ&#x2122;\ Â&#x153;Â&#x2DC;Ă&#x192;Ă&#x2022;Â&#x201C;iĂ&#x20AC; *Ă&#x20AC;Â&#x2C6;Vi Â&#x2DC;y>Ă&#x152;Â&#x2C6;Â&#x153;Â&#x2DC; August 20: BOE August Meeting Minutes
Economic Indicators BoE Interest Rate: 0.5% GDP: 0.8% Q2 (q/q) Â&#x2DC;y>Ă&#x152;Â&#x2C6;Â&#x153;Â&#x2DC;\ £°Â&#x2122;ÂŻ Ă&#x2022;Â&#x2DC;i Unemployment: 6.5% May Trade Balance: GBP -9.2 May
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The location maze p.52 Everything you need to know about ‘bootstrapping’ p.56 The art of leadership p.60 What’s your exit strategy? p.64
BUSINESS TOOLKIT
BUSINESS TOOLKIT
THE LOCATION MAZE DOES IT REALLY MATTER WHERE YOUR BUSINESS SETS UP HOME?
STRATEGIC AREA
PARKING SPACE
52
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BUSINESS TOOLKIT
RIGHT LAYOUT
SAFE NEIGHBORHOOD
PUBLIC TRANSPORT
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53
BUSINESS TOOLKIT
The fact is, there’s no more important decision for an SME than choosing where to be based. The wrong location can be costly and take you away from customers and suppliers - while the right choice can be a powerful catalyst in building a vibrant market, contact with the community and constructive investor dialogue. Associate Editor Vicki Connolly explores the options... Whether a business starts life on the kitchen table or with an idea written on the back of an envelope, it is likely that decisions will have to be made at some point about where it will be based. Location, Location, Location: it’s as vital to a venture’s success as the product or service being sold. Just a few years ago, the idea of businesses being run by a group of people working remotely from laptops or from a smartphone for example, took a stretch of the imagination, but technological changes have made this possible. Even an internet business, however, must know where to position itself on the worldwide web, or be lost in virtual obscurity. Choosing the right location - where to start? First, the golden rule when deciding upon the location of an SME is that the value of a piece of property for any business depends almost entirely on where it is located. This might seem obvious, but bearing this in mind at all times, means that an SME will be likely to reap the business rewards associated with it. These rewards include increased consumer traffic for the retailer and easy access to suppliers and transport routes for the manufacturer. It is also important that entrepreneurs remember that the business value of a property cannot be measured in purely financial terms. A financially valuable property is usually a good sign that it is located close to resources such as transport; however, the nature of an SME will
54
also determine how the value of its location can be measured. Put an emphasis on closeness to housing or shopping centres if the business sells consumer goods, or try and find premises near the banking district if clients come mainly from the financial world. An existing business must consider whether existing clients can easily reach them. Can a business afford to lose current customers? Even the most loyal patron will struggle to purchase a product or service, if the location is inconvenient. Another rule to remember when considering the location of a business is that compromise is often the key to eventual success, especially when the SME is a fledgling operation or start-up. If an entrepreneur has a limited budget, they must put financial concerns before personal preferences for example, accepting that initially a business may have to settle for a less appealing location, as long as the savings they will make, will allow the business to move into that great office around the corner soon. Of course, rental expenditure needs to be kept in mind as part of start-up costs for any new venture, or if the business is making a move or expanding. Using the retail operation as an example, a shopping mall can be the ideal location for this type of business - big crowds and proximity to other successful companies can contribute significantly to revenue. However, rents are invariably higher in prime locations such as popular malls. Once again an entrepreneur must think compromise - starting out in a less prestigious spot can be a sensible decision if it will allow a business to operate on lower costs in those crucial first few months of trading. Security is another concern that must be considered when investigating the ideal location for
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BUSINESS TOOLKIT
AN ENTREPRENEUR MUST STUDY BOTH THE CURRENT REAL ESTATE CLIMATE AS WELL AS PAST, AND LIKELY FUTURE, TRENDS.
a small business. An entrepreneur must make sure that he or she is aware of the security situation in an area before they decide to relocate their business there. If an area has poor security and a reputation for being unsafe, customers may be deterred from going there to do business. It is important for any SME to choose premises in a place where both team members and clients feel safe and comfortable. Research  the  options When choosing a business location, preparation and education is key. An entrepreneur must study both the current real estate climate as well as past, and likely future, trends. Local real estate publications and word-of-mouth networking are great ways of keeping upto-date with the latest property opportunities and may lead to an entrepreneur knowing exactly when that perfect office or shop will become available. It is also useful to remember that if an SME specializes in a particular field â&#x20AC;&#x201C; such as computing or travel â&#x20AC;&#x201C; locating it near similar businesses will enable the business to take advantage of an areaâ&#x20AC;&#x2122;s reputation for this or that specialization. Similarly, it can also help to be based close to your investors. If you see the role of an investor as not dimply a source of cash, but also of good strategic advice, it will be important to have as much contact and dialogue with them as possible - and this will be difficult if you are geographically remote. It may even be a requirement from your investors that you find a location where they can keep a watchful eye on what you are doing in those crucial first few months! Finally, an entrepreneur must consider his or her own personal preferences. If a business owner is happy to spend time commuting
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to work, an office a little further from home will suit. On the other hand, a central location will be vital if managers need to get to work quickly or rely on public transport. Family commitments should also be a factor in the decision making process. As with all business choices, personal happiness should be a key influence when it comes to deciding upon a companyâ&#x20AC;&#x2122;s location. There are many factors to consider regarding each available location, and much will depend on the specific nature of the business. Here are some important general questions to keep in mind: Â&#x2021; ,V WKH DUHD ]RQHG IRU WKH W\SH business you want to open? Â&#x2021; :LOO \RX EH DEOH WR HVWDEOLVK D good working relationship with the landlord? Â&#x2021; ,V WKH QHLJKERUKRRG VDIH" Â&#x2021; ,V WKH IDFLOLW\ LWVHOI LQ JRRG FRQGLWLRQ" Â&#x2021; :LOO UHSDLU ZRUN EH QHFHVVDU\" Â&#x2021; 'RHV WKH IDFLOLW\ KDYH WKH ULJKW layout? Â&#x2021; ,I \RX QHHG WR H[SDQG ZLOO \RX EH able to? Â&#x2021; :LOO WKHUH EH HQRXJK SDUNLQJ IRU your customers? Â&#x2021; ,V SXEOLF WUDQVSRUWDWLRQ QHDUE\" Â&#x2021; $UH WKHUH DQ\ ORFDO EXVLQHVV organizations that will help with marketing? A lot of hard work and careful consideration goes into finding the right location for a small business and it may be tempting for an entrepreneur to devote energy to more creative tasks like developing a logo or fine-tuning product selection. Is it important however, to keep in mind that none of those details will matter if customers canâ&#x20AC;&#x2122;t find the business or if the rent is more than the entrepreneur can afford. In order to source the perfect location for an SME, an entrepreneur must be prepared to put in the time and effort to find the best location and give his or her business the strong start it deserves.
