SME ADVISOR issue 113

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strategic SME partner

ISSUE 113

A slice of success Getting in deep with Freedom Pizza’s Ian Ohan

Whatever next?

Top tIps for product development

Got your

number The power of database marketing

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sme advisor ISSUE 113

EDITORIAL COMMITTEE SME Advisor is delighted to announce that during 2015 we will be working with some of the leading names in the SME space key figures who have kindly agreed to take part in our new Editorial Committee. This panel will play a vital role in channeling the feature content of our magazine and ensuring that we are more topical than ever - analyzing and discussing the ‘real world’ issues of tangible value to our readership and bringing industry-leading expertise across the publication and its raft of prestigious related events. We are delighted to introduce the following SME personalities:

Avishesha (Avi) Bhojani Avishesha (Avi) Bhojani is the CEO of Bates PanGulf (BPG) Group. At the helm of the BPG Group since 1991, he is responsible for consolidating the Group’s interests across advertising, public advocacy, public relations, design, activation, media asset management and digital verticals, in the Middle East and North Africa region.

He is also instrumental in the conceptualisation and execution of a number of strategic retail initiatives in Dubai such as Dubai Shopping Festival and Dubai Summer Surprises.

Professor Val Lindsay, MSc (Otago), MBA (Victoria), PhD (Warwick) Dr. Val Lindsay is a Professor in Strategy and International Business, and Dean of the Faculty of Business at the University of Wollongong in Dubai (UOWD). She has a keen interest in teaching and research in the areas of international strategy, exporting, services internationalization, entrepreneurship, small and medium-sized enterprises, networks and clusters, and economic development.

Essa Al Zaabi Essa Ali bin Salem Al-Zaabi is the Senior Vice President - Support Services at Dubai Chamber of Commerce & Industry, and the Director of the Dubai Chamber initiative, Tejar Dubai. He is a proven UAE leader and business entrepreneur, with the ability to rapidly mobilize teams to achieve organisational change and integration.

A self-motivated team-builder and corporateperformance driver, he has held a number of key positions throughout his career that has reflected his passion and commitment to the development of UAE nationals as business professionals, young entrepreneurs and future leaders. Previously he has worked with the National Human Resource Development and Employment Authority, as the Director of Tanmia – Dubai Office, then became

the Vice President of Human Capital at the Dubai World Trade Centre, and later on the Deputy General Manager of the Emirates Institute for Banking and Financial Studies.

His Excellency Abdullah Saeed Al Darmaki His Excellency Abdullah Saeed Al Darmaki is the Chief Executive Officer of the Khalifa Fund for Enterprise Development, a government entity that spearheads the support and development of SMEs in the UAE. His role is integral to the strategic planning and management of the organisation in alignment with the Executive Council’s objectives.

With over 17 years of experience in Oil & Gas, Petrochemicals and Manufacturing industries, and a background in Sales & Marketing, he has held a number of leadership positions with governmental and private organisations in the UAE. Mohan Valrani Mohan Valrani came to Dubai in the year 1966 and has been staying in Dubai for last 48 years.

Mohan Valrani is the Senior Vice Chairman & Managing Director of Al Shirawi Group of Companies, which is a large conglomerate in the UAE and one of the largest in the Arabian Gulf, with headquarters in Dubai (UAE). Apart, from his business activities, he is also deeply involved in social activities. He is the founder - Chairman of the India Club and on the Board of Trustees of The Indian High School and has been as instrumental in contributing to the success of these institutions.

Roberto Mancone Roberto Mancone is the Global Head of Business Products for SMEs and MidCorporate for PFB Germany, PBC Int’l and Postbank. He is Chairman of the Global Credit Product, Deposit and Payments Executive

Committee of the Private and Business Clients Division of Deutsche Bank.

He is Board Member of the Advisory Board of Deutsche Auskunftei Service GmbH, Chairman of Business Advisory Council of EFMA, member of ECGI (European Corporate Governance Institute) and Member of the Advisory Board of BAA, the Alumni Association of Bocconi University and SDABocconi.

Yogesh Mehta Yogesh Mehta is the Managing Director of Petrochem Middle East.

He graduated with a Bachelor of Science in Chemistry from National College Bandra in Mumbai, India. Over time he opened his own chemical trading business, which enjoyed fair success. He then relocated to Dubai in 1990 and within five years, he managed to establish a business by opening a state-of-the-art storage terminal for bulk and drum chemicals.

Driven by passion and a need to succeed, he established Petrochem Middle East in 1995 with friend and business partner David Lubbock.

Petrochem Middle East has since grown from strength-to-strength to become one of the largest independent petrochemical distributors in the Middle East. A self-made billionaire, his greatest attributes are mentoring and leading by example.

Sultan Sobhi Batterjee Sultan Sobhi Batterjee is the owner and CEO of IHCC, the leading Hospital Construction Company in the Middle East and Africa, and Founder and President of Lifestyle Developers Ltd. He is a member of several social and economic associations including the Young Arab Leaders Society in Dubai, the young entrepreneurs committee Jeddah Chamber of Commerce and he is also a Board Member of the (EO) Entrepreneurs’ Organisation in the USA. He holds a number of academic honours including a Bachelor’s Degree in International Finance and Accounting from the Regent’s Business School in London and a Masters in Entrepreneurship from the Entrepreneurs’ Organisation/MIT and Strategic Diploma from Oxford among others.

FROM THE EDITOR MANAGEMENT Dominic De Sousa Chairman Nadeem Hood Group CEO Georgina O’Hara CEO - Business and Consumer EDITORIAL Group Director of Editorial Paul Godfrey paul.godfrey@cpimediagroup.com +971 4 440 9105 Editor Rushika Bhatia rushika.bhatia@cpimediagroup.com +971 4 440 9115 Event Sponsorship Manager Gill Fairclough gill.fairclough@ cpimediagroup.com +971 4 440 9120 DESIGN Head of Design Glenn Roxas Senior Graphic Designer Froilan Cosgafa IV Production Manager James Tharian Data Manager Rajeesh Melath

What your SME has in common with the Greek government…

With so much talk about the current state of the Greek economy and will it/won’t it exit the Euro, the vast array of ‘smoke and mirrors’ tactics employed by both sides has tended to obscure the real obstacle facing the Greek government - cashflow. At the macro, national level, as well as at the micro, local level, cashflow is king. Whether Greece can repay the IMF in full, or extend its credit terms, isn’t the real issue: the crux of the matter is that without continued bail-out funds, Greece won’t have any cashflow and can’t pay its bills.

Whether or not a business (or a government!) has cashflow is the real hallmark of its success and viability. When the great ‘junk bonds’ guru Michael Milken was looking to source SMEs that he thought could support a bond issue, the first thing he looked at was cashflow - not capital, not assets, but the ability of a business to get its bills paid on time and reward its stakeholders in a timely way as and when it needs to. No coincidence as well that in a recent survey from the world’s No.1 management think-tank - Wharton School of Business - the ability to deliver cashflow was seen as a more important trait of great leadership than either acquisition strategy or product innovation.

What makes cashflow so important as a measure of success is that you can’t create it artificially: you won’t be able to secure it by getting a business loan or secondary finance, because that means that you’re using capital to cover up an intrinsic shortfall in the business and simply digging a deeper hole for yourself. The only ways to secure good cashflow are, firstly, by finding healthy customers who pay largely on time (preferably a range of sizes and styles of customer, to hedge against over-dependence and deteriorating markets); secondly, by avoiding excessive costs; and lastly, to have a well-organised finance team - whose skills and prudence are the heartbeat of the business. Note here that the SME has to be cast-iron in its pursuit of resourcefulness and building strong internal operations (and the same is true at the macro level, when the IMF asks Greece to enact major structural reforms).

Cashflow is also the only sound basis on which to grow: it’s the foundation of all M&A activity, for example, and the first thing that a bank or VC looks at when considering any kind of major refinancing initiative. In a less grandiose way, it’s also the key factor that will lead the growth opportunities for SMEs as they approach the all-important realities and challenges of Q4. Best wishes with reaping the benefits of cashflow success in the remainder of the year.

Enjoy this issue of SME Advisor.

Paul Godfrey Senior Editor Printed by Al Ghurair Printing & Publishing LLC

Head Office PO Box 13700, Dubai, UAE Tel: +971 (0) 4 440 9100 Fax: +971 (0) 4 447 2409

Rushika Bhatia Editor Talk to us: E-mail: paul.godfrey@cpimediagroup.com Facebook: www.facebook.com/SMEadvisor

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© Copyright 2015 CPI. All rights reserved. While the publishers have made every effort to ensure the accuracy of all information in this magazine, they will not be held responsible for any errors therein.

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STRATEGIC SME PARTNER

KNOWLEDGE PARTNER

Contents

“Consumers perceive any brand based on the quality of service they get, the kind of service staff they interact with and how we care for them each and every day.”

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p44

“DMCC has undergone a huge transformation in the recent past, with a fresh focus on innovation and delivery complementing what is already known as an exceptional trading hub and infrastructure.”

ON THE FRONT COVER

p52

07 Editorial Committee SME personalities bringing industry-leading expertise across the publication and its raft of prestigious events.

09 Editor’s Note Paul Godfrey highlights what your SME has in common with the Greek government…

12 Data and decision making Our infographic section showcasing key trends shaping the SME marketplace.

Ground level 14 Where’s the time?

We present top time management tips that will help you supercharge productivity (and profitability).

18 Product development. Will you be a champion of change – or the victim of circumstance?

We clarify what needs to be done.

sme advisor ISSUE 113

44 Entrepreneurial advances – Freedom Pizza’s fresh start.

We meet Ian Ohan, Co-Founder and CEO of the popular food chain.

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48 Voice of an entrepreneur: Aly Rahimtoola.

The hardened entrepreneur shares candid insights on life as an SME owner.

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64

52 Eight days to free zone status.

We explore DMCC’s attractive value proposition.

Legal 56 What do I need to do with my Memorandum of Association?

Experts from Clyde & Co. provide sound answers in light of the new UAE Commercial Companies Law.

22 Promoting key staff.

Do you have a personnel plan to build your business? SME Advisor investigates…

26 Quality management – techniques and strategies to get you ahead.

Enjoy our detailed blueprint!

Business Banking 32 Connecting with the customer.

Why effective database management is key...

Digitally Disruptive 36 The Roaming Entrepreneur.

Stay connected on-the-go with Etisalat’s stellar solution.

Movers & Shakers 40 Reaping the rewards of success – Donna Benton’s growing empire.

An exclusive interview with the dynamic entrepreneur…

Strategy 60 Cashless Exporting.

Dr. Ashraf Mahate, Head of Export Market Intelligence, Dubai Exports, sets the scene…

Country Focus 64 Doing Business in France.

We asked Business France to give us a brief overview on this lucrative market.

Family Business 68 A Family Affair Here’s some compelling market intelligence that will help family business owners in their pursuit for success.

Finance 74 Breath of fresh air: Peer to Peer finance.

The team at Beehive clue us in to this emerging concept.

Tech Trends 78 Top apps for the ardent traveller.

Data and Decision making

Unlocking the potential of the THE FUTURE OF IoT

Number of connected devices:

2bn

15bn

200bn

objects in 2006

objects in 2015

objects in 2020

The total global worth of IoT is estimated to reach

The global IoT market is estimated to expand at a CAGR of

$6.2 trillion

31.72%

by 2015

between 2014 and 2019.

OPPORTUNITIES GENERATED IoT-related products and suppliers will create an incremental revenue exceeding $300 billion by 2020.

Industrial internet has vast potential and could possibly add $10 t0 $15 trillion to the global GDP over the next 20 years.

In terms of economic growth, IoT is predicted to create an impact of $3.9 trillion to $11.1 trillion per year in 2025.

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WHAT ARE BUSINESS LEADERS SAYING?

96%

believe that their organisations will be using IoT in some shape or form within the next three years.

76%

are already looking into IoT and its range of benefits.

68%

report that their companies are investing money within the IoT landscape.

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Data and Decision making

Internet of Things (IoT) IoT ACROSS INDUSTRY SECTORS

Manufacturing

40.2%

Healthcare

30.3%

Security

7.7%

Retail

8.3%

Transportation

4.1%

Focus on the manufacturing sector: a) The manufacturing sector experiences a 204% year-over-year growth in the number of IoT connections. b) By 2016, 53% of manufacturers will offer smart products. c) Within factories, IoT can create 10-15% of energy savings and improve labour efficiency by 10-25%.

THE SECURITY RAMIFICATIONS

80%

of connected devices raise privacy concerns.

80%

fail to necessitate passwords of sufficient complexity and length.

60%

don’t use proper encryption when downloading software updates.

IoT’s BENEFITS TO SMEs 1

Improved efficiency of processes

2 Higher employee productivity 3

Increased convenience to customers and enhanced service experience

4 Advanced production quality monitoring 5 Better understanding of data

Sources: TechNavio, Gartner, GE, Cisco, HP’s Internet of Things Research Study, Ironpaper.com, Verizon’s State of the Market – The Internet of Things 2015, Best Computer Science Degrees and The Internet of Things: Mapping the value beyond the hype by McKinsey Global Institute.

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GROUND LEVEL

Where’s the

time?

As a business owner, you fully understand the importance of the old adage “Time is money”. But, even the most efficient entrepreneurs can often get caught up in the whirlwind of SME realities and lose out on significant business due to ineffective time management. In the following feature, we present top tips that will help you supercharge productivity (and profitability)!

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GROUND LEVEL

“Once you have mastered time, you will understand how true it is that most people overestimate what they can accomplish in a year – and underestimate what they can achieve in a decade!”

– Anthony Robbins

As a business owner, you are required to don several different hats and juggle various roles within your company. While it is necessary for you to stay involved in all areas of your business, the reality is that managing conflicting demands in a haphazard manner can often lead to disastrous results including loss of a key client, low customer satisfaction or lack of proper innovation. Effective time management can help you – a) Maximise the use of your business resources b) Get more business c) Spend more time focusing on key tasks d) Stay organised and disciplined e) Gain more time for innovating and implementing new ideas

Here are ten steps to help you manage time effectively...

1

IDENTIFY your goals

Writing down what you want to achieve is a good way of understanding the direction you need to be heading in and it gives you a clear idea of what needs to be undertaken to get there. When www.smeadvisor.com

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GROUND LEVEL

One of the easiest ways to make more time for yourself is to build a team you can trust, and delegate to them.

making this list, try to come up with ‘SMART’ goals, i.e. goals that are Specific, Measurable, Attainable, Relevant and Time bound. Following this format will help you formulate goals that are concise, yet detailed, in nature. For instance, instead of saying “I will develop my marketing plan this year”, you should say “I will hire a marketing specialist and launch our online marketing campaign in three months’ time from today”.

2

Make a to-do list

Write down all the tasks that you need to undertake in order to achieve your goals. Divide them into daily, weekly and monthly lists. Ensure that each task is well defined and has a reasonable timeframe attached to it.

Typically, you should allocate 75 per cent of time from your day to these tasks and allow 25 per cent of your time for unforeseen circumstances or unexpected issues.

3

Prioritise taskS

Look through your to-do list and mark the tasks with high priority. Remember efficiency is doing things right but effectiveness is doing the right things.

