SME Advisor Middle East - October 2013 by SME Advisor Middle East

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Issue 95 OCTOBER 2013 EXCLUSIVE TELECOM PARTNER

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Every one a winner Getting top value from client meetings

Risky business Covering the risk management essentials

The

Time to Venture? Tips to secure Venture Capital

Get social How social media can leverage success

Influencer Dr. Amina Al Rustamani and the power of the Free Zone

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You can’t get inside the head of an entrepreneur…

n discussions about the best ways for an SME to get finance, it’s often forgotten that it’s simply impossible to see inside the head of an entrepreneur and understand the full richness and potential of the idea that he or she might have. No amount of figure work, projections and business plans can equate to the grand scheme of the vision that drives a good entrepreneur forward. The snag is that this leads to two very significant problems. Firstly, the lender or investor might find it extremely difficult to tell a very good project from a relatively insecure one - and it’s no use enforcing different repayment structures as a hedging tool, because that simply leads to a riskier portfolio. Next - and even more worrying - is the fact that it can then be very difficult for the lender or investor to determine whether the finance, when given, is being used in a way that really helps nourish and develop the primary business concept. It could be argued that if the repayments are coming according to plan, all is well, but the reality goes much deeper: could the sum have leveraged far greater rewards if there was a sharper clarity about how to realise the entrepreneur’s vision? Now, lenders have recognized this problem for decades, and they call it ‘asymmetry’ - because everything they’re told about the scheme or business project can’t match what’s in the mind of the entrepreneur. Nor is this simply a challenge facing startups: if anything, the difficulty is more acute with established SMEs looking for Round A finance to grow the business - simply because this is likely to be the very point where the entrepreneur’s grand scheme of things really kicks in (eg, where having built a local customer base, the time has come to take on top manufacturers in the US or Taiwan). The moral of the story is that the more the SME owner can do to communicate the depth and colour of the business vision, the better. It’s no accident that companies heading for an IPO will often recruit a public relations firm, and they do so not simply to tell the public know nice things about them, but to ensure that the full extent of their plans are properly communicated. The more the entrepreneur can do to spell out the full extent of the dream, the better: it’s not egotism, but a positive route to underpinning the finance application in the most productive way possible. If in doubt, imagine - if you can - Steve Jobs trying to apply for finance for the Apple Mac (the most influential computer in history) and saying “well it’s really good because there are these little pictures on the screen and I call them icons…” Take the time to tell the lender or investor the full story and your own company may have a similarly bright future. Enjoy this issue of SME Advisor.

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October 2013

Issue 95

October 2013

CONTENTS

26 The Influencer Dr. Amina Al Rustamani and the power of the Free Zone

Editor’s note 03 Paul Godfrey on the challenges of getting inside the entrepreneur’s head. SHOPTALK 10 News and developments impacting SMEs in the region. SME ABOUT TOWN 18

Key events attended by SME owners and managers.

The Entrepreneurial Spirit - profile of the Abu Dhabi Entrepreneurship Forum 2013.

BANKING FOR BUSINESS 22

A Roadmap for Change. Key insights and future directions from the ADCB-sponsored 4th Annual Middle East SME Forum.

Movers & Shakers 26 Pioneering Dubai’s Creative Communities - an exclusive interview with Dr. Amina Al Rustamani, Group CEO, TECOM Investments. 30

A Place in the Sun. SME Advisor meets the extraordinary multi- faceted entrepreneur, Jelena Bin Drai.

22 October 2013

CONTENTS

Understanding Risk Management. It makes good financial sense to mitigate risks before the threat becomes real - Audrey Weir, Chief Risk Officer AIG MEA Limited, explains how.

Getting finance 40 Financial Strategies for SMEs - mergers, acquisitions and the role of the management accountant. Geetu Ahuja, Head of GCC - Middle East, CIMA, explains the key aspects. 44

Ready to Venture? Our insider guide to the unique challenges of applying for venture capital: how the venture industry works, thinks – and rewards.

Workspace 48 The Serviced Office Experience. How the working environment can supercharge your customer interaction - Servcorp’s experts explain how. 52

Mastering the Digitization Revolution. Vikram Chadha, Vice President, SME Marketing, du, explains the key priorities for SMEs looking to get up to speed with the new digital culture.

Marketing 56 Social Media: reap the benefits in 10 easy steps. Follow our guide to the essentials of social media - and pick the elements best-suited to leverage success… Legal 60 Corporate Governance in the UAE. Keeping up to date with the compliance issues for your SME - Clyde & Co.’s Niall O’Toole and Georges Attieh explain the latest developments.

Industry watch 62 Crucial role of the retail sector. 63

A step ahead - the Masdar Institute of Science and Technology.

Top choice: logistics programmes.

SME trends in KSA.

‘Export focus’ for SMEs in the UAE.

TECHNOLOGY FOR BUSINESS 70 IT trends and tools that are reshaping business in the region. The next level… 74 The Missing Link - the challenges and opportunities facing an educational brand in the SME sector. A profile of UWC and its hopes, aspirations and financial template.

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SHOPTALK

UAE

Ethical standards and your business

he Chartered Institute of Management Accountants (CIMA) has produced an ethical scenario tool to help people comply with ethical standards in a volatile and complex business environment. This followed a recent Chartered Global Management Accountant (CGMA) survey which revealed that 20 per cent of respondents in the UAE worked for an organisation that had suffered from a serious reputational failure. Globally, this figure is at a staggering 25 per cent. However, in the UAE, nearly 75 per cent of companies are prepared to lose profit in the short term for the sake of protecting reputation and driving more success in the long term.

This is promising for the region considering that a CGMA research last year also highlighted that one in three finance professionals around the world have faced pressure to act unethically. As CIMA members are committed to upholding a Code of Ethics, the institute has produced an interactive tool to support and guide ethical decision-making. Created with input from members globally, and available to the wider business community, it takes the user through a series of challenges in areas such as conflict of interest, the supply chain, bribery and data protection. Tanya Barman, CIMA’s Head of Ethics, said: “Ethical challenges are part of working life, and often there is no perfect answer. But if they are not dealt with

DWC to fuel Expo 2020’s success At a monthly Business Luncheon organised by CEO Clubs Network Worldwide, Paolo Serra, Director, Dubai World Central (DWC) Business Park, presented a plan which explained how the logistics facilities, infrastructure and location of DWC can significantly contribute to the success of Expo 2020. DWC is an official member of the worldwide network. “Expo 2020 is expected to bring in the best products, technologies and materials from around the

Tanya Barman, Head of Ethics, CIMA

appropriately, there may be severe consequences when they come to light – both for the individuals and for the companies they work for.” She continued, “Unfortunately it is still common for employees, be they in finance or in other parts of the business, to face pressure to compromise their ethical standards, and the standards of their company. It is vital to act ethically in order to build long-term business success and avoid the shortcuts that can turn into tomorrow’s scandal. Through releasing this tool – to both members and the wider business population – we hope

world to Dubai in a few years’ time. This massive undertaking requires an equally extensive logistical and infrastructural framework which DWC is more than capable of delivering. DWC will continue to be actively involved in setting up the best possible environment and support to ensure the success of Dubai’s Expo 2020 bid,” said Serra. DWC, the world’s first purpose-built aerotropolis, is a strategic initiative of the government of Dubai that strongly positions the emirate as a leading international trade centre. The various districts that are part of DWC cover the logistics, aviation, commercial, exhibition, humanitarian, residential, and leisure sectors and are

to encourage better working cultures that lend themselves to the ethical standards that most firms subscribe to.” Geetu Ahuja – Head of GCC, CIMA said: “We are seeing a strong effort by the government and businesses in the UAE to adhere to ethical guidelines across all sectors. Just recently the process of pitching for clients by advertising and marketing organisations has received an overhaul in the UAE. Many in the industry have signed up to a best practice guideline, a code that is the first of its kind in the region and that has the support of the International Advertising Association’s UAE Chapter. “Such initiatives, including CIMA’s ethical scenario tool, help both employers as well as employees to ensure that they are acting in an ethical manner that meets both local and international standards.” The tool is available at: www.cimaglobal.com/ ethicstool.

being built around the Al Maktoum International Airport, the centrepiece of the development. The Business Park, located at the entrance of DWC, is a free zone that has been conceptualised to offer companies the space and the flexibility they need to grow and expand with the aerotropolis and city around them. Offering a total office space of 210,000 square metres, the Business Park is complete and ready for immediate handover. Furthermore, held at the Dubai World Trade Centre, the Luncheon featured Chris Scott, Director – Development & Investment Management and Key Master Planner for the UAE’s bid to host the Expo 2020, as the main speaker.

October 2013

SHOPTALK

New effort to boost female entrepreneurship

L to R: Ann Cairns, President, International Markets MasterCard, and Raja Easa Al Gurg, President, DBWC, announce the partnership

asterCard and the Dubai Business Women Council, part of the Dubai Chamber of Commerce and Industry, announced a collaboration to drive entrepreneurship among women in the emirate. The

Dubai Islamic economy potential Setting the pace for the upcoming Global Islamic Economy Summit, Dubai Chamber of Commerce and Industry organised the first roundtable discussion for media on ‘What is the Islamic economy?’ in partnership with Thomson Reuters. The briefing was presided over by His Excellency Hamad Buamim, DirectorGeneral, Dubai Chamber; Russell Haworth, Managing Director – MENA, Thomson Reuters; Sayd Farook, Global Head of Islamic Finance, Thomson Reuters; Abdulhamid Evans, Head of Creative, Global Islamic Economy Summit (GIES); and media representatives.

partnership builds on the efforts of both organisations to mobilise and encourage women to participate in the economic sector by realising their entrepreneurial ventures. The agreement was finalised at a recent meeting between Raja Easa Al Gurg, President, Dubai Business Women Council, and Ann Cairns, President, International Markets, MasterCard, at the Dubai Chamber of Commerce and Industry premises. Following the collaboration, MasterCard and DBWC will organise an annual event where aspiring women entrepreneurs will present their business

HE Buamim apprised the media about Dubai’s ambitious vision of becoming global capital of the Islamic economy and finance under the guidance of His Highness Sheikh Mohammed bin Rashid Al Maktoum, the UAE Vice-President and Prime Minister and Ruler of Dubai, and the efforts the emirate was making in that direction. He explained that under the patronage of HH, Global Islamic Summit’s vision is to become the catalyst of a new economic paradigm that positions Dubai as the capital of the Islamic economy and connects the world’s leading thinkers, policy makers and stakeholders to inspire projects and drive future investments in the USD four trillion Islamic economy. He also added that Dubai is rightly poised to become the capital of the Islamic economy as it enjoys a strong private and public sector partnership and offers

proposals to a panel of judges and the winners will be mentored and guided by MasterCard to implement their business models. The screening process for this event will commence during Q1 2014. “Since 2002, the Council has been providing business women in the country with opportunities to develop and enhance their business enterprises. Women in the UAE are playing an increasingly important role in driving the economy, and we have taken it upon ourselves to support these entrepreneurs in their undertakings. By joining hands with MasterCard, we can now offer the much needed support to our members and ensure that even more women get the opportunity to participate in and contribute to the UAE’s booming economy,” said Raja Easa Al Gurg.

His Excellency Hamad Buamim, DirectorGeneral, Dubai Chamber, during the session

huge investment potential in various economic sectors. He continued that the promotion and development of the Islamic economy is the responsibility of Dubai, and the Summit will witness the launch of key initiatives and committees that will oversee the setting up of a centre for halal certification, application of R&D and new ways to address the needs of the consumers which will rightly serve the purpose of establishing Dubai as the

global centre of the Islamic economy. He further expressed that the Islamic economy has huge untapped potential as it encompasses food, lifestyle, consumer products, education, standardisation, SME development, Islamic business frameworks and more. Dubai has significant advantages in these areas, or the potential to significantly expand and to form joint partnerships with global centres around the world.

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SHOPTALK

The certificate was presented to Al Janahi by Karen Williams, Deputy Head of UK Trade & Investment (UKTI) in Dubai, in the presence of Theuns Kotzé, Regional Managing Director; Ahmad Al Khatib, General Manager Assurance and Testing; and Mathew John, Business Development Manager, BSI Middle

UAE

ISO certification for Dubai SME

ubai SME received the ISO 9001:2008 certification for its quality management programme from the British Standards Institution (BSI), one of the leading assessment and certification authorities in the world. The certificate recognises the efforts undertaken by Dubai SME to improve services provided to SMEs and entrepreneurs. Several initiatives undertaken by Dubai SME such as the Intelaq Programme – for home-based businesses – and the Government Procurement Programme – enabling SMEs to participate in government purchases – were evaluated against the global best practices as part of the certification.

Top SME to work for Great Place to Work® Institute Gulf (GPTW), part of a global research, training and consultancy firm that recognises the best workplaces in over 45 countries worldwide, in association with Dubai SME, revealed today its inaugural list of ‘Top SMEs to Work for in the UAE’ for 2013. The official list was revealed during an awards ceremony at the Dubai SME headquarters in Dubai. Combining more than 25 years of proprietary research, the annual benchmarking study assesses the level of credibility, respect, fairness, pride and camaraderie within an organisation. Only companies that score

Abdul Baset Al Janahi, Chief Executive Officer of Dubai SME, receives the certificate

Abdul Baset Al Janahi, Chief Executive Officer of Dubai SME, commented: “This certification validates our efforts and focus on providing high quality services in SME development and assisting entrepreneurs to evolve into business leaders. Our quality team has demonstrated the required skills and capacity to support entrepreneurship development without external help and they are now taking their initiatives to the next level.”

75 points or more in the study are recognised by the Institute. To select the “Top SMEs to Work for in the UAE”, GPTW conducted an evaluation of each participating company. Two-thirds of the company’s score is based on the results of the Institute’s Trust Index© survey, which is sent to the employees from each company. The confidential survey asks questions related to their attitudes about the management’s credibility, employee engagement and job satisfaction. The other third of the scoring is based on the company’s responses to the Institute’s Culture Audit, which includes detailed questions about pay and benefit programmes, and a series of open-ended questions about hiring,

East and Africa. “Getting the ISO certification in 2013 also shows that we have accomplished a major part of our strategy for 2013. We aimed at internationally accepted standards in our quality initiatives and our programmes in training and mentoring entrepreneurial talent and SMEs. The certification proves we were able to achieve this target,” said Shamma Saeed Bin Sulaiman, Quality Manager at Dubai SME.

communication, and development. Ranked the nation’s top SME to work for in this year’s study was bizgroup, a business strategy, training and corporate team building company with offices in Dubai and Abu Dhabi. According to the Institute, the company’s sound and people-centred workplace practices, especially in hiring, inspiring, welcoming, and thanking staff, helped bizgroup achieve the highest score on its proprietary trust measurement tool. Another five SMEs were also acknowledged by the Institute for their best people practices and strong HR programmes. The companies honoured with a “Distinguished Mention” were: DABO & CO, Emitac Healthcare Solutions, Eton

Institute, Leminar and Paramount. Widely acknowledged as the preeminent corporate award for workplace practices, the “Top Companies to Work For” research programme and its various sublists are recognised by leaders in a variety of industries, including government and education institutions, as a chief means to improve their workplace environment, public image and financial performance. Best Companies in the U.S. have consistently outperformed the S&P 500 by a wide margin since the first list was announced in 1998. They also experience at least 50 per cent less voluntary staff turnover compared to the industry average and enjoy higher levels of customer satisfaction.

Top recognition platform for UAE businesses

he 7th cycle of the Mohammed Bin Rashid Al Maktoum Business Award ceremony will be held on November 13 at the Madinat Jumeirah. During the event, a host of winning organisations across various award categories will be honoured for their outstanding performance in achieving business excellence. His Excellency Hamad Buamim, Director-General, Dubai Chamber, said that the award, held under the patronage of His Highness Sheikh Mohammed bin Rashid Al Maktoum, the UAE VicePresident and Prime Minister and Ruler of Dubai, has attracted a growing number of organisations since its inception. He said: “The award’s appeal cuts across various economic sectors as it is open to all types of companies in the country which are looking to adopt world class practices and improve their overall organisational performance.” This year the award categories are: construction, finance, manufacturing, re-export, services, trade, and transport and logistics. The award’s refined format encourages companies to adopt global best practices and improve their performance while allowing them to obtain an organisational learning experience through self-analysis

which they can compare with the best local and global business practices. The award is supported by the Mohammed Bin Rashid Al Maktoum Business Performance Programme, which is an intensive and rigorous qualification initiative that all applicant companies must complete. Since its inception, the programme has assisted many companies meet international standards of business excellence. The programme provides an institutional and educational opportunity for participants to evaluate and analyse their own business performance, benchmark their progress against best world-class organisations and benefit from other participants’ experiences in seeking excellence, as well as gain insight into business excellence fundamentals from distinguished experts in the field. “Overall, the award experience provides motivation and encouragement for companies to improve their institutional performance,” said HE Buamim. “It also helps participating organisations identify their strengths as well as highlighting opportunities for their improvement and enable them to become better to compete in today’s ever changing business landscape.”