55
BUSINESS TOOLKIT
EVERYTHING YOU NEED TO KNOW ABOUT ‘BOOTSTRAPPING’ BOOTSTRAPPING IS A TERM COMMONLY USED IN THE START-UP AND SME UNIVERSE. BUT, WHAT DOES IT REALLY MEAN? HOW CAN IT HELP YOU TAKE YOUR BUSINESS OFF THE GROUND? IN THE FOLLOWING FEATURE, WE COVER EVERYTHING YOU NEED TO KNOW ABOUT THIS CONCEPT – THE CHALLENGES AND THE OPPORTUNITIES…
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BUSINESS TOOLKIT
BANKS, VCs, AND THE RANGE OF INVESTORS ARE OFTEN MORE CONFIDENT FUNDING BUSINESSES THAT ARE ALREADY BACKED BY THEIR OWNERS.
OxfordDictionaries.com defines bootstrapping as “the technique of starting with existing resources to create something more complex and effective”. In a business context, this means starting (or growing!) your company with little or no financial help from external sources such as banks, venture capitalists and angel investors. Lack of access to finance has led to an increasing number of business owners adopting this method; dipping into their personal savings, or reaching out to family and friends, in the hope of acquiring the funding amounts they need to fuel their companies. With such a large number of businesses considering this as a viable option, Private Sector Qatar presents the following practical points, which are critical to understanding – and fully maximising the potential of – bootstrapping. Why do most entrepreneurs bootstrap? Bootstrapping has tremendous advantages, which include but aren’t limited to the following – 1. Working with your money means that you are going to be superefficient with every single penny, which will eventually work in the favour of your business. You are more aware of the costs involved in the day-to-day running of the business and start operating your company on a ‘lean’ business model. A great example of this is the emerging trend of ‘hotdesking’, where entrepreneurs, before setting up their business, share the same office space during different times of the day, week or month depending on their individual business needs. This is a fantastic way to cut down costs and build a strong network of contacts in the process! (Note here that this concept is yet to fully develop in
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a lot of countries and may have its legal implications.) The fact that you don’t have to worry about raising the finance you need will allow you to fully concentrate on the core aspects of your business such as sales, product development, and so on. You can rest assured that you, or your partners, won’t be sidetracked by countless investor meetings, pitching events and other such engagements. 2.
Without any external investors in the business, you have full control of the business. It means that you don’t have to depend on any one else when making crucial decisions. It’s basically your (and your partners’, if any) call. You have the independence to ensure that your business is moving in the direction you want, according to your vision and cultural values, without any investor influence. 3.
4. Something that most business owners don’t realise is that building the financial foundations of the business, on your own, is a huge attraction to future investors. Banks, VCs, and other investors are often more confident funding businesses that are already backed by their owners. It shows that the owner fully committed to the business and is willing to give it his or her 100 per cent. 5. Another interesting advantage that comes with bootstrapping is that your product or service doesn’t necessarily have to be perfect at the time of its launch. Starting, and working, with limited finance gives you the flexibility to begin straight away without worrying about the small glitches in your business proposition. You can get customer feedback instantly and improve the quality of your offer, so that when you
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BUSINESS TOOLKIT
GROWING IN POPULARITY, ASSET RE-FINANCING IS A FANTASTIC WAY TO FREE UP THE CASH BLOCKED IN YOUR BUSINESS, EVEN WHEN YOU ARENâ&#x20AC;&#x2122;T BOOTSTRAPPING!
are indeed ready for external financing your value proposition is significantly better! 6. Finally, working with limited cash can often force you to explore alternative options, which you might not consider otherwise, such as factoring, asset re-financing, and trade finance. (Find more details on this in the next section!)
7LJKW FDVKĂ&#x20AC;RZV" 'RQÂśW VZHDW LW While bootstrapping is all about making the most of the resources at hand, it doesnâ&#x20AC;&#x2122;t necessarily limit your options when it comes to building a strong working capital. Take a look at some viable, effective and advantageous solutions that ensure your business has all the cash it needs â&#x20AC;&#x201C;
Â&#x2021; )DFWRULQJ This is a solution wherein your company sells its account receivables to a thirdparty company (usually a financial institution), who is then responsible for collecting the funds from the customer. This happens at a mutually agreed discount rate allowing the factoring company to cover its credit risk and collection costs. Factoring enables your business to avail the cash it needs immediately, especially in industries with long receivables cycles. Â&#x2021; $VVHW UHILQDQFLQJ Growing in popularity, asset re-financing is a fantastic way to free up the cash blocked in your business, even when you arenâ&#x20AC;&#x2122;t bootstrapping! The challenge with asset re-financing is that it can be useful depending on the kind of assets your company has. If you are a large printing press, itâ&#x20AC;&#x2122;s likely that this is a suitable financing solution for you. However, for an e-commerce business, it might be difficult to acquire large amounts. Â&#x2021; 7UDGH FUHGLW This is simply
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when a business purchases goods and services from its suppliers on credit terms. These terms are agreed upon beforehand and allow the company to be flexible in its SD\PHQW VFKHGXOH $Q RQOLQH DUWLFOH on Entrepreneur.com explains IXUWKHU Âł$V D VPDOOHU EXVLQHVV \RX may need to incentivise suppliers to give you extended credit terms. Such incentivisation can come in PDQ\ IRUPV 2QH RQOLQH PDUNHWLQJ company gave their client a free monthly campaign in return for favourable credit terms while other companies sometimes select their suppliers on the basis of their credit policy.â&#x20AC;? We should also add here that trade credit comes with a fair warning â&#x20AC;&#x201C; you donâ&#x20AC;&#x2122;t want your business to adopt this as a longterm solution as this may increase your dependency on suppliers that you are used to working with regularly and limit your options. %XW P\ FRPSDQ\ LVQÂśW D Â VWDUW XSÂŤ 2QH RI WKH ELJJHVW P\WKV RI bootstrapping is that itâ&#x20AC;&#x2122;s an option available only at the startup stage. However, the reality is that bootstrapping can help your business at the growth stage as well, or any stage really. For instance, when you are looking for that all-important secondary and tertiary finance to take your business to the next stage, the options that weâ&#x20AC;&#x2122;ve covered above are great to inject that extra cash into your business! 7KLQN LWÂśV JRLQJ WR EH HDV\" :HOO WKLQN DJDLQ While bootstrapping helps you avoid going through the dreaded process of pitching to investors, banks, and so on, it has its fair share of challenges as well. For one, you have the added pressure that all your personal savings are at stake! It also means that you will have to sacrifice a huge portion
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BUSINESS TOOLKIT
REMEMBER, YOUR BUSINESS MAY BE PROFITABLE BUT IF ISN’T CASH-RICH, YOU ARE INTO DEEP TROUBLE. CASH IS ALWAYS THE TOP PRIORITY!
