SME Advisor Middle East - August 2014 by SME Advisor Middle East

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ISSUE 104 strategic SME partner

Kcal’s PROSPECTUS

Close-up on a template for growth

Stars of Business

Be in it to win it – apply now!

IPO?

Meet the experts: NASDAQ and Grant Thornton

THE ART OF

LEADERSHIP A meeting with HE Abdullah Al Darmaki, CEO, Khalifa Fund for Enterprise Development

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sme advisor ISSUE 104

EDITORIAL COMMITTEE SME Advisor is delighted to announce that during 2014 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:

Alexandar Mathew Williams Alexandar Mathew Williams is presently the Director of Strategy and Policy at Dubai SME, a government agency of the Department of Economic Development (DED) tasked with the development of Entrepreneurship and Small & Medium Enterprises (SMEs) in Dubai. He has logged more than 20 years’ experience in public policy and strategic programme development focusing on micro-economic, business and SME development. Anas Halabi Anas is Managing Partner at Prediam Partners, an independent investment advisory firm, focused on real estate, hospitality and related ventures that he co-founded. Prediam has successfully assisted in setting up, structuring and financing numerous regional and international projects and startups, including an innovative application for Muslim travelers, an aggregator website for tourists in the UAE, an income producing hospitality portfolio in Dubai and a boutique hotel development in Beirut. Mona Tavassoli With over a decade of work experience, Mona Tavassoli is the Founder of Mom Souq (www.momsouq.com), an online community and bazaar for mothers residing in the UAE, through which mothers can network with each other, share advice and their experiences. As an extension, with the aim of continually providing support to working mothers in this region, Mona launched a new platform - Mompreneurs Middle East (www. mompreneurs.me).

Audrey Weir Audrey Weir is Global Head of Risk and Regulatory Strategy with AIG - currently the world’s 9th-largest insurer. Audrey brings to her role an in depth knowledge of risk and insurance earned over a 25 year career that spans the geographies of North America, Europe, and the Middle East. Audrey has held key risk and insurance management positions with global players such as PricewaterhouseCoopers, Fujitsu, Transport for London, and Aon. She commands an expansive career which crosses a wide array of sectors including Construction, Energy, Real Estate/Commercial Property, Financial Services/ Institutions, Retail, Information Technology, and Transport. In addition to her corporate experience, Audrey spent six years as a University Lecturer, Careers Tutor, and Director of Studies in Risk Management. Simon Hodges Simon has more than 30 years of experience working for international companies at Board level. He has spent over 10 years in the UAE and was previously Corporate Director of Administration of The Jumeirah Group, Senior Executive Officer of Dubai Holding Insurance Services LLC and Head of Governance for ADNEC. He also completed a two-year assignment as head of the health funding project for the Government of Dubai. Since 2011 he has been mentoring business owners from Dubai to enable them to create and then manage effective organisations that support business growth. Hazel Jackson Hazel has built an impressive reputation and successful multimillion dollar business

– biz-group FZ LLC- during the past 19 years based in Dubai. Nearly two decades ago, and with just US$700 in her pocket, Hazel founded biz-group, which she has developed from a small training company into an organisation of 42 professionals servicing the Middle East’s corporate training, team building and business strategy needs. Passionate about impacting performance, biz-group’s success is a testament to Hazel’s entrepreneurial spirit. Kay Braganza A seasoned public relations professional and successful entrepreneur, with five years of experience in the industry and an extremely commendable portfolio, Kay Braganza decided to pursue her love PR and start up her own agency four years ago. Here, she aims to cater to the demand of a flexible and a truly bespoke PR service, which strives to make a lasting difference to companies of all sizes. A recognized and respected expert in the PR world, her proficiency in the field speaks for itself, after working in it for nine years and having dealt with reputed clients such as Sony Gulf, Nokia, Mom Souq, and Clarion Events amongst many others. Nadine Halabi Nadine Halabi has been the Coordinator of the Dubai Business Women Council since August 2011. Since then, she has been managing the overall operations of the exclusive Council, coordinating the high profile board members, its stakeholders and members in line with the values, visions and missions as set out by its President, Mrs. Raja Al Gurg. Prior to her joining the DBWC, she worked at an events management and PR agency in Bahrain, where she flourished in a senior role as Deputy General Manager.

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MANAGEMENT Dominic De Sousa Chairman Nadeem Hood Group CEO Georgina O’Hara Group COO EDITORIAL Group Director of Editorial Paul Godfrey paul.godfrey@cpimediagroup.com +971 4 440 9105 Group Managing Editor Melanie Mingas melanie.mingas@cpimediagroup.com +971 4 440 9152 Assistant Editor Rushika Bhatia rushika.bhatia@cpimediagroup.com +971 4 440 9115 Editorial Assistant Adelle Louise Geronimo adelle.geronimo@cpimediagroup.com +971 4 440 9160 ADVERTISING Publishing Director Rajashree Rammohan raj.ram@cpimediagroup.com +971 4 440 9131 Commercial Director - Business Division Chris Stevenson chris.stevenson@cpimediagroup.com +971 4 440 9138 Sales Manager Jason Bowman jason.bowman@cpimediagroup.com +971 4 440 9154 Media Sales Executive Emma Hughes emma.hughes@ cpimediagroup.com +971 4 440 9120

FROM THE EDITOR Make sure you hard work doesn’t go to waste… For myself and all the team here at SME Advisor, this is always a landmark time of year because it’s when the NBAD Stars of Business competition goes live. This is quite simply the largest business awards occasion in the GCC, last year receiving 4,974 entries. It’s also run with absolute dedication to the most scientific, objective appraisal of each and every application, across all 23 of the Awards categories. Hence its hard-won prestige and standing as the pre-eminent occasion of its kind. It’s also worth pointing out that the entry pool in the NBAD Stars of Business is enormously diverse: from major car showrooms in Dubai’s Sheikh Zayed Road to agricultural importers in Al Hamriya free zone; from smart, leading-edge clinics in downtown Abu Dhabi to spray shops in Al Rashidiya. All of the SME universe is there, and I should also mention that some of the best and most comprehensive application forms are completed not by the big, sophisticated firms getting ready for an IPO, but by those who are committed to ensuring that at least in one area of business life, their small, aspiring company stands out from the crowd. It’s also amazing how competitive the occasion becomes: last year, the panel of 13 judges (who receive 10 shortlisted names for each category from our audit partner) came to an absolute deadlock over three of the awards, and my Assistant Editor Rushika Bhatia was asked to give a casting vote on each occasion. Entering your business for one of the coveted awards really can help ensure that your hard work doesn’t go to waste: winners receive a raft of promotional opportunities, getting a good deal of completely free publicity head and shoulders above the other players in the market. It’s also a great motivational caveat for your hardworking teams. What’s more, the credibility of the occasion is underlined by the fact that our knowledge partners in the event include both the Khalifa Fund and Dubai SME - who see it as entirely complementary to their own initiatives (indeed, this year, we are proud to launch - for the first time - a new award titled the ‘SME Toolkit Emirati First-Time Entrepreneur’). Oh, and one last thing: you’d better apply - here’s the link: http://www.starsofbusinessawards.com Best of luck - and enjoy this issue of SME Advisor.

Event Sponsorship Manager Gill Fairclough gill.fairclough@ cpimediagroup.com +971 4 440 9120 DESIGN Head of Design Glenn Roxas

Paul Godfrey Senior Editor

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STRATEGIC SME PARTNER

KNOWLEDGE PARTNER

Contents

Q4 is a good time for SMEs to review or prepare their planning and seek investment from venture capitalists or other external sources.

p14

A variety of government-led initiatives have not only targeted the role of SMEs in building a vibrant and diversified economy, but looked specifically at how imperative it is to raise awareness of this sector and its career benefits specifically amongst the Emirati workforce. p26

07 Editorial Committee SME personalities bringing industry-leading expertise across the publication and its raft of prestigious events. 09 Editor’s Note Paul Godfrey on this year’s landmark SME occasion and why you should mark it into your calendars! 12 Data and decision making Our new info graphic section showcases key trends shaping the SME marketplace. Ground level 14 Are we there yet? Countdown to Q4. Associate Editor Vicki Connolly explains why it’s never too late to start successfully planning your Q4 delivery strategies… 18 CFO – the new corporate leader. We explore the emerging role of a CFO and its implications on your SME. 22 Managing your mobile workforce. Are you caught up in the balancing act between flexibility and productivity?

sme advisor ISSUE 104

Event Preview 34 Drive your business to success. Join us for an exciting full-day conference on September 29, 2014, and learn innovative strategies to achieve exponential business growth.