New retail outlet for Dubai SME100 firm

L to R: Mohamed Ahmad Bin Ghalaita, Chairman of Mohamed Bin Ghalaita Group, and Abdul Baset Al Janahi, Chief Executive Officer of Dubai SME, at the opening

untron Electronics, a Dubai SME100 company and winner of the Mohammed Bin Rashid Award for Young Business Leaders in 2007, announced the opening of its first retail outlet in Dubai. The opening ceremony was attended by dignitaries including Abdul Baset Al Janahi, Chief Executive Officer of Dubai SME. Dubai-based Suntron is a pan-GCC retailer of home appliances and consumer electronics. It offers flexible, interest-free payment options through which customers can complete their payments in monthly instalments within 18 months of their purchase. This is a first-of-its kind facility that Suntron offers in line with the Islamic economy initiative of His Highness Sheikh Mohammed Bin Rashid Al Maktoum, UAE Vice President and Prime Minister and Ruler of Dubai. The electronics retailer is part of the Mohammed Bin Ghalaita Group and was ranked 31 in Dubai SME100, a premier ranking of Dubai’s topperforming SMEs launched by Dubai SME in 2012. “The growth and expansion of Suntron Electronics underlines the focus of Dubai SME and the success of Dubai SME100 in recognising and promoting SME excellence. Dubai has a large reserve of entrepreneurial competitiveness capable of meeting expectations and competing globally as Suntron and other Dubai SME100 companies continue to prove,” commented Al Janahi. “Dubai SME has given us tremendous support in growing into a diverse business with interests across the electronics, automobile, furniture, and foods sectors. Suntron Electronics has an expanding portfolio of over 35 products across its five branches in the UAE and we look forward to becoming a preferred retailer in the vibrant Dubai market,” said Mohamed Ahmad Bin Ghalaita, Chairman of Mohamed Bin Ghalaita Group.

October 2013

SME ABOUT TOWN

Elevate your business model

ubai Business Women Council (DBWC) collaborated with ShiftIN Partners, a management consulting firm, and EngageME, a creative employee communication and engagement consultancy, to hold a seminar on Business Model Generation (BMG) at Dubai Chamber of Commerce and Industry. BMG is one of the most innovative methodologies currently available today, and it facilitates ‘out-of-thebox’ discussions on strategy and business models.

During the session

It employs a graphical strategic management and entrepreneurial tool to map out the nine building blocks of a business model, namely, Customer Segments, Value Propositions, Channels, Customer Relationships, Revenue Streams, Key Resources, Key Activities, Key Partnerships and Cost

INDEX KSA to offer innovative design solutions Businesses looking to setup or refurbish their offices have a great opportunity to explore multiple options at the upcoming International Design and Furniture Exhibition or INDEX, Saudi Arabia, to be held from November 12 to 14, 2013. The Exhibition will take place at the Jeddah Chamber of Commerce and Industry and will see over 150 brands exhibiting from across 19 countries, including France, Italy, Spain, UK, Egypt, Czech Republic, Turkey and the USA. INDEX KSA will cater to the needs of the residential, commercial and hospitality interior sectors covering different industry segments including Furniture, Kitchen and Bathroom Furnishings, Lighting, Textiles, Surfaces and Finishes, and Outdoor Living. That’s not all. The event will also showcase interior design solutions for schools, hospitals, offices and the retail sector.

Structure. The result is a ‘Business Model Canvas’ which is used to describe, design, challenge, invent and pivot an organisation’s business model in just one page. During the DBWC-hosted seminar, moderators discussed BMG concepts, methodology and examples. Participants then engaged in a Business

Model exercise, followed by a presentation of works and interactive discussions. “BMG represents the kind of innovation in business thinking that today’s women entrepreneurs need to better understand and optimise the running of their organisation and stay competitive in their field. ShiftIN Partners was an ideal collaborator for this learning initiative given its extensive management consultancy expertise, while we also benefited from the innovative graphic facilitation and visual recording technique that EngageME offered during the event. The BMG seminar was an empowering event for business women who want to get the most out of their business models,” said Raja Al Gurg, President, Dubai Business Women Council.

In order to assist visitors navigate the show and easily explore areas that interest them the most, a Self-Guided Trend Tour option will be available. Additionally, with the support of the Feature Sponsor Archimedia, specialist in creating custom home entertainment and automation solutions in the Middle East, INDEX KSA will provide its visitors with valuable educational opportunities through free-to-attend seminars and workshops over the three days. Line-up of international brands

Several international brands will present their latest products, trends and innovations to the Saudi Arabian community of interior designers, architects and those passionate about design. Some of the exhibitors include – Roca, Legrand, Atelier Alain Ellouz, SOLEA, Gemini Padana, FEDE, Vavex, and Edition Bougainville. In addition, several companies from across the Middle East will also showcase their products such as Oman’s Poly Products, one of the largest

manufacturers of superior quality bedding in the region. The show will also feature a wide range of major Saudi Arabian companies including Nova Color, Soft Dreams, Refaie Group, El-Ajou Group, Fadak Riyadh Est and Anwar Al-Sayouf Est. INDEX KSA is organised by MICE Arabia, co-organised by dmg events and supported by the Jeddah Chamber of Commerce & Industry (JCCI). For further information, please visit www.indexksa.com/.

Integrate information security into your business

u’s first Cyber Security Conference, held recently in Dubai, saw industry experts facilitating dialogue and discussing pertinent issues and trends within the online industry. The event was opened by Osman Sultan, CEO, du, followed by a keynote address from Marc Maiffret, Chief Technology Officer, BeyondTrust. Speaking of the significance of the event, Marwan Abdulla Bin Dalmook, Senior Vice President – Technology Security and Risk Management, du, said: “It is in every organisation’s best interests to have information security integrated into the very fabric of its business mission, in order to provide full protection of its employees’ data. This is especially important in an increasingly mobile world, in which 1.2 billion workers worldwide are classed as mobile. Mobile devices are

du’s first Cyber Security Conference

the second highest security concern after application vulnerabilities, and today’s event has been successful in the discussion of ways to counter these threats.” The day-long event hosted several speakers throughout the day, including Ahmad Al Mulla, Vice President, Dubai Aluminium (DUBAL); Saeed Belhoul, Director e-Government Operations, Telecommunications Regulatory Authority (TRA); Samir Omar, MEA Business Development Manager,

Implementing HR best practices The GOV HR Summit 2013, held in Abu Dhabi, addressed key HR-related topics and highlighted the significant role of HR within a business. In fact, the principle theme of the event was ‘Redefining the HR function in the region’. During the event, Hessa Al Ghurair, Head of Human Resources at Tanfeeth – GCC’s first Business Services Company – delivered a keynote speech. He said: “For GCC businesses looking to achieve customer service excellence as a prerequisite for global competitiveness, it is critical that their HR function supports the achievement of this goal, given a primary determinant of such service quality is in fact, the quality of its human capital.” He further explained that if businesses in the GCC region want to create an alignment between their

business and HR goals, the HR function needs to be expanded so that it delivers value at a strategic level as well as an administrative level. “Here in the GCC, HR is still too frequently perceived as an administrative, back-office function and this needs to change. For HR executives, it means comparing what their function is doing now, with what needs to be done to ensure it supports the delivery of the organisation’s strategic goals. For example, HR can play a significant strategic role in the development of customer service quality through talent acquisition, specific training and continuous professional development. High quality customer service is a key competitive advantage in the UAE and the need to manage this human capital intensive

Verizon; Bashar Bashaireh, Regional Director, Fortinet Middle East; and Ian Evans, Managing Director – EMEA, AirWatch. A panel discussion on Cloud Security Challenges for Governments was also held, with representatives from du, Oman Data Park, and ITS Square. The du Cyber Security Conference will be an annual event, promoting and sharing information about the latest developments in cyber security, including information security risks, threats, vulnerabilities and safeguards.

function is paramount in today’s business environment,” continued Al Ghurair. “Having customer-centric Key Performance Indicators (KPIs) for every employee, irrespective of role or team, and then linking their performance to financial incentives can also ensure every employee understands the precise relationship between the level of customer value they deliver and their financial rewards. “In introducing new HR initiatives and practices, HR professionals need to strike the right balance between using centralised implementation and governance to promote positive and wide-scale cultural change across the organisation, with the need for flexibility so they can be tailored to the needs of individual business units,” concluded Al Ghurair.

October 2013

SME ABOUT TOWN

Fostering social enterprises

UBAI+Acumen launched the Acumen for Social Enterprise Business Plan Competition 2013 (ASE 2013) – an “innovation accelerator” focused on promoting social entrepreneurship. The concept of a ‘social enterprise’ is relatively new to the region. A social enterprise is an entity that operates with a primarily social, rather than financial, objective, is market-driven and financially self-sustaining through earned revenues and profits. Unlike Corporate Social Responsibility (CSR), a social enterprise seeks to address a socio-economic or environmental challenge in society by operating as a profitable business rather than relying on grants or donations. Conceptualised by DUBAI+Acumen Chapter Leaders — Jean-Pierre Aramouni, Natasha D’Souza and

Sameeha Khan — ASE 2013 represents a unique UAE initiative as the first and only community-centric business plan competition organised entirely by volunteers. Inspired by the calibre and achievements of last year’s candidates and winners, the ASE 2013 leadership team have raised the bar for participants at this year’s competition. The Dubai+Acumen leadership team explains: “Social enterprise represents a vibrant and vital part of the entrepreneurship ecosystem, addressing social problems that are traditionally tackled by non-profit or non-governmental organisations. DUBAI+Acumen remains resolutely committed to supporting aspiring social entrepreneurs in the UAE. Through the Acumen for Social Enterprise Business Plan Competition, we intend to encourage a budding entrepreneur’s interest in social enterprise and support social entrepreneurs at various stages in the idea-generation and enterprisecreation process, enhancing the

viability of their proposed businesses and their prospects for success.” This year, Acumen for Social Enterprise 2013 offers entrants the opportunity to compete for prizes established by ‘Prize Partners’ Venture 7 Capital (V7) and Dow, with a combined value of AED 150,000. The V7 Grand Prize, valued at AED 100,000, comprises of AED 50,000 in seed capital and a host of in-kind services including free office space and business set-up assistance. In addition, Dow has instituted The Dow Prize for Sustainability, valued at AED 50,000 in seed money, to be awarded to a social enterprise idea that complements Dow’s sustainability philosophy. Primary activities of the competition such as the Workshop Series and Grand Finale will be hosted in conjunction with Venue Partner; Dubai International Financial Centre (DIFC). The competition will close for entries on October 20, 2013, and winners will be announced on November 23, 2013. For more information, please visit: dubai.plusacumen.org.

Social media instrumental to the UAE’s economic vision The first edition of the Social Good Summit 2013, held by the United Nations Development Programme (UNDP), was held on September 24 at the Khalifa University in Abu Dhabi. The event had a theme of 2030NOW and brought together a dynamic community of government and business leaders who shared valuable insights on two crucial topics: • The transformative power of social media • How the use of digital technology for social good can build a better future The Summit also challenged participants to share

solutions and ideas on building a pathway to a better world by 2030. 2030NOW builds on the UN-led process to craft a post-2015 development agenda that will follow and accelerate progress on the Millennium Development Goals. Actively participating in the event was the Telecommunications Regulatory Authority (TRA) and Noor Shamma, Acting Director – Corporate Communications, TRA, was one of the key speakers at the event. “The prevalence of social media is common knowledge, yet a closer

look at the statistics reveals the sheer size of this modern phenomenon,” said Shamma. “In the Arab World, social media is growing exponentially with data from the first quarter of the year indicating that the UAE continues to have the highest Facebook penetration rate amongst

all Arab countries with 41 per cent, ahead of Jordan, Lebanon, Qatar and Tunisia. In terms of Twitter usage, the UAE has 401,000 active Twitter users, the third highest number in the region and LinkedIn usage also remains highest in the UAE with a rate of 16.5 per cent.”

October 2013

SME ABOUT TOWN

World-renowned speaker heads to Dubai

nternationallyacclaimed speaker, author and the former training head of Disney University, Doug Lipp will be in Dubai for a one-day seminar next month. An expert on customer service, leadership, change management and global competitiveness, Doug has inspired audiences all across the world in his career as a keynote speaker, business consultant and author. His corporate clients include Mercedes-Benz, Prudential, Cisco, Saks Fifth Avenue and McDonald’s to name a few. Formerly, the Head of Training at Disney’s Corporate Headquarters, Doug provided the famous Disney University “Traditions” programme and developed leadership courses for Disney executives.

Leader in Logistics Summit

Mustapha Kawam, Managing DirectorGulf States of GES

Doug is the author of numerous articles and books on leadership, customer service and international business, including Disney U: How Disney University Develops the World’s Most Engaged, Loyal, and Customer-Centric Employees; The Changing Face of Today’s Customer: How to Attract and Retain a Diverse Customer and Employee Base; and Even Monkeys Fall from Trees: The Art and Science of Outstanding Customer Service which focuses on a balanced approach to service, leadership and teamwork. During the seminars, Doug will share his experiences and offer valuable insights on fostering a culture of innovation, transformation, growth and the timeless secrets of service and leadership. Through dynamic case studies and best practice

examples, Doug will show delegates how and why Disney continues to capture the hearts and minds of hundreds of thousands of employees around the world implementing the core values established by Walt Disney himself. Presented by Right Selection, Doug will be in Dubai on November 6, 2013 at the Grosvenor House from 9 am to 5 pm. The theme of his seminar is ‘Leadership and Service Magic’. Investment per delegate is AED 2000. This investment includes the workbook and material, a signed certificate of attendance, refreshment breaks as well as lunch, not to mention the fabulous networking opportunity throughout the day. For groups of five or more, the investment per delegate is AED 1850 and for groups of 10 or more, the investment is just AED 1700. To register, please e-mail success@rightselection.com or call 04-3527803.

At the recent Leader in Logistics Summit, held at Ritz Carlton Hotel DIFC, Globe Express Services – a global logistics provider – shared key industry insights and best practices. The event was the perfect platform to discuss strategies to increase productivity and efficiency, overcome challenges and highlight business opportunities in supply chain management. Furthermore, Mustapha Kawam, Managing Director-Gulf States of GES, was one of the keynote speakers at the forum. Addressing an audience of senior professionals from the regional logistics industry, Kawam said: “Today, with the regional logistics sector witnessing robust growth, there needs to be an increasing emphasis on linking the regional hubs and ensuring that these hubs are optimally leveraged. Moreover,

Doug Lipp

factors such as the steady growth of regional economies, the positive impact of projects such as the GCC rail expansion on the logistics sector and the growing adoption of technology are creating new opportunities for the region’s logistics sector. In line with this, we have been making major investments in state-of-theart infrastructure and have some of the most competent professionals to maintain the highest level of excellence in our services. The Leader in Logistics Summit serves as an excellent venue for senior logistics professionals to share their expertise and experiences, learn about industry best practices to gain a competitive edge, offer insights on ways to overcome challenges and capitalise on existing opportunities to maximise profitability of the regional logistics sector.”

Social media – key tool for business growth

During the session

recent Network Majlis session organised by Dubai Business Women Council (DBWC) highlighted that businesswomen and mothers can achieve business growth with the help of social media. The event themed ‘Social Media for Businesswomen and Mothers’ was conducted by social media specialist Ayman Itani, Founder and CEO, Think Media Labs. Itani discussed strategies for the optimisation of social media to achieve business growth, improve sales, and win new customers through several insightful case studies. He offered a detailed presentation on how mothers can use the latest digital platform to stay in touch with family and friends as well as nurture the community. He also gave sound advice to participants on how to build their digital profile, manage privacy, develop social media etiquette and devise social media strategies for various digital platforms such as Facebook, Twitter, Pinterest, Instagram and Tumblr. Itani said, “Social media is the simplest and probably

one of the most economical modes of marketing. Women entrepreneurs should take full advantage of user-friendly social media platforms to empower their businesses. Mothers too can stay in touch with like-minded people, family and friends to share their experiences and learn about others through the social web. The efforts of DBWC in enlightening, training and inspiring women entrepreneurs are commendable and I would like to extend my support to them in all their future initiatives.” Raja Al Gurg, President, Dubai Business Women Council, said, “It was an honour to have Ayman Itani as the guest speaker for our latest Network Majlis. His valuable insights on social media marketing strategies, web etiquette and privacy issues will certainly help our members as they seek to strategically grow their business. Moreover, the online success stories of Arab women entrepreneurs will definitely be a motivation for our members to optimally leverage the power of social media.”

Event: Research Squared Strathclyde Abu Dhabi Centre recently hosted a research themed evening, Research Squared, featuring guest speaker Dr. Nada Kakabadse – Professor of Policy, Governance and Ethics at Henley Business School. Dr. Kakabadse’s research interests range from leadership and boardroom effectiveness to governance, ethics, policy, diversity and more. She is currently conducting research in the UAE with Dr. Katerina Nicolopoulou, Strathclyde Business School Senior Lecturer and resident academic at Strathclyde Abu Dhabi. The event kicked off with a mini masterclass which addressed a key topic – ‘The application of philosophy to research’. The class, aimed at those interested in pursuing high-level academic research, explored several areas surrounding research and its methodologies. After presenting a wide variety of tools and constructs for determining personal outlooks and narrowing down inquiries into a given research topic, Dr. Kakabadse also discussed the importance of thoroughly considering such concepts prior to submitting a PhD proposal or committing to an academic advisor. Gender-based diversity

Furthermore, the evening continued with Dr. Kakabadse discussing insights of her own research on gender-based board diversity in the UK, US and Ghana. After sharing extensive background research on the breakdown of international board diversity (or often, lack thereof) along the lines of gender, age, ethnicity, and other factors, Dr. Kakabadse revealed surprising findings from her recent study. Examining aggregate data accumulated through interviews with top-50 listed companies, she found that boards with three or more women members were actually correlated with lower share prices than their counterparts with predominantly male board members. However, during the course of the event it was further explained that this finding wasn’t necessarily the reflection of gender capabilities, but rather – largely – a likely repercussion of criteria for appropriate board member selection often being ignored under pressures of affirmative action or positive discrimination. The study’s findings thus encourage organisations to pursue ideals of board diversity without sacrificing adherence to best practices when it comes to seeking and evaluating potential board members.