Ask yourself – “does this task directly affect the bottom line of my business?” or “is this going to increase profits?”

Increasing profitability of your business should be on the top of your list. On the other hand, it may be the case that certain departments of your business are running smoothly while others need special attention. Analyse this carefully when setting your to-do list for the day.

4

Implement the Eisenhower method

This is a popular method implemented by several renowned business 16

leaders. Sba.gov explains, “The Eisenhower method is named after President Dwight D. Eisenhower, who said, “What is important is seldom urgent and what is urgent is seldom important.” To use the Eisenhower method, take the tasks created from your goals, along with your ongoing business operational needs, and sort them into four categories: a) Urgent and important: do these tasks immediately. b) Important but not urgent: put these tasks on your calendar for at a later time. c) Urgent but not important: delegate these tasks to someone or assign the tasks to the lowest priority. d) Not important and not urgent: these tasks may never get done because tasks in the other three categories will take priority.”

Following the previous point, using this strategy will ensure that your time is fully dedicated towards the right things.

5

Use technology to empower you

From simple tasks such as bill payments to complex accounting procedures, technological software can help you automate processes and get work done quickly. For instance, setting up an auto-reply for common inquiries or using a task management app to delegate responsibilities and check the progress of a project. Technology can also aid in multitasking; you can Skype with your colleagues, while creating a proposal for your upcoming meeting, for example. Evernote is a fantastic app that lets you make notes, organise meetings, manage projects and so on. Similarly, Mint.com is great for managing finances and Salesforce. com for customer relationship management. Of course, it is important to add that such technology should be used in moderation and only to serve your business purpose. www.smeadvisor.com

GROUND LEVEL

Top tip for SMEs!

Data analysis:

Managing time Number of employee roles business owners have to typically take on:

3 to 4 5 to 6

46% 30%

72% of business owners say they work longer working hours as well as on weekends

53% of business owners believe that having to fill in multiple roles is one of the most difficult aspects of their jobs

50% say not having enough time to get things done is a difficult aspect

78% of business owners report that their company’s usage of mobile apps saves time Sources: Evoice and Mavenlink

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6

Assign duties and delegate responsibilities

One of the easiest ways to make more time for yourself is to build a team you can trust, and delegate to them. Start by understanding the strengths and weaknesses of your employees and assign duties accordingly. As a business owner, a majority of your time should be set aside for improving your overall business offer, reviewing finances and building new partnerships. All other areas such as hiring, IT, customer service and so on should be left in the capable hands of your team members.

To ensure that the work is being done in accordance to your guidelines, set a monthly review meeting to catch up with your staff.

7

Outsource

As an SME, it is quite possible that there are tasks that are beyond your area of core specialisation such a PR, accounting and so on. Don’t be afraid to outsource such functions to external agencies. This can save you a lot of time, effort and money.

8

Set aside time for e-mails, meetings and phone calls

Responding to e-mails or phone calls can easily eat into the most productive part of your day. Set aside a time for answering e-mails and stick to it; research suggests checking e-mails mid-day or towards the end of your day is ideal as this is when your productivity levels tend to dip. Using labels and categories within your inbox also allows you to receive and respond to the most important e-mails rather than sifting through each and every message. When it comes to meetings, get into the habit of reviewing a written meeting agenda prior to every meeting in order to evaluate if you need to be

in it. It is very often the case that a client meeting needs your attention over an internal team meeting. Most importantly, avoid participating in meetings to fill in your day and use any spare time towards brainstorming or taking a break! In case of any other distractions, be assertive and let the opposite party know that you will need to excuse yourself after a few minutes and get back to what you were doing.

9

Create a time management plan

A time management plan is essentially a written compilation of all the above mentioned points. It is a document that ties in all these elements into one cohesive strategy document. Such a plan is useful if you are working with business partners and need to spread tasks across the board. It ensures that all of you are kept in the loop and are fully aware of each other’s workloads.

In addition, it gives you a clearer picture of how much time you spend on each function of your business.

10

Enjoy some time by yourself

Entrepreneurs can experience burnout too, so it is critical to spend time away from your business so that you can revaluate, rejuvenate and look at the bigger picture. This doesn’t need to take up a large part of your day – it could be 10 minutes of reading the newspaper or 20 minutes of yoga before you start your day. Staying physically and mentally fit will enable you to give your best to your company.

Good luck!

For an online version, please visit: www.smeadvisor.com/2015/07/wheresthe-time/

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GROUND LEVEL

Product development will you be a champion of change - or the victim of circumstance?

Time doesn’t stand still, and no-one’s product or service offer is resistant to evolving trends and customer needs. Just ask Kodak or Nokia about swimming against the tide of change. Yet companies end up resisting product development because the process of innovation or improvement is no easy task.

Here, Senior Editor Paul Godfrey sets out to clarify what needs to be done to set the pace of change and when you’ll need to do it.

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Product development is a hazardous business. According to the UK’s Department of Trade & Industry, about 77 per cent of all new products fail when they are brought to market. So does that mean that it’s better to stick with what you’ve got and add on a few improvements?

That depends on the severity and competitiveness of the situation you face. Promoting a product with the phrase ‘new look and better performance’ can be a winning line - as long as the competition didn’t already overtake you two years ago.

Due to product development carrying inherent risk, over the last

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GROUND LEVEL

Promoting a product with the phrase ‘new look and better performance’ can be a winning line - as long as the competition didn’t already overtake you two years ago.

20-30 years a number of the world’s leading industrial consultancies have endeavoured to ratify and standardize the process, creating a benchmarked sequence of activities that contains recognizable key steps everyone can understand and follow. These processes are often too elaborate and costly for SMEs to follow directly, but nonetheless they provide helpful templates that clarify what a good product development path can involve.

The fact that product development has been increasingly crystallised as a ‘science’ is underwritten by the fact that there are dedicated

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institutions and professional bodies such as the Product Development and Management Association (PDMA) and the Product Development Institute (PDI).

(We should also mention here that the phrases ‘product development’ and ‘new product ‘development’ are often used in an interchangeable way, and very seldom relate to two entirely different processes).

Note that while as a consumer, you experience constant product development and change in many areas of your key lifestyle purchases (mobile devices and the automotive sector being key examples), these

changes result from a prolonged and conscious commitment to change on the part of the manufacturers you deal with. It’s always worth asking how your own business would be perceived: is it a true champion of evolving customer needs, anticipating market demand and at the forefront of sector improvements? Or is it stuck in the same old ways year after year?

You might be in a sector - trade, for example - where you may not think that the idea of ‘product’ development is relevant: but just put that scenario to the oil tanker fleets who had failed to source routing

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GROUND LEVEL

options prior to the trade embargos with Iran, and the picture looks rather different.

Do you need to change?

Recognise the symptoms!

Most of the factors indicating that you need to invest in product development relate to a marked change in performance, or sudden insecurity in markets where your presence, revenue and market share were originally very strong. There are a number of classic indicators - but remember there is no substitute for simply asking customers for feedback through regular contact, whether via social media or structured questionnaires. Key indicators suggesting an urgent need for change include the following – • Growth has slowed dramatically or there is no growth at all Typically, there are four factors to consider here. Firstly, has your sales staff line-up changed dramatically? Is there an economic downturn impacting product up-take? Have there been major changes among your customer base, perhaps a significant merger that dented the breadth of your client portfolio? Is there a shortfall in business across a particular customer demographic? If the answer is ‘no’, then in all likelihood you need to revisit the strength and relevance of your product line.

• Business from major customers declines Given that your customers still need the style of goods you make, this is a sure-fire indicator that competitors are doing something you’re not. Perhaps that may relate to price, not specification as such, so you need to streamline production to keep costs lower - and this in itself is a very important aspect of product evolution and development. The larger question to ask is ‘what needs does my competitor’s

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product meet that mine does not?”

Be aware that at this stage, it might already be very difficult to catch up.

• New companies with very little track record are able to steal your market Especially in technology markets, companies can come along with better technology and steal the show. It doesn’t matter that they have no pedigree or experience their products are just better and everybody wants them. Time to look at radically boosting and upgrading your own product offer.

• You’re constantly caught up in pricing wars People - and markets - aren’t stupid: if they perceive that a product is rich in innovation and quality, they will pay a premium price.

If you’re forever being asked to lower your price, then it’s because you’re perceived as offering the same as everybody else and you’re operating at a level where price is the only denominator. Unless you deliberately set out to be a ‘bargain basement’ provider, it’s time to invest in a USP that makes you stand out from the crowd and command that higher price.

• Advertising and marketing initiatives get poorer and poorer results This can be a powerful indicator that you’re perceived as offering the ‘same old, same old’ and are unable to compete in competitive markets.

Especially true if you’re working with a strong advertising house and are confident that it’s not the quality of your marketing that’s in doubt.

• Customers are making negative comparisons with other providers and saying you could offer more There’s no more obvious indicator that you’re falling behind the times than this. At the very least, it’s a sign that you’re competitors have found a better way of packaging their products with a raft of extras

and bonus features. What are you going to do to compete with them? The first step is to listen to your customers: is their message focused on the peripherals around your offer, or addressing more fundamental issues? It may be a question of upgrading your marketing or changing your distributor - or is it because your technology, design or quality of research has fallen behind the pack?

• The number of businesses in the market is shrinking This is a key symptom of a declining market: no-one walks away from a growing sector.

Beware how deceptive this change can be - as the number of competitors declines, your business does better and better.

Yet this is only a temporary fix, before the opportunity disappears altogether. Watch where the competitors are heading and where the new commercial contest is hotting up. Don’t be the last provider in a doomed market and accept that you might need to totally reinvent the profile of the business and its product range.

Confronting the need for product development Typically, the SME sector is the most productive when it comes to product development: it’s not only responsible for about 50 per cent of all new product launches each year, but has the best implementation record, with more than 60 per cent of the successful new products requiring little or no modification in the critical first few months after market release.

The question is, what is the best process to follow when deciding to develop a new product offer, or further evolve an existing product or service? SME Advisor spoke to the International Labour Office (ILO), who have collated the critical development steps from the standard

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GROUND LEVEL

models created by leading industrial agencies. The five steps they recommend are ‘Ideation’ – the process of fixing the idea and its USP This all-important first step is the absolute core of the development process. For clarity and precision, it’s often broken down into five separate phases. These are • Front-end innovation (ie, where do we really want to take this product or service?)

• Opportunity identification • Opportunity analysis • Idea genesis, idea selection • Idea and technology development.

These steps embrace the two key aspects of the ideation path - the creation and sharpening of the idea and the development process that will prepare it for commercial sale. The idea itself is likely to be the synthesis of your team’s understanding of the market and its needs, their technology/professional service know-how and the matrix of capabilities, resources and cost constraints that development is subject to.

One of the most effective approaches for getting this first phase underway is the classic SWOT analysis - looking at Strengths, Weaknesses, Opportunities, Threats. You might want to create a special team or committee for getting this brainstorming process underway, duly armed with budgets and necessary developmental timeframes.

Technical and market testing of product ideas At this stage, when the core innovation has been finalised and takes on a solid form suitable for detailed discussion, many companies will then embark on a detailed market research initiative, asking relevant representatives of the public and key target-prospects for their views on whether the idea is viable.

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This can result in very useful finetuning of the idea and the adoption of practical ‘tweaks’.

For help with technical issues, companies can take their ideas to specially-certified test centres, evaluation laboratories or well-known engineering consultants. It’s also common practice to seek input from university and college departments and their specialist testing services.

Establishing the idea as exclusively yours Always take steps to protect your fresh ideas and innovative new products. This is equally true whether you are you are a media house, an industrial manufacturer, or a professional services firm. The important factor here is not only preventing competitors from copying (stealing!) your ideas, but ensuring that your product has the marketable ‘uniqueness’ that will allow it to be licensed to other businesses should you so wish.

Note, though, that obtaining patents in GCC states is a costly and often lengthy process, and you will want to appoint a specialist patents lawyer. Similarly, ring-fencing your Intellectual Property (IP) is a complex and specialist legal process. In both cases, forward planning is essential; although each process can effectively run in parallel with the product launch.

Design, research and development ‘R&D’ is a classic phase of product development, critical for refining designs and functionality. It can also be financially draining, and in fact many banks and finance houses will provide specialist loans for smoothing progress through the necessary R&D path. (Applications for funding of this kind will generally need to be accompanied by a detailed business plan costing in the contribution that will be made by the new product and the timeframes this will involve).

R&D is costly because it can involve creating prototypes and testing them

for practicality, form and function and then potentially refining many times over. This will also involve preparation and review of marketing plans and sales forecasts, feasibility studies, and more.

Getting closer to market – promoting your new product There’s no point in going through all the time and trouble of developing a great new product if your customers don’t know about it. This ‘educational’ process can require significant rethinking of existing approaches to marketing and advertising. For example, it may be necessary to – • Re-claim a market that has been lost to competitors; you might therefore need to build a completely fresh lifestyle positioning of the new product from scratch.

• Commission a PR company, establishing a raft of associations for the new entity across a variety of events and media and positioning it as a natural, logical choice.

• Disseminate a wealth of messaging via social media, generating industry discussion and a vibrant range of comment across potential markets.

• Source new distribution channels that are better-aligned with the product’s associations and positioning and mirror the latest developments in your market.

New product development is at the core of your business’ ability to prosper and thrive in changing markets. Is it worth the large amount of reinvention, research and fresh resource allocation? Only you can answer: but if you take too long to reply, it might not be worth reorienting your business at all…

For an online version, please visit: www.smeadvisor.com/2015/07/productdevelopment/

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GROUND LEVEL

Promoting key staff do you have a personnel plan to build your business?

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GROUND LEVEL

MANY BUSINESSES SIMPLY PROMOTE THEIR TALENTED OR TOPPERFORMING STAFF AT RANDOM, IF AND WHEN THERE’S A CREDITABLE ACHIEVEMENT OR A RECORD OF SUCCESS. YET THERE’S ANOTHER APPROACH THAT’S BETTER-ALIGNED WITH BUSINESS NEEDS AND CAN BE A POWERFUL FACTOR IN FUELLING COMPANY GROWTH. IT’S ONE THAT PLACES PEOPLE AT THE CORE OF THE BUSINESS AND SEES THEIR DEVELOPMENT AS A KEY STRATEGIC DIRECTIVE. SENIOR EDITOR PAUL GODFREY INVESTIGATES…

An old adage says “Fail to plan and you plan to fail”. This is exceptionally true in the context of staff recruitment and promotion.

While you may think that the region is full of people who can meet your requirements for senior staff and fill top positions as and when required, according to the global personnel agency Manpower Group , interviewing and recruiting people from outside the business is five times more costly than training and nurturing the ones you already have. Moreover, the facts show that external recruitment is very hit and miss, with the right talent scarce and most businesses getting through two to three unsatisfactory appointments before finding the top performer they wanted all along.

Not only is it a good idea to focus on the people you already have, but it makes good commercial sense to create a structured personnel promotion plan that ensures strong and productive throughput and progression for the people who will make a difference to your business.

Recruitment, development, maturity A proper plan will tackle each end of the recruitment and rewards process. It will • Describe an effective process for recruiting employees • Have a clear, crisp template for developing skills and abilities • Prepare staff for more senior roles • Have a powerful retention capability to ensure a return on the organisation’s investment.