Movers & Shakers 38 Fostering entrepreneurship. An exclusive interview with HE Abdullah Saeed Al Darmaki, CEO, Khalifa Fund for Enterprise Development. 42 Catalyst for success. Management education can play a critical role in the overall development of an entrepreneur. Alumni at American University in Dubai share their experiences…

Stars of Business 24 Are you getting the recognition you deserve? The NBAD Stars of Business Awards 2014 are now live. Don’t miss out! Business Banking 26 Roadmap for growth. An exclusive insight into how leading financial entities – like NBAD – are helping develop Emirati SMEs. Business Innovation 30 Two heads are better than one Etisalat - leading telecoms provider in the Middle East and Africa - has developed a number of strategic partnerships to enhance its offer to the SME and enterprise sector. We spoke to Govind Rao, Vice President, SMB Partnerships & Alliances, Etisalat...

Workspace 48 Start-up to IPO. We present the views of two world-class experts – Kam Mattu, Vice President, Equity Capital Markets, NASDAQ Dubai, and Hisham Farouk, Managing Partner, Grant Thornton UAE. The next level 52 The taste of success. Mark Carroll and Andreas Borgmann – the cofounders of Kcal – on how they are revolutionizing healthy eating… Trade and Export ME 55 We present our new comprehensive section, Trade and Export ME – a practical, informative and incisive guide for the trading community in the region. Tech Trends 84 Appealing apps for the ardent entrepreneur – Download now!

Data anD Decision making

The sTaTe of family businesses

competitive strengths and performance indicators

US$88.5b

Generated by Mena’S top 10 faMily bUSineSSeS in 2012 221,740

barriers To growTh

AttrActing skilled tAlent

55%

Consider recruiting the right skills as a key emerging issue in the Middle East

Employed by MENA’S top 10 family businesses in 2012

75%

40%

Economic activity in the private sector constituted by family-owned businesses in the Middle East

80%

Approximate GDP generated by familyowned businesses in the Middle East

FAilure to implement succession plAnning

Middle Eastern respondents are concerned that the transfer of the business to the next generation might cause problems (compare this to a figure of 32% globally!)

49%

review succession plans when a change in management requires it

58%

consider family business to be more entrepreneurial than other sectors of the economy in the Middle East

45%

of Middle Eastern family firms intend to pass on both the ownership and management of their business to the next generation

65%

of Middle Eastern firms believe that family businesses play an important role in ensuring economic stability

45%

believe that family businesses are able to reinvent themselves with each new generation

1 to 49 50 to 246

lAck oF Access to FinAnce

250 to 999 1,000+

0 About the same as before

20%

40%

Becoming easier to obtain

60%

100%

Becoming more difficult to obtain

SOURCES: PwC’s Family Business Survey 2012 – The Family Firm: Central to the success of the Middle East PwC’s Next Generation Survey 2014 – Bridging the gap: Handing over the family business to the next generation

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Data anD Decision making

looking To The fuTure

43%

see retaining key staff as an issue

Bridging the skills gAp

1 in 6

firms believed that bringing non-family members into key positions was a motivator of governance change (in the past three years prior to the survey)

63%

28%

31%

of Middle Eastern family businesses have non-family directors

of the next generation had gone into the family business straight from school

12%

of family firms make it to a third generation

Building A succession plAn

42%

of non-executive family members often are not aware of succession plans

15%

of family firms in the region have a ‘family council’ embedded within their governance framework

of Middle Eastern family businesses plan to pass on their shares but bring in professional managers

46%

went to university first

had worked for another company before taking a role in the family firm

What is a family council? It’s the means to conduct a formal discussion with all family members involved within the business to iron out any issues or concerns, giving the business the ‘green light’ to move smoothly ahead!)

Developing Innovation, new products, new technology Support investment into new markets

OTHER ISSUES:

45%

innovation

48% 34%

price competition

putting Your FinAnces to Work

regulation

Mergers and acquisition related investment Support growth in current market Mixed investments New staff Relocation 0

10%

20%

30%

40%

50%

Deloitte’s Perspectives on family-owned businesses – Governance and Succession Planning EY Family Business Yearbook 2014 Ernst & Young’s Built to last – Family businesses lead the way to sustainable growth (in collaboration with FBN International)

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GROUND LEVEL

Are we there yet?

Countdown TO

“I Hate 4th Quarter”. Sounds familiar? It’s a scary time of year, the dreaded fourth quarter (Q4). A time when entrepreneurs realise that their goals haven’t been attained, quotas not made, and budgets not adhered to. Yet SMEs are by definition quick, agile and nimble - and the challenge of Q4 can just as easily result in a time of celebration, achievement and ambitions met. Associate Editor Vicki Connolly explains why it’s never too late to start successfully planning your Q4 delivery strategies… 14

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GROUND LEVEL

Business owners traditionally dread the Q4 and view it with trepidation and a “coulda, woulda, shoulda” frame of mind. With the right approach to business planning however, the fourth quarter should be one of rejoicing, breathing a sigh of relief because goals were reached or are within sight, quotas are on track and business owners are prepared and confident about the visit from the accountant. Okay, so maybe that is in the perfect world. That’s not always the way it is in the real world, where desired quotas are not met; where clients drag their feet on signing contracts (or decide not to sign at all); where contracts get cancelled mid-stream and where business plans didn’t get written or implemented. As a business heads towards Q4 (and while it may be too late to achieve all of the goals set for the year), it is never too late to review its performance and set a revised, more strategic plan for the future. So what are the key Q4 activities that will ensure an entrepreneur steers an SME in the right direction? Failing to prepare is preparing to fail While Q4 may be too late to achieve all of the goals set for the year, it is never too late to evaluate plans. Businesses should start by reviewing their year month by month - to see what obstacles were encountered and how the business responded. Was there a contingency plan in place; was an entrepreneur’s reaction to unexpected events proactive or reactive? A well thought-out, comprehensive strategic plan will take into account the various scenarios that a business may face and how to respond appropriately. Although there will always be the unknown, by reviewing the past, a business may see a pattern emerge that will enable them to draft a blueprint that includes solutions to problems that could occur. Planning for the future Q4 is also a good time for SMEs to review or prepare their planning

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GROUND LEVEL

Q4 is also a good time for SMEs to review or prepare their planning and seek investment from venture capitalists or other external sources.

and seek investment from venture capitalists or other external sources. Working with the business plan, firms should review their performance and adjust their overall strategy and tactics for the future. In addition, resellers should invest in research and development in order to introduce new brand features to the market and substantially expand market coverage by adding new sales outlets. Suppliers should continue their efforts to improve product reliability, production scheduling and capacity utilisation. Both parties should continue to invest in technology and procedures to streamline the supply chain. Study the market Q4 is also a good time for entrepreneurs to consider expanding their business strategy; study the market, financial, and operational data to determine how to better meet customer needs, improve economies of scale, add to the bottom line and surpass the competition. Resellers can explore licensing opportunities and the development of strategic alliances with other resellers.