October 2013

SME ABOUT TOWN

The entrepreneurial spirit:

The Abu Dhabi Entrepreneurship Forum, 2013 At an occasion attended by close to 1,000 delegates and supported by headline sponsors BP, SENAAT and ADCB, key figures from government and the business sector gave a number of provocative, engaging presentations in an event that proved to be one of the most impactful debates on the SME sector so far seen in the region. Taking place on October 8-9, it was a powerful tribute to the burgeoning role of the Khalifa Fund for Enterprise Development.

here is the next wave of mix - and it’s the visionary input of the entrepreneurs coming entrepreneur which ensures that a nation from? What are the stays at the forefront of intellectual and social conditions that commercial activity. encourage entrepreneurship? What can the government do to encourage the Breaking down the barriers spirit of entrepreneurship and lessen “The entrepreneur”, said Lord Peter the challenges of running an SME? Mandelson in the opening day’s third These were the conference keynotes special address, “is someone who sees a as highlighted in the opening remarks brick wall, wonders what’s on the other side of HE Sheikh Nahyan bin Mubarak Al and starts to build a road to reach it.” His Nahyan, UAE Minister of Culture, Youth paper focused on three themes that were and Community Development - and each later tackled and developed via the they were to resonate as the dominant event’s exceptional workshops, presentations threads of discussion and debate and open seminars. These were throughout the rest of this keynote • The role of government. Should the Khalifa Fund event. government simply stay out of the The importance of encouraging a fresh way of the SME owner or try to be a wave of entrepreneurs and stimulating facilitator, giving help and support commitment to the private sector was where it can? also highlighted by HE Eng. Sultan • The changing face of global commerce, Saeed Nasser Al Mansouri, Minister of whereby the modern era is all about Economy, UAE, who emphasized that niche players - essentially SMEs the a key function of the entrepreneur is specializing in key components, rather to introduce diversity into the economic than being the era of the big company

producing a complete finished item. Yet to what extent is the GCC, with its powerful legacy of family businesses, pursuing this role for its SMEs? • Self-finance or not? Can an SME truly be expected to ‘stand on its own two feet’ at an early stage or should there be government intervention/public sector funding? The event saw the classic dilemma of SME financing tackled from a number of angles. Firstly, in a crystal-clear, summary paper by Deepak Khanna, Chief Investment Officer, International Finance Corporation, and then in a major workshop session reviewing the challenges, issues and opportunities around financing, featuring figures such as Howard Gaunt, Executive Vice President, Head of Corporate and

effectively via the kind of ‘cookiecutter’ model we see in Microtakaful, for example. The economic impact of the entrepreneur Discussions on entrepreneurship nearly always revolve around the economic factors that help or hinder the entrepreneur. At the Forum, we saw the equation turned on its head: how can the entrepreneur change and influence the economy? In a session titled ‘Transforming economies through entrepreneurship’, a distinguished panel

There is a very good case for more microfinance availability for SMEs, which could be rolled out cost-effectively via the kind of ‘cookiecutter’ model we see in Microtakaful, for example.

Business Banking Group, ADCB; Fatima Abu Okab, Deputy General Manager, Microfund for Women, Jordan; and Mahdi Kilani, Head of Business Banking, ADIB. This was then followed by an open panel session on the role of Microfinance for the SME sector, with names including Heather Henyon, Managing Partner, Balthazar Capital, UAE; Bassem Khanfar, General Manager, National Microfinance Bank, Jordan; and Dr. Atef El Shabrawy, CEO, Family Bank, Bahrain. These sessions reached two ground-breaking conclusions: • There is insufficient focus on financing for growth (so-called ‘Stage 2 finance,) once an SME has navigated the early stages and is ready to expand. • There is a very good case for more microfinance availability for SMEs, which could be rolled out cost-

drew on regional and international examples of the invaluable economic impact of the entrepreneur. Panellists included Mohammed Al Fahim, Honorary Chairman, Al Fahim Group, UAE; Yusuff Ali, Managing Director, Lulu Group International, UAE; and Riccardo Maria Monti, President, Italian Trade Agency. They considered factors such as – • The role of the entrepreneur in job creation • The entrepreneur as a driver of the high-tech sector • The importance of small businesses to national economies and their ability to leverage a diversified economy The reality is that far from being a renegade or maverick entity in society, the entrepreneur is an invaluable backbone of economic growth and a powerful mover in bringing about a diversified and thoroughly contemporary economic mix.

As to where the next generation of entrepreneurs is actually coming from, one of the most significant sessions - featuring, for example, Ibrahim al Mansoori, Chief Operation Officer, Khalifa Fund for Enterprise Development, and Rabea Ataya, Founder and CEO, Bayt.com - assessed which sectors were proving the most fertile ‘incubators’ and inspiration for fresh talent, and what were the key indicators to watch for. For example, a key factor is the availability of investor finance, which tends to become something of a self-fulfilling prophecy investors are commonly found in areas where they themselves built their success, and one of the most fertile territories is the IT and technology sectors. Yet, how is it possible to generate similar investor enthusiasm and presence in areas such as manufacturing, aviation and logistics? Case studies Another extremely productive aspect of the Forum was a series of ‘living case studies’ in the shape of an Entrepreneurs Series - whereby a number of successful entrepreneurs gave short papers on how they built their business and navigated the problems and pitfalls. Figures here included Chad Hurley, Co-founder of YouTube and AVOS Systems, USA; Aman Merchant, Founder, Future Leadership Academy & Executive Chairman, HUB Dubai; and Sala Zalatimo, Founder & CEO, SooSheff, USA. The Abu Dhabi Entrepreneurship Forum 2013 succeeded in being one of the most comprehensive and muchdiscussed SME events of its kind - not simply in the region, but internationally. Perhaps more significantly, the exceptionally rich mix of speakers and panelists was able to reach highly innovative conclusions about the role of the entrepreneur and his/her relationship with the economy and society at large. Factors likely to be immensely valuable in building a broad and productive entrepreneurial sector in the years to come. For an online version, please visit:

www.smeadvisor.com/2013/10/theentrepreneurial-spirit/

October 2013

Banking for business

A roadmap for change SMEs face increasingly critical choices, with a background of heightened market competition, an ever-more-bewildering raft of investment needs and the growing imperative to build an international presence. These were some of the crucial issues tackled in the 4th Annual Middle East SME Forum (October 1-2), an event which with ADCB as headline sponsor - looked to provide SMEs with practical answers and a new level of strategic and commercial awareness.

n his keynote address to the 4th Annual Middle East SME Forum, Howard Gaunt, Executive Vice President, Head of Corporate and Business Banking Group, ADCB, commented that: “The UAE - and the Middle East region by extension - are witnessing unprecedented opportunities for existing and rising entrepreneurs. The growing economies, coupled w ith the ev er-changing demographics across the region, are

fuelling the opportunities for business diversification, with SMEs having had a very strong early start here.” Yet these opportunities - as he went on to explain - can be something of a double-edged sword, since they demand ever-higher levels of awareness and sophistication, and a greater appreciation of what it takes to excel in a competitive market. Indeed, SME owners and directors wishing to supercharge their business would do well to take a deep breath and

consider the following. Figures recently released by Dubai SME show that while the SME sector may be the most important venue for job creation and overall share of GDP, in reality there are major shortfalls in terms of competitiveness, professionalism and the pursuit of financial precision. Consider the following – • 95 per cent of businesses in the UAE are SMEs, and they account for 62 per cent of GDP. Yet there is a ‘darker’ side to this statistic: the remaining five percent of businesses - ie, large-scale companies

- actually represent a massive 38 per cent of GDP. Which of course means that they are vastly more efficient and productive, pro rata, than SMEs. So how can an SME compete and make the most of its advantages - factors such as access to niche markets and the capacity to be nimble and adaptive? • Only three per cent of SMEs actually disclose financials. Which means that there must be immense doubt as to what percentage of the remainder keep audited accounts at all. All of which implies that there would be very little ability to raise funds from credible sources and indeed, no-one can know for sure the size or scale of market opportunities - since there is no knowledge of the financials of the players involved. Yet ironically, the opportunities for SMEs to raise their game, benefit from governmentbacked initiatives and use burgeoning IT advances to reach previously unheard-of markets, has never been better. The question is, how to cut through the uncertainly and adopt practical approaches that are affordable, effective and full of competitive edge? Led by ADCB’s financial and banking experience in the SME sector, the 4th Annual Middle East SME Forum presented a rich two-day agenda, assessing factors such as: • Regional economic trends and their implications for SMEs • The most effective strategies for raising bank finance • SMEs and their role in employment creation • Building (and benefitting from) partnerships between government, industry and schools • Business innovation and its role in sustaining competitiveness • The role of the entrepreneur in the changing economic landscape • Learning from case studies of key organisational and entrepreneurial successes With Day One assessing the core background issues and the changing matrix of the economy, the role of keynote government initiatives, and the interaction of public and private sectors, Day Two put the emphasis firmly on the future, with guidance on building and sustaining capital and then blueprinting the various progressive options

that SMEs can follow, as well as how to avoid the more treacherous ‘banana skins’ that await the unwary. Getting to the heart of the matter Across no less than 17 speaker presentations and five panel discussions, the event crystallized three key conclusions about the changing shape of the SME sector and how best to ride the waves of change to maximum advantage. These were: • In the middle and long term, the educational sector can play a powerful role in shaping SME performance. Schools must do more to build eager entrepreneurs early on - creating better understanding of what an entrepreneur actually does and teaching the key features of business life in the private sector.

The opportunities for SMEs to raise their game, benefit from governmentbacked initiatives and use burgeoning IT advances to reach previously unheard-of markets, has never been better. • SMEs should understand - indeed, master - the financial templates appropriate to each stage of their development. This means knowing, from the earliest stages, what an investment partner needs to see and hear, and when to approach a bank for second-stage financing for growth. Again, SMEs should understand exactly what the bank will need to see, and prepare all submissions accordingly. • Harness innovation in order to win competitive edge, and be aware of the technologies and social media that will help the business market its services, gauge customer reactions and reach a potentially global audience. For example, one of the most powerful sessions of the conference explored the

current portfolio of Government and private sector initiatives for SMEs. With the session Moderated by Howard Gaunt, the panel featured a number of highly influential figures, including Dr. Adeeb Mahmoud Al Afeefi, Director of Foreign Trade and Export Support, Abu Dhabi Department of Economic Development; Najla Al Midfa, Senior Manager - Entrepreneurship Development, Khalifa Fund for Enterprise Development; Colin Fraser, Executive Vice President, Head of Wholesale Banking Group, ADCB; and Mohammed Rithaudden Makip, Director, Business Advisory & Support, SME Corporation Malaysia (who would later give one of the event’s most highly-regarded papers, ‘SME development from a Malaysian context). Three of the themes emerging here were – • Whether or not entrepreneurism is ‘nature’ or ‘nurture’, more needs to be done at secondary school level to explain the basics of how business works. Had anybody ever been told, for example, anything about business and finance fundamentals, like bank accounts or ATM machines? • There needs to be an awareness that further resources need to come from the public sector, especially in terms of coaching, mentoring and resource planning - vital factors in ensuring sustainability. • Making a cultural change whereby experimentation and failure is not seen as a disgrace, but rather as a rich and valuable experience which paves the way for future success. The importance of accelerating interaction between public and private sectors was developed further by a warmly-received panel discussion later in the day - ‘Building partnerships between Business Industries, the Government Sector and Schools’. Moderated by Adly Al Zou’bi, Business Banking Division, ADCB, it featured discussions on the role of the Labour Ministries and Educational Bodies in building qualifications and benchmarks suitable for training and assessing the entrepreneurs of the future, not to mention the time-lag that the private sector may have to experience before reaping the benefits of new educational initiatives. The influence of social, governmental and economic platforms were then revisited in

October 2013

Banking for business

the last session of the conference, ‘Where to for Entrepreneurs in today’s Economy?’, an Open Panel Session which highlighted factors such as whether or not the regional SME model was sufficiently developed to adapt to further changes, and if existing public sector initiatives were enough to help enterprise development and achieve real sustainability. The consensus view - held by Tamer Bazzari,, CEO, Genero Capital, Ajay Singh Chauhan, CEO, Spectrum Group, and Ghazi Chebbi, CEO, SACEM Industries, was that most SMEs still have a long way to go in terms of the sophistication necessary if they are ever to make the quantum leap to being large businesses, and that there needs to be more recognition of this at a governmental level, where for example changes in labour law could reap significant rewards. Raising finance In his paper “Successfully raising bank finance’, Pankaj Jain, Founder & Managing Director, Radiant Holdings, gave a crystal clear description of how (and how not!) to secure the risk finance you need - detailing more than 20 points to bear in mind and diligently prepare for. How many delegates were aware of these key pointers - and how many budding entrepreneurs had seen their businesses wither and die through lack of this crucial knowledge? Further financial imperatives were then elaborated on in the panel discussion, ‘The Financial Dilemma: Raising and Sustaining

Across no less than 17 speaker presentations and five panel discussions, the event crystallized key conclusions about the changing shape of the SME sector.

Innovation Board: Getting the Bright Ideas Out of the Box’, featuring figures such as Pieter Sleeboom, COO, Cobone. com, Dawood S. Marafie, Vice Chairman and CEO, Shiraa Holdings, and Racha Mourtada from the Mohammed Bin Rashid School of Government. The session looked at factors such as how e-Commerce is now streets ahead in terms of its innovation quotient, and how the same passion for leading-edge invention sorely needs to return to sectors such as manufacturing where of course it first began! Also, what are the factors driving innovation and where - and how - does it differ from pure invention?

Capital’, featuring leading names such as Ahsan Ali, Director: Credit & Operations, Khalifa Fund for Enterprise Development Take control - be your own catalyst and Sumit Khanna, Emerging Corporate The 4th Annual Middle East SME Forum gave Unit Manager (Abu Dhabi), Mashreq, in a good deal of food for thought, coming at a session moderated by Hussein Al Sayed, a time when factors such as social media, Business News Anchor, CNBC Arabia. This changing distribution strategies and stricter assessed how incredibly important it is for legislation are forcing the SME sector to SMEs to have accurate and properly-audited ‘raise the bar’ in more challenging ways than accounting systems, as well as reviewing the ever before. key benefits - and disadvantages - of loans One overwhelming recommendation versus equity finance. emerged from the conference, it was this: ‘Be aware! Investigate and use the full raft of Innovate - or die! strategies and tools at your disposal - and Throughout the conference, innovation you will be your own catalyst for change’. was seen as a key ‘must-have’ - a vital But here’s the caveat: you have to do it factor in ensuring competitive edge and now. avoiding a lapse into a stale, dated product offer that would leave the business at the For an online version, please visit: mercy of would-be predators. This thread www.smeadvisor.com/2013/10/a-roadmapculminated with the panel session, ‘The for-change/

October 2013

MOVERS AND SHAKERS

Pioneering Dubai’s creative communities:

Dr. Amina Al Rustamani Dubai’s free zones have been a powerful catalyst in the remarkable story of the emirate that has set new standards of regional business performance and commercial allure. Offering a plethora of preferential trading conditions to both international and local firms alike, they have been hugely popular, and in many cases enjoyed virtually full occupancy. Yet the free zone story continues apace, with the recent addition of the much-vaunted Dubai Design District, better known as‘d3’. The new creative district reconfirms the appeal of a ‘purpose-built environment’, one that is dedicated to the growth of specific knowledge industries (in d3’s case for the design and fashion industry), and it signals that the popularity of free zones remains on an upward trajectory. SME Advisor spoke to the architect behind the multitude of free zones in Dubai, which have been developed and operated by TECOM Investments – Dr. Amina Al Rustamani, the real estate company’s Group CEO. Serving as an influential mentor and business figure, she has been championing the successful growth of Dubai’s industry focused free zones for over a decade. Here, she explains why these communities, many of them hotbeds of entrepreneurialism, innovation and creativity, remain at the core of the emirate’s appeal as a global centre for business….