of your regular income – often re-investing most of the money you make back into your business. Be prepared to cut back personal expenses and survive a couple of months without any definitive amount of cash coming into your bank account. Another major downside is managing your business cashflow. Starting and running your business with limited financial resources means that there is a possibility that you might find yourself in a sticky cash-strapped situation. Make sure to plan and forecast all your business financials thoroughly (preferably with a certified accountant) so that your company is well-prepared for any such unforeseen circumstances. Remember, your business may be profitable but if isn’t cash-rich, you are into deep trouble. Cash is always the top priority! Moreover, investors – especially VCs and angel investors – infuse more than just cash into the business; they bring with them experience, mentorship and business advice. If you are
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bootstrapping, it means that you don’t have access to a pool of intellectual resources that could potentially give your business a competitive edge. Lastly, if you have borrowed money from family and close friends, be careful to fully understand what they expect in return. When do they see the money coming back? Do they want a share in the business? Is it simply an act of goodwill? Ironing out any such issues at the outset will ensure that your personal relationships aren’t affected by your business decisions, and will give you the peace of mind you need moving forward. Are you ready to make history? Finally, don’t forget that some of the most successful entrepreneurs started by bootstrapping, creating companies that were etched into the history of the business world – most popular examples being those of Bill Gates (Microsoft), Steve Jobs (Apple), Michael Dell and Richard Branson to name a few. The question, then, to ask yourself is – will yours be the next?
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BUSINESS TOOLKIT
THE ART OF LEADERSHIP ARE YOU LEADING YOUR SME TO SUCCESS - OR JUST HOPING FOR THE BEST? Itâ&#x20AC;&#x2122;s often said that the glut of challenges that SMEs face can only be overcome by effective leadership. How else can a business navigate its way through VKRUWIDOOV LQ FDVKĹśRZ market competition and tricky overseas expansion initiatives (to name but D IHZ " 7KH SUREOHP LV LWĹ&#x2018;V KDUG WR GHĹľQH ZKDW leadership really involves itâ&#x20AC;&#x2122;s not something that can be crystallised and sold WR DVSLULQJ PDQDJHUV EXW UDWKHU LWĹ&#x2018;V WKH VXP RI PDQ\ RWKHU VNLOOV DQG TXDOLWLHV and we only really know it when we see it in action. Senior Editor Paul Godfrey investigatesâ&#x20AC;Ś
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BUSINESS TOOLKIT
â&#x20AC;&#x153;A true leader shines not because of glittering armour, but by understanding the needs of the humblest footsoldierâ&#x20AC;? â&#x20AC;&#x201C; Sun-Tzu, The Art of War
However we define it, the fact remains that leadership is a vital role in any organisation. Why? Because without it, the business is literally adrift on a becalmed sea, aimless and lacking in purpose, focus and commitment. Put simply, leadership is all about defining the direction of the teams reporting to you and then communicating that goal to the people in the driving seat - motivating, inspiring and empowering them to contribute to the companyâ&#x20AC;&#x2122;s success. The ingredients of effective leadership are complex and vary from RQH VSHFLÂżF VLWXDWLRQ WR WKH QH[W 7KH\ DOVR GHSHQG RQ WKH GLIÂżFXOW\ RI WKH tasks, the degree of a leaderâ&#x20AC;&#x2122;s authority and the maturity and capabilities of the reporting teams and personnel. Whatâ&#x20AC;&#x2122;s more, leadership skills often take time to learn, because they are multi-faceted, and not easy to transport from job to job, role to role. Another factor is that great leaders tend to attract followers by virtue of example, without having to PRWLYDWH WKHP ZLWK VSHFLÂżF LQFHQWLYHV or requests. Challenges Make no mistake: becoming an effective leader is a challenging quest. It necessitates an understanding of human psychology, strategic thinking, direction setting and motivation. Yet the rewards are great - leveraging team performance is the surest way to achieving business growth and building recognition, both on a corporate and personal basis. So are there a stable set of criteria that the majority of successful leaders will demonstrate? Well, while good leaders come in many shapes and sizes (and WKHUH LV QR RQH OHDGHUVKLS SURÂżOH RU â&#x20AC;&#x2DC;personalityâ&#x20AC;&#x2122;), certain attributes are commonly found. These include Â&#x2021; 3RVLWLYHQHVV UHOLDELOLW\ DQG D proactive approach Â&#x2021; $ FOHDU YLVLRQ RI EXVLQHVV JRDOV Â&#x2021; $ ÂżUP FRPPLWPHQW WRZDUGV PHHWLQJ GHÂżQHG JRDOV Â&#x2021; $Q DELOLW\ WR FRPPXQLFDWH WKHLU vision effectively
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THE INGREDIENTS OF EFFECTIVE LEADERSHIP ARE COMPLEX AND VARY FROM ONE SPECIFIC SITUATION TO THE NEXT. THEY ALSO DEPEND ON THE DIFFICULTY OF THE TASKS, THE DEGREE OF A LEADERâ&#x20AC;&#x2122;S AUTHORITY AND THE MATURITY AND CAPABILITIES OF THE REPORTING TEAMS AND PERSONNEL.