SME Strategic planning isn’t just what pops out of people’s heads in water-cooler or break room conversations (even though those ideas can certainly help). Strategic planning is the intentional and deliberate process of reviewing the business for new ideas and business decision-making. It’s important that there is a process behind the ideas and discussions. Strategic planning and the re-evaluation of business performance during Q4 allows an organisation to set a course, detour when necessary, but build momentum with intention. It is the company that takes the time and effort to strategically plan for their organisation’s well-being that will be in the race for the long haul. A business will never have a “perfect” plan. A strategic plan is an active document that can be updated as the business changes and grows. As a familiar saying goes: “A good plan today is better than a perfect plan tomorrow.” Every strategy, every game plan needs to be adaptable. The market and the environment change, and a company must be able to read those changes and recalibrate strategy to fit a fluid situation. The business

environment is littered with the wreckage of companies who couldn’t adapt and didn’t survive. Q4 is the perfect time to reset goals and objectives. Plans can be adjusted; attitudes can change; entrepreneurs must remember the good that has occurred during the trading year, it will help SMEs to develop a plan that is focused on the positive aspects of the business and how owners and managers can and will move it forward. There is nothing more stressful than Q4 for an SME owner and it is defiantly a love/hate relationship. Entrepreneurs love the pressure of Q4 with calendars jammed with big meetings, daily texts with updates on the largest deals and strategizing meetings with sales teams; yet at the same time there is too much to accomplish and not enough hours in the day. When it comes to the love/ hate relationship SMEs have with Q4 the answer is simple: you have to be in it to win it.

For an online version, please visit: www.smeadvisor.com/2014/09/are-wethere-yet/

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1 A QualityLogic 2010 study commissioned by HP comparing original HP LaserJet Monochrome print cartridges with nine brands of non-HP toner cartridges available in Europe, Middle East and Africa for the HP LaserJet P1505 and P4015 printers, HP 36A and 64A. For details, see www.qualitylogic.com/EMEAmonotonertest.pdf. 2 From a 2012 EMEA Lyra Research study, commissioned by HP. Results based on a total of 1050 HP Color LaserJet users who have used both original HP and non-HP toner cartridges, of whom 552 experienced problems with non-HP cartridges.

GROUND LEVEL

CFO â&#x20AC;&#x201C; the new corporate leader Tradition dictates that the primary function of the CFO is to ensure that his company stays financially safe and can meet its liabilities or obligations. Undoubtedly, this responsibility remains imperative even today. But the role of the modern CFO has evolved into a wider and more generic range of responsibilities which require expansion into many fields other than bare financials. SME Advisor investigates how CFOs have emerged to become new corporate leadersâ&#x20AC;Ś

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GROUND LEVEL

A CFO is increasingly considered to be the public face of a company as the survival of the company depends on the bottom line figures. This crossover role from CEOs emanates from the need of transparency in issues such as corporate governance, risk management and the maintenance of effective systems. Increased scrutiny of revenue, profits (and every expense in between) has transformed CFOs from custodian of the balance sheet to the saviours of a company’s reputation. The role of a CFO Core responsibilities of a CFO can be summarised as the following: 1. In order to cater to the unprecedented and ever changing business environment, CFOs have to be abreast with market trends, threats from competitors and the avenue for new opportunities. They have to work hand in hand with management on budgeting, forecasting and financial reporting. 2. CFOs are expected to reassure investors and analysts on the company’s behalf. In addition, they must also convince internal stakeholders and employees on strategy and financial performance. They should be transparent with information and also - of course defend business decisions and strategies undertaken by the company.

CFOs are expected to take profitability management to new levels and establish marketing as more than just a discretionary expense. Vital information and management skills are important when managing such complexities. Businesses are constantly bombarded with market fluctuations and confusing external factors. The need of the hour is to integrate with internal financial and operational management to form decisions and opinions. In addition, CFOs will have to justify decisions by modelling scenarios and reporting. 3.

4. People management has also evolved as a prominent factor in the CFO remit. Teams and departments are streamlined and made smaller and diverse, due to

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cost cutting. So it is imperative to know who is more apt for which role and who is dispensable, when making job cutting moves. 5. CFOs have to keep themselves attuned to technical and technological upgrades in their specific industries. They should take the lead to apply analytics to meaningful operational decisions as well. This will help them strengthen ties throughout the business and expand influence outside core finance functions.

Mergers and acquisitions (M&A) add value to every enterprise and contribute to the organisation’s long-term growth. The CFO has to determine which M&A adds money to the balance sheet while adding to the reputation and goodwill of the company at large. 6.

On a strategic front… As the pinnacle position in finance and accounting, CFOs are being expected to take on more strategic responsibilities and participate in decision-making processes. CFOs of the day are not merely bean-counters. He or she is on par with the CEO in managing a business. CFOs are now considered to be the strategist and trusted advisors to their non-finance colleagues, assisting in constructive discussions that help make finance sense out of the business propositions. They must also be able to tackle issues quickly and decisively in the fast business environment. There is also a greater focus on risk management due to uncertainties. They must have the ability to seize opportunities as well as address threats. It’s all about juggling and balancing the short term needs and long term objectives. It is increasingly important to possess an exceptionally rigorous knowledge of finance, and to understand both internal and external strategy, including a company’s growth potential and the independent needs of various operational sectors. This varied proficiency places the CFO in a unique

GROUND LEVEL

As the pinnacle position in finance and accounting, CFOs are being expected to take on more strategic responsibilities and participate in decisionmaking processes. position of being able to apply skills to numerous areas and conceive ways in which such sectors might cooperate or be integrated. For a company to succeed today, the CFO must work closely with various departments like Human Resources and Information Technology, to externally or generally-focused branches including Corporate Governance and Overall Corporate Planning CFOs, far from being just relegated to the cost reduction agenda, are being drawn into providing expert advice to support boardroom decisions. Finance is being tasked with providing forecasts, managing risks and providing insights into issues ranging from pricing to production. The extent of the role played by the CFO in non-financial metrics depends on industry, organisational size and maturity. CFOs must use their deep understanding of financials and liquidity to predict how volatile prices and demand will affect the performance of their companies. They should have the expertise to manage potentially lethal threats and to ensure the availability of the financial resources required for countercyclical investments. Leading international expansion As organisations move into a new era of globalisation, they face the risk of complex dynamics and decision making. This has resulted in the role of the CFO having to focus on the success of global

initiatives. Many CFOs are rising to the task and stepping up to manage a broader set of business issues than those faced at home or in core markets. Conducting cross-border operations in multinational companies is no simple endeavour. Added to this is the complexity of legal and cultural differences. Given the magnitude of the work involved, management can never be prepared enough when it comes to its investigation protocols and procedures. Excessive rules and regulations have caught companies in an intricate web of complex bureaucracy and legal stipulations. Ultimately it results in much more expensive audits and liability insurance premiums. CFOs must proactively develop case management and investigative procedures that align with the company’s values, standards, and principles and take into account region-specific or country-specific requirements, customs, and practices. A ‘one size fits all’ approach will not work with cross broader operations. Procedures need to be customised to meet the requirements of a particular jurisdiction. Foreign data privacy laws and regulations pose some of the greatest challenges to conducting cross-border mergers, because of restrictions on the kinds of data that can be collected and transferred out of the jurisdiction. Many countries have enacted laws that place a high priority on protecting personal data, including establishing a fundamental legal right on the privacy of personal data. Cultural differences remain another mammoth task to conquer. No longer can companies rely on procedures and resources used for domestic operations. Instead, they must be customised to comply with different local laws and to respect diverse cultures and customs.

educating the board of directors about the company’s legal responsibilities to disclose information. Especially in an SME, decisions that would normally have been made at a management level are now going up to the board. That means the CFO has to keep the board better updated in defining its mandate, reporting relationship, power, composition, roles and responsibilities. The present stage of the economic cycle indicates that there are more concerns from consumers about investments, and more complaints about disclosure and scams. When a company collapses, the notion in the industry and amongst general public is that there has been a breach of the law. The law expects corporate officers to assume responsibility for the actions of the company. CFOs are assuming a leadership role in reducing the likelihood of corporate fraud by promoting an ethical business climate, backed by a written code of ethics that stresses honesty, trust and integrity. They are deploying strategies for tracking regulations and providing compliant employee training. As regulatory demands grow in complexity, training and continuous learning become crucial in meeting a broad range of mandates, from financial reporting and tax laws to affordable sales targets. The same prudence should be applied before taking any action with regard to an allegation of misconduct. Taking the time to assess the matter is critically important for the sake of confidentiality and privacy, as well as the credibility of the compliance programme, the integrity of the investigation progress, and the reputation of those involved. Balancing the integrity of the investigative process with the legal rights that overseas subjects enjoy under local law is both an art and a science.