It will be effective because it is rooted in a deep and considered understanding of company culture and day-to-day behaviour. So it will pride itself on • Understanding the organisation’s long-term objectives.

• Identifying people’s real developmental needs.

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• Second-guessing workforce trends.

• Being aware of the skills pool created by existing employees.

• Considering the impact that not promoting would have on the current workforce.

• Analysing the cost of recruiting and training.

Note that this is not intended as a strategy only for elite staff or for director-level retention; rather, it can be an effective blueprint for all levels of personnel and become an organic part of the company’s structure and forward planning.

The idea here is to provide a holistic approach that recruits the right people from Day One (ie, both in terms of skills and ‘cultural’ fit), then moulds them in a way sympathetic to the business’ longerview requirements. It means that whatever the strategic ‘forks in the road’ that the company may be facing - going for an IPO, breaking new markets, launching a new product, committing to a better online presence, etc. - there is always a people solution to support the necessary operational decisions.

When to promote - the role of good timing Having a structured plan will only work if the right people are promoted into the right roles - and at the right time. Promotion is a serious decision with financial, personal and cultural ramifications, and it pays to consider a variety of factors before making any moves that it may well be impossible to reverse. You will need to keep in mind the following 1. Make sure you develop a comprehensive set of benchmarks for key positions so that everyone’s performance can be properly evaluated against the job competencies required.

2. Identify the exact levels of competence (and strengths and weaknesses) for each member of

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GROUND LEVEL

Employees can be tested and assessed against both the agreed benchmarks and evolving management expectations to see how well they match the profile of a potential manager.

staff, so that there are no errors or misjudgments about who can be placed where.

3. Having more than one candidate for each key job is important.

Success happens most often when there are choices between two or more qualified people.

4. Build a list of relevant seminars and workshops for employees to attend. Their keenness (or not) to learn is a great indication of eligibility for promotion.

On returning from training/ seminars, employees should be encouraged to share what they have learned with other staff.

5. Arrange a series of interactions between promising, upand-coming staff and top management. This can not only isolate and identify potential weaknesses but groom the employee on preferred behaviour and the management’s view of objectives.

6. Employees can be tested and assessed against both the agreed benchmarks and evolving management expectations to see how well they match the profile of a potential manager.

7. Give candidates a ‘ghost run’ at key management tasks – this will allow you to properly gauge performance capability and potential (and avoid disasters later on).

8. Tell everyone through your internal media platforms what the requirements for promotion actually are. This creates a level playing field with all requirements out in the open.

But remember the essentials…

You will only be able to reap the benefits of these key approaches if you manage them properly and take the necessary steps that will lead to action. In other words, you need to put in place a regime that practices what it preaches! There are three key initiatives that should be your HR mantra, namely -

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• Whatever your raft of other activities, be sure always to follow the progress of individual staff and be aware of any problems/ roadblocks they encounter.

• Use your knowledge of the business to be aware of the key gaps in talent - and take action to make good any shortcomings asap.

• Live in the real world and make sure the incentives and bonuses on offer are tied to the parameters for promotion. There is no better way to invite scorn and lose organisational credibility than for repeated ‘wins’ to have no good consequences at all.

Following these steps means that there is always smooth transition into key roles - helping both the organisation and the individual and ensuring that the personnel appointed are ready and wellqualified. Remember as well that there is nothing more disruptive to the organisation than either making the wrong appointments or having to live with the empty gap when no replacement can be found at all.

Think of personnel recruitment and promotion as a core part of business opportunity and these scenarios need never arise.

For an online version, please visit: www.smeadvisor.com/2015/07/promotingkey-staff/

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COMPLEXITY

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GROUND LEVEL

Quality management techniques and strategies to get you ahead Businesses often believe that offering a unique set of products is sufficient to sustain in today’s fiercely competitive markets. But, is that really enough? No matter how extraordinary your product is, without the right quality, it will fall short of your customers’ expectations. SME Advisor illuminates the critical role of quality management in underpinning a progressive, proactive approach to competition.

Creating a quality culture Technology has empowered consumers and given them access to a wide variety of products and services, and has made them more aware of high-quality, value for money and sustainable goods. So, as a business, how do you thrive in such a competitive market?

The answer is quality culture. It’s no secret that consumers often prefer to deal with businesses that offer enhanced quality – whether it’s a tangible product or a service experience. An article on www. processexcellencenetwork.com/ describes the following five steps to achieving an excellent quality culture.

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a) Develop a mentality of “we’re all in this together” (the company, suppliers, and customers) - The company not just as the buildings, assets, and employees, but also customers and suppliers. The goal is consistently win-win-win for all parties. b) Remember that open, honest communication is vital - An important way to encourage truthtelling is by creating a culture where people listen to one another. This is a culture where open, honest communication is understood as necessary for people to function best.

c) Analyse key data and utilise information - Information accessibility is at the heart of the work we do. Business leaders should be open about sharing information on the company’s strategic goals because this information provides direction for what we will do next and - more importantly - direction for how to improve. d) Stay focused on processes Everyone should move away from a “blame the person” mentality to a “blame the process and let’s fix it” approach to problems and improvement.

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GROUND LEVEL

e) Emphasise on learning experiences An important insight is that failure and success are always value judgments we form after the fact.

We can never predict with certainty whether what we do will end up as a success or a failure (or a mistake).

We do the best we can based on our current experience, information, and understanding, and something happens.

In addition to the above factors, it is also important for business owners to lead by example and enhance the quality of not just processes and products, but also the overall working experience. Employees should feel

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the quality in the way they work, interact with each other and within their surroundings. This will have a trickledown effect on customers as well.

Principles of quality management Integrating quality within your company’s culture is a vital stepping stone towards success, but it’s also important to complement this with practical, grounded and hands-on tools which ensure the quality of the day-to-day operations of your business. This is where one of the most prestigious quality methodologies comes into play – Total Quality Management (TQM). TQM is a solid

framework entailing detailed quality and productivity tools that increase the productivity and profitability of a business. TQM was invented by Walter Shewhart and championed by W. Edwards Deming, who is often referred to as the ‘father of quality control’. While there are several interpretations of TQM available today, Deming laid down 14 core principles for businesses to implement. The beauty of TQM, as demonstrated in the following points, is that it takes a 360 degree approach to quality, encompassing suppliers, employees and customers.

1 Create and communicate to

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GROUND LEVEL

TQM is a solid framework entailing detailed quality and productivity tools that increase the productivity and profitability of a business.

The evolution of quality management Critical Success factors

Critical Success factors • Product Testing • Statistics • Workmanship control • Complaints 1960s - 1970s

Quality Control

Critical Success factors • Quality assurance programs • Process documentation and qualification • Quality assurance standard 1970s - 1980s

• Quality manuals • Process Manuals • Software QA • Quality assurance everybody responsibility • Quality assurance standards. ISO 9000/14000 1980s - 1990s

Quality Assurance

all employees a statement of the mission and vision of the company.

2 Adapt to the new philosophy of the day; industries and economics are always changing.

3 Cease dependence on inspection to achieve quality.

4 End the practice of awarding business on price alone; instead, minimise total cost by working with a single supplier.

5 Work constantly to improve quality and productivity.

6 Institute training on the job.

7 Adopt and institute leadership.

8 Drive out fear; create trust.

9 Strive to reduce intradepartmental conflicts.

10 Eliminate slogans, exhortations and targets for the workforce.

11 Eliminate numerical quotas for the workforce and numerical goals for management.

12 Remove barriers that rob people of pride of workmanship, and eliminate the annual rating or merit system.

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Critical Success factors

Quality Management

• Customer Satisfaction • Strategic planning • People and change management • Process improvement • Impact on Society • Quality Awards • Maturity model • Performance measure 1990s - Current

TQM

Educate with self-improvement programmes.

14 Include everyone in the company to accomplish the transformation.

13

Deming’s theory emphasises the role of senior management (or business owners) and explains the central role they play in quality control. In fact, he highlights that only 15 per cent of quality errors arise due to employeerelated issues and 85 per cent of them are associated to poor management or lack of proper processes and systems.

Deming’s fundamental rule is that organisational change is at the core of quality management, which is often in the hands of business owners or senior directors.

The other crucial factor guiding Deming’s 14 principles is that they are all synonymous to continuous improvement highlighting that quality management is an ongoing process.

Any organisation must use customer feedback, surveys and other quality control tools to continually enhance

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GROUND LEVEL

any business striving to achieve quality greatness within the TQM context will require: participative management, continuous process improvement and the utilisation of teams.

performance and increase the standards of the final output.

In a nutshell, any business striving to achieve quality greatness within the TQM context will require – participative management, continuous process improvement and the utilisation of teams.

Why TQM works for SMEs? In addition to the reasons mentioned above, TQM is a great approach for small businesses because it ties in quality and price perfectly – two critical factors driving an SME’s success. Moreover, TQM as a technique is dynamic in nature and can be applied within a retail, trade or manufacturing business. Finally, SMEs often rely on the ideology of ‘delivering high-quality products and services at reasonable prices to a niche segment of the market’ and TQM is completely in line with that.

TQM’s seven quality control tools To fully maximise the results of TQM, any business will require a range of quality control tools that will help

A sample of the cause-and-effect diagram PEOPLE

MANAGEMENT

MATERIALS

Commitment Vendors

Hiring

Quality Policy

Responsibility Orientation

Costs

Specifications Training

Customer needs Inspection Leadership QUALITY IMPROVEMENT

Design

Devices

Maintenance Capability

Controlled

Calibration

Standards Quality Impact

EQUIPMENT

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MEASUREMENTS

ENVIRONMENT

Uncontrolled

conduct assessments, interpret findings and take corrective action. Here are seven of the most commonly used tools a) Cause-and-effect diagram (also known as the fishbone chart): This identifies many possible causes for an effect or problem and sorts ideas into useful categories. b) Check sheet: A structured, prepared form for collecting and analysing data; a generic tool that can be adapted for a wide variety of purposes. c) Control charts: These are graphs used to study how a process changes over time. d) Histogram: This is a widely-used graph used for showing frequency distributions, or how often each different value in a set of data occurs. e) Pareto chart: This shows on a bar graph which factors are more significant. f) Scatter diagram: These are graphs with pairs of numerical data – one variable on each axis, to look for a relationship. g) Flow charts: A technique that separates data gathered from a variety of sources so that common patterns can be identified.

Understanding quality costs Implementing advanced quality controls while keeping your budget in mind can be a challenging and daunting task for any business. So, it worth bearing in mind the following types of cost and planning for them in advance – a) Prevention cost: as the name suggests, this involves anything that is undertaken to prevent poor quality. For instance, quality training for employees or process capability surveys. b) Appraisal cost: this is the cost involved in measuring or evaluating products or services to check if they meet the desired conformance levels. For example, the cost of testing equipment.

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GROUND LEVEL

Breakdown of quality costs

of the facilities. Once the ISO registrar is satisfied, he gives the final go ahead for the company to receive the certification. Typically, a business should allow about 18 to 24 months for the entire procedure and set aside a budget of US$ 10,000 to 30,000 to cover the costs of certification.

Cost of Quality

Cost of Poor Quality

Internal Failure Costs

Cost of Good Quality

External Failure Costs

Appraisal Costs

Prevention Costs

c) Internal failure cost: this is cost that is incurred before the product or service has reached the customer.

E.g. retesting or rework. d) External failure cost: this is any cost that is incurred after the product or service has been delivered to the customer. E.g. product recalls, warranty claims and managing customer complaints.

Typical workflow for quality management 1. Identify quality requirements 2. Prepare a quality management plan 3. Create quality culture 4. Undertake quality assessments 5. Monitor quality conformance 6. Take corrective action 7. Maintain documented reports on quality standards 30

Getting ISO certification The widely accepted ISO certifications can be defined as “A set of international quality standards and a certification demonstrating that companies have met all the standards specified.” Today, ISO certifications have become the Holy Grail for best practices and quality management. In fact, they are a necessity for businesses in some industries. For instance, small businesses looking to benefit out of tender opportunities with their larger counterparts would be required to meet one or more of the ISO standards.

In order to apply and receive an ISO certification, a business is required to – Provide a comprehensive document entailing its quality processes.

This includes the quality control methods being implemented, quality monitoring mechanisms, employee training descriptions and so on. This is followed by a visit by a registrar from the ISO, who verifies all the processes and undertakes a thorough inspection

Overcoming barriers A well-implemented quality control system sets in place good practice guidance and supports the longterm development of your business.

But, this is the case only if it is implemented properly and carefully.

Most businesses fail due to a) Poor efforts from senior management – TQM relies heavily on the initiative of senior directors, business owners or upper management. Without the right processes and standards in place from the onset, the business is doomed for failure. b) Concentration of short-term benefits over long-term profitability – While certain processes may yield significant profits in a short period of time, they may not necessarily be in line with the overall growth of the business. c) Lack of genuine quality culture – At the end of the day, customer is king and without a culture of quality, the business will always fail to appeal to its end user. Businesses that have benefited out of TQM are those that have integrated quality within their culture – understanding the needs of their suppliers, employees and customers.

Goodluck!

For an online version, please visit: www.smeadvisor.com/2015/07/qualitymanagement-top-tips/

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BUSINESS BANKING

Connecting with the customer why effective database management is key

Competitive market conditions demand the ability to deliver repeat business, up-sell customers and launch comprehensive and proactive campaigns innovatively addressing active prospects. If you can’t do this, your SME risks stagnation and a dangerous exposure to customer attrition. The question is, are you willing to commit to proactive data management and invest in building a relevant and vibrant customer infrastructure? Senior Editor Paul Godfrey assesses the key steps to effective database marketing‌

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BUSINESS BANKING

“So often when businesses fail, it’s not because they have an inferior product or a product at the wrong price; it’s because they don’t know who to sell it to.”

– Peter Drucker

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If you think that database marketing is simply a question of keeping a few hundred names and then sending them an occasional e-blast, guess again. For example, ask yourself this: how effectively does your company use the data that it actually has at its disposal? How up to date is that data and does it reflect the latest and most promising conversations your team has been having? If you’re a media house, do your editors and reporters add all their fresh contracts - from their hundreds of interviews and meetings - into your database and flag up the most promising dialogues? If you’re a maintenance contractor, do your service and maintenance teams identify the customers who have the oldest equipment and the most pressing need to trade-up? It’s not only difficult to raise the bar - it’s a challenge to set it at any level at all.

Interactions of this kind are crucial to business success - and they’re grist to the mill of today’s database

systems, purpose-designed to make those easily-forgotten and haphazard tasks relatively easy and inexpensive.

They make accessing the information platforms (and the process of tracking down and updating the entry fields) very straightforward - and indeed, a multiplicity of related tasks become second-nature when you have instant access to details of all your customers and prospects and all your points of contact with them.

So, how do we go about creating a powerful and effective database and then manage it for peak effectiveness?

The following criteria are taken from a comprehensive guide produced by the Chartered Institute of Marketing in 2012, titled: “Understanding the Essentials of Database Marketing”.