Â&#x2021; $ FRPPLWPHQW WR WKHLU WHDP DQG WR their organisation Â&#x2021; 6NLOIXOQHVV LQ SODQQLQJ DQG developing strategies Â&#x2021; $ IRFXV RQ PRWLYDWLRQ DQG VHWWLQJ clear directions Â&#x2021; 7KH DGDSWDELOLW\ WR HQJDJH ZLWK WKH views and needs of team members Â&#x2021; $Q DELOLW\ WR LQVSLUH HPSOR\HHV WR meet goals Â&#x2021; $ FRPPLWPHQW WR WKH KDSSLQHVV DQG wellbeing of their team Â&#x2021; +RQHVW\ DQG RSHQQHVV ZLWK WKH WHDP Developing leadership capabilities requires an individual to understand his or her own strengths and weaknesses and to be willing to continuously improve with experience. Nature  or  nurture? Are leaders are born or made? Itâ&#x20AC;&#x2122;s commonly believed that certain people are natural leaders, particularly with UHIHUHQFH WR SLYRWDO KLVWRULFDO ÂżJXUHV Yet on the other hand, many people ÂżQG WKHPVHOYHV LQ PDQDJHPHQW roles where they will need leadership capabilities - and then learn and
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BUSINESS TOOLKIT
A KEY FACTOR THAT WE DO KNOW ABOUT LEADERSHIP IS THIS: EFFECTIVE LEADERS LISTEN TO THE EXPERT VIEWS OF OTHERS.
develop the necessary skills to be a leader. The reality is that good leadership probably results from a combination of personality traits and many specific skills and capabilities learned over time and gained through experience. A key factor that we do know about leadership is this: effective leaders listen to the expert views of others and are adept in tailoring and mixing this knowledge to create a comprehensive solution to a tough and complex challenge. Note, however, this doesnâ&#x20AC;&#x2122;t mean that leaders are always the smartest person in the team: they may simply be better listeners or have a fairly thorough understanding of the 360-degree challenge ahead (which a super-specialist might not have). Successful leadership allows the specific skills and knowledge of the leader and each of their team members to be brought together in the best way to allow effective directions to be set and good decisions to be made. Are  there  â&#x20AC;&#x2DC;natural  leadersâ&#x20AC;&#x2122;? A personâ&#x20AC;&#x2122;s character, personality and attitude may be helpful in assuming a leadership role. But research suggests that the many different styles of leadership are, largely speaking, equally effective and that there is â&#x20AC;&#x2DC;something for everyoneâ&#x20AC;&#x2122; in terms of growing into a style that feels more natural. A naturally gregarious, social individual might thrive in some leadership settings, but not in others, which might call for a more cautious, modest approach. Some of the basics of good leadership can be self-taught, but many useful skills will be acquired through experience developed over time. Many good leaders have evolved their own style through watching and analysing, seeing what proves effective for others. Is  the  entrepreneur  a  leader? Another aspect of this is that itâ&#x20AC;&#x2122;s important not to confuse the role
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of leader with that of entrepreneur. The latter is by definition a livewire â&#x20AC;&#x2DC;doerâ&#x20AC;&#x2122; determined to make a mark and build a business - but this might often be achieved at the cost of disgruntled staff and a series of broken supplier relationships. Whereas the leader takes people on the journey and inspires them with a vision of what the future can be like - contrast here Steve Jobs and Barack Obama, for example. Itâ&#x20AC;&#x2122;s this aspect which is going to be especially important as SMEs confront troubling issues likely to impede growth: the true leaders will show their mettle by galvanising everyoneâ&#x20AC;&#x2122;s best efforts into a concerted effort to move the business forward. Letâ&#x20AC;&#x2122;s dispel a few more myths about the role of the leader. Â&#x2021; )LUVWO\ OHDGHUVKLS KDV QRWKLQJ to do with seniority or oneâ&#x20AC;&#x2122;s position in the hierarchy of a company. Too many people talk about a companyâ&#x20AC;&#x2122;s leadership when referring to the most senior executives in the organisation. Yet leadership doesnâ&#x20AC;&#x2122;t automatically happen when you reach a certain salary scale. Â&#x2021; /HDGHUVKLS KDV QRWKLQJ WR GR with titles. A C-level title doesnâ&#x20AC;&#x2122;t automatically make you a â&#x20AC;&#x2DC;leaderâ&#x20AC;&#x2122;, but, conversely, you can be a leader in a much more humble role, such as in a local community initiative or a charity franchise. Â&#x2021; 0RVW LPSRUWDQWO\ OHDGHUVKLS LVQÂśW management. Leadership and management are not synonymous. You might have 15 people reporting to you and P&L responsibility? This means youâ&#x20AC;&#x2122;re a manager. Managers need to plan, measure, monitor, coordinate, solve, recruit, regulate, and carry out many other diverse activities. But leaders lead people: the two things are not automatically the same, and indeed, all too rarely are. So - do you have what it takes to be a leader?