Congratulations on your role! How do you find this changes your day-to-day working life and your range of responsibilities? “Thanks. Before I was appointed Group CEO of TECOM 1. Guaranteed 100 per cent ownership Investments in January 2013, I was CEO of TECOM Business 2. Tax free status Parks, which is a huge part of the company, so my transition has 3. Access to state-of-the-art, industry focused infrastructure been quite straightforward and well planned. It really helped that 4. The essence of a business community which enables your I was an internal appointment and already knew the business inside out. business to easily interact and network with its peers “The main difference in my responsibilities is that I lead the 5. To be positioned as a “business partner” versus a “lessee” organisation at a corporate level and am now responsible for As a business entity operating in one of TECOM’s free zone other investments and businesses under the TECOM Investments business parks, you would be able to enjoy all these benefits and umbrella. An example of the change to my role is restructuring many more including security, licensing, government services the organisation to gear up for the growth seen in the market, and postal facilities. Pioneering this development of free zones and to expand the company’s real estate portfolio with a focus in the city is TECOM Investments; the umbrella group managing on growth.” TECOM’s free zones - nine business parks under four distinct industry clusters, namely: ICT, Media, Education and Sciences How do you feel your own exemplary academic background (TECOM also has a Manufacturing cluster but this is not a free has prepared you for such a senior and influential role? zone). However, that’s not all. Continuing to foster business “My education and background was very important when I was growth within different industry sectors and reinforcing its starting out with TECOM and helping Dubai Media City get up position as a top innovator for purpose-built facilities and creative and running. More generally, my engineering qualifications communities, TECOM recently introduced the Dubai Design and technical knowledge are very helpful when running a world District, also known as d3. class real estate developer like TECOM with a focus on attracting We asked the lady leading this real estate ‘revolution’ – Dr. technology companies or companies that use technology in Amina Al Rustamani, Group Chief Executive Officer at TECOM their core business. Investments – to explain the appeal of the free zone concept, “Leaving qualifications to one side, my philosophy for success TECOM’s expansion, the exciting plans for d3, and what’s in revolves around three things: hard work, an unwavering focus, and a never give up attitude in pursuit of excellence and your store for the future…

or anyone looking to start a business or locate a regional office in Dubai, it’s very likely that they’d want their new company to tick the following boxes:

Dr. Amina Al Rustamani, Group CEO, TECOM Investments

October 2013

MOVERS AND SHAKERS

own personal goals. From my experience, if you stick closely to these concepts, more often than not the result is a positive one.” What do you feel is the most attractive feature about the free zone concept and how does it differ substantially from commercial and industrial sites outside the free zones? “Dubai’s free zones have specific benefits around company ownership and tax, which make them attractive to many businesses – and this also differentiates them from mainland entities. However, with the TECOM business parks in mind, they provide a lot more than that. “TECOM’s free zones are industry focused, which means bespoke infrastructure and facilities are available, such as the ‘Sound Stages’ in Dubai Studio City. They are also strategically grouped into clusters to create thriving communities where businesses can be in the company of their peers, network, and promote the development of the industry together.” We hear a good amount about d3, tell us a little more about its unique partner proposition and how does it differ from other established free zones? “I’m glad you’ve heard a lot about it – it’s a great new initiative and I’m very proud to be a part of it! Dubai Design District, d3, was launched by His Highness Sheikh Mohammed bin Rashid Al Maktoum, VicePresident and Prime Minister of the UAE and Ruler of Dubai, in early June. It’s a free zone business park that will be dedicated

to fostering the growth of the emirate’s How favourably has d3 been received? design, fashion and luxury industry. It What was the inspiration behind the offers businesses, entrepreneurs and creation of this new zone? individuals a creative community that will “It has been really well received by the be at the heart of the region’s design scene, industry, which is fantastic, and just the providing a unique gateway between East kind of response we wanted. The fact and West. that key designers and industry figures “There are currently 10 buildings under have rushed to be involved is exciting construction, which are due for completion and adds tremendous momentum to in 2015. Once they are finished, d3 will be a the initiative. Their views are going to purpose-built environment catering to the be a major influence on our decision full value chain of the design, fashion and making as the free zone community luxury industry – and all with the vision of grows. Sheikh Mohammed’s Decree creating a world-class creative community establishing a Design & Fashion Council that engages, nurtures and promotes local, is very important too, as these experts regional and global design talent. from across the industry will help guide “d3’s facilities will include everything from the industry development. cutting-edge design institutes to residential, “Why did we launch a free zone focused hospitality, retail and office space. It is also on this industry? Well, the economics of in an absolute prime location, close to the project really make sense. The global Mohammed Bin Rashid City, and a short apparel, accessories and luxury goods distance from the city’s arterial highways market is currently valued at a staggering and two international airports. The District USD 1.4 trillion. That is a big market by is in sight of the Creek, Dubai’s historic anyone’s standards and Dubai is well trading epicentre, Burj Khalifa, the world’s placed to increase its share, generating tallest building, and Dubai Mall, the world’s jobs and economic growth along the way. largest shopping complex. “Research by Bain suggests that the Middle “Once up and running, d3 will be the East luxury goods market saw growth of 10 to most connected design, fashion and luxury 15 per cent from 2011 to 2012, establishing destination in the world – with Dubai being the region as the tenth largest luxury goods only eight hours flight time from 90 per cent market in the world. Moreover, the UAE of the countries in the world. was ranked as the second most attractive “Guided by the objectives set out in Dubai emerging market for apparel retailers in Fashion 2020 – a strategic plan to harness A.T Kearney’s 2011 Apparel Index. This goes the full growth potential of the fashion some way to explaining why 85 per cent of industry – d3’s creative community will the top international brands already have support Dubai’s goals for a more diversified a presence in Dubai, helping the emirate’s knowledge economy.” retail industry generate approximately AED 150 billion per year. “The retail experience is clearly a major part of the attraction for visiting Dubai – with 40 per cent of luxury goods spending driven by tourists, and the Dubai Mall welcoming a record 65 million visitors in 2012. “We see an opportunity in this knowledge industry and believe TECOM’s experience and success in the past is a major advantage. We also look at this as an opportunity to support and nurture local and regional talent, which over time will help this business park to become a leading destination for Arab talent, creativity and products – as well as being a gateway between East and West for the industry.” How flexible is d3 in terms of offering working space to both startups and large established businesses? “The d3 project is about a lot more than

just fashion. We envisage it becoming a full service community for all design industry related organisations, brands, and supporting enterprises within the value chain; encompassing retail, commercial, residential and leisure. “Once complete, we’ll have a business centre for startups, space for offices of various sizes, residential accommodation and hotels for tourists, as well as land for companies that want a ‘build-tosuit’ project. We’re building a genuine community at d3.” Do you believe there’s one particular reason for the overwhelming success of the free zone concept in Dubai? “Dubai recognised early on that it had far lesser natural resources relative to its neighbours. It needed to forge another way forward. The free zones are the result of a determined effort to diversify and to develop a leading knowledge-based business are clear on their objectives and empowered to implement initiatives and economy underpinned by a larger private changes amongst their teams that lead to sector. They have been very successful and commercial success. now contribute approximately 30 per cent “These changes are especially important of Dubai’s GDP. “Nowhere is the thriving business nature as the Dubai and wider UAE economy picks up momentum. We want to be in the of Dubai more visible than in TECOM’s business parks. These pioneering, industry- best possible place to capture the growth opportunity.” focused communities are now home to over 4,500 companies – big and small, local and With the majority of free zones running multinational – and they employ around close to partner capacity, is there a good 70,000 knowledge workers. “According to a recent World Bank report case for planning a further cluster of on the knowledge economy, the UAE has media and industry free zones? the highest employment growth rate in the “With the introduction of d3, TECOM now has 11 business parks – 10 of which are free MENA region having seen employment zones. During 2012, we had high occupancy reach 3.5 million in 2009 from 1.7 million rates averaging 95 per cent in Dubai Internet in 2000 – the year that TECOM’s first free zone business park, Dubai Internet City, City, Dubai Knowledge Village and Dubai Media City. Our occupancy rates continue was established. to demonstrate superior levels compared to “The industry-focused cluster model has worked in Dubai, helping the UAE Dubai’s average occupancy rate of 69 per cent, to become the eighth most competitive which is testament to their attractiveness to businesses as well as the success of TECOM’s nation in the world, so there is more of this approach to come with the launch of d3.” knowledge cluster model. “We do still have space, however. The recent restructuring of TECOM has International Media Production Zone and Dubai Studio City are part of our been called a ‘quiet revolution’. How does Media Cluster, and they are both in great this restructure better prepare TECOM locations near major transport routes. It’s for the challenges ahead? also important to highlight that we are “The purpose of the restructuring was offering different products and services twofold. Firstly, to ensure we are focused in these zones to cater for the demand on our core real estate business of we have seen from business partners in developing and operating business parks; Dubai Media City. In addition, there are and secondly, so that we enhance internal some really good plots of land for sale for efficiencies by being better organised. We investors, which are multi-zoned so can also want to ensure our leaders within the

be for residential, commercial or retail; and of course we have additional building space for businesses to rent. “In terms of creating more industryfocused free zones, we will continue to further develop our current clusters. We are also very focused on d3 and the reaction to the launch announcement from the business community has been really positive. We see an opportunity in this space for Dubai and believe TECOM’s experience and success in developing industry focused creative free zones over the last 13 years will be a major advantage.” What is your vision for the future development of the free zone concept and how does this align with the larger vision for the future of Dubai? “The free zones model lies at the heart of Dubai’s diversification strategy and will play a key role in the emirate achieving the ambitions set out in Dubai Vision 2020 and Tourism 2020. “Naturally, the free zones will need to be flexible and adapt to changes in the market, technology and regulations. But, fundamentally, they will remain dedicated to fostering the growth of Dubai’s business community, and for TECOM’s zones, they will be focused on critical knowledge industries helping to increase the talent pool.” For an online version, please visit:

www.smeadvisor.com/2013/10/ pioneering-dubais-creative-communities/

October 2013

MOVERS AND SHAKERS

A PLACE IN THE SUN When you think of a model-turned-businesswoman, who comes to your mind first? There’s no shortage of examples around the world, but in the GCC region Jelena Jakovljevic Bin Drai is one of those rare models who have broken through to become highly successful SME entrepreneurs. Tamara Pupic caught up with Jelena to learn the secret of her time management as a busy mother of three, and her inspiration to excel in business…

ere’s the reality: serial entrepreneurship is still largely (and erroneously!) considered a man’s game. Yet as many of our stories here in the pages of SME Advisor have proven, more and more

w o m e n a re c reat i ng a n d leading businesses of their own. Furthermore, they’re often highpowered self-starters who don’t settle down after launching a company, but pursue the thrill and challenge of launching one enterprise after another.

One excellent example is Jelena Jakovljevic Bin Drai - who has dramatically changed directions since the days of her modelling career to establish such wellknown enterprises as Vanilla by Jelena Salon & Spa; Chocolate by Jelena Gents Salon & Spa

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MOVERS AND SHAKERS

exclusive location on the iconic Palm Jumeirah Dubai immediately positioned the salon as a high-end, luxury brand in Dubai. I found venturing into this sector to be a natural step from my modeling career since I already understood the importance of good grooming and taking care of oneself.

Jelena Jakovljevic Bin Drai

Having everything under one roof, a beauty salon as well as spa services, really differentiated us from our competitors. (in 2007); Duchess by Jelena, a luxury clothing brand; and Asya’s Nursery in 2011. Then - last but not least - the Al Das Medical Clinic in 2013. With five companies under her belt, she is part of a small but growing group of driven women in the region - the epitome of the female serial entrepreneur. Jelena, please tell us more about the beginnings of your entrepreneurial path in Dubai - Vanilla by Jelena Salon & Spa and Chocolate by Jelena Gents Salon & Spa. Did you spot a niche market in Dubai’s beauty & spa industry? Since then, what has been your Unique Selling Point? I could see the need for something in the beauty and spa industry with a Western flavour that would fit into the Middle Eastern market. It is well known that competition in this sector is fierce, so I had to quickly determine what would really make us stand out from the crowd. Having everything under one roof, a beauty salon as well as spa services, really differentiated us from our competitors. In addition, choosing the

What challenges did you face as a new entrepreneur in Dubai? How did you overcome them? Spending 15 years in the tough, competitive modeling world was the best preparation for launching my own businesses in this challenging market. Simply, I learnt the importance of having to fight for my ‘place under the Sun’. Since then, I have been growing from facing various hardships. As with any other business startup, there are struggles along the way, but I started out strong, knowing that I was bringing unique concepts to the market. I felt confident in my ability to successfully carve out a niche for my business in Dubai and also bolstered by everything I had learnt by educating myself in business and diplomacy previously. I have always been a businesswoman at heart, and I’ve always had a clear vision of the high standards I want to offer to my customers. In my opinion, if you are providing the highest standards alongside top of the range products and services, it makes it much easier to overcome all challenges. I’m proud to say that I never settle for less than my best in meeting my customers’ needs. One of my later ventures, Asya’s Nursery, for example, offers the highest level of education for children aged six months to four years. It is PLA certified and, thus, one of only two nurseries in Dubai that gained this certification. Later on, you started your own fashion brand – Duchess by Jelena. What inspired you? In your opinion, what business opportunities does Dubai’s fashion industry offer? Establishing Duchess by Jelena was another natural progression from my modeling career. I have always been interested in fashion, and developed a sense to recognise what is beautiful. I was truly inspired by my own need

for dresses that bridge the gap between the couture and ready-to-wear fashion. So, I’ve decided to create a line that is modern and glamorous, yet completely appropriate for the region. I love the fact that Duchess is filled with exceptionally wearable pieces that will stand the test of time. Ten years from now, you will be able to take one of my dresses out of the closet and wear it again - proving that my designs are timeless. In terms of Dubai’s fashion industry, I think that this region has the potential to be better. There’s a niche in the market for younger designers to bring a fresh approach with more affordable prices. You are also the founder of Asya’s Nursery and Al Das Medical Clinic. Since your business interests are becoming quite diverse, how do you identify which opportunity is worth pursuing? With all of my business ventures, I was looking at what was missing in the market. Once that gap was identified, I was determined to be the first to meet that need. Quite often my ventures were borne of my own experiences and the needs of my family. For example, I was inspired to open my nursery after searching for the perfect environment for my daughter. I couldn’t find a nursery in Dubai that offered the high standard care for children I would feel comfortable with, so I opened my own. With Al Das Medical Clinic, I actually headhunted my doctors from across both the Middle East and Europe based on their expertise in their respective fields. Since starting out as an entrepreneur, all I’ve ever wanted to do is to expand and keep building my dreams. I’m the kind of person who always wants to achieve more, so I find branching out into various business pursuits very exciting. How many employees do you have? What is your management style? I have 130 employees and I am very particular when it comes to recruiting my staff. I need people whom I can delegate responsibilities to with absolute confidence. I’d say that my management style is motivational. I also like to create a family-like environment at work.

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MOVERS AND SHAKERS

I have always been a businesswoman at heart, and I’ve always had a clear vision of the high standards I want to offer to my customers.

Being well organised is absolutely paramount. I like to schedule weekly meetings when my managers report to me. I trust that my carefully chosen managers are doing a great job. I work five days a week, between seven and nine hours a day. After spending the evening with my family, I tend to get back down to business at about 11pm and go through all my emails thoroughly. I also use this time to analyse, review and schedule business plans. So, it’s a very productive part of my day.

In your opinion, how important is it to find a good business partner? Please Tell us about your biggest breakthroughs tell us more about your experience of – a triumph and a struggle that were working with co-directors. pivotal moments in your entrepreneurial I usually prefer working on my own, journey? but I’ve partnered with Jamil Brair to As I am very particular with the staff I establish Asya’s Nursery. I love working hire, employment has been challenging. with him because he translates my vision All my employees need to meet certain into numbers and his expertise helps us educational and professional standards maintain a very successful relationship. in order to be able to provide a service that’s second to none. Being a serial entrepreneur is quite My personal breakthrough was with demanding. How many hours a week Duchess by Jelena. I hadn’t even launched do you work? How do you organise your my collection, but I already had clients schedules to achieve success across all from different parts of the Middle East these many roles? contacting me. Furthermore, I received Each day of the week is dedicated to a a lot of interest from media due to word different company. of mouth. It has been incredibly exciting,

and I can’t be happier with the responses I’ve received about my designs. What are your current business goals? I’ve reached a point now when I want to focus on fine-tuning my businesses in order to ensure that they each reach their absolute peaks and stay at the top of their game, so to speak. For me, quality is everything, and I always demand the highest standards from my employees, my partners and myself. How would you motivate other women in Dubai to start something of their own? I would advise other women to decide what they want to do and to just do it – don’t make excuses and don’t wait around missing opportunities! If you’re not financially able to do it alone, explore the possibilities of getting a business partner on board. Remember that some people naturally make better founders and owners than others. So, success doesn’t have to be determined by how many companies you own, but by how well you do your job, and how happy you are while doing it. For an online version, please visit:

www.smeadvisor.com/2013/10/a-placein-the-sun/

September 2013

Risk management

Understanding risk management Rather than constantly worrying about the cost of repeat insurance claims, wastage of funds because of high stock levels, or the threat of cyber crime throwing the business into chaos, doesn’t it make good sense to reduce the likelihood of things going wrong in the first place? This is the art of risk management, where the motto is ‘prevention is better than cure’. It’s a discipline applicable to any scale of business, but the first step is understanding the essentials of how it works.

One of the advantages of risk management is that while the risks themselves may be diverse and complex, the process of tackling them can be crystallized into a relatively simple five step process.

s an SME you might well be asking yourself whether risk management is applicable or practical for your business. Risks differ between SME sectors. Food and beverage businesses with perishable goods; medical or clinical establishments with high value electronic equipment on which there is a huge reliance to provide continuity of services; schools and colleges that have potential liabilities to students, staff, and visitors - the list goes ever onwards. Risks also vary according to your distribution and service model. Internet

based business models are exposed to risks that differ from businesses requiring an office/retail outlet and which hold valuable stock. Some businesses may have ongoing financial commitments (such as rent) even if they suffer business interruption that stops or reduces their ability to generate revenues. Onshore and offshore SME businesses here in the GCC also have different considerations in the form of licenses, the particular legal system that applies, and the style of regulation. Moreover, your business model, strategy, and marketplace expose you to business risks. In other words simply

by being in business exposes an SME to risk. A few examples of the risks which might resonate with you as an SME are likely to include: • Cash flow. Customers and clients not paying in a timely manner (resulting in monies being due, however not accessible monies, as they’re needed for your own outgoings) • Errors or omissions. By staff who may be required to fulfill multiple functions (resulting in customer dissatisfaction or loss, and reputational damage) • Cyber attack. On your website, customer infor mation, and/or

October 2013

Risk management

banking information of your clients or customers (resulting in liability to customers for financial loss, breach of data privacy or protection). Tackling the risks in five key steps One of the advantages of risk management is that while the risks themselves may be diverse and complex, the process of tackling them can be crystallized into a relatively simple five step process. This can best be described as 1. Assessing the key things that might cause an issue to, disrupt, and/or make your business fail. Focus on identifying the top five to ten items (these are your key identified downside risks). You do not need a huge list of risks, simply a representative one for your business. Consider both internal and external causes of risk. For example: • Economic downturn • Outsourced invoicing with receivables being collected (and held by a third party) • Reliance on one key person for your business to be successful • Large values of stock held in one location (theft/fire/obsolescence risk). Your internal staff and management team are better placed than any third party to identify the risks which specifically apply to your business. Third parties can however help by bringing cross-sector experience, deep industry knowledge, or by challenging the team to think more broadly. 2. For your top five to 10, record whether the issue identified in Step One could possibly happen or might be likely to

happen (likelihood). In addition, consider what the impacts would be (financial, business collapse, reputational damage, loss of license, other). These are the possible impacts. Overall this is your risk assessment. For some of your top five to 10 you might decide to accept these risks (they are unlikely or have a minimal impact). For others in your top five to 10 you might determine that they are likely, or would have an unacceptable impact. For these risks, continue to Step Three.