The CFO as a communicator In the light of numerous worldwide scandals they have brought, the CFO’s role as a communicator has increased. They are now more responsible for

Treasury management In the radically changing economic environment, treasury is both central and critical to many of the key tasks facing a CFO, like risk management,

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GROUND LEVEL

Food for thought

2/3 73%

agree that increasingly the CFO has to act as the face of company performance of CFOs surveyed see their role as a destination in its own right and only 10% have an ambition to be a CEO

Source: EY’s The DNA of the CFO

ensuring availability of credit, driving working capital efficiency and restructuring banking relations to work in a shared services environment. Beyond simple productivity improvements, the next level treasury functions include business benefits and enhanced processes among finance and IT departments. Proper management of the treasury provides valuable benefits for the CFO such as: • Opportunity to make better financial decisions through improved visibility into cash, treasury, and risk management • Minimised operational risk through enhanced controls and compliance • Improved efficiency and less cost to manage a treasury function The need for tight cash management is greater than ever in the competitive markets that SMEs face today. Expertise in the treasury departments is highly valued, by finance departments and by boards and business units. With the financial crisis coming to centre stage, the role of treasury in protecting a company’s financial assets is becoming more widely recognised. As a result, CFOs are revisiting the priorities of the treasury function. Is it focusing on the right tasks among its jumble of responsibilities? And are those tasks delivering value to the company?

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The consensus is that treasury can play a more strategic role by concentrating on three areas: the care and feeding of banking relationships, the management of working capital, and the screening of capital investments. Treasury departments now spend a significant amount of time and energy probing for land mines in the financial markets. The main thing is to protect the assets you do have under your control. CFOs and treasurers are now more likely to monitor key metrics like financial viability and cashmanagement services. One broad goal for treasury operations is to evolve to the point of providing insights for cash management planning and freeing up cash for the business to use for growth opportunities. The end goal is to optimise their company’s liquidity, raise capital and manage financial risks. The improving, but volatile economic outlook has made this an increasingly challenging task. Corporate Governance and Best Practice As corporations increasingly consider the financial causes and outcomes of corporate strategy, a CFO can play a particularly vital role in donating expertise to the decision-making process. The CFO should stand for investor concerns when participating in strategy meetings, as well as applying insight into such concerns when designing possible business models. As the CFO ideally becomes involved in other aspects of company operations, he will have the ability to bring their knowledge of these arenas to strategic meetings. New legislation and reporting requirements have helped increase corporate discipline. A stronger ethical climate has been created in which the CFO is likely to receive greater assistance from management and staff with accounting practices, financial reporting and internal controls. Corporate culture has become more receptive to whistle blowing in response to a breach of ethics.

The connection between corporate governance and corporate performance has never been more critical or more complex. Good corporate governance ranks very high on the agenda of shareholder and board of directors meetings. The presence of good governance practices can dramatically contribute to economic strength, and the absence of them will compromise it. Because the increased workload of boards forces the delegation of many responsibilities to committees and individuals, the CFO now has more opportunity and obligation to play a stronger role in both setting and overseeing processes and procedures. One of the most overwhelming obligations of the governance committee involves making decisions about who has the expertise to guide the strategy. Once that has been established, the CFO’s responsibility will be to make sure those candidates have the financial knowledge to put the strategy into motion. Another key to good governance lies in leveraging your directors’ contributions better. Therefore, they should be encouraged to communicate regularly about their experience and expertise. The CFO should know how to extract this information from the directors when required. Conclusion CFOs who can bridge the gap between strategic and operational decisionmaking with analytical information, will be successful in driving the company to achieve its financial goals. In short, modern day CFOs are expected to merge the defining lines between ‘managing a business’ and ‘running a business’.

For an online version, please visit: www.smeadvisor.com/2014/09/cfo-thenew-corporate-leader/

GROUND LEVEL

Managing your mobile workforce In a business ecosystem where change is the only constant, leading your business to the forefront of connectivity, mobility and technological readiness can be a mammoth task. However, what you should really be worried about is – how will you manage your team, and its productivity, once you get there?

How often do you hear people using the phrase “going to work”? In today’s era of global connectivity, chances are not very many. Fastpaced technology, increased used of mobile devices and emerging trends such as BYOD and cloud computing have blurred the concept of a traditional workplace. Business owners experience this almost every day; you may be based out

of Singapore, finalising details of a project with an employee located in Dubai. We’ve now entered into this new era of the ‘mobile workforce’, where employees are no longer confined to their office cubicles. The reality, however, is that a mobile workspace extends to be much more than just that. A Citrix research paper defines the mobile workspace as “a portable, always on, always connected working environment that follows an employee no matter where they go, no matter what device they chose to use, and no matter what connectivity they happen to be leveraging”. The article further explains: “There are a variety of technologies that enable the mobile workspace. For users to get the most out of these new solutions, a mobile workspace incorporates the following six characteristics: • Access to any and all applications • Access to corporate data • Access to collaboration tools • Access to the intranet and other internal resources • Content access where people are and from the device of their choice • Flexibility for IT to provide services over any network from any cloud” Apart from connectivity – and the ability to speed up business processes – mobilising your workforce to be truly ‘on-the-go’ can have terrific benefits. It enables your business to effectively lower its costs, sparks creativity within employees, improves operational

Statistics and key data

42%

growth in the remote workforce from 2006-2012

80%

upsurge in engagement by organisations offering workplace mobility

Sources: Survey on Workplace Flexibility 2013, WorldatWork; American Community Survey 2013, United States Census Bureau; IDC

1.5 billion more mobile workers by 2015 as forecasted by the research firm IDC

efficiency, enhances collaboration and puts you in a position of complete control. However, as a business owner, leader and manager, keeping your employees in check can be difficult; with the new mobile workforce, managers are finding it increasingly difficult to master the balancing act between productivity and flexibility. In such a scenario, considering some of the following tips can be hugely beneficial in being able to smoothly transition into this new style of working: 1. Keeping all lines of communication open: Don’t let the geographical distance get between you and your employees. As a business owner, make it a priority to continually interact with key staff members through telephone calls, video conferencing and even visiting them from time to time. Remember face-to-face conversations are still the most effective way to engage with employees. Constant communication will allow you to be in touch with the real-time operations – and needs – of your business. 2. Implementing the right KPIs: Brief all your employees of their role within the company and what is expected out of them. Putting into place Key Performance Indicators (KPIs), which are results-oriented versus time-based, will eliminate the chance of any future disputes. For instance, measuring the productivity of your design team based on the number of projects they have been able to deliver in a month, instead of the number of hours they’ve spent on each project. This takes-out the traditional ‘9-5’ working template out of the picture giving employees better flexibility, without employers losing control. 3. Use technological tools to help you: With sophisticated project management software, productivity apps, cloud computing and several other data-sharing mechanisms, working remotely is certainly much easier. Incorporating these within the day-today operations of your business can be

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GROUND LEVEL

LIFE IN A MOBILE WORKSPACE That was quick!

Who can I get to fill this shift IMMEDIATELY?

The manager gets an alert and needs to reach multiple employees to resolve the issue.

The manager quickly selects qualified employees and sends a text message to all of them with just a few clicks.

a huge advantage. It gives you, and your team, access to the raft of company data anytime, and from anywhere.

sure that all the platforms and devices you use are as secured as possible. For instance, companies have been increasingly adopting Mobile Device Management (MDM), which allows employees to switch between personal and professional use when using their mobile devices. This means all company data is secured when your staff is outside working hours.