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BUSINESS TOOLKIT
WHAT’S YOUR EXIT STRATEGY? If you’re struggling to build your business, chances are the thought of leaving it all behind one day and doing something else has barely crossed your mind. Yet perhaps it should: because planning what you want to get from the business in the future is the best way of focusing your strategies on the present - and don’t forget, many investors will bring their own exit strategy to the table anyway, and it may be far different from the future you had in mind. Senior Editor Paul Godfrey explains a selection of exit options…
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BUSINESS TOOLKIT
The phrase â&#x20AC;&#x2DC;exit strategiesâ&#x20AC;&#x2122; basically covers two different scenarios: Â&#x2021; <RXU RZQ H[LW VWUDWHJ\ DV D IRXQGHU &(2 RU 'LUHFWRU :KDW GR \RX ZDQW WR WDNH IURP WKH EXVLQHVV ZKHQ \RX OHDYH D ODUJH FDVK VXP WKDW \RX FDQ UH LQYHVW RU OLYH RQ IRU OLIH WKH peace of mind of leaving the company WR IDPLO\ RU D VXFFHVVRU RU WKH RQJRLQJ UHZDUGV RI D VXFFHVVIXO VDOH" Â&#x2021; 7KH H[LW VWUDWHJ\ RI D SULYDWH LQYHVWRU RU D YHQWXUH FDSLWDO EXVLQHVV 7KH LQYHVWRU PD\ ZDQW WR VHOO WKH EXVLQHVV WR UHFRXS WKH loan at what is perceived by their ¿QDQFLDO DQDO\VWV WR EH DQ RSSRUWXQH moment; perhaps they will want to IRUFH DQ ,32 WR Ã&#x20AC;XVK FDVK WKURXJK WKH EXVLQHVV RU H[SDQG LQWR DQ overseas market and then sell their interests to a large international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¿QDQFLDO UHSRUWLQJ V\VWHPV DQG FRQWUROV H[SORULQJ JURZWK WKURXJK LQWHUQDO RSHUDWLRQV DQG ¿QH WXQLQJ \RXU FRPSDQ\¶V VWUDWHJ\ DUH the same ones that are in any case UHTXLUHG WR EXLOG D VXFFHVVIXO FRPSDQ\ 7KH UDQJH RI H[LW VWUDWHJLHV LQFOXGHV Â&#x2021; 7DNLQJ WKH FRPSDQ\ SXEOLF WKURXJK DQ LQLWLDO SXEOLF RIIHULQJ ,32
Â&#x2021; 6HOOLQJ WKH FRPSDQ\ WR D VWUDWHJLF DFTXLUHU Â&#x2021; 5HFDSLWDOL]LQJ DQG VHOOLQJ WKH ¿UP WR the management team - also known DV D PDQDJHPHQW EX\RXW None of these are right for everyone: WKDW¶V ZK\ HYHQ WKRXJK \RX PD\ GHVSHUDWHO\ QHHG LQYHVWPHQW FDSLWDO
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LW¶V VR LPSRUWDQW QRW WR KDYH \RXU hand forced by an investor who sees D SDUWLFXODU VWUDWHJ\ VXLWLQJ WKHLU RZQ ¿QDQFLDO HQGV *HQHUDOO\ WKH LQYHVWRU¶V intended exit strategy will be declared µXS IURQW¶ DV SDUW RI WKH FRQWUDFWXDO LQYHVWPHQW RIIHU EHLQJ PDGH WR \RX $ JROGHQ UXOH KHUH LV WKDW LI WKH H[LW VWUDWHJ\ LVQ¶W DSSHDOLQJ WR \RX EHFDXVH LW ZLOO FRQWRUW DQG WZLVW WKH EXVLQHVV \RX KDYH GRQ¶W DFFHSW LW ,QVWHDG UHGXFH WKH VL]H RI WKH VXP EHLQJ RIIHUHG by offsetting it against another loan WKLV ZD\ \RX ZLOO EH DEOH WR QHJRWLDWH PLOGHU H[LW WHUPV Objectives  are  unique  and  personal  -  and  they  matter The reality is that different people start FRPSDQLHV IRU GLIIHUHQW UHDVRQV DQG WKDW FDQ LQÃ&#x20AC;XHQFH WKHLU H[LW VWUDWHJ\ Not everyone has the end-game of a 6WHYH -REV LQ PLQG :KLOH VRPH SHRSOH do indeed want to change the world ZKHQ WKH\ VWDUW D FRPSDQ\ RWKHUV KDYH WKH PRWLYDWLRQ WKDW WKH\ QHYHU HYHU ZDQW WR ZRUN IRU DQ\RQH HOVH DQG WKH\¶UH KDSS\ WR NHHS WKH EXVLQHVV VPDOO IRU SHUSHWXLW\ ,I \RX¶UH ORRNLQJ WR OHYHUDJH JURZWK WKURXJK LQYHVWPHQW UHPHPEHU WKDW IXQGDPHQWDOO\ WKLV EX\V RWKHU SHRSOH D ULJKW WR LQÃ&#x20AC;XHQFH \RXU EXVLQHVV QRZ DQG LQ WKH IXWXUH ,I \RX WDNH RQ LQYHVWPHQW RYHU WLPH IURP YHQWXUH FDSLWDOLVWV DQJHO LQYHVWRUV HTXLW\ LQYHVWRUV RU LQGLYLGXDOV \RX ZLOO XVXDOO\ JLYH XS D SRUWLRQ RI WKH FRPSDQ\ RU VKDUHV DQG WKRVH shareholders will have a say in any SRWHQWLDO H[LW VWUDWHJ\ Itâ&#x20AC;&#x2122;s vital to have a mental checklist of the following points in mind when choosing an exit strategy: Â&#x2021; &RQVLGHU \RXU IXWXUH UROH LQ WKH EXVLQHVV 3DUW RI \RXU GHFLVLRQ ZLOO GHSHQG RQ ZKHWKHU RU QRW \RX ZDQW WR FRQWLQXH WR PDQDJH \RXU EXVLQHVV ,Q DQ ,32 RU D PDQDJHPHQW EX\RXW \RX DQG \RXU WHDP ZLOO SOD\ PXFK the same roles before and after WKH WUDQVDFWLRQ ,Q D VWUDWHJLF DFTXLVLWLRQ KRZHYHU WKH EX\HU PD\ UHSODFH \RX DQG \RXU WHDP ZLWK LWV RZQ SHRSOH $ VWUDWHJLF DFTXLVLWLRQ
MAKING MONEY FROM EVEN THE BEST OF EXITS CAN BE MUCH TRICKIER THAN YOU MIGHT IMAGINE. FDQ EH DQ H[FHOOHQW VROXWLRQ IRU FRPSDQLHV WKDW DUH VWUXJJOLQJ ZLWK VXFFHVVLRQ SODQQLQJ LVVXHV ZKLOH DQ ,32 RU D PDQDJHPHQW EX\RXW ZLOO work more effectively for teams that ZDQW WR VWD\ LQ FKDUJH Â&#x2021; :KDW DUH \RXU OLTXLGLW\ QHHGV DQG KRZ TXLFNO\ GR \RX ZDQW WR JHW ULFK" Making money from even the best RI H[LWV FDQ EH PXFK WULFNLHU WKDQ \RX PLJKW LPDJLQH 0DQ\ EXVLQHVV owners view their exit strategy as a FKDQFH WR UHDS WKH EHQH¿WV RI WKHLU hard work and to increase their SHUVRQDO ZHDOWK +RZHYHU QRW DOO H[LW VWUDWHJLHV ZRUN HTXDOO\ ZHOO LQ WKLV UHVSHFW ,Q DQ ,32 IRU LQVWDQFH \RXU VKDUHV DUH OLNHO\ WR EH VXEMHFW WR D VKDUH ORFN XS DJUHHPHQW ZKLFK PHDQV \RX ZLOO QRW EH DEOH WR VHOO \RXU VKDUHV HYHQ DIWHU WKH ,32 IRU D SHULRG RI WLPH W\SLFDOO\ VL[ PRQWKV $ VWUDWHJLF DFTXLVLWLRQ ZLOO often generate an immediate cash SD\PHQW WKHUHE\ LQFUHDVLQJ RZQHU OLTXLGLW\ 6RPHWLPHV KRZHYHU WKH ¿QDO SULFH LV QRW GHWHUPLQHG XQWLO WKH HQG RI DQ HDUQ RXW SHULRG ZKLFK FDQ ODVW VHYHUDO \HDUV ,Q D PDQDJHPHQW EX\RXW WKH RULJLQDO RZQHUV DOVR JHQHUDOO\ ZLOO UHFHLYH OLTXLGLW\ RYHU D SHULRG RI WLPH 7KHUH LV DQRWKHU IDFWRU KHUH DV ZHOO ZKDW DUH \RXU LQYHVWRUV¶ OLTXLGLW\ QHHGV" ,I \RX DFFHSW RXWVLGH LQYHVWPHQW \RX HVVHQWLDOO\ WDNH RQ SDUWQHUV DQG WKRVH SDUWQHUV DW VRPH SRLQW DUH JRLQJ WR ZDQW OLTXLGLW\ 7KH UHDOLW\ LV WKDW \RX VKRXOG ORRN IRU JRRG SDUWQHUV ZKR GRQ¶W SUHVVXUH \RX WR VHOO RU JR SXEOLF EXW ZDLW XQWLO WKH WLPH LV ULJKW DQG WKH FRPSDQ\ KDV PDWXUHG Â&#x2021; :KDW LV UHDOLVWLFDOO\ \RXU FRPSDQ\¶V JURZWK SRWHQWLDO" 3HUKDSV \RX GRQ¶W UHTXLUH LPPHGLDWH OLTXLGLW\ EXW FDQ KROG EDFN DQG SDUWLFLSDWH LQ \RXU FRPSDQ\¶V IXWXUH