Spending USD50,000 to manage a risk that might have a maximum consequence of USD5,000 and no reputational damage can never be considered to be good business sense.

3. Determine what you can influence or change. Can you reduce the likelihood, or the impact, or both? Before embarking on action, factor in the cost against the benefit. Spending USD50,000 to manage a risk that might have a maximum consequence of USD5,000 and no reputational damage can never be considered to be good business sense. This will provide you with a risk management action plan. Make sure that you take action in a timely manner.

Audrey Weir is Chief Risk Officer with AIG MEA Limited, based in Dubai. Audrey brings to her role an in depth knowledge of risk and insurance earned over a 25 year career that spans the geographies of North America, Europe, and the Middle East. Audrey has held key risk and insurance management positions with global players such as PricewaterhouseCoopers, Fujitsu, Transport for London, and Aon. She commands an expansive career which crosses a wide array of sectors including Construction, Energy, Real Estate/ Commercial Property, Financial Services/Institutions, Retail, Information Technology, and Transport. In addition to her corporate experience, Audrey spent six years as a University Lecturer, Careers Tutor, and Director of Studies in Risk Management.

Address actions proactively, before that risk has become a reality. 4. After review of what can be managed and makes good business sense to action, consider whether there are still risks that the business could not recover from, or might have difficulty in recovering from. Can you transfer some of the risk, even if only the financial consequences to another party? Insurance is one such arrangement, and involves pooling funds from many to pay for the losses that some may incur. These are your risk transfer options. Remember however that the risk transfer will not be without cost. 5. If you opt to devote time to understanding your business risks, discuss these in your management team. Evolve your top five to 10 as you define or change your strategy; as you consider expanding into different markets or countries; if you are considering an IPO; as you become aware of external factors that impact your business changing. The investment that you may make in risk management does not need to be extensive to be effective. It does however need to be a living, evolving approach. Is risk management worthwhile for you? To conclude; is risk management for your SME: • Possible? • Practical? • Worth the investment? For your SME, only you can tell. If you believe it could be, then make sure that the approach is scaled to your business, and is specific to your business. Spin-off benefits that large corporate entities derive from investment in risk management include protection of business interests, and enhanced governance. Regulators, rating agencies and financiers derive comfort from any businesses able to identify, articulate, and manage the risks that might have a negative impact on business and revenues. For risk-managed companies, prevention is better than cure. For an online version, please visit:

www.smeadvisor.com/2013/10/ understanding-risk/

RUN

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Getting finance

Financial Strategies for SMEs

- mergers, acquisitions and the role of the management accountant

M&A activity can be a powerful way to leverage the growth of an SME - but it can demand specialist skills and financial understanding that may not currently be part of the skills mix on your Board of Directors. The Chartered Institute of Management Accountants (CIMA) is the worldâ&#x20AC;&#x2122;s leading professional body representing financial professionals with proven strategic insight and the ability to implement sophisticated commercial strategies. We asked Geetu Ahuja, Head of GCC - Middle East, CIMA, to explain the key aspects and relevance of the acquisitions process for SMEs here in the region.

he increase of Small and Medium Enterprises in the Middle East has been a hot topic for the past two years with eager entrepreneurs looking to fill gaps for a growing population. These companies can range from selling quirky gifts online (and doing this very well - like, for example, Wamli), to pet services such as Cloud 9 Pet Hotel & Care. As business confidence is returning, companies such as these have found a niche and gained a following because they offer something unique, but they must always ensure that they are relevant to the market while still growing the business. A company typically looks to grow its organization in one of two ways, either organically or through mergers and

A company typically looks to grow its organization in one of two ways, either organically or through mergers and acquisitions. acquisitions. Where organic growth messages are limited, many businesses focus on acquisition to increase their market presence. Having a clear and concise strategy can assist businesses in achieving their goals for overall growth.

However, there are several challenges to mergers and acquisitions for SMEs such as: â&#x20AC;˘ Lack of knowledge/understanding of their costs and as a result getting their pricing and product mix decisions wrong â&#x20AC;˘ SMEs may fail to manage their working capital and hence also fail to manage their cash flow adequately â&#x20AC;˘ Lack of due diligence and ability to maintain focus on the core business Understanding the realities Considering that the majority of these issues revolve around finance management, the Chartered Institute of Management Accountants (CIMA) sponsored a study of

October 2013

Getting finance

Geetu Ahuja, Head of GCC - Middle East, CIMA

the management accounting practices of SMEs. The study found that the emphasis on management accounting in SMEs tends to be on controlling information rather than aiding decision-making and that there is a tendency to make decisions without adequate financial information or analysis. Additionally, in smaller enterprises, the management accounting is often undertaken by the owner-manager/ entrepreneur, resulting in significant opportunity costs. In challenging economic times, it is absolutely vital that entrepreneurs and small businesses make full use of their finance people. They must look past the traditional view of accountants as ‘bean counters’ and understand their value as business partners. There is a tendency for SMEs to make decisions without adequate financial information or analysis. Time and opportunities are also being wasted because some owner-managers don’t want anyone else to know their business. The role of management accounting Given current financial constraints, and the increasing need for organisations to operate efficiently, effectively and ethically, management accounting has a crucial role to play in improving the quality of planning, control and decisionmaking.

In smaller enterprises, the management accounting is often undertaken by the owner-manager/ entrepreneur, resulting in significant opportunity costs.

While every acquisition is different, there are five main steps to negotiating a deal. They are:

• Assembling the team. Developing an internal working team made up of representatives from all areas of expertise such as sales, marketing, finance and law will allow for cohesive thinking and a 360-degree understanding of the acquisition purpose. • Initiating a target search. Evaluate target companies and receive counsel on the best partner for a strong financial and strategic fit. • Developing a plan. A well-rounded proposal will answer crucial questions, such as what are the specific objectives, how will we be financing the deal, valueadded efficiencies and cost savings. • Pricing the deal. While value is in the eye of the beholder, there are several price factors that need to be considered such as projected earnings, strategic value, outside assets and intellectual property. • Financing the acquisition: Each transaction is unique but key factors that affect the handling of the deal revolve around the buyer’s cash position, terms of purchase and market conditions. Having a qualified finance expert on board, such as a CGMA professional, can help the team understand how the different parts of a business need to come together. They will be able to combine financial expertise with business acumen and can guide the critical decisions that will drive sustainable business success without diverting key resources from the core of the organization. For any SME looking to expand their company, the first investment should be made internally by bringing on a knowledgeable management accountant that can successfully steer the company towards short-term profits while keeping an eye on the long-term goal. Having someone on board that can advise on all aspects of a business’s management will allow for more positive interactions with other organizations down the line. Acquiring key members to a team can ensure bigger and better acquisitions in the future. For an online version, please visit:

ww.smeadvisor.com/2013/10/financialstrategies-for-smes/

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October 2013

Getting finance

Ready to

venture?

Along with so-called ‘angel’ investors, crowd investing and raising finance from the bank, Venture Capital is often seen as a strong option when it comes to securing SME funding. The reality is that it’s probably the most challenging finance quest of all - one that requires a good deal of planning and the clearest possible understanding of your customer base and the financial appeal of your proposition. It’s also an option which - if you’re successful in getting funding - can be one of the most powerful and sophisticated routes to business growth and personal wealth.

“Like buying a pet, venture capital isn’t just for Christmas; it’s for life” - Gary Sharp, Director, Baronsmead Venture Capital

s with any area of business, it’s as well to be aware of the ‘bottom line’ right from the start. Obtaining venture capital commits you to a rigorous, structured and disciplined financial schedule that will in all likelihood last for the duration of your company itself. It will also involve giving up a seat on your board and taking advice from an expert, seasoned finance professional - who will no doubt have the most profitable exit strategy for his venture capital business uppermost in mind. Unlike dealing with a bank (whereby your commitment is over once the borrowed sum is paid back), or even with an ‘angel’ investor - who may have a certain affinity with your entrepreneurial vision and allow a modicum of flexibility - a venture capital business will be part and parcel of your SME throughout its various stages of growth and until it has reached a profitable point of ROI (which will have been agreed in advance). Venture capital isn’t a ‘quick fix’, but a long haul whereby the venture capital firm will typically work with your SME through a number of recognised stages of growth and gestation. The venture partner will typically want to see cold, hard proof that your business model is working - it’s quite

The venture partner will typically want to see cold, hard proof that your business model is working - it’s quite rare to get venture funding if you’re a startup with a concept and nothing more. rare to get venture funding if you’re a startup with a concept and nothing more. A chilling example of this is that in the USA, in 2012 there were 600,000 new business startups - but only 300 of them received venture funding. This is a success rate of approximately 0.0005 per cent. This aversion to lending capital early in the evolution cycle is the result of the risk factor; a startup involves a huge number of uncertainties, each entailing considerable additional risk. The following table shows how the risk factor diminishes with each stage of growth and a more and more proven track record –

your business, there are major advantages if they do. These include: • Expert (and perhaps world-class) financial guidance, helping navigate the business through uncertain financial climates. • A focus on growth strategies - remember, with a venture provider on board, you cannot remain as you are. The SME will get advice on M&A activity, expansion into fresh markets, and further borrowing strategies. • Win-win exit strategies. In order for the venture provider to exit on favourable terms, the business has to reach a favourable stage of development.The

Stage of business

Risk of loss

The seed stage (concept only)

66.2 per cent

The startup stage

53.0 per cent

The second stage (product on market)

33.7 per cent

The third stage (expansion/maturity)

20.1 per cent

The pre-public stage

20.9 per cent

Stages two, three and four are typically where the venture capital firm will ‘bite’, listening most seriously to your funding proposal. Approaching a venture provider at stages one and two is very likely to be a waste of time - time which is better spent approaching friends, family and selected ‘angel’ investors. The benefits! While there are limitations on when and how a venture capital provider will connect with

volatile growth and bottom line strategies that enable a profitable exit can also secure your personal wealth - albeit at the cost of potentially compromising some of your original vision of where the business was headed. Ticking the boxes – knowing what venture providers are looking for Venture capital firms will not be impressed by vague notions of likely business success or a concept that hasn’t been put to the test.

October 2013

Getting finance

venture capitalists don’t back companies aiming to be second-best. 4) Technology – do you have what it takes? You’ve got to prove the technology in your offer is the best. How do you do that? By identifying hoards of customers that are keen to pay for it and would queue up to get what you’re selling! What’s more, do you have talented top teams who will ensure that you’re still an innovator in five years’ time? If either of these expectations are beyond you, you’re applying for venture finance too soon.

They will want to know if you have paying customers, a strong, professional business plan, and audited accounts that demonstrate good cashflow and the business’ ability to make a return on an investment. In terms of your preparation, there are seven critical steps that you will need to follow. 1) Ask yourself this: is your business idea really, really good? Of course, you will think that your core business idea is great and that everyone will want to buy into it. Regrettably, the volume of new business startups is so colossal that it’s almost certain that someone else has an idea very similar to yours. Investors get used to seeing the same idea come to them time and time again. Does yours stand out? Does it present an answer to - and fully understand

Venture capital isn’t a ‘quick fix’, but a long haul whereby the venture capital firm will typically work with your SME through a number of recognised stages of growth and gestation. 46

- a big, genuine need in a clever, slick way? Does it identify a powerful opportunity that others haven’t spotted yet? Can you prove that you’ve exhaustively researched the markets and identified a workable business template? Don’t seek venture capital if you haven’t. 2) Building a team Venture capitalists aren’t interested in a ‘team of one’ approach. You have to prove that you can draw other senior people to your team, who - like you - are prepared to stake their future on the idea’s success. After all, if you can’t convince other people to join you, how will you convince an investor? The team you put together has to have senior credentials and show credibility for managing the business as it reaches a considerably bigger scale. If they cannot, you are proving to the venture firm that your business will sink in a couple of years’ time.

5) Can you beat the competition? Don’t ever believe you don’t have competitors: of course you do. They might not be as ingenious as you, they might not have the technology edge you do, and they might be much more expensive – but they’re all competitors and you have to prove you can outreach and outperform them in every way. Can you access your target customers clearly, loudly and convincingly before your competitors do? Prove it. 6) The figure work A true entrepreneur is tireless in the pursuit of clear, accurate financial projections. Why else would you be in business? Proper projections show that you understand how your business works - and you know what drives your expansion, gives you strong profit and powerful cashflow. 7) Credibility Get as many factors on your side to build your credibility as possible. For example, do you have a highly-regarded co-development partner? Or an advisory board comprising the great and the good in your sector? Do you already have household-name customers? These are the kind of factors that will underline your credibility and boost appeal to a potential venture lender.

The reality is that if you can’t tick each and 3) Create the opportunity every box above, you’re not ready to go for Venture capital is focused on businesses venture funding. Build your strength in each of that gain a competitive edge through better these areas and continually ask the question: understanding the market opportunity ‘do I have the clear, compelling and convincing and building fresh markets with the sheer answers to any questions I may be asked – and power of their ideas. Will you be able to do I have the paperwork to prove it?’ demonstrate that your idea has that unique market appeal? Do you have the means to If you do – good luck! create the market in a way that the venture capital provider can see and feel - or will For an online version, please visit: you be hoping to swim more comfortably www.smeadvisor.com/2013/10/ready-toin an existing large market? In other words, venture/

October 2013

Workspace

The Serviced Office experience

- strategies to supercharge the customer interface Every aspect of your company’s success depends on how well you respond to - and anticipate customer needs. Using an office environment that gives you the right platform for customer liaison and is well-suited to client visits gives you a powerful competitive edge, regardless of your sector or specialization. The question is, how you can achieve the necessary results in a cost-effective and straightforward way? To find the right answers, we spoke to Servcorp, the world leader in serviced office provision, about the key factors that are the hallmarks of a client-friendly premises… “In the 1970s, companies were obsessed with their organizational structure; in the ‘80s, it was all about quality; and in the ‘90s it was all about distribution strategies. But in reality, none of these elements matter. Only one thing matters - the customer.” Tom Peters, business guru and author of ‘In Search of Excellence’

ou might think that in the ongoing quest to give clients value, service and a share of your USP, the actual office space in which you conduct client meetings (and which projects your valueset to the customer) is something relatively trivial. You might think that - and you would be wrong. A survey conducted in 2010 by the UK’s Federation of Small Businesses - the world’s largest SME organisation, with more than 220,000 active members - showed that up to 22 per cent of businesses believed that a poor office environment had been a key factor in client attrition. What’s more, it hit hardest in relation to their big, valued clients. Here, it was felt to be a factor in up to 37 per cent of lost accounts. The picture is equally clear on the other side of the fence - from the clients’ own perspectives. The global design and

branding group Fitch conducted a five-year customer research survey between 20042009, and it showed categorically that both location and quality of office space were key factors in retaining and developing profitable client business. This was especially the case when younger middle managers were involved in visiting service providers. If the offices were amenable and made for an enjoyable visit, they were 32 per cent more likely to report back to their directors that the company was doing a good job. More chillingly, if the offices weren’t up to par, 64 per cent would give the business a potentially fatal ‘thumbs down’. Getting value The challenge is that buying suitable luxury office space - or signing a lease for an extended period - can be an expensive option, and there is the danger that the business is put into the same position as a Risk Manager who spends US$50,000 on limiting a risk that at worst will only cost the organisation US$20,000. So, if an SME is going to veer away from that commitment, does it make sense to look at a Serviced Office solution? Certainly, from the standpoint of pure flexibility, yes it does. This is especially true in terms of being able to access the very best locations, which are guaranteed to make a vivid, highly positive impact on

the client. Let’s take an extreme example. Doha’s Tornado Tower offers the preeminent office space in the Middle East, and it’s no accident that from the earliest planning stages, Servcorp ensured that it would be able to offer customers truly stunning suites in this ‘masterpiece’ setting. Suites that by any other standard would be exceptionally hard to get and command the highest international premiums. A similar example is the office space currently available in Dubai’s highly-acclaimed Boulevard Plaza, a stone’s throw from Burj Khalifa and the myriad attractions of the Dubai Mall. Come down just a couple of notches and, again, you will find that the serviced office route gives you high quality office space in bustling, prestige city-centre settings. You won’t have to travel out to distant suburbs - and more to the point, nor will your clients. Another factor is that office space in A Grade buildings in prime locations has held its value throughout the global financial crisis; as a result, in many cases it remains beyond the budgets of even larger businesses. Serviced office space gives access to this standard of accommodation at a preferential rate - and indeed, saves valuable time with all the logistical arrangements as well. There’s no time wasted on electrical bulls, telecoms

Sophie James / Shutterstock.com

Up to 22 per cent of businesses believed that a poor office environment had been a key factor in client attrition.