Bringing all your random information together: the data ‘matrix’ The point is that effective database management brings together all

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BUSINESS BANKING

the marketing information in the business. This includes: random enquiries, (which of course must be captured wherever possible), customer recommendations, sales and service dialogues, results from customer surveys, outcomes of marketing initiatives, and - most importantly of all - the mass of individual and repeat purchase histories. In bringing all this material together, it creates a complete data matrix which is yours to access and cross-sell against whenever you wish.

Armed with the data matrix, you can focus, refine and schedule all your sales and marketing activities. You will be able to • Identify the most profitable segments of your market and focus on those - why waste time doing anything else?

• Identify those prospects whose profiles are the closest to your most profitable markets - maximising conversion opportunities • Put in place contact schedules that ensure you not only contact customers regularly, but do so at times coinciding with their preferred buying cycles • Use all this background data to fuel your mailshots, telemarketing and e-blasts Tailoring the database build to your budget While you will want to capture as much information as you can about how your customers and prospects are engaging with you, it’s not vital to capture every single thing about them - only record the data that makes sense and is worthwhile for you. You don’t have to know every last thing about them on order to market to them effectively.

Remember that collecting data has a cost: so only collect that which is worthwhile and profitable for you.

Similarly, that cost will multiply when you try to update the data you have it’s not worth wasting time or using a dedicated employee to fill in data fields

34

that you don’t need anyway. The golden rule here is not to collect data you won’t use. Conversely, the essential data fields you will need include • Company name, address and postcode • Industry type (SIC code) • Number of employees at this site (ask) • Name, title and function • Interested in receiving relevant mailings, fax or email • Influencer, specifier or purchaser • Phone, mobile, fax and e-mail details • Ever responded/bought before • Buying history - what, when, where, why • Size and date of last purchase • Credit history • Source of data • Your account manager/sales channels What are your objectives?

Again, one of the best ways to avoid wastage is to be crystal clear about your marketing goals and the ways that you feel most comfortable achieving them. There are certain fundamentals to observe here, which if properly followed, will repay you time and time again. These include –

1

Only target hot prospects

Decide what it is you want and profile the businesses who best match prior success formulas; what do the customers and prospects in these other sectors have in common? Only pick and profile the most promising sectors of your market.

It may be that this information requires you to slightly customise a product for best results - and only you can say if this is worth the expense or not.

2

Communicate at the right times

Schedule and track activities to ensure the right frequency and type of contact for each group of customers and prospects.

3

Monitor your progress

Too many marketing initiatives fail because they don’t see the obvious - they fail to pick up on what’s working and what isn’t. If something isn’t working, don’t spend more time and resources trying to force the issue - move on. If it is working, further refine the process by subdividing success groups and identifying the areas of very greatest return.

Are you marketing to consumers?

The role of database marketing is slightly different when marketing to consumers, as opposed to B2B activities. Marketing to consumers usually means talking to large numbers of prospects, with very restricted opportunities to find out about them. In consumer marketing, the information on your database may be all the information you can ever have.

So, the targeting process will revolve around identifying prospects who are most closely matched to your existing customers. As a minimum, try to collect: • Name and initials • Address, phone and e-mail details • Gender, date of birth • Buyer, responder or competition entrant?

• Price paid and payment method.

• Source of name (a recommender may be the key to better marketing) Create a database that is easy to use It may sound like stating the obvious, but a database that is unresponsive and difficult to work with simply won’t be used. It must be quick and easy to put in new data and to update existing records.

This is especially vital if your team regularlyworks from home (or different locations in the field), when remote access to the information will be vital.

You can consider using Cloud systems in this case. As a rule of thumb • Choose a flexible database that will support mailshots (including e-mail),

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BUSINESS BANKING

generate reports as needed, allow you to modify selections from a list and connect with your word processing software.

• Your database needs to work as an analytical tool, allowing you to select and look at information in many different ways • Consider the processes that are likely to be used to input and extract data.

For example, typing in information is straightforward for small volumes, but creates problems if there are thousands of leads to capture.

Bringing in temporary help or outsourcing may be the only practical way to deal with inputting a large amount of new data, especially if it is not in a standardised form.

• Check if it is possible to scan in data that comes to you in printed form.

• Batch processing of input data in electronic formats is an important part of specialised marketing databases.

• Ensure that forms on your website can be used to collect addresses, including e-mail addresses. Be sure you also allow people to take their names off your database and unsubscribe from your e-mails.

Accuracy and flexibility From Day One, ensure that the system facilitates speed and accuracy on the part of the operator, but without asking him or her to be unreasonably rigid.

For example, it’s a good idea to give operators short-cut options to click on, so that they do not have to type everything out in full each time. Also, be sure to leave room for multiple records and include fields for comment in the database entry fields (a classic problem is that operators will otherwise ‘illegally’ put comments in other empty fields, potentially causing major logjam issues).

Similarly, in terms of designing-in flexibility, you will need to • Be able to generate a pick list of data, then add and delete entries or groups of records to get the exact list you wish to use for your mailshot or report.

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• Have the ability to run mailmerge operations, combining the database with your word processing or e-mail software, to send letters or e-mails to lists of people.

• Have the option to be able to run off one label for a single envelope, or 2,000 labels for a mailshot, without any complications.

Help the database help you So many of the traditional user grievances relating to databases reside in the fact that little effort has gone into thinking logically about the best and most coherent ways to retrieve data. A classic issue is the need to use unambiguous descriptions for data entry. It will pay to check, for instance, that the meaning of a tick or a mark in a field is clearly defined.

You should aim to break the data in each segment down into categories and sub-categories, and give each one a code.

• So, your ‘level one’ category can divide your contacts into customers, prospects, influencers and others.

• Customers might then be subcategorised according to size and frequency of orders.

• Prospects can then be subcategorised more subjectively, as hot, warm and cold, or as having large, medium or small potential.

Align with Client Relationship Management (CRM) systems Many businesses are working with CRM systems that allow the sales team and account managers to enter data about each client meeting and the possible buying signals that they encounter. Yet all too often, these are run independently of the database itself and there is little or no interchange of information between them. Tracking the dialogue that has gone on with client contacts is the best way to establish where new business actually comes from - and it’s especially important when there have been third-party ‘influencers’ that might otherwise disguise the buying path. Moreover, if you use the

database as a sales database linked to sales calls and initiatives, you can accurately evaluate which salespeople are winning new customers (or for that matter, losing them).

Cleaning the database It’s a general rule of thumb that unless you regularly update the database and check contact information, it will be unusable after two years. Nor is it simply a case of updating - you will also want to enhance the quality and range of data held, in order to better support the sales and marketing initiatives for which the database is the key platform. This cleaning process needs to focus on • Removing duplicates. This is critical, whether done automatically or manually. There’s no better way to annoy customers than by duplicate mailshots - and you waste money too. Contacts whose e-blasts or mail comes back undelivered should be removed from the database saving you money next time.

• Creating clear guidelines about when and how information is updated and who does it.

• Maximising feedback. Encourage recipients to correct errors in their name and address details or to say ‘no’ to further correspondence.

A properly-managed database becomes an organic part of the way that the business itself works - whether leading marketing drives, rewarding key salespeople or providing that all-important matrix of client and prospect data.

Is your business up to speed with the challenge?

For an online version, please visit: www.smeadvisor.com/2015/07/ connecting-with-the-customer/

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//DIGITALLY DISRUPTIVE

The Roaming Entrepreneur

Staying connected on-the-go!

In the age of instant connectivity, losing your network when travelling to a foreign country can truly ruin your holiday experience.

Now, there’s a solution. Etisalat’s new platform offers a range of convenient, simple and affordable packages - all through a few clicks! What’s more, signing up takes only a few minutes and is absolutely free. We walk you through the step-by-step process of using Etisalat’s seamless roaming experience...

step

1

Switch on your cellular data roaming and open your browser. The following Etisalat landing page will pop up automatically.

Different pages will appear for existing users and new users. Note that access to this landing page is absolutely free and Etisalat bears the cost of providing this information to its roaming customers.

Existing users...

Existing users will receive a status update page – giving them an overview of their current package.

They can simply modify or upgrade their plan by clicking on ‘manage your subscription’. In addition, package users can visit this link anytime while roaming to check their usage status in real time.

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New users...

If you are a new user not subscribed to Etisalat’s roaming packages, a welcome message appears providing you with information on standard roaming charges.

Click on ‘roaming package detail’ for information on all attractive packages to help you stay connected at a lower cost.

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The next page gives you the option to choose your preferred plan. Of course, the plans are engineered carefully to suit the varied requirements of travellers, and the beauty of the platform is that it’s designed for all Etisalat mobile users (not just business users)! For instance, if you are travelling for business, you can choose a voice and data package, which gives you comprehensive connectivity to stay in touch. On the other hand, a basic voice plan is also available for leisure travellers. In fact, this landing page is geared to identify and display packages based on customer type.

Scroll through and select your package of choice and click on ‘more details’ for an in depth description.

You will then see detailed information on your selected plan including roaming charges and a list of preferred partners. With over 105 destinations offering attractive packages, there’s something for everyone. Once you have everything you need to know about the package, you can go ahead and subscribe with a few easy clicks!

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You will then get a page which acknowledges your request and you will also receive a confirmation SMS to your registered Etisalat number.

Placed at the bottom of the page, you will see a panel that asks, “Have you experienced any difficulty in subscribing?” that is great to share your immediate feedback. This page is managed very closely by Etisalat’s team of experts, who are handson and look into any queries or challenges straightaway!

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Now, you are good to go! Enjoy your roaming experience with Etisalat.

“By providing a FREE medium to access services while roaming we are focusing on enhancing customer experience and increasing value for money.”

For an online version, please visit: www.smeadvisor.com/2015/07/the-roaming-entrepreneur/

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Manage, order, track and pay anytime anywhere Etisalat’s Business Online Portal gives you all the tools your business needs Etisalat Business customers can now view and pay bills, place and track orders, report and manage service requests and so much more on the new Business Online Portal. Log in today and enjoy online support services from Etisalat securely and conveniently without having to pick up

T&C apply

your phone or leave your seat.

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Etisalat Business Your business grows with us

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MOVERS & shakers

Reaping the rewards of success

Donna Benton’s growing empire

Donna Benton, Founder and CEO of the Entertainer

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MOVERS & shakers

BEHIND EVERY SUCCESSFUL BUSINESS IS A HUMBLE BEGINNING, AND THE SHEER HARD WORK, PASSION AND DEDICATION OF A VISIONARY LEADER. DONNA BENTON, FOUNDER AND CEO OF THE ENTERTAINER, SHARED INSIGHTS FROM HER JOURNEY EXCLUSIVELY WITH SME ADVISOR. WE PRESENT EXCERPTS OF OUR COMPELLING DIALOGUE…

You have a remarkable success story. Tell us how it all started.

I launched the Entertainer after I left a job that didn’t work out back in 2001. Shortly after I left, I was driving down Sheikh Zayed Road and I noticed that there were a huge number of restaurants and attractions, but realised there was no incentive for people to visit them – and this is how the idea for the Entertainer came to life.

I decided Dubai needed a powerful offer programme that would influence people’s decision-making and encourage them to try new outlets. I was determined to make it a success.

I had a great market, eager customers and confidence in my idea.

In the first year, we had 97 merchant partners and sold 983 products. This year we have over 10,000 merchant partners, with close to 500,000 users worldwide and drive US$1.3 billion dollars into the global economy. We still remain true to our original offer in our first book, which is always ‘Buy one get one free’.

Personally, I define success in terms of the value the Entertainer creates for customers and our loyal merchants. We enjoy great customer loyalty and a large number of our merchants have been with us since day one – so with that in mind we are definitely succeeding.

What are key factors about the Entertainer’s value offer that make it so appealing to customers?

I believe that it is the simplicity of the concept that has made the Entertainer so popular with our customers – they know what to expect. Entertainer offers

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are ALWAYS buy one get one free, valid for lunch and dinner, valid all year long, valid seven days a week (excluding public holidays). The two for one offer is the strongest offer you can get in the market, plus the quality and value customers receive is extremely high.

Our merchants are hand-selected by our team to ensure that we have only the best outlets in our products.

It is a facet of human nature to look for value for money, no matter how much you earn. Don’t you just love that feeling of getting a good deal?

Initially we thought that the Entertainer provided an incentive for customers to visit merchants, but our customers’ positive response to our products and our growth has shown us that everyone loves saving money irrespective of whether they need to or not. And I say, why not? It’s smart to save – you never know when a rainy day will come along.

What business model do you work to?

From the outset I knew that the model for the Entertainer needed to be simple.

I asked around the people I knew to try and establish what would make a compelling offer. The overriding feedback was that a compelling offer had to be valid seven days a week and had to give a significant degree of savings. With that in mind it was simple – I decided that the ‘Buy one get one free’ offer was a concept that would work for merchants and customers and this became, and still is, our key USP.

Who is your target audience?

In all 17 countries, our customer base is a broad spectrum from locals and expats to tourists and families. The best thing about the Entertainer is 41

MOVERS & shakers

Understanding employees and what drives and motivates them is also critical; human capital is central to the Entertainer’s success.

However, I now look back at all those challenges and I am proud and happy that we have come a long way from what we were when we began. Of course, as the business grows, we face more challenges along the way but we also have a great team and find our way around any obstacles in our way.

Initially, how difficult was it to convince investors of your company’s potential? What helped?

that you don’t have to use all the offers to recover the cost of the product. So even though the offers are valid for a whole year, tourists still find it a smart option to buy the Entertainer for their short visits.

Looking back, what were some of the biggest challenges you had to face?

When I started the Entertainer back in 2001, I was the only employee. During the first year, I handled all of the corporate legalities to set the business up, recruited all of the merchants, oversaw the printing and production and did most of the sales myself, literally door to door.

One of the most challenging aspects was learning all the legalities of trade and business in the UAE. I also had to convince merchants to participate and after bringing out the books I had to get customers to buy them as well!

Customers felt like it was too good to be true, because our offers were valid to use on weekends and promised great value.

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Over the course of the past 13 years, there have been quite a few potential investors who have approached me to buy a stake in the company. However, I was hesitant as it was important for me to select the right partner, who was aligned with my vision for the future of the company. I wanted to ensure that I would be able to maintain control of my business and benefit from an investor’s operational support.

In 2012, The Abraaj Group acquired 50 per cent of the Entertainer, which significantly sped up our expansion plans and has allowed us to become the global company we are today.

Their investment also assisted with the launch of our award-winning Entertainer app in November 2013.

How do you ensure that you are constantly reinventing yourself and staying abreast latest trends?

With a book of vouchers published once a year we were often limited when it came to staying current. The great thing about the app is that we can now update our offering all the time. We can now sign up merchants throughout the year, so when a new restaurant opens we can add them

straight into the app for the current year. Since January we’ve added over 120 merchants to the app that are not available in the books. Customers who have purchased a book can simply register their book and access all of these fantastic new offers on the app for the rest of the year.

With each app release we continually make improvements to the customer experience adding new features. We recently integrated Uber so that customers can book a ride directly and we will soon be adding TripAdvisor reviews in the autumn.

Introducing select global partners to the Entertainer app will provide our customers with a better user experience, increased convenience and will be a huge step forward in making the Entertainer app a holistic lifestyle product.

What, according to you, was the intuitive leap that transformed you from a start-up to the becoming an international brand?