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BUSINESS TOOLKIT
PROBABLY THE BEST TIME TO TAKE A STEP BACK AND EVALUATE YOUR PERSONAL EXIT STRATEGY IS THE MOMENT YOU CONSIDER TAKING ON BOARD EXTERNAL FINANCE. JURZWK SRWHQWLDO ,Q WKLV VFHQDULR you will want to choose an exit strategy that allows you to retain an RZQHUVKLS LQWHUHVW $Q ,32 DOORZV you to keep a substantial interest in the company, as well as to time the ultimate allocation of your shares to meet your own personal needs. $ PDQDJHPHQW EX\RXW DOVR ZLOO allow for continued participation in a companyâ&#x20AC;&#x2122;s growth. However, an acquisition will generally eliminate, or at least greatly reduce, your ownership interest in your company, DV ZHOO DV \RXU DELOLW\ WR LQĂ&#x20AC;XHQFH LWV future direction and performance. Â&#x2021; $VVHVV PDUNHW FRQGLWLRQV 'HPDQG for your companyâ&#x20AC;&#x2122;s products or VHUYLFHV WKH DSSHWLWH IRU ,32V DQG acquisitions among both investors and strategic buyers, and other market conditions also will have an impact on your exit strategy. Talk with your private equity partner, as well as with any commercial lenders, investment bankers, or other ÂżQDQFLDO SURIHVVLRQDOV DERXW WUHQGV in the marketplace. Â&#x2021; 'RQÂśW VHWWOH IRU DQ ÂľHLWKHU RUÂś predicament: consider a dual-track approach. When youâ&#x20AC;&#x2122;re planning to sell, how you present your company to investors requires a slightly different approach than if youâ&#x20AC;&#x2122;re presenting to potential strategic EX\HUV 3XEOLF PDUNHW LQYHVWRUV generally want to understand your company as a whole - what your main businesses are, what your
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prospects for growth are - while strategic buyers may be more LQWHUHVWHG LQ VSHFLÂżF SDUWV RI \RXU company that are complementary to their own interests. You can actually pursue both types of exits at the same time to capitalize on the most attractive opportunity. Remember as well that a good many of the complexities in the choices above result from the fact that you brought in external investors who required HTXLW\ DQG LQĂ&#x20AC;XHQFH LQ UHWXUQ 2QH solution here is only to take on board a â&#x20AC;&#x2DC;risk partnerâ&#x20AC;&#x2122; such as a bank, who will simply require that you meet your repayments and will not want any equity stake in return. The two potential hurdles here are that you will probably need to be a more mature EXVLQHVV WR UHFHLYH VLJQLÂżFDQW EDQN funding, and secondly, that you will DOVR IRUIHLW WKH SRVLWLYH EHQHÂżWV RI having an experienced mentor on your board, working closely with you to give strategic growth advice. Reviewing  the  options Before you can choose your exit strategy, it is important to understand what the options are, and their basic characteristics. Â&#x2021; $Q ,32 ,Q DQ ,32 \RX VHOO D SRUWLRQ of your company in the public markets. You and your management team typically remain in place for a period of years. Meanwhile, your investors and managers may be able to sell some stock, and your company continues to operate much as it has in the past. However, your company will be subject to additional regulations, and media analysts and institutional investors will constantly scrutinize company performance. Will you want to deal with the rigours this imposes and the constant need to promote SRVLWLYH 35 PHVVDJHV ZKLFK PD\ be a key catalyst in protecting the share price? Â&#x2021; $ VWUDWHJLF DFTXLVLWLRQ ,Q D VWUDWHJLF acquisition, another company purchases your business, either
with cash or shares in the acquiring company or with some combination of shares and cash. The acquirer may or may not retain you and your management team, and may or may not make substantial changes in your companyâ&#x20AC;&#x2122;s operations, staff, DQG SURGXFW OLQHV 7KH EHQHÂżW LV (typically) liquidity, because if you sell the company to a strategic acquirer you might be able to sell most or all of your shares. Donâ&#x20AC;&#x2122;t forget, though, that the disadvantage of this exit strategy is that you are likely to lose operating control - and so is the tried and tested management team. That team may have enjoyed the freedom of controlling day-to-day operations, but with a sale, theyâ&#x20AC;&#x2122;ll probably have to give that up. Â&#x2021; 0DQDJHPHQW EX\RXW 5HFDSLWDOL]LQJ the business and selling it to the next generation of managers it is known as a management buyout. This type RI WUDQVDFWLRQ LV XVXDOO\ ÂżQDQFHG through some combination of debt and/or private equity investment, with the debt collateralized by the DVVHWV RI WKH FRPSDQ\ ,W SURYLGHV immediate cash to the owner and early shareholders, and allows the company to continue as a private enterprise. 7KH RWKHU EHQHÂżW LV WKDW WKHUH LV usually quite a smooth transition. 0DQ\ RZQHUV DQG &(2V DVN ZKHQ LV the best time to start selecting their options from the above list? The reality LV WKDW Âľ'D\ 2QHÂś LV WRR VRRQ EHFDXVH QR RQH DW WKLV VWDJH FDQ DFWXDOO\ GHÂżQH the attractiveness of the business to investors (or to management teams!) and no-one can foresee its likely JURZWK FXUYH 3UREDEO\ WKH EHVW WLPH to take a step back and evaluate your personal exit strategy is the moment you consider taking on board external ÂżQDQFH 7KLV FDQ EH DQ DGXOW DQG sobering experience: itâ&#x20AC;&#x2122;s best to evaluate the options in the light that their complexities might come back to haunt you at a time when they are least welcome - when you are tired of the business and want to move on.