October 2013

Workspace

and IT payments, cleaning services - or even arranging the staff visa allocation. Everything is completed on the client business’ behalf, with one simple bill at the end of the month. Making an impact The Fitch survey showed categorically that when it comes to client meetings, ‘first impressions are lasting impressions’. Offices that appear cheap, thrown together or just plain unappealing aren’t the way to a client’s heart. So if we take the example of a Servcorp office floor, it’s likely to have cost somewhere in the region of US$1.5 million to US$2 million to build and furnish. You’ll find the very finest materials - rich mahoganies, solid cold-forged stainless steel and expanses of toughened float glass. These all cost significant sums which are likely to be out of the reach of the majority of businesses faced with furnishing their own office space. It’s no surprise that they play a major role in leveraging client approval once you access them via the served office route. The client experience is totally one of a 5-star, ‘A’-grade premises. Similarly, because the reception area is your clients’ first ‘point of encounter’ with the business, you’ll find large receptions that are often complemented by an exceptional view - great for giving clients an impressive, engaging experience right from the get-go (it’s worth noting that the reception area is often equal to the size of an additional office - that’s the kind of ‘breathing space’ it gives your visitors). Going the extra mile: meeting your clients in their own backyard Accessing premium quality office space so that your clients feel good about visiting you is only half the story. You can also work with a serviced office provider that has a global network - one that allows you to

arrange client meetings in prestige settings wherever your client happens to be. This can be a key strategy for cementing relations on a high-end account or cross-selling upscale services to an existing, favoured client. For example, in the case of Servcorp, clients are able to book office space, boardrooms and select their conference settings via their mobile phones, ipads or laptops through Servcorp Online, an exclusive online portal for Servcorp clients. The My Meetings app, which was created to make the Servcorp Online experience easier for mobile phones, displays strong, clear images of all the options and then book meeting rooms online instantly. Simple as that - and you can even specify if you want secretarial or PA support. This aspect of staffing support is again significant in that it means you have a permanent team of facilitators at your disposal. Highly trained, professional

The serviced office route gives you high quality office space in bustling, prestige city-centre settings. You won’t have to travel out to distant suburbs - and more to the point, nor will your clients. staff who will answer calls, handle mail, organise hotel bookings and provide the full spectrum of admin support. They complete the professional image of your business from the all-important point of view of the client. Because the right facilities matter… The role of technology has never been more vital - especially in terms of facilitating and cementing client relations. So you’ll find that the serviced office route can give you a good deal of competitive edge here, too. Take the example of Servcorp – where every suite has 24-hour IT support, coming with a firm undertaking that for any solution, an expert will be back to you in less than 24 hours. Videoconferencing and

teleconferencing are also standard features, with conference rooms available to seat up to 16 people. There are also customised cabling solutions to suit diverse technology needs, with sub-floor routing to the highest professional standards. Everything to ensure that the client simply sits back and enjoys what you have to say - rather than listen to excuses as to why the right presentation isn’t available today. It’s not only technology that makes an impact on the client: sheer convenience makes it mark as well. So, for example, another benefit with a good quality serviced office solution is that there is a strong premium on providing visitor parking wherever possible. The time factor Of course, all of the above can be achieved with your own office space - if you have sufficient budgets, and, perhaps even more importantly, enough time. Because the key factor here is that all of this is already done; you don’t have to waste precious time with fitting-out and complex IT installation, because the provider has already invested all that time and effort themselves. It’s also the case that if you want changes over and above the existing office layout, the service solution can be highly flexible, with the potential to re-configure layouts to meet your precise needs. Consider the following: • You may not want meetings rooms too deep inside the office, because you’re concerned that visiting clients might see your team ‘at work’ and your brand loses mystique and value as a result. No problem - meetings cabins can be configured accordingly. • You have frequent client visits but also don’t want to lose meetings facilities for your own teams. Again, not a problem, because a bespoke configuration can be discussed and put in place. All of means that you’re no longer dependent purely on what your team says and does in front of the client, because the actual architecture of the premises is also working on your behalf. Or perhaps you would like to keep on doing things the hard way? For an online version, please visit:

www.smeadvisor.com/2013/10/theserviced-office-experience/

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October 2013 51 For nomination enquiries, please contact: paul.godfrey@cpimediagroup.com, rushika.bhatia@cpimediagroup.com

Workspace

Mastering the

digitization revolution By Vikram Chadha – Vice President, SME Marketing, du

The pace at which our world is turning to digitization is accelerating. In order to compete in an ever-changing environment, small and medium enterprises (SMEs) must find new relevance for themselves, or risk losing touch with their customers. There are benefits to this digital upswing though. If harnessed properly, digitization allows SMEs to punch above their weight and compete globally, as well as providing the opportunity for them to enrich their customer proposition and cross-sell, niche-market and up-sell like never before.

o take advantage of the new digitization benefits, SMEs must know when to supercharge their business. Checking if you’re on track in reaping the benefits of the digital culture shift can be as simple as answering the following questions:

• Are you taking full advantage of social media as a way to gauge response, launch new promotions and build brand perception? • Can your staff access inventory and sales records instantly via tablet or laptop? • Are you able to send completely customized marketing approaches to each and every client or prospect, using data harvested from the wealth of archives in your business? • Are you working from a common communications platform, or is it fragmented across the business? • Are sales and merchandising teams able to access all CRM data while in front of the customer, via smartphone or tablet? • Are you already reaping the benefits of cloud systems? If you answered yes to all of the above, then you’re well aware of the benefits of the digital revolution. If you answered no to one or more, keep reading to find out how to best to adopt a digitization strategy. SMEs are constantly on the lookout for new ways to run their business faster, cheaper, and more efficiently. Digitization offers a whole new set of options for achieving these goals. To a large extent, this is being fuelled by the

rapid advance of smartphones and tablets globally. According to research by Gartner, tablets are expected to outsell PCs by 2015. Therefore, it’s becoming more important for SMEs to embrace digital solutions, and to do so at speed. If they don’t, they’ll be stranded with an outdated infrastructure and miss out completely on the new levels of flexible working that digitization offers. To get onto the digital map, SMEs need to develop mobile and internet services that will enable them to tap into new revenue streams and markets. There’s simply no way around this: SMEs need to be digital to access relevant information. By going digital, an SME can network or promote its products and find new customers or suppliers. Part

To get onto the digital map, SMEs need to develop mobile and internet services that will enable them to tap into new revenue streams and markets. and parcel of this is the importance of being able to integrate operational and marketing channels, over a period of time. For example, one of the simplest things that an SME should be able to do today is have a comprehensive and user-friendly website. At du, for instance, we’re at the epicentre of thousands of customer requests and we’ve worked in tandem with SMEs to deliver priority packages that help to bring them fully up to speed. We see a number of the realities in the marketplace, including: • The fact that it isn’t about where your business is in the SME spectrum. Adopting digital platforms isn’t about whether you’re large or small, it’s about whether or not you choose to work at a faster pace. • If you’re a medium-sized business, you’re in the best possible place, because you can utilize the sophisticated packages pioneered for larger firms - and which are now available to you at 20 per cent of the original cost! • Forget any concerns about whether what’s available in the Middle East is on a par with technology elsewhere in the world. In 80-90 per cent of cases it’s exactly the same, and sometimes even further ahead. • Remember that if you’re an SME, you can leverage technology and digital platforms to get a competitive advantage over other SMEs. Don’t squander resources trying to compete with large-scale monopoly or duopoly businesses. You can’t.

October 2013

Workspace

Vikram Chadha, du’s Vice President, SME Marketing

• The SME sector is getting more tech-savvy, but we haven’t reached a tipping-point yet. Many businesses are still labouring over methodologies and platforms that are outdated and can’t give them the commercial solutions they need. As du, we’ve got the highest penetration of data services in the market, and we see that there’s an incredibly important need to move customers from a voice-centric model to a data-centric model. This view is supported by trends in the multimedia applications that customers are asking for. Yet in each individual case, we can’t emphasize enough that we need you to tell us exactly what you want to achieve. For example, achieving full mobility ought to be a priority for every SME. The benefits of digital mobilization range from on-the-go access to internal processes, to privileged data for customers through bespoke apps. What the benefits have in common is that they are advantageous to customers, while dramatically reducing lost hours and downtime for employees. This kind of critical leverage can make a terrific difference to the way an SME handles all of its external relationships - and there’s no better example than

It provides limitless free PR capabilities, such as warming-up a potential market with blogging and creating the ability for a fresh business venture to hit the ground running, and offers effortless access to the global market. Cloud technology is another vital aspect of the digitalization movement. It’s important for SMEs to look at Cloud in a serious light, as it offers myriad benefits and lifts multiple limitations. For example, if your sales force is constantly on the move, there are no limitations any more about working from a distance or accessing your systems out-of-house. They simply access the Cloud wherever they are. Nor is there any limit to the sophistication of the resources you’ll have available: ‘Enterprise class’ solutions are part and parcel of the new Cloud technologies – ideal if you’re looking at aspects of multiproject management, or if you need to carry out complex risk assessments as part of a client site visit. While there’s been some debate about Cloud security issues, most of this is simply a case of urban myth. Cloud-based platforms take the view that security is of the highest priority, and provide supersafe data environments. There’s a worldAdopting digital class data infrastructure developed by the platforms isn’t about biggest names in IT - and it’s worth noting that this was evolved partly in response to whether you’re large the growing levels of cybercrime across all or small, it’s about the more conventional working platforms. whether or not you Whether Cloud, mobility or otherwise, every aspect of the digital revolution relates choose to work at a to very practical, everyday needs. It’s here faster pace. that the new technology really shines, offering affordable, workable answers that impact the way that even the most basic the ability to deliver crucial value to day to day operations are handled. We the marketing mix. Remember, digital pride ourselves on being totally aligned marketing is free or cheap. SMEs can use with these goals, working as the everyday the power of Linkedin, Twitter, Facebook solution provider for the SME. and Google Plus to network with their The digital revolution isn’t for someone customers. It’s important that SMEs use else’s business: it’s for yours. If you take these channels to increase awareness and a few crucial steps, the sky’s the limit to create interest amongst their customers the critical competitive advantages that and suppliers. The fact is that when people you’ll benefit from. say that a ‘revolution is taking place’, they’re SME Advisor is delighted to announce that wrong: it’s already happened. Either your there will be more articles from du tackling business gets aligned, or gets left behind. the essentials of the digital revolution in Another example is that the digital many of our forthcoming issues… environment is empowering for marketeers. Digitally-empowered marketing is hugely For an online version, please visit: cost-effective for building a network and www.smeadvisor.com/2013/10/masteringmerchandising via an online community. the-digitization-revolution/

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October 2013

MARKETING

SOCIAL MEDIA: REAP THE BENEFITS IN 10 EASY STEPS

ne definition of ‘social media’ on urbandictionary.com is “your electronic second life”. A bit too dramatic? Probably not. Let’s face it, almost all of you reading this have at least two active personal social media accounts. In fact, you might be logged in to one of them right now! Well, then what’s the need to get advice on social media? It’s because running a social media account for your personal use and generating social media presence for your small business are as different as chalk and cheese. For an entrepreneur or small business owner/director, social media is a great boon – an easy, cost-effective (or, free most of the times) and efficient platform to communicate with a mass audience! Therefore, it’s only fair that you give it sufficient attention and time to ensure that you are making the most out of it. Here, we present an easy 10 step guide for your small business to achieve social media success…

This will give you a direction to move ahead in and ensure that you aren’t shooting in the dark. Your strategy doesn’t need to be very fancy or complicated. Create a simple document that outlines basic issues such as: a) What is the business looking to get out of this campaign – a certain number of followers, attracting audience to monthly events, generating sales revenue, etc.? b) How often does the social media page need to be updated – hourly, daily, weekly?

Ensure that the information you are sharing on your page is relevant to your audience and more importantly a good indication of your brand value.

Step one: Don’t be a ‘Jack of all trades, master of none’. To boost your online presence, you don’t have to create an account on every social media platform under the sun. Keep it simple. Start with one or two that are best suited to the needs of your business and master those. Remember: quality is better than quantity. Twitter, for example, is an ideal option for companies looking to create PR. On the other hand, Facebook is a good option for companies looking to display a lot of multimedia content.

Step two: Have a strategy in mind. Take this example: you’ve decided to lose weight so you have enrolled yourself into an expensive health club. You go there occasionally and are satisfied that you are working out. But, in reality is this actually sufficient to lose weight? Social media is no different, signing up for an account and posting a few things from time to time will not yield any results. Just like any other business-related activity, social media is a tool for business growth and hence requires a well-thought-out plan of action.

c) Who is responsible for managing all the online activity? d) Who is your target audience? e) How is your brand positioned in the market and how can you reinforce this by social media usage?

Step three: Create good content. What you’re saying to your audience is of paramount significance as this is directly impacts their interest in your page. Ensure that the information you are sharing on your page is relevant to your audience and more importantly a good indication of your brand value. For instance, if your company is in the service industry offering grooming services, promoting best hygiene practices on your page is a great idea, and soon consumers will start associating your brand with good hygiene.

Step four: Stop selling, start sharing. Ensure that your page doesn’t look a miniversion of your product catalogue! For more information about your products

and services, your consumers can visit your website. Through social media, you can talk to consumers about your brand values, founders, company vision, and so on. Your audience wants to interact with their favourite brand on a more human level! Another great strategy to keep in mind is: sharing and reposting interesting facts and insights from other pages. It doesn’t have to be a direct competitor but don’t be afraid to network and collaborate with peers, partners and fellow brands on your social media page. This actually looks better for your business as you are offering more value content to your audience.

Step five: Welcome negative feedback. Customer criticism isn’t the end of the world. This is where you put on your rose-coloured glasses. Refrain from immediately deleting the post; ignoring the problem isn’t solving it. Instead, calm the customer down with a sincere apology (yes, even if he/she is wrong) and assure them that your team is currently working on a solution and will contact them personally. This is a chance to prove to your consumers that your business is open to feedback and takes it very seriously.

Step six: Don’t be afraid to use advertising tools. If your business does have a budget for online advertising, social media offers popular choices. Facebook ads are very well known and are great way to boost individual posts and allow businesses to pick and select areas that they want to highlight. These ads are also a good way to target a specific audience and narrow the reach of your campaign.

Step seven: Money can buy a lot of things but not followers. Paying for ‘likes’ or followers isn’t fooling anyone. It’s better to have 5000 followers that are true ambassadors of your brand and are loyal to your company instead of 50,000 followers that have little to no interaction with your brand. Consumers that have tried and tested your products will automatically spread the word leading to a solid fan following on your page. So, have faith in your strategy!

October 2013

MARKETING

Facebook penetration rate in the UAE stands at around 43 per cent.

There are roughly 3.6 million active Facebook users in the UAE.

In the UAE, there are 244,000 users tweeting every day.

Abu Dhabi and Dubai have the highest concentration of Twitter users in the UAE.

Source: www.stats.ae

Step eight: Beware of bandits!

Step nine: Draft a social media policy.

Social media may be an effective marketing This step is a precautionary measure to tool but (there’s always a ‘but’) if not avoid the problem of bandit messaging handled with care, it can to lead disastrous described above. Apart from a social outcomes. There’s often a chance of media plan, it’s crucial to have a social something going wrong – especially media policy in place as well. Most when working with technology. Picture small businesses might not be aware of this scenario: you have a very hands-on the importance of having this drafted. social media account which has a fairly The policy should list key guidelines decent number of proactive followers. for those involved in the day-to-day One of your social media executives management of social media within decides to leave the company but you your business. This document should don’t change your account password. be more formal and should include Now, your ex-employee is posting negative answers to key questions such as comments about your brand through ‘What are some sensitive topics that your account on your page! Can you shouldn’t be discussed on social even begin to comprehend the amount media? or ‘What is the appropriate of irreparable damage that can cause to tone of language to be used while your small business? This situation, of addressing customers?’ course, is one amongst many possibilities Make this as comprehensive as possible that can do more harm than good to your to avoid any future conflicts with your business success. employees. It should include minor issues

like using British English vs. American English for your social media content. At the same time, it should also address major issues such as – dealing with an angry customer who has just called your employee ‘stupid’. The document can be appended to staff contracts and personnel are required to sign a commitment not to transgress the agreed social media policies.

Step ten: Analyse your ROI. Don’t forget that like all other marketing tools social media should have an end goal that affects your business positively. Without getting anything out of it, there is no value for any small business to do it at

There’s often a chance of something going wrong – especially when working with technology. all. It’s important to have a bi-weekly or monthly check of how well your page is doing, what appeals to your consumers and what doesn’t, topics that receive the most interest and so on. One of the great appeal of social media is the ability to measure response precisely and be able to run experimental messages to see how it impacts customer perception. Most social media sites have made this quite an easy task offering analytics that help businesses determine their progress. Also, set aside times to meet with your social media team to ensure that they are on the right track – it’s crucial that your team understands your vision as they are the face of your organisation online. Finally, use social media to enhance the overall experience of your customer’s interaction with your brand instead of a tool to blatantly sell your products. And, now that you have mastered the art of social media, it’s time to get back to your, as they say, ‘first life’! For an online version, please visit: www.smeadvisor.com/2013/10/socialmedia-reap-the-benefit-in-10-easy-steps/

advertorial

LEGAL

Corporate Governance in the UAE â&#x20AC;&#x201C; Developments, Trends and what they mean for SMEs The need for good corporate governance has been dramatically highlighted by the global financial crisis - and while corporate governance measures are now compulsory for listed companies in the UAE, unlisted companies remain unregulated. In the following article, Niall Oâ&#x20AC;&#x2122;Toole, Partner, Clyde & Co., Abu Dhabi and Georges Attiah, Associate, Clyde & Co., Abu Dhabi, comment on the legal framework relating to corporate governance in the UAE, discuss trends in its implementation and emphasise the importance of good corporate governance for companies of all sizes.