To be honest, I never dreamed we would be in 17 countries and become a global company. I was very focused on making the product successful in the UAE first. Then I started to think that it would be a welcome product in Qatar and so in 2008 we launched in Qatar, Oman and Bahrain. We committed our focus to these three markets to make them a success as I do believe that you have to crawl before you can walk! Some years later we launched across the GCC, but I still couldn’t have imagined the scale of our global growth.

As I previously mentioned, it was a huge step for us launching the first digital version of the Entertainer.

Giving our customers a digital solution for redeeming Entertainer

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MOVERS & shakers

offers has helped us inordinately with the success of our new market launches. New markets expect you to be cutting edge and offering a convenient and sophisticated product; and with the launch of the app, we have met those expectations.

In terms of international and regional expansion and growth, what do you have in the pipeline?

We’ve launched in a lot of new markets in the past few years and we are currently going deeper in these existing markets, making our products even better quality and offering even more value for our customers.

With the app we can keep adding merchants to the products throughout the year, so there’s never really a quiet time for us now.

We have just launched our first Franchise product with the Entertainer Malta, which went on sale in May, and the Entertainer Athens will be launching in November. We’ve also released versions of the Entertainer app in Arabic and Cantonese.

In your expert opinion, what should be the next step in the development of The Entertainer’s proposition?

This year, we expect over half of our customers to be using the app and more than three quarters in 2016. The app excites me both because it offers our customers convenience, but it also provides us with a wealth of data that is really changing our business – helping us to continually improve our offers and products so that they provide the best customer experience imaginable.

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What is your leadership style?

How would you best describe it?

First and foremost, leadership is important – you need to lead by example and be willing to do the work that you expect your employees to do. Understanding employees and what drives and motivates them is also critical; human capital is central to the Entertainer’s success. Finally, it’s important to have the vision to look ahead three to five years and see where the business needs to go and to lead that change.

What is a typical day like in the office of the Entertainer?

No day is really the same and my plans are inevitably varied depending on the commitments at the time.

With 11 global offices I try to keep in touch with my country managers and what’s happening in each market. We are currently very busy signing up fantastic merchants for next year so I

can be out at multiple meetings during the day. We are soon releasing some exciting updates to our app, so I will be involved in planned developments with the E-business team.

Finally, what is your advice to fellow entrepreneurs in the region?

You need to have a good (and unique) idea and strong work ethic, but even these combined don’t necessarily make you money. Make sure you take the time to carry out a feasibility study. It is key to the success of a new business. Also, you have to be very passionate and believe in what you do, nothing just happens, so you have to keep focused. Remember - if it was easy everyone would be doing it - you have to believe in yourself!

For an online version, please visit: www.smeadvisor.com/2015/07/reapingthe-rewards-of-success/

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MOVERS & shakers

Entrepreneurial advances

Freedom Pizza’s fresh start From hand-picked organic ingredients to seamless online ordering, Freedom Pizza is taking fast food to a whole new level of success. SME Advisor meets the man leading this revolution – Ian Ohan, Founder and CEO of Freedom Pizza.

You were formerly the owner of NKD Pizza’s Dubai franchises. Now, you’ve relaunched as Freedom Pizza. How did this decision come about?

When I decided to partner with the original founders of NKD Pizza, it was because of their integrity, clear vision and passion for the business. I could see where they wanted to take the company and I was very much aligned with their thinking. Over time, however, ownership changed hands, the number of stores diminished to only eight globally and we saw the company getting further away from the brand’s mission and offering no support.

Additionally, we were more recently faced with a situation with the current owners of the company that forced us to terminate the franchise agreements for fundamental breach of contract.

This is when I decided to relaunch as Freedom Pizza. In fact, this is in partnership with one of the founding 44

partners of NKD Pizza – Robbie Vitrano, who also left the company some time back for similar reasons.

It was a difficult decision, but it was an important one. We wanted to return to the vision that was originally set out for the brand.

It was the right decision for our company, our employees and our customers.

Was this the inspiration behind your new brand name?

Absolutely! Freedom Pizza is now a locally owned brand and is able to do so much more for the community. We want to be true to ourselves, to our employees and – most importantly – to our customers. The notion of Freedom is an interesting one in that it means different things to different people. It also cuts across all geographies and cultures. We like the universality of this idea that we have chosen to express with strong visual images and high-quality photography

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MOVERS & shakers

Robbie Vitrano and Ian Ohan, Co-Founders, Freedom Pizza

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consumers perceive any brand based on the quality of service they get, the kind of service staff they have to interact with and on how we care for them each and every day.

capturing moments of Freedom. We will continue to build on this theme as we look to local markets to better inform and populate our library of moments of freedom.

How would you describe Freedom Pizza as a brand?

Freedom Pizza is a locally-owned brand that embodies trust, generosity, honesty and a spirit of collaboration.

What has changed with the relaunch?

30-second company

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Established by two of the original founders and UAE franchise owners of NKD Pizza Robbie Vitrano and Ian Ohan, Freedom Pizza is a cool, independent and authentic F&B business that combines delicious, honest pizza with a culture that cares.

Even though we were franchisees of NKD Pizza, our operations here in Dubai were very independent. Our focus was to help people eat better with organic, fresh ingredients and sustain a strong and where possible local supply chain. This was the driving factor behind the success of our NKD Pizza franchises and it continues to remain the same with Freedom Pizza. So, to answer your question – yes, the brand has changed but our vision and core values remain the same.

In terms of operations, the carry out and delivery business is all going on as usual, with our five stores across Dubai, a 237-strong team, 127 delivery drivers and an unrivaled average delivery time of 23 minutes!

Quick chat with Robbie Vitrano, Co-Founder and Chief Brand Architect, Freedom Pizza

Any relaunch can be a difficult transition for employees. How did you manage that?

“Ian and I started working together five years ago with a profound mission that informs our new undertaking. Freedom Pizza is about being true to self, to others, and to the community. We used to be a franchise, now we are locally owned. This allows us to do more for our customers, our staff and the community.”

That’s a great point! Any brand is built on the merit of its people and they are an integral part of your success. At the time of the relaunch, we wanted the team to feel like they were a part of this incredible

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journey and we wanted them to have a smooth transition. So, we booked a huge cinema hall in Mall of the Emirates, where the entire team came together. We unveiled the new brand and explained to them why we were doing this. The response we got was exhilarating – they were extremely proud of our move.

Moreover, on a day-to-day basis, we support our staff with practical training and development programmes, team building sessions, one-on-one meetings and so on. Even though it can be quite challenging with over 200 members of staff, we try to stay as close knit as possible.

Why was the UAE an attractive place to start your business?

The UAE was a natural choice because it has a very pro-business environment. Dubai, in particular, is the one of the best launch pads in the world. You can start a business and get a lot of attention for your brand here; it perfectly mirrors our attitude – fresh, dynamic, multicultural,

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MOVERS & shakers

ambitious, fast-growing and open to sharing with the world. We are very proud of our roots and to be ‘Made in the UAE’.

I think consumers perceive any brand based on the quality of service they get, the kind of service staff they have to interact with and on how we care for them each and every day.

Essentially, this hasn’t changed at has always been delivering high-quality food at the prices you would expect to pay and this remains true with Freedom Pizza. We currently have about 200,000 active customers, 70 per cent of which are repeat customers, and we consider them to be part of the extended Freedom Pizza family. It is critical that they feel comfortable with our transition – and we understand that. When we made the relaunch announcement, I sent out a personalised e-mail and business card with my contact details to all our customers so that they can directly reach me to ask any queries they had about our shift! I received over 800 e-mails and took time out to address all of their questions.

Isn’t it true that your produce is sourced locally within the UAE as well?

Do you think it is important for a business owner to be in constant touch with customers?

Yes, it all goes back to our vision of giving back to the community and providing the best quality local ingredients. We work with local suppliers to source healthy, fresh ingredients and wholesome grains.

Almost all of our veggies are sourced locally, from our Greenheart organic garden. We also work with our partners at Skinny Genie, who bake fresh, glutenfree and healthy handmade brownie bites and pizza crust. Finally, there is Savarin; they are helping us with our delicious new desserts menu.

Yes! At the end of the day, they are the ones that make or break your brand. We take customer feedback very seriously and use it to enhance our service experience. I personally respond to at least 70 per cent of all the e-mails and messages we receive, and constantly interact with our customers on social media platforms.

How would you like consumers to perceive Freedom Pizza?

Does its USP change?

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How are you improving your offer online?

Going digital is a huge part of our strategic agenda. We’ve developed a new bespoke website and online ordering platform. It is more user

friendly, sophisticated, secure and technically advanced. This is just Phase One of the project and there is a lot more to come including cool new features, native mobile apps, the re-launch of our loyalty game as well as innovative e-commerce features.

We consider this new platform to be essential to providing our customers with a better, more personalised, more efficient and convenient service.

What are some exciting developments in the pipeline?

There is so much going on! We have a new desserts menu coming out imminently, and we’ve launched new pizzas on our menu with many more pizzas, vegan options and fresh organic salads. There will be continual improvements to our menu with healthier, tastier options. Meanwhile, we’ve just partnered with Visa Checkout for our online ordering system. There’s a partnership with VOX Cinemas in the pipeline – watch this space for more!

And finally, we are looking to launch a store in Abu Dhabi. As you can tell, we are extremely excited about the future.

What are some final words of wisdom you’d like to share with our readership?

Perseverance is key to running a successful business; keep on going and don’t let hurdles stop you. Remember, some of the most successful entrepreneurs have been hardened by overcoming challenges. Necessity is the mother of invention…enter Freedom Pizza.

For an online version, please visit: www.smeadvisor.com/2015/07/ entrepreneurial-advances/

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Voice of an entrepreneur:

Aly Rahimtoola

Through the pages of SME Advisor, we’ve often spoken to business owners and presented their general views on key SME-related issues and current affairs.

This month, however, we took a slightly different approach. We asked hardened entrepreneur Aly Rahimtoola to take us through his entire entrepreneurial journey step-by-step, and share real, candid insights on life as an SME…

Humble beginnings I started Essentials seven years ago.

I had this single minded purpose: I wanted to create a range of high quality, yet affordable, all-natural beauty products for face, body and hair. And I wanted this home-grown range to become the most trusted natural beauty brand in the region.

I knew nothing of the very competitive, sophisticated and cluttered beauty industry, and I was not a marketing or operational whiz either. On the money front, there were no angel investors nor banks rushing to back me, and my family, though supportive, was concerned whether this business venture could really scale - totally understandable, given family businesses tend to have a rather risk-averse attitude and launching a new business is always risky at the best times (let alone during the crisis caused by the collapse of Lehman Brothers).

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And yet, what I did have going for me, was a good business sense.

I come from a family business whose primary interests were in commodity trading and shipping.

Both of these businesses are volatile and cyclical in nature. It was clear that we needed to diversify our portfolio in sectors that were a little less unpredictable. So, I was actively seeking those opportunities within industries that are resistant to external economic factors.

This is how I became interested in the personal care (skincare) industry and particularly in the growing global trend - at that time - towards ‘natural’. With seed capital from the family, I started Essentials.

The success of Essentials can be largely attributed to the business strategy, which has always put customers at its core. Not as a matter of semantics. This customercentric strategy gave way to a

different value proposition and to meaningful ways of connecting with our customers. I was determined to build something of value, to create products worth paying for - the kind of products that address and meet the needs of informed and discerning people.

I was also keen that we build a reputation as a skincare brand that keeps its promises, and as a company that operates with sound business ethics, with respect for people, nature and environment, as these would help build Essentials’ brand equity and would help us thrive.

And that turned out to be true: Within less than a decade, we developed a range of 33 products and quickly established ourselves in a very competitive and fast-paced market, experiencing sustained growth year on year. Today, Essentials is one of the fastest

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MOVERS & shakers

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MOVERS & shakers

Regardless of the size of the business, preparing a business plan with clear sales targets or keeping audited accounting books from day one are indispensable practices to building and growing a healthy company.

growing natural skin and hair care brands in pharmacy chains across the UAE; last year our retail sales growth soared to 46.7 per cent and is expected to surpass this level of growth again this year.

In the last two years alone we embarked on a regional and international expansion, charting distribution channels across the GCC, as well as in Pakistan. We are about to enter the European markets, and we have also introduced a premium range, Premium Essentials in 2014. And we did all that by self-funding ourselves at all times.

Essentials became a certified member of PETA’s “Beauty without Bunnies” programme, the only cosmetics manufacturer in the Middle East to do so to date; and was included in the Skin Deep Cosmetics Database (www.ewg.org/skindeep), an index of products low in toxins and consumer friendly, compiled by Environmental Working Group (EWG) in Washington DC. We have also received many accolades from the beauty industry: nominated for “Best Anti-Aging Product” and “Best Moisturizer” by VIVA Beauty Awards for two years running; “Best New Skincare Line” in 2013 by Aquarius Magazine and ranked #seventh in Home-Grown Heroes 2014 by Good magazine, and at the end of 2014 we won the “NBAD Star of Manufacturing” in the Stars of Business SME Awards, an event organised by this very publication.

Success is not without challenges It’s very satisfying to rejoice in all the success achieved, but the journey to where we are today has been far from easy. In many ways, it’s been a daily struggle just to stay in business. This doesn’t mean it wasn’t worthwhile or rewarding. I learnt plenty of dos and don’ts along the way, and I think it made me a better business person –

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more determined and resourceful.

Take financing for example. A new business like Essentials requires resources to set up production and storage facilities, research and develop products, roll out a retail and marketing plan, meet payroll and so on – all of it long before it can make any profit. As all small companies know, it is difficult to find the financial resources needed to start, run and grow the business.

The financial support for SMEs in the UAE is a topic hotly debated in recent years. And whilst things seem more dynamic of late, and the sector is getting a boost from a growing number of regional incubators and accelerators, the reality is that seven years ago, it was impossible for a new small business like Essentials to obtain a bank loan or to find any investors.

For the most part, banks in the Emirates were simply not equipped to deal with small businesses. Moreover, lending institutions are generally hesitant to invest in a small business that, despite its potential, does not yet have the equity a large, established multinational company has, and it is years away from competing successfully in the market place – which pretty much sums up the situation of Essentials a decade ago.

A bank loan also requires financial statements and all sorts of documents that support a company’s solvency as well as solid cash flows, as banks lend against cash flows in this country.

For any small business, especially a newly-started one, this is a big hurdle.

Nevertheless, dealing with banks at the early stages is not a futile experience.

Even if the company is not eligible for a loan, it reinforces the importance of financial discipline. Regardless of the size of the business, preparing a business plan with clear sales targets or keeping audited accounting books from day one are indispensable practices to building and growing a

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MOVERS & shakers

When resources are finite, there’s no place for trial and error or any random risks that may or not pay off.

Aly Rahimtoola is Founder of Herbal Essentials and Managing Director of Harmony Cosmetics FZC

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healthy company that would one day guarantee a bank loan or attract investors.

And so, the only financing option available to me was to fund the business with seed capital from my family.

When resources are finite, there’s no place for trial and error or any random risks that may or not pay off. At the same time, running a business is unpredictable. Even when every aspect has been carefully examined and planed, there can be no assurance; the possibility of a loss is as present as success.