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Flavours of Doha p.68 Apps for biz p.74
DOWNTOWN
DOWNTOWN
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DOWNTOWN
FLAVOURS OF DOHA
DOHA IS THE JEWEL AND ECONOMIC CAPITAL OF QATAR. LIFE IN THIS FLOURISHING CITY TENDS TO BECOME BUSY AND SO IT IS IDEAL TO TAKE A BREAK EVERY ONCE IN A WHILE. IN THE FOLLOWING FEATURE WE PRESENT A VARIETY OF STAND-OUT RESTAURANTS THAT WILL MAKE YOUR DOHA EXPERIENCE WORTHWHILE.
Idam,  Museum  of  Islamic  Art This Alain Ducasse restaurant, the )UHQFK FHOHEULW\ FKHIÂśV ÂżUVW LQ WKH Middle East, opened to much fanfare at the end of 2012, and has lived up to all WKH K\SH VLQFH /RFDWHG LQ WKH WRS Ă&#x20AC;RRU of the Museum of Islamic Art, the rather unusual choice of venue suddenly seems to make sense after a meal here â&#x20AC;&#x201C; every single aspect of the experience, from the dĂŠcor to the food, is a work of art. The Phillipe Starck-designed interiors in a monochromatic colour scheme, subtly interweave the regional heritage into the contemporary chic setting â&#x20AC;&#x201C; think oversized white chairs, modern metallic and plush carpets and chargers on the table with
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Arabic calligraphy. The bright feature bookshelf adding a touch of colour in RQH FRUQHU DQG WKH IXQN\ OLJKW ÂżWWLQJV will leave you impressed. But not as much as the food, when it arrives. The carefully designed menu, which also incorporates locally-inspired Ă&#x20AC;DYRXUV DQG LQJUHGLHQWV IHDWXUHV dishes that are executed with such assured mastery, that we challenge you not to whip out your phones for that Instagram-perfect shot! With a new chef at the helm, the menu continues to feature the signature dishes such as 0DULQDWHG ERQLWH ÂżVK ZLWK OHPRQ JROG FDYLDU DQG /RFDO ÂżVKLQJ VRIW FUXQFK\ Egyptian rice, for example â&#x20AC;&#x201C; with each dish revealing layer upon layer
of surprises, displaying the ultimate ÂżQHVVH LQ WHFKQLTXH $ FDQÂśW PLVV KHUH IRU ÂżUVW WLPH GLQHUV LV RI FRXUVH the signature tender camel â&#x20AC;&#x201C; a slowEUDLVHG FDPHO ÂżOOHW WKDW PHOWV LQ WKH mouth â&#x20AC;&#x201C; accompanied by duck foie JUDV EODFN WUXIĂ&#x20AC;H DQG GHOLFDWH VRXIĂ&#x20AC;HHG potatoes. The desserts continue to be a symphony of culinary art, with D TXLUN\ GHVVHUW WUROOH\ SUHVHQWDWLRQ and friendly service that encourages you to â&#x20AC;&#x2DC;try some!â&#x20AC;&#x2122;, while the delicious, thoughtfully designed mocktails mean even the most hardened drinkers will not miss the absence of alcohol in a )UHQFK ÂżQH GLQLQJ UHVWDXUDQW
Call +974 44224488.
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Spice Market, W Doha The W Doha is home to some of the city’s most popular restaurants, and for good reason. One of the two restaurants that celebrity chef Jean Georges Vongerichten has lent his name to, the Spice Market is a colourful mélange of all things south east Asian, from the interiors to the food. The bright, contemporary and stylish, yet relaxed setting is given an unmistakably Asian touch with paper lantern-style chandeliers, jars of spices and hand-made wooden plates as wall hangings. The menu, inspired by the ubiquitous street food of the region, encompasses everything from Japanese sushi, to Vietnamese rolls and Mongolian lamb satay, but also ventures into fusion territory with dishes like tandoori salmon and spiced chicken samosas. But, unlike other restaurants which attempt such a diverse variety of cuisines, everything on the menu stays true to its roots and is consistently delicious. Whether you’re stopping by for a quick sushi lunch, or satisfying a craving for Thai curry, or celebrating a special occasion with friends - there is something for everyone here, as long as they enjoy a VSLFH LQIXVHG ÀDYRXU SUR¿OH ± DQG ZKR doesn’t?
Call +974-44535000.
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Parisa,  Sharq  Village  &  Spa One of the only restaurants of its kind in Doha, serving Iranian cuisine in D ¿YH VWDU VHWWLQJ 3DULVD RIIHUV WKH DXWKHQWLF Ã&#x20AC;DYRXUV RI 3HUVLD 7KLV LV WKH sort of place youâ&#x20AC;&#x2122;d want to gather your friends and come with, to indulge in DQ DUUD\ RI PRUH LVK PH]]H VW\OH GLSV ZLWK KRW RII WKH WUDGLWLRQDO FRDO RYHQ breads, followed by succulent kebabs brought to the table on mini charcoal JULOOV WR NHHS WKHP KRW )URP ¿VK WR chicken and lamb, the kebabs are a GH¿QLWH KLJKOLJKW 3HUVLDQ VSHFLDOWLHV VXFK DV VORZ FRRNHG PHDW VWHZV DQG IUDJUDQW SRPHJUDQDWH MHZHOOHG ULFH GLVKHV DUH DOVR DYDLODEOH $IWHU DOO WKLV if you can leave room for dessert, then donâ&#x20AC;&#x2122;t miss the traditional faloodeh IUR]HQ YHUPLFHOOL GHVVHUW
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Visiting  Doha?  Here is our pick of where to stay and what to do: Check in: The Sharq Village & Spa, a Ritz Carlton property, is not only one of the most established hotels in Doha, but also one of the most luxurious. Designed to replicate a traditional village, with meandering alleys and courtyards, the resort celebrates Arabian heritage. The feel of a royal palace carries through inside too, with opulent, yet tasteful furnishings in the spacious rooms, housed in lowrise â&#x20AC;&#x2DC;villasâ&#x20AC;&#x2122;, which have their own private courtyards. The hotel is also home to one of the cityâ&#x20AC;&#x2122;s ĹľQHVW VSDV D VSUDZOLQJ OLWWOH village of its own that is a tranquil, inviting sanctuary, operated by the world renowned group Six Senses. The private beach fronting the resort, and mini souq shopping area, plus leading restaurants â&#x20AC;&#x201C; including the aforementioned Parisa and signature seafood outlet Al Dana â&#x20AC;&#x201C; complete the complement of facilities that make this the ultimate choice for someone looking for a luxe weekend in Doha.