The current position in the UAE

Despite an increased awareness of the need for corporate governance generally, the adoption of corporate governance measures remains voluntary for the vast majority of entities based in the UAE. The Commercial Companies Law of 1984 still applies to companies incorporated in the UAE and sets out basic rules for corporate governance. Over recent years, the introduction of more extensive legislation and codes has promoted the value of corporate governance for companies in the UAE. Ministerial Resolution No 518 of 2009 Concerning Governance Rules and Corporate Discipline Standards applies to companies whose securities are listed in the securities market in the UAE (i.e. DFM and ADX), with the exception of wholly owned government entities. Listed companies must comply with requirements such as the inclusion of independent and non-executive directors on the board, the formation of an audit committee, and the submission of an annual corporate governance report to the Securities and Commodities Authority. Federal government entities are also regulated by Federal Decree Law No 5 of 2011 which sets out a stringent approval process for the governance systems of boards

of directors and trustees of federal authorities and institutions. The introduction of these rules for federal government entities should set an example for companies that are not currently regulated. While non-binding best practice guides do exist, unlisted companies, which contribute to a huge proportion of the economy in the UAE, are not regulated and enjoy the freedom to adopt corporate governance to the extent that they feel necessary. Corporate governance for small and medium enterprises The creation of a Corporate Governance Code by the Mohammed Bin Rashid Establishment for SME Development and Hawkamah is a welcome framework for small and medium enterprises (SMEs) in Dubai. SMEs are defined within the code as any firm with a turnover of less than AED 250 million and less than 250 employees, and they make up 95 per cent of all businesses in Dubai. Although the code is not binding and is not aimed at SMEs outside Dubai, the code is based on principles of international best practice and should be seen as a benchmark for best practices in the UAE generally which any SME can adopt to suit its requirements. The code sets out nine pillars of corporate governance procedures as follows:

1. Adopting a formal corporate governance framework outlining the roles of the key bodies such as partners, shareholders, board of directors and management; 2. Conducting a succession planning process; 3. Establishing a timely, open and transparent flow of information with shareholders; 4. Endeavoring to set up a formal board of directors to accompany the growth of the company; 5. Developing a clear mandate for the board of directors to oversee the operational performance of the business as well as evaluating and improving business strategies; 6. Maintaining credible books of accounts, which are annually audited by an external auditor; 7. Setting up an internal control framework in place and conducting a regular review of risk; 8. Recognising the needs of stakeholders; 9. Formulating a framework setting out the familyâ&#x20AC;&#x2122;s relationship with the business. The code is a step in the right direction for promoting transparency and accountability for the benefit of SMEs and the economy as a whole.

Recent trends in corporate governance Clyde & Co has experienced increased interest from clients wanting advice and assistance on the methods available to improve corporate governance and performance generally. The growing awareness of the importance of corporate governance is largely based on an understanding that investors are prepared to pay a premium for a well-run company. Other catalysts for the voluntary implementation of corporate governance measures include the broader adoption in the UAE of IFRS accounting standards which demand high levels of transparency, and the strict sanctions for non-compliance with the far-reaching rules within the UK Bribery Act 2010 and the US Foreign Corrupt Practices Act 1977. While much has been achieved there is still more to do. There has been a lot of work undertaken by both Dubai and Abu Dhabi Chambers of Commerce to educate the private sector as to the need for and benefits of corporate governance. His Excellency Sultan Bin Saeed Al Mansoori, the UAE Minister of Economy, has called for companies to embrace corporate governance as “an institutional capacity, rather than a regulatory requirement”. In a region with a low percentage of listed companies and a high percentage of family businesses, a lack of regulation cannot be seen as an excuse not to adopt a formal corporate governance framework. According to a survey carried out by Red Flag Group, the UAE continues to lag behind the rest of the world in terms of compliance and risk transparency. Specifically, Red Flag Group found that transportation, engineering and utilities groups were the most transparent in the UAE, whereas family-owned companies were slow to adopt good practices. The new Commercial Companies Law (finally passed by the Federal National Council on 28 May 2013) provides for the establishment of general corporate governance frameworks for the regulation of both private joint stock companies (in which the number of shareholders exceeds 75) and public joint stock companies as well as (for the first time in the UAE) setting out mandatory standards and duties of directors. Detailed regulation will follow. Whilst the board of directors shall be responsible for the application of the rules and standards of governance, breach could result in a fine of up to AED 10 million for the company,

chairman, members of the board of directors, managers and auditors. The new Commercial Companies Law has yet to be published in the Official Gazette but we are hopeful that it will come into effect before year end. The strict penalties envisaged for noncompliance with corporate governance measures are a clear indication of the increasing importance of corporate governance in the UAE. The competitive advantages of corporate governance Corporate governance promotes transparency, accountability and the general protection of stakeholder rights for companies hoping to attract funding for growth. For SMEs struggling to fulfill potential, good corporate governance measures help facilitate growth, attracting investment and obtaining finance. The adoption of basic practices such as keeping proper financial accounts, establishment of a formal board of directors and the disclosure of remuneration and company information can produce some or all of the following benefits: • removing uncertainty, encouraging confidence in a company; • managing risk and removing conflicts of interests through clear decision-making policies;

• aligning stakeholder and employee interests; • optimizing value and share price; • encouraging external investment and facilitating growth. The next phase of corporate governance regulation in the UAE is set to cover unlisted companies and so the early adoption of good practices will make compliance easier in the future, thus placing compliant companies in a better position than those who are not. How we can help The consequences of non-compliance can be grave and expensive for regulated companies in the UAE with sanctions including the delisting of listed companies. For unregulated companies, the lack of compulsory corporate governance measures should not preclude them from adopting good practices. In the absence of a ‘one size fits all’ approach to corporate governance in the UAE, Clyde & Co can provide advice and assistance to companies of all sizes. We have a number of corporate governance experts and standard corporate governance policies which can be tailored to suit the needs of any company. For an online version, please visit:

www.smeadvisor.com/2013/10/corporategovernance-in-the-uae/

Niall O’Toole, Partner, Abu Dhabi Niall.otoole@clydeco.com Niall is the Managing Partner of the Abu Dhabi office where he has been based since 1997. Qualified in three jurisdictions, Niall has considerable experience in a broad range of matters including corporate/M&A, private equity, corporate governance, restructurings and international transactions. Niall routinely advises local and international companies in connection with the establishment, maintenance and termination of Abu Dhabi joint ventures, as well as corporate acquisitions and disposals and in connection with local regulatory requirements and developments. Georges Attieh, Associate, Abu Dhabi Georges.attieh@clydeco.com Georges is a corporate lawyer based in Abu Dhabi, specialising in international and domestic joint ventures, mergers, acquisitions and corporate legal restructurings. Georges also has hands-on experience advising clients on the incorporation of various types of business and investment vehicles in the UAE.

October 2013

INDUSTRY WATCH

Crucial role of the retail sector Industry experts gathered at the latest round of Dubai Chamber of Commerce and Industry’s CEO Dialogue - Dubai: World Leader in Retail – to discuss the importance of the retail sector.

he event featured an impressive panel of speakers including Mohi-Din BinHendi, Chairman, BinHendi Enterprises; George Kostas, CEO, Majid Al Futtaim Properties; and Christophe Nicaise, CEO, Ahmed Seddiqi & Sons. Presiding over the event, His Excellency Hamad Buamim, Director General, Dubai Chamber, stated that retail is an important driver of Dubai’s economic growth contributing 10 per cent to the total GDP of the emirate as it helps attract visitors from around the world, particularly high-spending GCC and Chinese tourists. He also added that the city is ranked second globally for retail representation, just behind London, and is favoured by European retailers for expansion while the Asian retailers view Dubai as the first choice for expansion and this is expected to increase in line with rising tourism flows from this part of the world. The Director General of Dubai Chamber further stated that the retail sector is directly supported by Dubai’s geographic location as a hub for the movement of passengers and freight transiting between the East and West. Also, Dubai's position as a favoured retail destination by top global brands and the emirate’s world-class shopping malls add to its appeal as a popular global shopping destination. Quoting a Business Monitor International (BMI) study, HE Buamim informed that the UAE, particularly Dubai, is

The city of Dubai is ranked second globally for retail representation, just behind London, according to the annual CBRE survey for the year 2012. an attractive destination for consumer electronics as the demand for electronic products in the UAE is expected to go up from USD 3.78 billion in 2012 to USD 4.73 billion in 2016, growing per capita by about 33.4 per cent during the same period which is an indication of a promising time for the sector. Meanwhile, Mohi-Din BinHendi, Chairman, BinHendi Enterprises, highlighted the presence of potential opportunities in the retail sector which he said serve as a magnet to pull in top retailers of the world to set up in Dubai, especially those in the fashion business. He also explained that although most of the global brands are present in Dubai, there’s still scope for more as this will directly support the increasing flow of tourists to the emirate.

A STEP AHEAD With the aim to raise the bar and achieve its next stage of growth, Masdar Institute of Science and Technology regrouped its academic programmes.

asdar Institute of Science and Technology is an independent, research-driven graduatelevel university focused on advanced energy and sustainable technologies. In a recent restructuring of its academic programmes, the Institute announced its four departments:

1. Department of Electrical Engineering and Computer Sciences (EECS) This Department, headed by Dr. Hatem Zeineldin, will include ‘Electrical Power’, ‘Microsystems’ and ‘Computing and Information Science’ programmes. 2. Department of Engineering Systems and Management (ESM) This Department, headed by Dr. Mohammad Omar, will include ‘Engineering Systems and Management’ and a new programme expected to be launched soon focusing on Sustainable Critical Infrastructure. 3. Department of Mechanical and Materials Engineering (MME) The ‘Mechanical Engineering’ and ‘Materials Science and Engineering’ programmes will be brought under the Department of Mechanical and Materials Engineering (MME) that will be headed by Dr. Daniel Choi. 4. Department of Chemical and Environmental Engineering (CEE) ‘Chemical Engineering’ and ‘Water and Environmental Engineering’ programmes will come under the Department of Chemical and Environmental Engineering (CEE) that will be led by Dr. Hosni Ghedira. The four departments will integrate with the Institute research centres through appropriate councils and platforms. The integrated approach is expected to bring increased visibility to the Institute’s current areas of research strength and widen stakeholder engagement, while identifying and fostering new areas of research in core domains aligned with the UAE’s evolving research and human capital needs. The establishment of these academic departments will enable Masdar Institute to stay aligned with its mandates of capacity building and knowledge generation to support Abu Dhabi’s strategic sectors as proposed by the emirate’s Vision 2030 Plan. Dr. Fred Moavenzadeh, President, Masdar Institute, said: “The regrouping of the academic programmes creates a very strong synergy amongst the programmes,

Dr. Fred Moavenzadeh, President, Masdar Institute of Science and Technology

and new opportunities for interdisciplinary research. The new structure will more effectively impart academic skills and expertise to graduate students in line with the knowledge-economy objectives as spelt out in the Vision 2030 plan by the country’s wise leadership. As Masdar Institute moves to its next phase of expansion and growth, we believe this new structure will provide an impetus in consistently achieving our academic goals.” Serving as a key pillar of innovation and human capital, Masdar Institute remains fundamental to Masdar’s core objectives of developing Abu Dhabi’s knowledge economy and finding solutions to humanity’s toughest challenges such as climate change. Established as an on-going collaboration with the Massachusetts Institute of Technology (MIT), Masdar Institute integrates theory and practice to incubate a culture of innovation and entrepreneurship, working to develop the critical thinkers and leaders of tomorrow. With its world-class faculty and top-tier students, the Institute is committed to finding solutions to the challenges of clean energy and climate change through education and research.

October 2013

INDUSTRY WATCH

TOP CHOICE: Logistics programmes Several academic programmes connected to cargo and logistics have witnessed a significant boost this year. Here's why... manufacturing and assembly, in a single customs-bonded and free zone environment. This allows companies to focus on the optimisation of their supply chains, using DLC as a global supply chain hub for sea to air or air to air transport combinations.

UOWD campus at Dubai Knowledge Village

ubai has become increasingly popular for its stature as a strategic logistics hub. Geographically, the UAE is situated between the Far East and Europe, making it an ideal candidate for a hub, sitting at the crossroads of international trade and commerce between the Eastern and Western worlds. The UAE is also considered to be the gateway to the world’s most progressive markets, including Africa, India, and China. The projects that have contributed to raising Dubai’s position in the logistics world include the Dubai World Central (DWC) Al Maktoum International Airport, Dubai Logistics City and Dubai Logistics Corridor, among others. The logistics-related developments in the UAE point to a focused approach to attain Dubai’s goal of becoming a mega logistics hub. The Dubai Logistics Corridor, one of the most ambitious projects, links Jebel Ali Port, the Jebel Ali Free Zone and Dubai World Central to form a single custom-bonded Free Zone environment spanning an area of approximately 200 square kilometres. DWC has direct access to the UAE’s main trans-emirates highways, the future Etihad Rail network, Al Maktoum International Airport and Jebel Ali Port, providing unmatched speed, connectivity and flexibility. Dubai Logistics City (DLC) is the world’s first truly integrated logistics platform with all transport modes, logistics and value added services, including light

Academic programmes – an upward trend As a result, several academic programmes connected to cargo and logistics have witnessed a significant boost this year. In 2013, University of Wollongong in Dubai (UOWD) saw record enrolments for its Master of Science in Logistics (MSc Log) programme that combines practical and theoretical aspects of logistics and supply chain management to assist managers in increasing business efficiency and advancing their professional skills. The MSc Log programme at UOWD is designed to develop an employee’s ability to analyse an organisation’s supply chain operations, its strengths, weaknesses, structure and performance and to undertake the design of supply chain systems. The programme also teaches managers to apply quantitative techniques for logistics and transportation related decision-making and to understand the impact of information technologies on logistics and supply chain issues. UOWD’s MSc in Logistics is recognised by the Supply Chain and Logistics Group (SCLG) in the Middle East. The programme also won the SCATA (Supply Chain and Transport Award) in 2010 for the best supply chain and logistics academic programme in the UAE. The University has entered into a Memorandum of Understanding with Maersk Logistics, a demonstration of its strong professional links. The programme is accredited by the UAE Ministry of Higher Education and Scientific Research and is fully recognised within the UAE, GCC nations and internationally for further education and employment in the private and public sectors.

INDUSTRY WATCH

SME trends in KSA A recent worldwide survey revealed that SMEs in the Kingdom of Saudi Arabia (KSA) are gearing up for technology-fuelled expansion drives across the region. per cent in three years. Within three years, 52 per cent said mobile would deliver greater competitive advantage. 3. Social media: The importance of social media is also on the rise. 37 per cent said they use it now, and 43 said they would during the next three years. By 2016, 49 per cent of respondents said it would result in competitive advantage.

new Oxford Economics survey, SMEs: Equipped to Compete, reported that nearly two-thirds (63 per cent) of SMEs in the Kingdom of Saudi Arabia have either completed, are undergoing, or are planning a business transformation with the aim to become more competitive and help drive job creation in the region. Of those, about two-thirds (65 per cent) are planning to enter new geographic markets, nearly double the global average of 37 per cent. In three years, no SME in the Kingdom expects to be operating solely in the country, whereas the number operating in six or more countries will rise from 16 to 41 per cent. The role of technology The survey revealed that 66 per cent of Saudi SMEs said that they would invest in technology only when there is a clear ROI. It also showed that the current investment priority for SMEs in the Kingdom is software related to business management (52 per cent), business analytics (45 per cent) and cloud computing (37 per cent). Here are a few other key findings: 1. Cloud computing: In the Kingdom, nearly onethird of SMEs (31 per cent) said they use cloud computing, but that is projected to skyrocket to 54 per cent in three years – a growth rate of 72.4 per cent. Furthermore, 57 per cent said that using cloud services would offer a distinct competitive advantage within three years. 2. Mobility: In addition, 37 per cent said they used mobile technology now – a figure set to rise to 53

“SMEs in the Kingdom of Saudi Arabia are not only growing in the country and creating vital new jobs, they’re increasingly looking to expand beyond the Kingdom’s borders to seize new regional opportunities,” said Ahmed Al-Faifi, Managing Director, SAP MENA. “Clearly, much of this growth will be fuelled by technology that increases insight, flexibility and overall competitiveness. SMEs are vital economic engines and incubators of innovation, so the positive, progressive sentiments indicated in this study bode extremely well for the future.” Looking ahead… SMEs are expected to be key drivers for economic growth, as the Kingdom continues to diversify its economy in line with the Ninth Development Plan 2010-2014. Part of the Ninth Development Plan calls for strengthening and developing SMEs, including providing them with specialised credit, technical assistance, and removing organisational and marketing barriers in some regions of the Kingdom. SMEs are also expected to make a significant impact on lowering the unemployment rate, which stood at 5.8 per cent as of Q1 2013, according to the Kingdom’s Central Department of Statistics and Information. The Kingdom of Saudi Arabia continues to grow its economy, posting a 2.7 per cent growth in GDP in Q2 2013, with the non-oil private sector growing by 4.2 per cent in April-June 2013, according to news analysis of government data. “The survey shows that Saudi SMEs across various industries are making major changes to their business models, products and go-to-market strategies,” said Sherif Hamoudah, Head of Ecosystem and Channels, SAP MENA. “Globalisation, transformation, and technology will be the hallmarks of successful companies, and, with a commitment to enter new markets and willingness to adopt technology innovations, SMEs have never been better positioned to win.”