4. Incorporate team-building activities: Working away from the usual office environment can significantly reduce the amount of face-to-face interaction employees have with one another. Hence, it is essential for managers to organise team-building exercises, office parties and other events that can bring the team together. These don’t have to be work-related at all; meeting once in three months for a hiking trip or a Christmas dinner ensures that team members know one another and have a strong professional bond. 5. Don’t forget about security and compliance: The downside of seamless data sharing is the increased possibility of breach of security. It is surely a good idea to invest time and money in making

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6. Achieving the right work-life balance: Working remotely or ‘on-thego’ allows for a flexible working model but very often managers use this as a way to control their employees 24/7. It’s crucial for managers to understand the need to give employees some time off even when they are working away from their office space. Maintaining a work-life balance is a significant aspect for all employees and will ensure that they aren’t fatigued or experiencing ‘burn-out’.

When the shift is claimed all employees are instantly notified and schedules are automatically updated – while the manager moves on to other critical tasks.

7. Invest in a serviced office: Serviced offices have gained a lot of popularity over the last few years and have become synonymous to connectivity. Equipped with state-of-the-art technology, serviced offices offer a comfortable office setting anywhere in the world. With their large branch network, no matter where you or your employees are located, you can access sophisticated office suites and stay connected with one another. Most serviced offices also offer packaged deals with mobile software featuring advanced functions such as team-chat, file-sharing, booking flights and so on.

Finally, remember that a ‘mobile workforce’ remains at the core of the future of business. So, implement these strategies - and the future would be yours! For an online version, please visit: www.smeadvisor.com/2014/09/managingyour-mobile-workforce/

Stars of Business

Are you getting the recognition you deserve? THE NBAD STARS OF BUSINESS AWARDS 2014 ARE NOW LIVE ON-LINE AND WELCOME YOUR APPLICATION. THESE AWARDS ARE THE MOST COMPREHENSIVE AND HIGHLY-RESPECTED BUSINESS HONOURS IN THE GCC - AND THEY EXIST TO REWARD AND RECOGNIZE THE SMES WHO ARE TRULY DOING THEIR BEST AND ‘GOING PLACES’. WILL YOU BE ONE OF THEM?

First things first. The Stars of Business, sponsored by National Bank of Abu Dhabi (NBAD), has become an iconic awards brand like no other in the region. It recognizes the very best SMEs across 23 business categories. The reason why it’s achieved such prominence - and become universally respected - is because it’s scientifically assessed and unimpeachably judged. In 2013, we had 4,974 entries. Using a proven financial matrix, these were reduced to a shortlist of 10 in each key category and then given to a panel of 13 industry judges, who selected the top three names for each award. You apply by completing an

online application form - use the following link to make your entry now: www.starsofbusinessawards. com. Entries are open until October 30. The final awards will be made at a gala dinner on November 30, with everyone who’s been shortlisted receiving an exclusive invite to attend. Recognising achievement and raising the bar Whether your business is just starting out and aspiring to great things; or a medium-sized enterprise with a brilliant history of growth and achievement, now is your chance to shine. What’s more, there are a broad range of categories you can enter - so there’s something for companies from every industry and background. Why you should enter If you’re proud of your business’ achievements, the Stars of Business awards can make sure the world knows about them. Whether you’ve broken new markets, exceeded all forecasts, pioneered new technology or leveraged exponential growth through acquisition - these Awards are for you. A spotlight on deserving SMEs in the toughest sector of all Stars of Business 2014 honours the SME sector - the core powerhouse of the regional economy, representing 95 per cent of all businesses. Every day, SMEs face overwhelming odds - trying to build growth and margins with often scarce resources, attempting to win fresh finance (with precious little encouragement), and coping with the increasing demands of legislation and Governance. The Stars of Business Awards 2014 are brought to you by SME Advisor, the leading regional magazine catering to this fast-moving and increasingly important segment - and a champion of the SME sector since its launch in 2005. The SME Advisor Stars of Business Awards are all about encouraging

regional businesses and best practice - and now in 2014, they’re bigger and more comprehensive than ever. Where your year of fame can begin… The Stars of Business Awards is a glittering annual gala. Extensively promoted across the press and online media, it’s a ‘who’s who’ of the regional SME universe, attracting 800 attendees to a sumptuous, glamorous evening of networking, followed by gourmet dinner, awards ceremony and sensational entertainments. This year’s venue couldn’t be better - the sensational Madinet Jumeirah with its wealth of unrivalled amenities. A night to remember on a grand scale, guests include senior government officials, captains of industry - and the owners, directors and managers of the region’s leading SMEs. Will you be there and see your business in the limelight? Stars of Business and SME Beyond Borders - twin highlights of the SME calendar The exclusive Stars of Business gala awards takes place at 8:00pm on November 30 - and it’s the perfect conclusion to Day One of a groundbreaking, benchmark conference: ‘SME Beyond Borders’. Drawing together VVIP speakers from across the globe, SME Beyond Borders is a supercharged, powerhouse SME event, authoritatively assessing sector trends and analyzing the key factors influencing the performance of SMEs in the region. The winners of Stars of Business walk in the footsteps of the thought leadership and quest for excellence that SME Beyond Borders crystallizes like no other event in the calendar. So there’s no better platform for the biggest and best business Awards in the GCC. But remember - you have to be in it to win it!

For an online version, please visit: www.smeadvisor.com/2014/09/are-yougetting-the-recognition-you-deserve/

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The largest business awards in the GCC 30th November, Dubai

Stars of Business has become an iconic awards brand like no other in the r egion. It recognizes the very best SMEs across 26 business categories. Itâ&#x20AC;&#x2122;s universally respected as scientifically assessed and unimpeachably judged.

327,000 SMEs across the UAE $234 billion estimated total revenue of the SME sector 4,974 Awards entries in 2013 1,856 Individual company applicants

nominate now at www.starsofbusinessawards.com

Presenting Partner

Strategic SME Partner

Knowledge Partner

Official Publication

Organiser/Publisher

BUSINESS BANKING

Roadmap for Growth VIA A SERIES OF AMBITIOUS SUPPORT PROGRAMMES, THE UAE IS COMMITTED NOT ONLY TO THE GROWTH OF THE SME SECTOR AS SUCH, BUT TO HELPING INDIVIDUAL BUSINESSES DEVELOP TO THE MAXIMUM EXTENT. THE REALITY IS THAT GROWTH IN THIS SECTOR MAKES GOOD COMMERCIAL SENSE - AND IT’S A GOAL THAT HAS THE BACKING OF MAJOR FINANCIAL ENTITIES SUCH AS NATIONAL BANK OF ABU DHABI (NBAD). SME ADVISOR LOOKS AT THE GROWTH PARADIGM AND THE FACTORS THAT ARE NOW STRONGLY MOTIVATING EMIRATI-LED BUSINESSES…

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BUSINESS BANKING

For almost a decade, leading economies around the world have looked increasingly to the SME sector as the one area able to deliver volatile growth, at a time when traditional industries and enterprise-level businesses are often looking tired and past their best. Part of the programme for delivering this growth has been a commitment to building leadership and entrepreneurial skills in the sector, along with a better understanding of the financial priorities that were typically the preserve of larger operations. Emerging economies such as the UAE are no exception: a variety of government-led initiatives have not only targeted the role of SMEs in building a vibrant and diversified economy, but looked specifically at how imperative it is to raise awareness of this sector and its career benefits specifically amongst the Emirati workforce. Already, entities such as the Khalifa Fund for Enterprise Management and Dubai SME are helping create a ‘new era’ amongst Emiratis, breaking the traditional