Jazz  at  Lincoln  Centre,  St  Regis  Doha  Want a little piece of New York recreated in Doha? Then head straight to this jazz club that, in partnership with the original JALC, brings a carefully curated selection of artists on tour to the Middle East. With some of the worldâ&#x20AC;&#x2122;s best jazz acts in live performance in an intimate, glamorous venue, little else is usually required to draw in the crowds â&#x20AC;&#x201C; and that it does, in droves, particularly on weekends â&#x20AC;&#x201C; but if any additional incentive is required, then the food is it. Looking to the home of jazz for inspiration, the New Orleansstyle menu features a variety of small plates that are perfect for sharing, with
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cocktails, including a traditional gumbo (a chicken and sausage stew with okra), jambalaya (a paella-style rice one-pot with seafood and vegetables), Louisiana crab cakes, and of course, cheesy, gooey burgers. Donâ&#x20AC;&#x2122;t miss their creatively titled and designed desserts such as the piano cheesecake. With superlative standard of entertainment unparalleled in the region, itâ&#x20AC;&#x2122;s safe to say youâ&#x20AC;&#x2122;ll come for the music, but you might just stay for the food!
Call +974-44460105. 7KLV DUWLFOH ZDV ÂżUVW IHDWXUHG LQ RXU sister publication BBC GoodFood Middle East.
Check out: Katara Cultural Village This open-air village-style cluster of restaurants and art galleries is located by the seaside in the trendy new West Bay area of Doha. Katara is the place to visit over the weekend, whether itâ&#x20AC;&#x2122;s to bring out the art fanatic in you at an exhibition viewing, for a cup of tea and conversation at one of the many cafes, or to simply stroll E\ WKH VHDVLGH ZLWK D SODWH RI ĹľVK and chips in hand. A selection of beach activities are on offer at Katara beach as well. Visit www. katara.net for more information.
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MULTIPLY YOUR BUSINESS PRODUCTIVITY WITH THESE TRENDY MOBILE APPLICATIONS , Rushika Bhatia s view...
LinkedIn Pulse This popular app will completely change the way you access your daily news. LinkedIn Pulse enables you to get all your stories in one news feed offering a truly seamless experience. As the name suggests, the app is a part of LinkedIn and users have the option to log in using their LinkedIn accounts. The application delivers news stories from most major publications and users can customise their content – so what you read is personalised based on your interests. What is particularly attractive about LinkedIn Pulse is its ability Ì ` Ü >` iÜà v À vy i Ài>` }] Ã Þ Õ ` ½Ì >Ûi to worry about internet connectivity.
Available on: App Store and Google Play Cost: Free.
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Duolingo How many times have you travelled for business without being familiar with the foreign language? Duolingo is a fantastic app that offers free tutorials for languages such as Spanish, French, German, Portuguese, Italian and English. The app’s interactive interface makes learning simple and fairly straightforward. More importantly, it saves you from the hassle of enrolling into different courses or buying various books for every language. What’s distinctive in the app is its option to track your progress, so that you know how well you are doing.
Available on: App Store and Google Play Cost: Free
Snapseed This photo-editing app is a quick, easy and convenient way to perfect images. If you are putting together a business proposal on-the-go, this app can be quite handy in resizing images, adding effects and so on. The app’s useful ‘Center-Focus’ feature allows you to highlight the primary subject of the picture by blurring out any background elements. Snapseed > Ã vviÀÃ > Û>À iÌÞ v >}i w ÌiÀÃ that help improve the overall appearance of the app.
Available on: Google Play Cost: Free
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LogMeIn LogMeIn, with its advanced features, is perhaps one of the most useful apps you’ll come across. Following a few basic instructions, the app allows you to remotely access your computer using your Android device. So, for instance, you may be in a client meeting, where you need to urgently get hold of additional information to close the deal with very limited time on-hand. Using LogMeIn, you can easily get all the files on your computer without having to travel at all! Of course, you do have to ensure that your computer has the LogMeIn software installed.
Cost: Basic version and services – Free
Podio Podio is the ideal app for project management. It provides a common platform for all team members to work remotely on projects using handheld devices. With notable features such as idea sharing, instant feedback, project handling, measuring progress and so on, Podio can play a major role in boosting team performance. A unique dimension that makes this app an absolute must-have is its chat feature, which allows one-on-one interaction as well as group messaging. So, no matter where Þ Õ >Ài] Þ Õ V> V Ì Õi V >L À>Ì } Ã } wV> Ì «À iVÌÃ with the entire team.
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Available for: Google Play and Apple Store Cost: Free
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Together we make legal matters as easy as solving this maze What is OQOOD? OQOOD is a 70% subsidised legal services programme offered by Enterprise Qatar to Qatari entrepreneurs and SMEs. The programme entails the provision of intellectual property rights and trademark registration, and the development of contracts, agreements and article of association. The objective of this programme is to give Qataris access to subsidised, professional legal services to ensure a sound legal framework for their business. Who is eligible? OQOOD is offered to Qatari entrepreneurs and SMEs who need assistance in developing contracts and agreements and who are interested in the intellectual property and trademark registration. Follow us on
To apply, please contact Enterprise Qatar Tel: 4012 5000 | Website: www.eq.gov.qa E-â&#x20AC;?mail: oqood@eq.gov.qa | Fax: 4012 5001 Address: The Gate, Bay Tower 4 â&#x20AC;&#x201C; Floor: 16, West Bay, Doha. Terms and Conditions apply