That’s why I had to spend money frugally and I was forced to become more industrious, to make the most of the resources available to me. Having finite resources in the initial stages of the business fosters a culture of self-sufficiency that is so important in small businesses, it forced me to keep a close eye on all operations so that I could improve our margins; to try to expand my own industry knowledge and learn all there is to learn about the competition, the economics of the sector, the ingredients, the supply, distribution and retail chains, so that we could maintain a competitive advantage.

I also needed to learn and teach myself new skills too.

Running a small new business takes not only time and energy, but

also willingness to learn constantly.

New problems and issues can crop up every day challenging the most carefully laid-out plans. It could be higher-than-budgeted market expansion costs, new staff hire or training needs, or some unanticipated production expenses, whatever the case, the key to solving them is flexibility. A flexible approach allowed me to address such new issues not as setbacks, but as if they were part of a regular workflow on the path to accomplishing some bigger set goals.

Lack of flexibility can put a small business at a distinct disadvantage in the marketplace.

Each day there are multiple tasks that compete for my attention - sales and marketing, accounts payable and receivable, business development, staff – and it’s impossible to strike a balance that would allow me to allocate precisely the required time and focus to run all operations smoothly. Learning how to prioritise – when delegating is not always an option - is another critical skill for a small business owner that can improve efficiencies on the operational level.

In the end, all is well when it ends well, when the payoff can outshine the challenges! And I was able to deliver on the vision I had for Essentials. Now it’s time to drum up funds and further expand our reach, because there’s always more room to grow in business!

And I look forward to the personal growth ahead of me as well!

For an online version, please visit: www.smeadvisor.com/2015/07/voice-ofan-entrepreneur/

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Eight Days to Free Zone status Dubai Multi Commodities Centre (DMCC) has always offered a highly attractive Free Zone environment, but now, an all-new Digital Transformation Programme allows complete, 360-degree online visa and licensing facilitation - meaning that you can supercharge registration timings and go from arrival to free zone status in an average of only eight days. Paul Godfrey spoke to DMCC about this new opportunity for SMEs.

DMCC is among the best-known of Dubai’s Free Zones, and is indelibly associated with its administrative home in Almas Tower, for five years the second-highest building in the UAE. There in the heart of ‘new’ Dubai - at Jumeirah Lakes Towers (JLT) - there’s no doubt that DMCC has undergone a huge transformation in the recent past, with a fresh focus on innovation and delivery complementing what is already known as an exceptional trading hub and infrastructure.

The reality is that the bar for operational efficiency at the Free Zone has been tweaked to encompass the whole gamut of setup and operational requirements.

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the emphasis is now on how you get started, just as much as on the quality of the environment itself. Right from the registration process to Day One of actually doing business, DMCC has become streamlined, sleek and paperless.

“Our company registration process is completely online.

We take you through the entire process step-by-step to make a complex process much simpler,” says Krysta Fox, Director of Free Zone. There’s no doubt that already, this online portal has made a massive difference. There has been a remarkable take-up of the various services provided

by DMCC. For example, through its business directory, the Free

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MOVERS & shakers

DMCC has undergone a huge transformation in the recent past, with a fresh focus on innovation and delivery complementing what is already known as an exceptional trading hub and infrastructure.

Zone connects businesses with recruitment agencies. Having partnered with one of the best insurance brokers in the region, DMCC is able to bring its member companies the buying power of 40,000 employees that they would otherwise never have. In the last two years, we have gone from having two value-added services to providing a whole suite of such services,� she said. The change is clearly visible at several levels.

For DMCC’s property service, for instance, the Free Zone provides matching services for companies that come in to register or renew their licences. “Suppose they go on from being a 10-member company to a 50-member company, we can

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MOVERS & shakers

Another factor in the DMCC offer is the ability to connect its member companies with business apps and electronic signatures.

match them straightaway with the property solutions that they need.

That is quite unique to this Free Zone,” Fox revealed.

Encouraging feedback In its endeavour to find out exactly what SMEs wanted, DMCC launched a real-time satisfaction survey in April 2014. As soon as a new service was delivered, respondents were asked to give their feedback. It received an 89 per cent satisfaction rate.

Now, DMCC has begun asking its members about their experiences with various banks in an effort to help new members by deriving valid information from the existing ones. This quest for understanding what makes SMEs tick was one of the core reasons underlying the fact that DMCC was voted as the best Free Zone in the world for SMEs by the fDi magazine last year. Efficiency and speed were also paramount. Krysta Fox comments that: “SMEs don’t have the time to develop their own corporate governance systems.

They require one that has already been developed for them. We create efficient systems by partnering with the right people. For the larger corporates, we implement a key accounts management function providing a very different service.

Each requirement is managed and coordinated by a key account executive.”

Timing and location At the cusp of Dubai’s growth, DMCC continues to be a global gateway for trade and enterprise.

The successful transformation of its Free Zone is a testament to the vision of His Highness Shaikh Mohammed bin Rashid Al Maktoum, Vice- President and Prime Minister of the UAE and

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Krysta Fox, Director of Free Zone

Ruler of Dubai, to position Dubai as a global hub.

Another factor in the DMCC offer is the ability to connect its member companies with business apps and electronic signatures.

Indeed, working in collaboration with Salesforce, one of the most highly valued and innovative Cloud computing companies in the world, DMCC has enhanced its percentage of services. “Salesforce gave us a platform that allowed us to control everything from sales to operation, website to knowledge hub. Our client interaction has become faster, consistent and purposeful,” Krysta explains.

Thanks to Salesforce, DMCC now has a 360-degree view of the Free Zone. This includes every single member company, every single employee, and every service that the firms can obtain from DMCC. Krysta Fox explains that: “We chose a platform that was incredibly scalable, flexible on the cloud and very innovative. This has brought a whole new way of doing business.

It is simple, efficient and effective.

For example, when our members

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MOVERS & shakers

Innovation is at the core of DMCC’s phenomenal growth.

want us to improve upon a specific area like queries we act quickly. The first thing we introduced this year was a case management system.

There are three ways to raise a query with us now: members can get in touch with the call-centre where we run extended hours; queries can be raised through live chat; or they can simply write to us and receive a prompt response. One thing we shouldn’t forget is that while going digital, we should still have a personal relationship with our members. Timing is also a very important. So the moment a query is raised, the clock starts ticking.

We have moved from answering 30 per cent of the cases within two days to now more than 90 per cent of the cases. In our case, doing something quickly isn’t enough. We ask our members how happy they were with the outcome.”

In demand DMCC is one of the largest and fastest growing free zones in the Middle East. Home to over 10,500 companies ranging from startups to large corporates, the Free Zone is helping create a long-term commercial and trade set-up in Dubai.

Krysta Fox comments that: “We are part of the government of Dubai. Our remit is to bring businesses into Dubai and help them be successful - whether it is in trading, services or the industrial sector. The way we do that is by creating this eco-system that helps companies get a soft landing into Dubai and create connections and networks as quickly as possible for them.”

DMCC is also aiming long-term.

A cursory look at its work ethic and policy initiatives suggests that the Free Zone seeks to be as relevant today (in its support of the

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businesses) as it would in 20 years’ time. Krysta elaborates: “The way we look at it is three-dimensional.

We offer a platform to our member companies. There are standards by which we operate and we expect our member companies to operate. We actively connect and help companies to network within this business environment.” Innovation is at the core of DMCC’s phenomenal growth.

Added Fox, “We innovate in order to meet the requirements of our customers. It includes customers that we have today and the customers that we are going to have in future. We have to be efficient enough to be able to handle the massive growth that we have experienced. Three years ago we had about 3,000 member companies.

Today we have more than 10,500 firms. In order to triple in size in just three years, you have to make sure that you keep ahead of the rest of the market.”

For an online version, please visit: www.smeadvisor.com/2015/07/eightdays-to-free-zone-status/

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LEGAL

What do I need to do with my Memorandum of Association?

How the new UAE Companies Law may impact existing LLCs

The new UAE Commercial Companies Law (Law No. 2 of 2015) (the New Law) came into force of July 1, 2015. We spoke to experts at Clyde & Co., who present its legal reunifications.

The managers/directors of any Limited Liability Company (LLC) that is incorporated “onshore” in the UAE should start to consider what changes may need to be made to the LLC’s Agreement for Incorporation/ Memorandum of Association (Memorandum) to bring it in line with the New Law. LLCs may also want to take advantage of a number of deregulatory changes in the New Law. The grace period Article 374 of the New Law allows existing companies a 12 month grace period in which they must “adjust their positions”. This is

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LEGAL

taken to mean that an LLC will need to amend any conflicting provisions in its current Memorandum by 30 June 2016, unless that deadline is extended.

However, it is important to note that this grace period does not mean that LLCs do not need to comply with the New Law for a year. Where a new corporate action is to be taken which is not the subject matter of the LLC’s existing Memorandum, that action must be taken in compliance with the New Law. Therefore, from July 1, 2015, LLCs will need to implement important amendments, in practice, such as taking account of the new codified standards for directors and

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the new requirement to prepare audited accounts in accordance with International Accounting Standards.

address of the LLC’s head office and of any branch offices it has registered.

Any additional branch offices that are registered and any change in the existing head office or branch office addresses will need to be reflected in an amendment to the Memorandum going forward, as an additional administrative requirement

Potential amendments to a Memorandum There are two types of amendment which may be made to a Memorandum to reflect the New Law: changes which are mandatory under the New Law, and amendments which are desirable to make the operation of an LLC more efficient. We highlight a few of these below.

Pledges: The New Law envisages that the Memorandum will include information on the manner in which a share pledge may be created

Necessary changes Addresses: Under the New Law, the Memorandum should set out the

Manager dismissal: The New Law changes the way in which the manager of an LLC may be

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LEGAL

The basis on which the quorum and voting at general meetings is calculated has been amended under the New Law, both for ordinary resolutions and special resolutions.

dismissed. Under the New Law, if the Memorandum is silent, the manager may be dismissed by an ordinary resolution at a general meeting. However, the LLC may specify its own requirements for dismissal in the Memorandum.

This contrasts with the position under the 1984 Commercial Companies Law which provided that, if the Memorandum of Association was silent on the manager dismissal rights, unanimous shareholder approval was required. Alternatively, if the Memorandum allowed a manager to be dismissed, a special resolution was necessary. Going forward, LLCs may want to consider their manager dismissal rights, particularly if the Memorandum is silent. This may be important in an LLC in which the minority shareholder has made all of the investment and exercises day to day management of the LLC

Quorum and voting: The basis on which the quorum and voting at general meetings is calculated has been amended under the New Law, both for ordinary resolutions and special resolutions. The relevant provisions in a Memorandum may need to be amended to ensure that they continue to provide the same level of voting control for the shareholders as currently exists, particularly those holding a minority of the shares Other potential amendments Deregulation of notices: The New Law allows for notices of general meetings to be given in any way set out in the Memorandum. Therefore, it is open to a company to provide for notices to be given by way of electronic communication, as well as hard copy registered notices.

This will significantly improve the efficiency of convening general meetings

Shorter notice: The New Law permits shareholders to agree to shorter notice. Market practice

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will determine after the New Law is implemented whether it is possible to specify the shorter notice required in the Memorandum The way forward Directors/managers should also check that any other provisions of the Memorandum do not expressly contradict the New Law. As with many new, important pieces of legislation, it may take some time for the whole impact of the New Law and its interpretation to be understood by the market and to be fully reflected in practice. However, managers/directors are well advised to think about the changes which may need to be made, not only to the existing Memorandum, but also to the way in which they conduct their corporate affairs from today.

Further information If you would like further information on any issue raised in this update please contact: Jonathan Silver Partner E: jonathan.silver@clydeco.com Clyde & Co LLP PO Box 7001 Level 15, Rolex Tower Sheikh Zayed Road Dubai, United Arab Emirates T: +971 4 384 4000 F: +971 4 384 4004 Clyde & Co accepts no responsibility for loss occasioned to any person acting or refraining from acting as a result of material contained in this summary. www.clydeco.com

For an online version, please visit: www.smeadvisor.com/2015/07/what-do-ineed-to-do-with-my-moa/

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STRATEGY

Cashless Exporting This relatively recent concept is now widely gaining popularity due to its liberating effect on a company’s cashflow.

Industry expert Dr. Ashraf Mahate, Head of Export Market Intelligence, Dubai Exports, sets the scene...

The search for new exporting opportunities is not only limited to the logistics and legal aspects; it also includes the important question of ‘how do exporters get paid’. Especially in the cases where financing is an issue, exporters are finding that countertrade is the best form of payment. Essentially, countertrade is a practice whereby a supplier agrees to receive goods or services in full or partial payment rather than with money. The simplest and oldest form of countertrade is barter which is a direct exchange of goods and services of an equivalent value.

Traditionally, countertrade was limited to developing nations who

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tended to had rather limited foreign exchange reserves but large reserves of natural resources. Through countertrade these nations could obtain their requirements without using their limited foreign exchange reserves.

Today, countertrade is practiced by a whole host of countries seeking to support their local industries, create employment opportunities, reduce the trade imbalance or exploit their competitive advantage all through promoting a tradable commodity.

In most cases, countertrade agreements tend to be confidential and reliable statistics are very difficult to obtain. Nevertheless various estimates

show that it is a rapidly increasing form of trade finance with more than 100 countries regularly using it. Studies show that the volume of countertrade varies between 15 to 30 per cent of global trade. In some regions such as Asia and Eastern Europe, estimates suggest that countertrade to be as high as 50 per cent of the total trade value. The rise in countertrade has been greatly assisted by information technology and most notably the internet which has allowed firms to match needs with availability. In the past, firms may have avoided countertrade due to the difficulty in identifying a counter party. In other

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STRATEGY

words the success of countertrade rested on the fact that as the economist Paul Samuelson noted “a hungry tailor happens to find an undraped farmer, who has both food and a desire for a pair of pants, otherwise neither can make a trade�. Historically, countertrade was an inefficient system of trade finance because the initial seller also had to look for the parties who wanted the commodity or service that was received in exchange. For large companies such as GE it was less of a problem because they had specialised trading departments which facilitated the identification of counter parties.

However, for the typical exporter

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Anecdotal evidence shows that some exporters have been able to improve their collections cycle as a result of countertrade.

countertrade was rather difficult.

However, the internet has changed this so that any SME can participate in the countertrade using widely accessible platforms such as Ali Baba. These platforms allow even the smallest of exporters to post the products available to potential customers all over the world.

Improving cashflow Anecdotal evidence shows that some exporters have been able to improve their collections cycle as a result of countertrade. Cash payments are typically dependent on a number of firm related factors such as liquidity,

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with difficult economic and business conditions is that there is usually a strong demand for goods and services.

However, more often than not the strong demand is not necessarily matched by the immediate ability to pay with cash. Therefore, countertrade offers buyers an immediate ability to finance imports without the use of cash.

Of course it does require the exporter to be innovative in that it needs to identify what the buyer has readily available as a form of payment and to seek out potential counter parties.

STEP

1

understand the types of countertrade

With such benefits available the natural question that arises is how exporters can utilise countertrade. The first step is to understand the different types of countertrade which are:

seniority of accounts payables etc.

However, with countertrade the buyer simply exchanges a commodity which they have ownership over in return for the one that they are acquiring.