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assumptions that their future lay automatically in the public sector, by painting an altogether broader and more appealing picture of the rewards of private sector entrepreneurship. With SMEs accounting for more than 92 per cent of all businesses in the UAE, they presently deliver a little more than 62 per cent of GDP. These statistics indicate that their growth curve will benefit substantially from the critical efficiencies that larger businesses are able to deliver - and suggest that many SMEs are still marketing and selling at the level of a ‘corner shop’, rather than as companies leveraging the benefits of international trade or entering into the public/private sector partnerships so successfully pioneered as a commercial template here in the GCC (and facilitated, for example, by the work of the Khalifa Fund Gateway programme). Hence, a focus on achieving growth and the means to acquiring the skillsets able to deliver it. The new generation of Emirati entrepreneurs, presently the focus of the government-led initiatives, will play an important role in securing that transition in the medium term. Why growth is fundamental to survival Growth, for SMEs, isn’t simply a ‘nice to have’, or a by-product of adopting the more sophisticated management techniques of big business. It’s actually a key requisite of survival. Sixty years ago, the great economist, John Maynard Keynes, showed that the index of survival for any business was the formula ‘performance = scale of profit ÷ by inflation + the dominant trend in cost of living’. Since the cost of living typically rises by 45 per cent every decade, any business has a clear choice: grow or go bust. There is also the fact that while a small business may be able to be more agile and nimble than its larger cousins,

the sheer economies of scale and cashflow dictate that too small can be perilously close to extinction. There is the added challenge that many of the business owners who might otherwise run reasonably solid SMEs simply don’t have the training to handle (or for that matter, to apply for) the levels of funding that a fast rate of growth can often require, especially once the business has hit a plateau at the all-important third and fourth year stage. Encouraging businesses to press on with a structured growth path is very much the focus of the government initiatives such as the Khalifa Fund and Dubai SME, as well as the nation’s more proactive financial institutions - NBAD is a clear example. Growth strategies for Emirati SMEs While much of the media focus inevitably tends to be on the role of the start-up (the legend being that this is where we are more likely to find ‘pure’ entrepreneurship), the more important - and immediate - commercial gains are more likely to be made by encouraging alreadysuccessful businesses to grow. So, entities such as the Khalifa Fund and Dubai SME have developed a range of initiatives designed specifically to leverage growth, whether by teaching the requisite operational skills - such as accountancy, marketing, business administration - or by making available the right market intelligence to encourage expansion, either into fresh markets, or via new product development. The Khalifa Fund for Enterprise Development, for example, has established its strategy based on three main ‘pillars’, two of which are very much focused on the growth and long-term development/sustenance of already-proven SMEs. While the first pillar is all about spreading an innovative and entrepreneurial spirit amongst the community

BUSINESS BANKING

A variety of governmentled initiatives have not only targeted the role of SMEs in building a vibrant and diversified economy, but looked specifically at how imperative it is to raise awareness of this sector and its career benefits specifically amongst the Emirati workforce.

(and equipping Emiratis with an entrepreneurial mindset), pillars two and three look at: • Providing financial support to SMEs, fast-tracking development via six unique funding programmes. There are a remarkable number of success stories already generated by this approach, especially in terms of proven business ‘turnarounds’. • Creating a supportive and optimal environment to enable the growth, prosperity and sustainability of Emirati-led SMEs. Perhaps more widely known is the way that the Khalifa Fund also reaches out to SMEs via the hands-on assistance provided by its specialist division, ‘SME Toolkit’. The main purpose of the SME Toolkit is to act as a resource for all UAE entrepreneurs who are interested in either setting-up a new business venture or expanding their existing business. A project of the International Finance Corporation, a member of the World Bank Group, the SME Toolkit offers free business management information and training for SMEs on: • Accounting and finance • Business planning • Human resources (HR) • Marketing and sales • Operations, and information technology (IT). Again, the abiding idea here is showing businesses how to capitalize on their existing strengths and deliver the critical abilities and skillsets necessary to ‘go for growth’. To achieve this, very helpfully, the SME Toolkit offers a wide range of how-to articles, business forms, free business software, online training, selfassessment exercises, quizzes, videos and resources to help entrepreneurs, business owners, and managers in emerging markets and developing countries to start, finance, formalize, and grow their businesses. Within the context of the UAE, the SME Toolkit provides a powerful catalyst for

change in terms of the raw materials that Emirati business owners can use to leverage critical growth where and when it’s needed most. HE Abdullah Al Darmaki, CEO, Khalifa Fund, identifies this growth perspective when he says: “Khalifa Fund’s services range from fee exemptions, priority in government purchasing, participation in national and international trade shows and events, as well as receiving ongoing guidance and support to access new markets and thus enable SMEs to better grow.” The role of the Government in creating a conducive growth platform for SMEs: the Dubai initiative While in many ways acting in parallel with the raft of objectives demonstrated by the Khalifa Fund, Dubai SME has developed a somewhat broader demographic focus, by encompassing the aims and aspirations of expat-run SMEs, not purely those founded and led by Emiratis. Its flagship initiative, Dubai SME 100, is the epitome of this approach, complementing the core spectrum of activities designed to foster growth in locally-run SMEs.

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BUSINESS BANKING

Since the cost of living typically rises by 45 per cent every decade, any business has a clear choice: grow or go bust.

These core activities (where we see an equal focus between start-up incentivisation and a commitment to mid-term development) include: • An in-depth review of Equity Financing relationships for SMEs, and their advantages and disadvantages. • An ‘accreditation’ programme for Dubai-based angel investors (which is seen not purely in terms of start-ups, but rather, as an ongoing source of finance and Board-level expertise). • A business Valuation and ‘valuedrivers’ programme. • A Mentorship programme designed to match mentoring needs with the company’s respective level of development. • A ‘Be Bankable’ initiative which aims to coach the ability for SMEs to ‘self-assess’ their readiness for bank finance, as well as provide the expertise to make realistic and highlydocumented finance applications. It will also aim to give SME owners/ directors the ability to negotiate the best-suited finance options, as well as direct them towards qualified auditors able to provide authenticated annual accounts. In addition, a declared objective for 2015 is a move towards educating investors about opportunities in the SME space, with an emphasis towards accelerating those businesses already on a growth trajectory and explaining the benefits to be accrued from investment in an established concern. The banking perspective: helping develop established Emirati SMEs While a good deal of attention is often focused on the apparent ‘disconnect’ between start-ups and the availability of risk finance from banks, considerably fewer column inches are given to the very healthy and vibrant relationship between banks and established SMEs committed to growth. The reality is that, for a number of the leading banks, this is one of the principal areas of commercial activity and there are a

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wide range of products and services dedicated specifically to helping SMEs get the very best from their primary growth phases - indeed, these products can effectively be the catalyst enabling that growth to happen in the first place. In the case of NBAD, for example, there is a clear commitment to helping Emirati-led SMEs deliver the best possible growth potential, via a raft of products and services tailored to have their needs uppermost in mind. For example, many of the products that are generally grouped under the heading ‘Trade Finance’ in fact exist specifically in order to supercharge growth by liberating cashflow and freeing-up fresh investment capital. Classic financial instruments of this kind include Letters of Credit, Factoring, Cheque and Invoice Discounting and Trade Credit Insurance. This is quite aside, of course, from the larger area of secondary and tertiary finance initiatives, whereby the established Emirati SME can unleash fresh resources to, eg, leverage market expansion, invest in leading-edge product development, or lay the foundations for the creation of a world-class branch network. Another important dimension of this relationship is the way that a financial institution of this standing can initiate bespoke conversations with its Emirati SME customers, with a view to fully understanding individual needs and current financial priorities. Armed with this data, it can then purpose-design and offer a highly customized product mix. This level of tailored service - matching expertise to aspirations and sourcing the financial instruments to accelerate the business plan - complements the efforts we’re seeing from the public sector, and provides the Roadmap for Growth on the journey from SME to Enterprise.