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INDUSTRY WATCH

‘Export-focus’ for SMEs in the UAE A study released by the global insurer Zurich revealed that SMEs in the UAE are the most export-focused in the world. opportunity for their business. This figure was double the global average of 14 per cent and significantly higher than Switzerland (10 per cent), Germany (10 per cent) and Brazil (nine per cent). Zurich’s study suggests that the domestic and international expansion of SMEs in the country is supported by the perception of the UAE as a lowrisk jurisdiction, with high competition (42 per cent) considered to be the biggest threat. Whereas other potential risks, such as cybercrime (six per cent), natural catastrophes (four per cent), fire (three per cent) and malicious damage, are considered to be nominal risks. “Zurich’s findings illustrate a sense of real ambition and confidence among SMEs in the UAE to grow their businesses overseas, at a time when other global small businesses are far more cautious about international expansion. This represents good news for the economy as SMEs are a vital economic growth engine for the UAE,” said Brian Reilly, Chief Executive Officer of Zurich’s General Insurance business in the Middle East. “The findings in our SME research highlight the strength of the UAE as key global trading hub, which benefits from a low business risk perception that encourages small businesses to invest in expanding their operations and seek international growth opportunities.” Brian Reilly, Chief Executive Officer of Zurich’s General Insurance business in the Middle East

hallenges, Risks and Opportunities for Small and Medium Enterprises surveyed more than 3,250 SMEs across 12 countries, including 250 businesses in the UAE. A quarter (26 per cent) of SMEs in the UAE reported that they expanded their exporting activities over the past 12 months – the highest figure across all surveyed countries and double the global average of 13 per cent. This figure is particularly notable when compared to established exporting countries such as Switzerland (15 per cent), Germany (eight per cent) and Brazil (eight per cent). In addition to targeting overseas growth, 30 per cent of SMEs in the UAE also reported that they expanded their activities to target new domestic customers over the past year, which compares with a global average of 23 per cent. In response to what they view as the biggest opportunity for their business over the next 12 months, SMEs in the UAE again picked exports, with 28 per cent of respondents citing expansion to international markets as a key

Percentage of SMEs that see international expansion as a key opportunity over the next 12 months: Ranking

Country

Percentage Distribution

United Arab Emirates

26%

Switzerland

15%

Mexico

15%

Spain

15%

Australia

14%

Ireland

14%

United Kingdom

10%

Portugal

Indonesia

Germany

Brazil

Italy

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TECHNOLOGY FOR BUSINESS

Visit DSG at GITEX 2013! Dubai Smart Government Department (DSG) is geared up to host 32 government entities at its massive 2700 plus square metre stand at GITEX Technology Week 2013 from October 20 to 24, 2013 at the Sheikh Saeed Hall in Dubai International Convention and Exhibition Centre (DICEC).

t its Smart Government stand, DSG will showcase the latest government apps and eServices on smart devices in implementation of the initiative of His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, to transform from eGovernment to Smart Government. His Excellency Ahmad Bin Humaidan, Director-General of Dubai Smart Government, said: “Our commitment is to provide a unified platform for visitors to have a better understanding of our transformation

in implementation of His Highness Sheikh Mohammed’s initiative and the directives of His Highness Sheikh Hamdan Bin Mohammed Bin Rashid Al Maktoum, Crown Prince of Dubai and Chairman of Dubai Executive Council for the prompt shift to smart government by displaying the latest smartphone services and applications as part of the connected Smart Government, which will contribute to positioning Dubai as an integrated, creative and knowledge-based city in the 21st century for the convenience and happiness of those living in the emirate.”

Aptis – handy tool for small businesses A new online assessment tool makes it easier for businesses to measure the English language capability of potential employees. At the 10th HR Summit and Expo in Dubai, Philip Rylah, Director Examinations MENA for the British Council, highlighted the importance of the English language within companies and educational institutions involved in international trade and communication. He said: “Companies are increasingly driving demand for English in the region. This

is particularly the case for multinationals. Industries such as oil and gas, IT, maritime and airfreight, telecommunications, banking and finance, as well as tourism and hospitality have the highest need for English-speaking employees. “As the Arab world continues to develop, there is a clear demand for many organisations

DSG began its GITEX preparations early in the year by meeting its stakeholders in government entities and customising the stand according to their needs. The GITEX stand is fully equipped with the latest technology including a high-speed network, display screens and wellstocked halls for press conferences and lectures. Throughout the fiveday event, DSG’s stand will feature over 35 presentations and lectures including the latest smartphone applications, Government Resources Planning (GRP) systems, messaging and collaboration services and Government Information Network (electronic infrastructure) in addition to presentations from participating government entities. More than 250 smart devices are up for grabs in various awareness contests, raffles and surveys during GITEX 2013. To further create awareness and track its activities, DSG has created a dedicated microsite gitex.dubai.ae and will be interacting with fans, followers and customers through its social media channels on Facebook, Twitter and Instagram. It will also have a dedicated television show every day of the event on Sama Dubai called Dubai.ae from 8.40 pm onwards.

to adopt strong English skills. About 75 per cent of English speakers are actually second language speakers and one in four people worldwide use English at a useful level personally and professionally.” A device that can prove useful in this regard is Aptis – a modern, flexible and cost-effective English assessment tool developed by the British Council. Aptis not only helps filter potential employees for interviews, or identify English skills gaps among employees, but also offers an end-toend solution to develop English language proficiency across a firm. Good quality

assessment allows good quality decision-making within organisations. The cost of misplacing someone with the wrong English skills can be huge. “Until now, universities and companies wanting to benchmark the English language proficiency of their students or employees have chosen off-the-shelf tests that are often an imperfect fit. Aptis will allow these organisations to effectively and easily assess the English language levels that are relevant to their requirements,” adds Rylah. For more information on Aptis, please visit www. britishcouncil.org/aptis.

TECHNOLOGY FOR BUSINESS

How secure is online banking? Cybercrime is on the rise and there’s been a lot of discussion on the several different ways it can impact your business – one such area is online banking.

ith the rise of online banking transactions, businesses are now faced with a new problem: theft of payment information. Kaspersky Lab experts explain in further detail: Banking Trojans

Banking Trojans are the most dangerous kind of specialised malware. Once installed on a victim’s computer, a Trojan automatically collects all payment data, and sometimes even conducts financial transactions on the victim’s behalf. Criminals often use multi-targeted banking Trojans which are able to attack customers of different banks and payment systems as well as Trojans that are targeted at a specific bank’s customers. Criminals may send out Trojans in phishing letters which lure the user into clicking on a link or opening an attached file that turns out to be malicious. For mass distribution of banking Trojans, they also actively

exploit vulnerabilities in Windows and popular applications. After furtively penetrating the system, exploits load a Trojan on to an infected computer. In order to attack more efficiently, criminals use exploit packs – a set of various exploits for different vulnerabilities. Once on an infected computer, Trojans use the following techniques: • Intercepting keyboard input – Trojans detect key strokes which help perpetrators steal the account data of online banking users. • Screenshots of a form with financial data entered. • Bypassing virtual keyboards, giving criminals details of the symbols clicked on a virtual keyboard. • Changing hosts files, which redirect users to fake websites even when the address of a legal site is entered manually. • Injection into browser processes lets Trojans control browser connections to a server. The perpetrators can gain account data,

Enhanced storage for your mobile device! The demand for tablet devices is sky-rocketing and to capitalise on this market, Seagate has unveiled a new hard drive exclusively for mobile devices. Seagate, a worldwide storage solutions provider, introduced its new hard drive solution – the Seagate® Ultra Mobile HDD – designed exclusively for mobile devices and delivering up to seven times the storage capacity of a traditional 64GB tablet

with the same power, performance and reliability of a flash device. Seagate has addressed several key areas beyond a standard laptop drive to optimise mobile applications with the Ultra Mobile HDD and its Mobile Enablement Kit.

which the user enters at a bank site, as well as modifying the contents of the online banking entry page with additional forms (webInject), for instance, requesting a credit card number, owner’s name, expiration period, CVV code, secret word, etc. Thus, perpetrators gain access to additional confidential information. Moreover, banking Trojans are able to bypass additional security layers such as two-factor authentication with one-time passwords (TAN codes). One of the approaches the ZeuS Trojan uses works like this: as soon as the victim enters an online banking system and inputs the onetime password, the malware displays a fake notification stating the existing list of TAN codes is invalid and inviting the user to get a new list of passwords. To do this the victim needs to enter all available TANcodes into the relevant form, created by ZeuS through the webInject method, for “further blocking”. As a result the criminals acquire all the victim’s codes, and can immediately use them to transfer the money to their own accounts. In 2012 alone Kaspersky Lab detected more than 3.5 million attempted ZeuS attacks on 896,000 computers in different countries.

These areas include better shock management, heat, vibration and gyroscopic motion—all of which have been heavily tested to ensure the drive delivers the best experience in a tablet solution. Here are some key features of the product: 1. The newly-engineered 2.5-inch drive is just 5mm thin while weighing in at a mere 3.3oz – about the same as a light bulb. Featuring up to 500GB of capacity, it delivers the highest areal density available in a small, ultra-thin form factor

while supporting over 100,000 photos, 125,000 songs or 62 hours of high-definition video and movies. 2. To further support reliability for mobile devices, the Ultra Mobile HDD integrates Seagate’s own Zero Gravity™ Sensor providing better shock management. Incorporated power modes support the drive in sleep, standby and idle enabling it to consume as low as 0.14W and support the long battery life demanded by tablets.

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THE NEXT LEVEL

The missing link Education is so often the missing link in the SME chain â&#x20AC;&#x201C; we seldom hear about the challenges facing schools and colleges, even though they are classic SMEs and face profound issues relating to funding, resources and market competition. The following article redresses the balance, focusing on United World College (UWC) a leading international college brand with twelve schools and colleges spanning five continents, each of which tackles unique financial hurdles and strives to provide a world-class education - not to mention confronting a raft of best practice and governance requirements. We spoke to Sunita Gomes, Chair, UWC UAE National Committee and Member, UWC Council.

o ordinary college, UWC boasts a network of more than 50,000 alumni from no less than 181 countries. Far from offering a conventional campus environment, the whole idea behind UWC is to build a spirit of true international understanding, where values such as service to the community, teamwork and cultural resilience go hand-in-hand with academic success and learning. In fact, students are chosen on the basis of their being able to honour this larger role - and itâ&#x20AC;&#x2122;s no accident that UWC graduates include heads of state,

business leaders, politicians, aid workers, academics and artisans of all kinds. The children and grandchildren of both Nelson Mandela and Desmond Tutu have received UWC educations. Moreover, the prestige of the college is highlighted by the fact that the President of UWC is no other than Her Majesty Queen Noor of Jordan. Sunita, how did UWC come about? The extraordinary journey of the UWC movement began in the United Kingdom, with the establishment in 1962 of Atlantic College,

THE NEXT LEVEL

through the dedicated efforts and enlightened vision of its European founder Dr. Kurt Hahn. He had an unwavering belief that the education of talented individuals, within a cross-cultural and multi-national context would promote respect for pluralism and an enduring sense of community with colleagues from other countries. Entry into a UWC college is based on a student’s commitment to UWC values and how suited they are to champion UWC’s mission. UWC believes that to achieve peace and a sustainable future the values it promotes are crucial: international and intercultural understanding, celebration of difference, personal responsibility and integrity, mutual responsibility and respect, compassion and service, respect for the environment, a sense of idealism, personal challenge, action and personal example. How do the priorities of a UWC education differ from those of a conventional schooling? Kurt Hahn said that the best way to motivate young people was to make them know they are needed. UWC is unique in recognising that education has a higher purpose and potential: to bring young people from across the world together to engage with others on the basis of a shared humanity. Studying at UWC is a levelling experience and a profound one. UWC Colleges typically provide a two year pre-university IB Diploma to students aged between 16 – 19 years regardless of race or creed. What’s different is that:

How can we expect the future to be any different from the past if young people from opposite sides of conflict do not have the opportunity to know each other?

Tell us about UWC in the Middle East. Given that the Middle East is one of the most divided and war-torn regions of the world, does it offer a good market for the UWC concept? UWC is a learning community that seeks constructive ways of engaging conflict. That is precisely why the MENA region is a rich market for UWC. Is it easy? Of course not. Nothing worth doing typically is easy. But the difficulties in this case make the opportunitiy for students that much greater. Our National Committees across the MENA region invest much energy in drawing together students from many different backgrounds. And not just apropos of the obvious conflicts we hear about in the news, but also socio-economic divides. How can we expect the future to be any different from the past if young people from opposite sides of conflict do not have the opportunity to know each other, and to learn in each other’s company?

• High academic standards are intentionally balanced by a broader experience encompassing inter-cultural exchange, international awareness, personal challenge and the development of leadership, responsibility and teamwork. • A very heavy emphasis is placed on student initiative and leadership. • A vital part of the experience, reflected in the importance attached to it, is the How - in real, everyday terms - does UWC idea of students being expected to lead promote ‘international awareness’ and by serving others. ‘intercultural exchange’? Especially within a busy teaching syllabus? The connection with surroundings is At all our colleges academic achievements are important, especially in our more rural put into perspective with a demanding mix of campuses, linking our students with community engagement, international affairs, Hahn’s belief in the importance of them physical activities, service commitments staying in touch with nature. Students ski and creative pursuits. Also colleges share in Norway, canoe in Canada, backpack in the same basic values as outlined in the the US, farm in India, all experiences they UWC mission statement. refer to as transformative and all thanks However each college responds to the UWC to their surroundings. mission statement within the context of its location; this creates distinctive identities based upon local resources and opportunities. For example, UWC Mahindra College has an international body of 240 students living and learning together in rural India. One student initiative is the Akshara programme. The idea is simple, that a UWC college based in a rural and largely underprivileged part of India has a duty to ensure that its presence is a positive contributor to the future development of its host community. Akshara helps students improve their pass rate in the state board exams in addition to teaching them to be aware of their community responsibilities. Though the primary focus of the programme is improve existing educational systems in selected village schools, UWC Mahindra has also created a symbiotic relationship by opening its own doors to young villagers who may otherwise face subsistence farming as their only option.

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because of its international, experiential, and interdisciplinary focus on learning. It is arguably the most recognised and respected high school diploma in the world today. UWC played a pivotal role in the creation and development of the International Baccalaureate (IB) Diploma. The IB Diploma was created by a group of teachers from three international schools - International School of Geneva, UWC Atlantic College and the UN School of New York. It was founded in Geneva, Switzerland in 1968.

Since each campus is in effect an SME, what is the business model that it works to? UWC is a not-for-profit network of 12 independent schools and colleges that are members of UWC International. Through the support of its many donors all schools and colleges work to ensure quality of education, financial sustainability and to extend the impact of UWC. UWC International (UWCIO) is registered as a charity in the UK. How are your teachers trained and do they have qualifications recognised internationally by traditional teacher training colleges? Like its students, UWC teachers come from all over the world. For example, Mandarin teacher, Haiyang Wang, comes to UWCUSA through an arrangement with the Confucius Institute, a non-profit public institution aligned with the government of the People’s Republic of China that seeks to promote Chinese language and culture and facilitate cultural exchanges. UWC faculty and staff are not only experts in their respected fields, but they also share a commitment to the UWC mission and a belief in the students who will carry it forward. Additionally, colleges like UWC-USA for example, have hosted International Baccalaureate workshops for more than 25 years, successfully meeting the needs of teachers who are new to IB as well as seasoned educators. Do your students sit the same exams as students in traditional sixth form colleges? UWC colleges offer the International Baccalaureate Diploma Programme (IB)

Here in the UAE, how do you promote the benefits of a UWC education? The UWC UAE National Committee is new; the UWC International Office in London has only recently launched our website www.uae.uwc.org. Our volunteers are single digit at present so you don’t see us

out and about right now even as we are happening. It’s under the ground like the roots of a tree, but our presence and our passion will spring up and you’re going to see this big tree of volunteers, alumni and donors in the UAE within a few years.

How did UWC build its financial template in the early days, and manage to expand so successfully? UWC Atlantic College was opened in South Wales in 1962 by the German educationalist Kurt Hahn – who also set up Gordonstoun School in Scotland and the Salem School in Germany – as a practical response to the search for new and peaceful solutions

in a post-war world driven by political, racial and economic divisions. Each school and college has its own board, budget and funding model; the funding, in other words, does not come from a central source. Most colleges have ‘founding donors’ who have made the establishment of the college possible by a significant donation. Colleges today rely on several sources of funding, including endowment funds, state funding, private companies, philanthropists, individuals, alumni, national and international foundations. The UWCIO has in the past three years also embarked on an international funding strategy which seeks funding for the whole movement. For example, UWC International recently secured a large donation from the Qatar Foundation. Additionally, two large donations were secured a few months

ago to support 50 students from Pakistan and 36 students from Eastern and Central Europe to go to UWC in the next five years. Tell us about the Corporate Governance and Best Practice criteria you work to? UWC International’s governance structure consists of a Board and an International Advisory Council. The Board and the Council set the strategy and work relentlessly and consistently to ensure that we deliver quality in education and also provide opportunity to share good practice across the organisation. For an online version, please visit:

www.smeadvisor.com/2013/10/themissing-link/

ACCOUNTING FOR EXCELLENCE THE MIDDLE EAST ACCOUNTANCY AND FINANCE EXCELLENCE AWARDS WEDNESDAY 11 DECEMBER 2013 AT THE RITZ CARLTON, ABU DHABI once again, the very best talent in the world of accountancy and finance will be celebrated by icAew at a stellar awards ceremony. icAew is a professional membership organisation supporting over 140,000 chartered accountants around the world. And, on wednesday 11 december 2013, at the ritz carlton in Abu dhabi, weâ&#x20AC;&#x2122;ll be recognising excellence in twelve categories featuring: cfo of the year, corporate finance deal of the year and the internal Audit excellence Award with an impressive line up of speakers, special guests and entertainment, it all adds up to a truly memorable evening. to submit a nomination or for more information, visit icaew.ae/awards nominations close on 1 november 2013

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