Therefore, payments are not related to the liquidity position of the buyer.

More importantly, in countries where transfers are difficult or subject to restrictions countertrade avoids the official payment mechanisms.

Another important factor that is persuading more firms – and particularly SMEs – to be actively engaged in countertrade is working in a challenging business environment.

When firms are transacting in more stable business environments, traditional payment mechanisms and trade finance tools are sufficient.

However, when firms are transacting with buyers located in countries with difficult economic and commercial conditions then sellers need to be innovative in the manner in which they do business. The interesting aspect of dealing with buyers in countries

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Barter – This is, as we mentioned earlier, the oldest and the simplest form which involves a single agreement to cover the exchange of one set of goods or services for another. This type of agreement tends to be very short term in nature and may involve a single transaction.

Buyback – This means an exporter supplies capital plant or equipment and agrees to be paid in the future in the form of output from the importer’s factory. These types of agreements by their very nature are long term and largely used in mining and heavy industrial product sectors.

Switch trading – This is where a third party, usually a countertrade broker or agent, purchases the exporter’s credit for the sale of goods and sells them to another party that needs the good or service. The countertrade broker or agent charges a fee for its services in identifying a buyer.

Tolling – This is similar in many respects to contract manufacturing but with the importer providing many of

the inputs. A typical example of tolling tends to be where the importer will supply raw material and hires capacity of the exporter’s factory to turn them into finished goods. The final output is then re-purchased by the importer or sold to a third party for payment. The exporter is then paid by the third party buyer or through a share of the final products.

Counter purchase – This is where the exporter sells a good or service to the importer but simultaneously agrees to purchase another specified product or service from the importer. In some cases, the counter purchase can involve either a third or fourth party who buys the product or service from the importer or exporter in return for cash.

Offset – This form is most often used in government-related contracts, typically within military sales. The first type of offset is simply to use components or sub-assemblies from the importing country. In some cases the importing country may also require the exporter to establish a local production facility. The second type is for the exporter to enter into a long term arrangement to develop an unrelated industry or enterprise in the importing country as a part of a wider import substitution policy.

2

STEP

with countertrade the buyer simply exchanges a commodity which they have ownership over in return for the one that they are acquiring.

Develop a strategy

The second step is for an exporter to develop a strategy for the effective use of countertrade. There are four main types of strategies that are commonly used and tend to be: Not at all group - This strategy is to shy away from countertrade but assist the importer with arrangement or even to identify a buyer for their commodity. This particular group chooses not to take on the risk of selling the importer’s commodity and values payment in cash either www.smeadvisor.com

STRATEGY

directly from the importer or the third party buyer.

The ad hoc user – This group of exporters view countertrade as a necessary evil in limited situations.

This group of exporters will participate in the use of countertrade only if it is truly required to make a sale and in the process.

To gain a competitive advantage firm – In this case, the exporter has realised that in certain countries (or even clients) the use of countertrade is essential in gaining a competitive advantage. These firms will be widespread users of countertrade but only with targeted countries (or product areas). In the process these firms gain considerable knowledge and expertise in the products that they receive in exchange and establish networks in order to facilitate its sale and obtain cash.

It’s the best policy – This group of firms has made a strong commitment to countertrade and makes extensive use of it as a marketing strategy.

Their aggressive use of countertrade implies that they are prepared to accept a whole host of commodities and services in return for making a profitable sale. This group of firms views countertrade as an opportunity to make money through trading as well as selling their own products.

STEP

3

Be wary of the challenges

Although understanding the different types of countertrade and developing an appropriate strategy is important, the exporter needs to understand that it is not free of problems. The typical issues with it tend to be identifying counterparty.

Even when a counterparty or in some cases a number of counterparties have been identified each need to agree on the quantity, specifications of the product, delivery date etc. As www.smeadvisor.com

a result countertrade agreements tend to take much longer to negotiate than standard cash based transactions. With all negotiations there are associated staff costs as well additional administrative requirements. Also, countertrade has a higher potential for trade disputes because more often than not firms try to dispose of lowquality products or those that are difficult to sell. Therefore, countertrade invariably requires firms to insert a product quality clause to verify the quality of the products incurring additional costs and of course time. Anecdotal evidence shows that some SMEs accept their customer’s products in exchange for cash with a view to selling them. However, this has meant that their customer is now in competition with them as both are selling the same good to the market. The best form of countertrade is where the SME has an internal use for the product or a buyer that is not available to the original supplier. Some SMEs have used barter agents to distance themselves from the actual process of finding the counterparty. The typical manner in which is done is to employ the services of barter agents. However, barter agents tend to charge a high fee thus reducing the profitability of the sale.

Meet the author...

Dr. Mahate received his doctorate from Cass City University Business School in London (UK).

He read Economics at University College London, followed by a Masters in International Economics and Banking at the University of Wales in Cardiff. Dr. Mahate is a professional educator and received his training at the Institute of Education (University of London).

He is a member of the Chartered Institute of Managers (UK) and a Member of the Institute of Commercial Management (UK). He is also a member of the Association of Certified Anti-Money Laundering Specialists (ACAMS). He can be reached at ashraf.mahate@ dedc.gov.ae.

The real lesson for exporters is that countertrade allows it to capture new and lucrative markets but this should be done in a careful and strategic manner in order to reap the huge potential that it offers.

For an online version, please visit: www.smeadvisor.com/2015/07/ cashless-exporting/

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country focus

Doing business in France The solid trade partnership between the Middle East and France has created a multitude of opportunities for businesses in the region. We asked Business France, the agency championing this growth, to give us a brief overview on this attractive new market‌

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country focus

What are the primary objectives of Business France and how does it seek to accomplish them?

Business France is the national agency supporting the international development of the French economy, responsible for fostering export growth by French businesses, as well as promoting and facilitating international investment in France.

It promotes France’s companies, business image and nationwide attractiveness as an investment location, and also runs the VIE international internship programme.

The two main missions of Business France are: • To help French companies export • To help foreign companies set up business in France UBIFRANCE and IIFA (Invest In France Agency) merged on January 1st 2015 to create Business France. Through this merger of two state-owned agencies, the French government intends to increase the number of foreign investments in France, support the development of French companies overseas, and better promote France’s business image.

Business France supports French companies to export all over the world, the investment becomes a major part of the activity as the agency will focus on implementing foreign investment to go to France.

One of the main objectives will be the promotion of the economic image of France as well.

The name of Business France will be very well known in the coming months, as it’s becoming a brand of reference related directly to the French exports and investments.

What kind of support initiatives do you have in place for import and export businesses?

The regional office in Dubai has 20 people and which is so far the first market for French exports in the Middle East.

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country focus

In the region, Business France is represented in the following countries: Saudi Arabia (Riyadh and Jeddah), Qatar, Kuwait, Lebanon and Egypt. The agency is also very active in Oman, Bahrain and Jordan through partnerships.

This is the global coverage of Business France in the Middle East region, the UAE is by far the first market of France in terms of export. Indeed, there are many tradeshows held in Dubai, and in different sectors: Health, Beauty, Food, and Decoration, Aeronautics, Construction, Oil & Gas. Business France organises French pavilions within these exhibitions to gather all the French SMEs in the same place; the goal is to put together the best of what France has to offer in a sector. Business France also provides commercial and promotional services to French companies for a very specific purpose: strengthen ties between French and local businesses.

Are there any specific sectors that are doing better than the others?

We can see that innovative companies in various fields such as healthcare, digital, energy and telecommunication are growing and becoming increasingly successful.

Thanks to the excellence and creativity of its talents, France is an attractive country for innovation. In fact, France prioritizes innovation to strengthen its competitiveness on the global platform. The government has decided to focus on research and development and has created a tax credit, considered as one of the most generous tax treatment for companies in Europe: it covers 30 per cent of all R&D expenses up to 100 million in any sectors. To strengthen this leading position, France developed 71 innovative clusters which attract public and private research together with the business ecosystems: more than 606 foreign owned companies

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are already members of the clusters. As a result, 28 per cent of the total R&D in France is now made by foreign companies.

What sectors would you say have significant potential but haven’t been tapped yet?

There is a lot to say, but let’s concentrate on some opportunities. Islamic finance as a rapidly growing market has a strong potential of development.

France has taken significant steps and developed the legal framework and the infrastructure towards establishing Paris as a center in Western Europe. Also, I believe there is still a lot to do in the fields of sustainable energies. France seeks to remain a global leader in carbon-free energy supply by expanding its renewable energy capacity (wind, biomass, solar).

Finally, France remains a dynamic market for high flying technology firms. For the fourth year in a row, France leads Europe in the Deloitte Technology fast 500 EMEA with 86 firms in the list.

How is Business France looking to boost foreign investment from the GCC? Business France is promoting and supporting GCC investment projects in France through specific actions. Our team in Dubai organises business seminars on French attractiveness, meets with C-level executives as well as the extended business community and provides with investment opportunities to our regional partners. These efforts to strengthen the relationship between France and GCC contributed to a significant increase in the number of Gulf companies in France: they are estimated today to be more than 100 companies, which are employing nearly 6,000 people in the country.

What do GCC investors need to keep in mind when considering to invest in France?

In France, it is about long term investment. The biggest part of the international companies that settled in France some years ago continue to invest in new projects nowadays. Let us not forget that France is the first leading country for investment in industry in Europe. Investors are attracted in all the fields of innovation, R&D and are more and more interested in settling their headquarters in France. It is a question of reliability and confidence. The government is very keen to listen to the international investors. The French President of the Republic gathered twice, in the last year, global CEOs from different countries to listen to them and adjust the business environment in consequence.

Try France and you will adopt it!

For an online version, please visit: www.smeadvisor.com/2015/07/doingbusiness-in-france/

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2015 JuSt a number or the year you make a difference?

SME Advisor – a champion of the SME sector – has built its peerless reputation on the ability to get in front of SME decision makers, speaking frankly and directly to the movers and shakers of the industry.

Providing a trustworthy conduit that’s evolved for nearly a decade and creating one of the region’s best-known ‘how to’ blueprints for everyone looking to build a prosperous SME agenda.

In 2015, the publication brings together diverse media and integrates different formats into a seamless mix – events, online and hard copy.

Will you be part of this exciting journey?

SUBSCRIBE NOW! www.smeadvisor.com ADVERTISING & SPONSORSHIP Gill Fairclough Tel: 04 440 9120 gill.fairclough@cpimediagroup.com

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A family affair From micro ‘mom and pop’ stores to growthstage businesses to large conglomerates, Rushika Bhatia explores family businesses that are at the helm of economic development, trade and innovation, and presents a snapshot of the evolving landscape. Here’s some compelling market intelligence that will help family business owners in their pursuit for success.

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family business

Family businesses have always been an interesting, yet complex, subject of discussion. This is largely because some of the key factors driving family businesses are slightly different from traditional businesses. For instance, familyowned businesses are looking for longevity – creating a business that can be carried on for several generations, maintaining independence from external parties and generating profitability for all members of the family.

There is no doubt that family businesses are a major force across the global economy. Just within the Middle East, 85 per cent of all privately-owned businesses are family businesses. Given their significant role in the development of the economy, it is important to understand the parameters affecting them. Let’s look at some of the key challenges faced by these businesses, the opportunities that lie in store for them and regional trends that are paving the way for future growth.

Seizing the opportunities

1

Innovation

62 per cent reported that the need to continually innovate is a primary concern in PwC’s Global Family Business Survey.

By nature, family businesses aren’t very open to innovation. This is due to the fact that they have knowledge or expertise limited to their industry, they are averse to risk and they are usually confined to ideas generated by family members. However, over the last few years, this has been changing as family businesses are now looking at these hurdles as potential opportunities.

Here are a few examples of how they are ttransforming challenges into competitive advantages: • Long-term vision: one of the primary characteristics of a family business is its longevity and this means that they

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FAMILY BUSINESS

With fast-paced digital advancement, automation is key to business efficiency and labour productivity.

can invest in ideas that will prove to be beneficial over longer periods of time.

They can also pump money into R&D and yield projects that require a few years to be commercially successful.

• Limited business control: since most of the decision-making power lies within the hands of the family business owners, it is easier to make critical investments within new products or markets without having to get approval from layers of management. This enables family businesses to move quicker and stay nimble.

• Harnessing the intellectual power of different generations: in some scenarios having two different mind sets can create unnecessary clashes.

But, when it comes to innovation, bringing in the experience of the older generations with the modernity of the newer generation can generate unique, profitable ideas.

2

Expansion

Family businesses have been quick to grasp the opportunities within fresh new territories such as the emerging markets.

In fact, PwC’s 2014 Family Business Survey reported that “80 per cent of family businesses anticipate steady or quick and aggressive growth in the next five years.”

As a family business owner, if you are looking for global domination, it is worth pursuing the following strategies: a) Diversification – Whether its product or segment diversification, family businesses need to continually innovate and reinvent themselves.

The key here is to retain the traditional essence of the business, while still being nimble and adopting new trends. b) Use technology to automate processes – With fast-paced digital advancement, automation is key to business efficiency and labour productivity. Integrating technology with the business will help make a smooth entry into new markets. c) Invest in market intelligence – Even the most innovative product or service

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can fail if it doesn’t meet customer requirements. Set aside a budget for market surveys and map out customer expectations before entering a completely unknown market. Doing your homework will help you be prepared for unforeseen challenges or unexpected complexities.

3

Women in family businesses

A recent survey on family businesses

by EY reported that 70 per cent are considering a woman for their next CEO. This demonstrates the changing landscape when it comes to women in management roles. Several studies across the world have already made a strong case for women in leadership positions, highlighting their unique capabilities and powerful decisionmaking. For family businesses, this is a huge opportunity that they need to maximise on and not be afraid to pass on reigns of the business to female members of the family.

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family business

Working with the challenges

1

Creating corporate governance structures

Research suggests that around 15 per cent of family businesses in the region have corporate governance structures in place. This statistic is not surprising given that family-owned businesses are often hesitant to involve external parties in the operation and management of their company.

They like to stay private and keep all information within the family. But, the reality is that the majority of family businesses that continue to go from strength to strength have strong governance structures in place. A key lesson to bear in mind is to start early; implementing corporate governance principles from inception makes life much easier. In a recent report by EY, Marnix van Rij, Global Leader, Private Tax Services, EY, highlights four common governance challenges that typically arise within a family business a) Succession and the business’s dependence on the owner. The family business owners are often the leaders of their businesses.

But they are also a potential risk through their failure to plan for succession or to relinquish control when it would benefit the business to do so. b) Internal family conflicts. Internal conflict between family members can, at its worse, disable a company. The assets of the business can often be abused by family members for their own personal benefit. c) Nepotism. This can undermines professionalism in the business and discourage non-family business staff. d) Tunnelling. This refers to a situation in which family owners create a complex set of ownership structures that undermine nonfamily minority shareholders.

This can ultimately damage the efficiency of the business.