For an online version, please visit: www.smeadvisor.com/2014/09/roadmapfor-growth/

BUSINESS INNOVATION

Two heads are better than one Everyone whoâ&#x20AC;&#x2122;s attended a management course knows all too well that it pays to work as part of a top team - leveraging combined talents to make short work of otherwise challenging tasks. Itâ&#x20AC;&#x2122;s no surprise, then, that Etisalat - leading telecoms provider in the Middle East and Africa - has developed a number of strategic partnerships to enhance its offer to the SMEs and enterprise sector. To find out how these key initiatives work and the benefits they can deliver, SME Advisor spoke to Govind Rao, Vice President, SMB Partnerships & Alliances, Etisalat...

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BUSINESS INNOVATION

What do you see as the major benefits of a ‘partnership’ style of working? It increases the level of resources at your disposal, letting both parties play to their strengths. Although you may have a terrific mix of skills in-house, these may not be exactly aligned with the needs of a specialist market sector - so it makes sense to work with a partner who already has this level of expertise. Traditionally, telecom providers have worked with some of the world’s leading brands to access special markets or deliver very advanced technical solutions. Being able to build on each other’s skillsets means that you are much better-placed to reach your goals. Also, the cost benefits that something of this kind delivers mean you can offer the customer better value, because you’re not having to re-invest or re-train - you’re twinned with a leading expert who has already made the investment.

Do you use the partnership model only for special initiatives and bespoke product programmes? No, it can be used in many ways. Partners can provide the links between the vastly different types of services that a telecom business can provide. Gone are the days when the telecoms providers were simply about connectivity: today, there can be a complex raft of services and no business, no matter how advanced, would be able to perform them effectively all by itself. Of course, the partner relationship can also be very simple - we might work with the leading courier company in the UAE to deliver your handset to you, for example. On the other hand, we

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Traditionally, telecoms providers have worked with some of the world’s leading brands to access special markets or deliver very advanced technical solutions.

could be undertaking a complete data management initiative across a broad market sector, requiring a very complicated matrix of partnership touchpoints. An example of this is an extremely successful project for a governmental entity. This meant launching an international network, working with many different specialists across borders and handling complex market and regulatory requirements. Not to mention working with a good many overseas telcos and aligning the many operational platforms.

What do you look for in a working partner? The style of working partner that’s preferred depends on the style of partnership that’s required. For example, if there is a need for a strong channel partner to outreach into a particular part of the SME community, you’re going to look for a company that has experienced sales personnel and a proven record of meeting quarterly and annual targets. On the other hand, you might link up with a company that

BUSINESS INNOVATION

Our work with leading banks is a classic case in point, where their ability to dissect the market into key demographic sets means we can focus our efforts and add value in a very precise way.

is a high-technology specialist, so you can offer very sophisticated services to a targeted business segment. The one constant, though, is that we will team only with businesses with an exceptional, proven record and who share our commitment to quality of customer service.

Tell us a little about the key partnerships and the initiatives that they have delivered? There have been many, but some great examples include credible work with Airlines, Banks and an international luxurious stationery brand. In all these cases, both parties brought to the table their ability to enhance the offer to the customer.

Is this ‘partnership’ approach something new for Etisalat? Far from it. It’s a tried and tested way of working that’s achieved dramatic success for us over the years and enabled us to keep on enhancing the customer offer.

Do all the partnership initiatives focus on a similar business segment, eg, the SME sector, or do they reach across different markets? This is an interesting question. Generally speaking, we will work with a partner in order to develop our proposition for a particular market sector, but the skillsets that different companies have means that we might also choose to tackle a broader cluster of segments. Our work with leading banks is a classic case in point, where their ability to dissect the market into key demographic sets means we can focus our efforts and add value in a

very precise way. Whereas if we are partnering with a worldwide leader in technology, for instance, we are leveraging their technology solutions for a broad selection of larger enterprises. Another example is our current relationship with a multi-national insurance provider; we have together developed an offer that is applicable to businesses across the spectrum, from micro to large enterprises. I can reveal that in terms of an initiative for a specific segment, we will soon be coming up with an exciting offer for the hospitality sector - more updates will follow soon!

Do these partnership agreements generally have a fixed time span, or are they seen as ongoing arrangements? They can be either fixed term or long term. A good example of a longerterm relationship is with our resellers, for example, where the relationship

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BUSINESS INNOVATION

might well go on to prosper for many years. In other cases, we will only work together for one finite, specific customer programme.

How effective are these partnerships in helping Etisalat access particular customer markets and supercharge its success in delivering an innovative product offer? They are very effective. For example, as a result of these initiatives, the previously ‘unengaged’ segment of our SME business has seen quantum growth in the last several months! This is just the beginning of our ability to build extremely strong and productive relationships with our business customers via the partnership model. However, let me also say this: the best is yet to come.

Tell us about your own role in driving forward these partnerships? Govind Rao, Vice President, SMB Partnerships & Alliances, Etisalat

COMING SOON

a unique offer for the hospitality sector (with savings benefits for every business traveller!)

In his interview, Govind hints at a forthcoming exciting offer for the hospitality sector. This will be a groundbreaking opportunity for business travelers - it offers a brilliant, one-stop solution for the challenge of expensive roaming costs when overseas. It’s been made possible by a very successful three-way partnership, where Etisalat has teamed up with one of the world’s leading device and technology brands and a pioneering regional hotel group. Watch this space for more details and an exclusive launch profile soon!

Well, I think my job title probably says it all - this is a primary focus for me in my particular role. I’m delighted to say that, currently, I’m working to develop a range of partnership opportunities which will really raise the bar in terms of the sophistication and value of the offer to SMEs and will set a new benchmark for this sector here in the region. In light of Etisalat’s strong commitment to fostering partnerships, the leading telecoms provider welcomes any partnership enquiries via http:// www.etisalat.ae/en/business/ sme/sme-channelpartner.jsp

For an online version, please visit: www.smeadvisor.com/2014/09/twoheads-are-better-than-one/

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EVENT PREVIEW

Drive your business to success

On September 29, a major event - the Roadmap for Growth - sets out to give SMEs a complete guide to the strategies and initiatives best-suited to deliver successful performance. More than this, it takes SME owners and directors on a journey from start-up to IPO - spelling out the best approaches and looking at the key commercial landmarks. Co-hosted by NBAD and Etisalat, and organised by SME Advisor, it promises to be one of the biggest occasions in the SME calendarâ&#x20AC;Ś SEE ARTICLE, P. 36

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Make them think about changing their career

Smart Security Surveillance Service

800 5800 etisalat.ae/cctv

Introducing the one-stop solution for keeping a secure eye on your premises. Subscribe to our Smart Security Surveillance Service and avail our fully managed CCTV systems, powered by LG Electronics. With this secure monitoring service, vandals and thieves will want to think about making a career change.

EVENT PREVIEW

HE Abdulla Al Otaiba

Senior Managing Director & Group Head of Retail and Commercial Gulf, NBAD Consider the following business challenges: Do you know the best method for boosting cashflow in a medium-sized SME? What is the right way to talk to the press in the build-up to an IPO? How do you put the cash that Factoring makes available to work? What is the best way to gather market data about an overseas market? How do you go about getting full connectivity between all devices and making customer data available to a salesforce on the move? How do you build expansion and growth into your business model from Day One? These are just a handful of the day-to-day issues facing SME owners and directors. We’ve chosen them because they all have actual answers and correct responses that an experienced CEO will know all too well. Yet unless you have that experience, it can be very challenging to avoid making expensive mistakes that cost your business precious money, time and resources. What if you had a detailed roadmap of the way forward - a clear set of strategies that you could rely on and put to work straight away? That’s the value of ‘Roadmap for Growth - driving performance, mobility and leadership’. The event has been designed to help you build your SME into a substantial and successful concern; to help you choose a

John Lincoln

SVP - Small & Medium Businesses, Etisalat

Jassim Albastaki Director General, Midex Airlines

route that minimises risk, avoids cost and wasted time, and delivers exponential growth and financial rewards. Roadmap for Growth gives an extremely practical and comprehensive assessment of what SME owners need to do, and when. In a one-day format, it covers key agendas such as: Identifying the right growth model: from micro to branch network to regional leader Leadership: how you become a knowledgeable and confident leader - able to stand firm and deliver commercial performance and team solidarity Creating a powerful, simple strategy for mapping the way ahead Effectively managing costs and leveraging the best ICT solutions, in line with budgets and business needs Taking the lead from successful enterprises The role of a strong banking and finance partner How to get hi-tech connectivity and use it to strategic advantage - with replicable data for every member of the team, from back office to point of sale Roadmap for Growth is hosted by two of the most significant corporate entities in the UAE: Presenting Partner National Bank of Abu Dhabi (NBAD) and SME Strategic Partner, Etisalat. They’re working in alliance to empower your business.