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The important of succession planning

Nothing is more disruptive to a business than poor succession planning. A majority of family businesses still struggle with transitioning between generations and aren’t able to cope with new leadership styles, changing management dynamics and other critical challenges. A good succession plan is a must for any family-owned business and should have a clear outline of the strategy moving forward. Typically, it would highlight the following areas – a) Ownership of the business: how is this going to be divided amongst the remaining stakeholders? Will it go the next person in line or will it be divided across several members of the family? b) Day-to-day management of the business: this is a crucial point that can determine the future of the organisation. The owner needs to assign executive responsibilities to executive members based on their skill sets in order to ensure a smooth transition. c) The business mission and vision: every business owner has a longterm vision in place that drives the company forward. Without this, it may be the case that the company completely loses focus of where it is going. The succession plan should entail the business owner’s vision for the company and steps that need to be undertaken in case he or she has to withdraw from the company.

Reaching out to a seasoned legal expert or a specialist management accountant to guide you through the process can be immensely helpful. In addition to securing the future of a business, succession planning plays a fundamental role in protecting the financial interests of extended family members that are closely associated with the company.

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Number crunch 40% agree that professionalising the business is a primary challenge over the next five years only

16%

of family businesses have a detailed plan of succession in place

65% of family businesses report growth in the last 12 months

15% express a desire to grow significantly over the next 5 years

58%

consider price competition as a key concern

73% understand the organisational changes they need to undertake Sources: The Family Factor by PwC

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3

Working within the regulatory framework

Although family businesses dominate the overall business landscape, particularly in this part of the world, very few regulations are in place to govern their operations.

Therefore, many family businesses that are faced with internal disputes such as lack of appropriate successor or equity transfer have to come up with innovative solutions. Moreover, any conflicts arising with the board of directors or governance committee are most likely to be solved internally.

Professionalising the family business Recently, PwC released a comprehensive report titled Professionalising the Middle Eastern family firm. The publication revealed unique insights and highlighted a fresh aspect of family businesses. Here’s an excerpt: “Professionalising the business will allow family firms to innovate better, diversify more effectively, export more, grow faster, and be more profitable.

It will open up new commercial opportunities, and new options for a possible sale in the long term, by making them more attractive prospects for both PE buyers and multinational buyers. But these benefits will only be realised if family businesses have the courage to professionalise the family, as well as the firm. Doing one and not the other will only create tension and possible conflict, especially if outside managers are brought in at executive level.

Professionalising the family is much harder, and will take longer, and it’s understandable that many family firms are shying away from tackling an issue so fraught with potential conflict. But it cannot be postponed indefinitely. The rewards will be significant for those who do seize this challenge,

while the risks of not doing so will increase with time, especially as it’s likely that the failure rate of the family business sector will rise as the pace of change in the wider economy accelerates.

Professionalising the family will ensure that family members become effective owners, whether or not they are actively involved in managing the firm. It will make it possible to reinvent the business, by taking the objective perspective of the informed investor, rather than falling prey to decisions dictated by emotion or history.

The Middle East has special advantages, in its strong family culture and long tradition of entrepreneurial success, but firms in our region will only make the most of these strengths if they can rise to the challenge of professionalising the family. If they can, the sector as a whole could reinvent itself, and evolve from a model based on a ‘family business’ to one driven by a new and powerful vision of the ‘business family’.”

For an online version, please visit: www.smeadvisor.com/2015/07/afamily-affair/

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FINANCE

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FINANCE

Breath of fresh air Peer-to-Peer finance The commercial reality is that every business needs an injection of cash at critical points in its life cycle to sustain growth and make progress. While traditional sources of funding may not always be available or affordable, a range of alternative solutions are now providing SMEs with exciting new opportunities. Peer-to-Peer finance is one such option that is gaining traction in the region. We asked experts at Beehive to share exclusive insights on this emerging concept, the latest market trends and more…

The financial route you opt for your business can give you a considerable ‘competitive edge’ in terms of your ability to make progress and take your company to the next level. Access to affordable funding can make the difference between expansion and bankruptcy for your business, particularly in its first few years. A large portion of SME failures, across sectors, arise from the inability to access the finance they need at reasonable terms.

As the current scenario stands, the International Finance Corporation (IFC) estimates that the current SME funding gap in global emerging markets is more than $US 2 trillion (approximately $US 260 billion in MENA). This considerable funding gap between the demand and supply of capital is driving a critical need for alternative funding solutions to fuel growth in this underserved sector of the economy.

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This context has created a ripe environment for Peer-to-Peer (P2P) finance to emerge as a viable alternative, allowing the model to rapidly gain popularity due to the attractive cost, accessibility and flexibility it offers. Borrowing from tried and tested concepts in crowdfunding, P2P finance is a simple, novel way of raising money using the internet’s network-effect to get a large number of people contributing a small amount of money individually.

The evolving landscape P2P finance has grown exponentially since it first appeared nearly 10 years ago; there are a wide number of peer-to-peer finance providers, also known as ‘marketplace lenders’, offering a variety of services targeted at small businesses and individuals.

As P2P finance continues on a

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A key factor enabling P2P finance to deliver such benefits is that it uses the internet as a platform to reach hundreds or even thousands of potential investors who invest small amounts of money.

Craig Moore, CEO, Beehive

steep growth trajectory, finance originating from the industry reached $US 9 billion globally last year. The most recent estimates project a 40 per cent year-onyear growth for the relatively young industry over the coming decade. Forecasts for the global P2P industry vary widely, from accounting firm PwC’s estimate of $US 150 billion by 2025, to Morgan Stanley’s estimate of between $US 150 billion and $US 490 billion by 2020, to venture capitalist Charles Moldow’s more buoyant prediction of US$ 1 trillion over the same period. But even the lower end of the estimate range represents a compound rate of nearly 40 per cent annually over the next decade, signifying an undeniably noteworthy upward trend.

Why is P2P finance a viable solution for SMEs? The allure of P2P finance is obvious and makes it highly

We estimate global marketplace lending can reach $290 billion by 2020 (base case) Global Marketplace Loan Issuance ($bn) 300 250 200 150 100 50

51% expected CAGR 2010-2020 123% CAGR 2010-2014

0 2010 2011 2012 2013 2014 2015 2016 2017 2018

Australia

China

Source: Company Data, Morgan Stanley Research

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UK

US

2019 2020

attractive for businesses looking for lower cost finance than they can secure through a bank, as well as for investors who want higher-thanmarket, steady returns. A key factor enabling P2P finance to deliver such benefits is that it uses the internet as a platform to reach hundreds or even thousands of potential investors who invest small amounts of money to finance businesses in return for monthly repayment instalments.

The online nature and technology efficiencies of P2P platforms significantly reduce the cost of transaction versus their bricksand-mortar counterparts, enabling them to provide a source of finance for smaller businesses looking for smaller amounts. The fact that individual investors bid and compete to finance business requests means that an auction (think reverse eBay) ensures the lowest blended rate is offered to the SME. Additional factors adding to the model’s appeal include the ability to quickly make a financing request, plus its ease-of-use and transparency, especially when compared to traditional sources of finance. This approach, supported by a robust risk assessment model and legal structure, means businesses end up getting faster access to lower-cost, debt-based finance and investors get better returns on their money while diversifying their risk. Furthermore, most P2P platforms do not charge SMEs a penalty for early repayments, providing yet another reason that makes P2P business finance a viable business funding alternative.

Accessing P2P finance in the UAE In November 2014, Beehive was launched as the first peer-topeer financing platform in the UAE, authorised and licenced by the DMCC, with a vision to transform the local SME finance market and increase the options

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FINANCE

that SMEs have to obtain finance.

With an operational structure modelled on global best practice and robust investor protections in place, Beehive’s focus is to serve established credit-worthy SMEs looking to finance working capital for expansion and growth.

Through the use of innovative technology, Beehive set out to create a marketplace that directly connects established businesses with smart investors so that SMEs get faster access to lower cost finance and investors get better returns.

Businesses seeking investment starting AED 100,000 gain access to individual investors who bid to provide the financing, choosing how much they will finance and at which rate. The SMEs receive funding typically in 14 to 18 days, depending on the length of auction, and investors receive monthly repayments at target rates of between 8 per cent and 20 per cent.

The response to Beehive and the P2P concept has so far been tremendous, with SMEs and all kinds of investors joining the platform and helping to spread the word in the UAE. The timing was absolutely right for the UAE to embrace P2P finance, and to provide a template for the rest of the region as to how the P2P model serves to benefit businesses, investors and the wider economy.

To date, a wide spectrum of businesses have used the Beehive platform, from an HR consultancy, digital agency and a coffee supplier, to a pet supplier and plastic manufacturer. Beehive’s investor base is equally as varied and includes investors across different nationalities and age groups, each choosing to bid different amounts of money across the Beehive platform.

How is P2P finance different from Crowdfunding?

Both equity crowdfunding and P2P finance are built on the power of the crowd, sharing the same principle of raising finance from a number

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of people who pool together.

Individual or small investors place relatively small investments in businesses, allowing them to gain higher returns and diversify holding. In exchange, SMEs get a lower cost and ready source of financing. But it’s likely that one will better suit your business needs, depending on what stage your business is at.

But the two financing concepts entail markedly different considerations with long term implications for a business. To determine which is the most suitable for a business, one must be clear about what stage the business is at, how much funding is needed, what the capital will be used for and how quickly the funding is needed.

Equity crowdfunding entails selling part of the business to investors with the help of a website that connects investors with the company. The finance request is covered by a number of investors who invest relatively small amounts of money in the business, product or idea. The added benefit of crowdfunding is that experienced investors can also bring new skills and opportunities to the business and understand that their investment is at risk. The downside to giving up equity is that the company’s founders give up a share of their business. More importantly, company management may have to consult their investors when making certain management decisions, adding an additional air of complexity. As a result, many advise that crowdfunding is most appropriate for start-ups as investors’ share the business risk and there is no repayment schedule involved.

As an alternative finance option, P2P finance offers a fast and accessible way of getting a cash injection into your business.

The fundamental difference

between this and investment crowdfunding is that you do not give away any equity, but rather make repayments on the money you borrow. This option is attuned to the needs of more established SMEs and offers the most flexible way of getting lower-cost finance and which accommodates their needs.

Whether the financing will be used for new equipment to increase production capacity, to purchase a property, or to expand your office and workforce, the advantages are many and varied.

Building a comprehensive finance strategy While P2P finance has its fair share of benefits, the reality is that using a combination of various techniques will yield the best results and give you a comprehensive advantage. So, don’t be afraid to complement P2P finance with more traditional sources of finance. The key to success lies in the prudent implementation of a strategy that best suits the unique needs of your business!

For an online version, please visit: www.smeadvisor.com/2015/07/ breath-of-fresh-air-p2p-finance/

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TECH TRENDS

Top apps for the ardent traveller Whether you are travelling for

business or leisure this summer, these apps have got you covered!

Rushika Bhatia ,s view...

iTranslate This translation app will help you overcome language barriers in foreign territories. With its directory of over 90+ languages, it can translate simple words or long phrases. This app stands out with its unique voice output feature which offers translation in various dialects and also lets you select between male or female voice! If you are a frequent traveller, this highly interactive is an absolute must have.

Available on: iOS and Android Cost: Free

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TECH TRENDS

AwardWallet From frequent flier miles and car rentals to hotel loyalty points and restaurant discounts, this app keeps track of all the rewards programmes you are enrolled in. It ties everything well into your current travel plans and gives you timely reminders.

A notable feature of this app is that it generates automate flight statuses and suggests alternative flight options when required.

Available on: iOS and Android Cost: Free

Concur Concur tracks, organises, manages and reports all your travel expenses in a systematic and orderly manner. This app takes away the hassle of handling paper receipts and stores all your data on one platform. Using its ‘capture receipt’ feature, you can upload receipts by clicking a picture of them. For business owners and professionals, Concur is ideal to create a report of your travel expenditure and present a formalised summary to colleagues or partners.

Available on: iOS and Android Cost: Free

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TECH TRENDS

aTimeLogger This is a unique, interesting application that lets you track your activities while on the go. The app has preset categories such an entertainment, meeting, transport and so on. All you have to do is simply tap on the appropriate category and the app starts logging the time you are spending on it. At the end of your trip, you can create reports and analyse your time spent towards each activity. This is fantastic for super-efficient entrepreneurs who like to keep track of time and increase productivity. What’s particularly appealing about this app is that it lets you set goals and pushes you to achieve them, which is ideal for time management.

Available on: iOS and Android Cost: $2.99

AroundMe Travelling for business can be hectic and chaotic – the last thing you need is to lose your way or spend huge chunks of your time navigating. AroundMe is a useful app that identifies your current location and finds places around you such as restaurants, ATMs, coffee shops, gas stations and so on. That’s not all. It also gives you their descriptions, opening hours and contact numbers, in addition to detailed directions.

This app offers basic features but is simple, effective and quick!

Available on: iOS Cost: Free

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XE Currency This award-winning app provides the latest currency rates and also provides a handy currency converter.

It allows users to pin their base currency as the header within the app for quick reference. Moreover, the app works offline and stores the last updated rates in case you don’t have Wi-Fi connectivity. For Apple Watch users, this app also syncs with your device giving you access to view and refresh rates instantly – ultimate convenience for a business traveller!

Available on: iOS, Android and Windows Cost: Free

TravelSafe Pro In case any unforeseen circumstances that require external assistance arise, TravelSafe Pro is your go-to app. This basic application provides a comprehensive directory of all emergency contact numbers you would need including embassies, hospitals and so on. TravelSafe Pro works with an extensive database that covers almost every country you would ever visit! It also gives you the option of pinning certain numbers to your home screen so that you can dial through with a single touch – ideal for tricky travel situations such as loss of passport, etc.

Available on: Android Cost: AED 4.99

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TECH TRENDS

Dubai Airports For frequent travellers based in Dubai, this app is quite handy. It gives you all the information you possibly need while travelling from Dubai’s airports. In addition to basic flight information, you can check your flight status and enjoy personalised journey planning. The most appealing part of the app is its quick reviews on restaurants within the airport so that you don’t have to waste time exploring what’s on offer.

Available on: iOS and Android Cost: Free

AwayFind This is arguably one of the most useful apps for business travellers. The innovative app helps you stay on top of your e-mails without having to constantly go through your inbox. AwayFind sends users push notifications when e-mails that they’ve marked as urgent or important come in. So, there is no need to scroll through hundreds of e-mails to get to the ones that need your attention. In fact, the app also offers a feature where you can simply type in the e-mail, name or domain address of the person you are expecting an extremely urgent message from and the app notifies you as soon as it comes in!

Available on: iOS, Android, BlackBerry and Windows Cost: Basic version is free

For an online version, please visit: www.smeadvisor.com/2015/07/top-apps-forthe-ardent-traveller/

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Aim high with your business Enjoy up to at NO

50% MORE broadband speed

EXTRA COST.

T&C Apply

Offer available for Business Quick Start and BusinessSuper + Voice bundles.

800 5800

etisalat.ae/businessquickstart www.smeadvisor.com

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Get finance on your transactions with NBAD Loan against Point of Sale Receivables www.nbad.com NBAD Commercial Banking offers finance against your Point of Sale Receivables, without collateral, so you can run your business efficiently.

• Loan amount up to AED 5 million • Flexible tenors up to 48 months • Competitive interest rates • Easy & simple documentation • Quick turnaround time To know more, SMS “POS loan” to 2050, Email: CommBankingSales@nbad.com or call Toll free 800 2211 Subject to bank approval. Terms & conditions apply.