What’s more, in order to reflect the calibre and appeal of this combined branding, the occasion will be set in the prestigious, upscale venue: the Jumeirah Beach Hotel Conference Centre. Content and agenda The programme follows a unique format, designed to be provocative, informative and totally relevant. The event will comprise three key modules. • The first two will each have a series of four VVIP keynote speakers. • The third module is called ‘The Big Debate’, it has two adversary panels,

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EVENT PREVIEW

Robert Keay

Kawthar Bin Sulayem

CEO, Ethos Consultancy

CEO, KBS Communications

such as sustainability, marketing, corporate strategy and business education. Connectivity, resources, cash - the landmarks that build your business. With four speakers and a panel session, this element embraces fundamental themes in successful business growth - namely, the raft of competitive financial techniques and the role of the ‘digital revolution’. What are the financial and commercial strategies you will use and how will you best take advantage of the mobility and data efficiency that today’s connectivity allows? How does an SME use these factors to leverage growth and navigate the key steps on the way to building an international presence? 2.

each with four panelists, who will ‘confront’ each other around the key topic of whether it’s best to borrow to grow, or re-invest profits as and when available.. The themes for the three modules are: 1. Leadership - what it takes to motivate and dynamize growth. With four speakers and a panel session, this theme will focus on key case studies from big companies: how they achieved their goals, evolved from being SMEs and became outright market leaders. The session includes a strong emphasis on aspects

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The Big Debate - borrow to grow, or debt-free road? Two ‘adversarial’ panels debate whether it is best for a business to achieve growth through debt financing, or simply by reinvesting its profits and favouring the path of debt-free stability wherever feasible. The event is a powerful point of focus for everyone leading and building an SME; it also sets out to be one of the unforgettable landmarks for the SME community during 2014. 3.

Speakers who lead by example There is one extremely important respect in which Roadmap for Growth differs markedly from any other SME event. Rather than follow the formula of ‘SMEs talking to SMEs’, it offers delegates the chance to learn from worldclass ambassadors of enterprise-level businesses - being shown how to grow a business from small to large by the experts who know. So the VIP speaker list includes key personalities such as: HE Abdulla Al Otaiba, Senior Managing Director & Group Head of Retail and Commercial Gulf, NBAD John Lincoln, SVP - Small and medium Businesses, Etisalat Jassim Albastaki, Director General, Midex Airlines Kawthar Bin Sulayem, CEO, KBS Communications; Robert Keay - whose own company, Ethos Consultancy, achieved the No.1 spot in the Dubai SME 100 rankings. Through these and other keynote presentations, delegates will immediately be able to take away replicable, relevant information and use it to advance their business’ progress along the allimportant road to growth. A roadmap to keep, learn - and implement Every delegate to the event will also receive a detailed info-graphic - in the form of a novelty, fold-out roadmap outlining the statistics and commercial landmarks along the challenging but engaging (and ultimately rewarding) route to business growth and success. This is a convenient and immensely practical collation of the relevant growth data available for SMEs in the region.

For an online version, please visit: www.smeadvisor.com/2014/09/driveyour-business-to-success/

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Fostering entrepreneurship

a focus on the Khalifa Fund for Enterprise Development

HE Abdullah Saeed Al Darmaki, CEO, Khalifa Fund

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IN THE NATION’S SHIFT FROM FOSSIL FUEL TITAN TO A DIVERSIFIED ECONOMIC POWERHOUSE, THE SME SECTOR IS SEEN AS A CRITICAL ELEMENT FOR DELIVERING VOLATILE GROWTH - AND IN LEVERAGING THE CHANGES, THERE’S NO MORE IMPORTANT CATAYST THAN THE KHALIFA FUND. SME ADVISOR WAS PRIVILEGED TO MEET THE MAN WHOSE CHALLENGING TASK IS THE EMPOWERMENT AND GROWTH OF THE SME SPACE - THE KHALIFA FUND’S MUCH-HONOURED CEO, HIS EXCELLENCY ABDULLAH SAEED AL DARMAKI, WHOSE UTTERLY GROUNDED, PRACTICAL AND ENLIGHTENED VIEWS DRIVE THE REGION’S FOREMOST SME CHANGEENGINE…

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“First things first. I think it’s important to ‘set the scene’ and say we were established as, basically, a development agency that had to look at changing the mindset of the Emirati population - and in the short-term we had to do it from a social perspective, and then with economic objectives in mind. You see, people didn’t see the possibilities in the private sector. We had to empower that change. Generations of local Emiratis grew up with the view that they would work in government. It was as simple as that. The alternatives never really existed, in practical terms. So the Khalifa Fund started by promoting the idea of entrepreneurship in Abu Dhabi, and identifying it as something relevant, achievable and worthwhile. “We set about building a different view of the private sector, so that when young, would-be entrepreneurs were thinking ‘what can I do?’, they were suddenly able to think: ‘what do I have to do to get where I want to be? I know - I’ll size up!’ We want that view, that mindset, to become a kind of second nature. The role of education “Yet of course, even though our role is all about ‘fostering entrepreneurship’, that process really starts much earlier: it should start in schools, building that belief in - and commitment to - the role of the entrepreneur from an early age. For me, part of the task of education is keeping in mind ‘how do we change the thinking of these individuals and make them more dynamic? That’s a relatively new challenge, and we have to appreciate that it stands in the way of building the business culture that will really help the UAE fulfil its true capabilities. “At the Khalifa Fund, we can only create the platform that enables this more dynamic mindset to flourish and to see aspirations as

being worthwhile and capable of achievement. I believe that’s an important role, though, because we have to be realistic in terms of what we expect education itself to deliver: remember that less than one percent of the funding of academia goes to R&D activity - so it’s no wonder that the role of invention and entrepreneurship has to be re-communicated in a powerful and appealing way. “Also, our remit is increasingly to encourage that R&D activity, which is a very important element in the SME marketplace. For example, more and more Emiratis are trying to make a difference though social media, and we are seeing so many really ingenious business start-ups in this sphere.” Breaking the mould: key initiatives “We also encourage home-based businesses. While on the one hand, we see that some 68 per cent of Emiratis in the workplace are women, we also see more and more women wishing to set up homebased initiatives. This isn’t simply in the sophisticated, cosmopolitan communities, it’s in the Western Region, for example, where women are seeing honour in the potential to earn their own livelihoods, using the skills mastered in their households over generations. “Plus, across other styles of homebased work, we want to encourage the role of freelancers, helping them join like-minded networks and showing them how to market their rare skills to the markets they have in mind. This kind of microbusiness initiative is really where the whole mission of the SME space begins. Another example is the fact that we work with the malls to bring in retail elements from the local communities, not simply the big brands everyone knows. We try to promote awareness of this brilliant and unique work that is right on

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our remit is to supercharge competence, capability and achievement across every sector OF the SME universe and every demographic of entrepreneur.

everyone’s doorstep, but which otherwise the artisans and creators can find very difficult to promote. “As you can see, our remit is to supercharge competence, capability and achievement across every sector of the SME universe and every demographic of entrepreneur whether that means a dynamic and highly knowledgeable founder of an internet trading site, or a housewife taking her first hesitant steps into commercial life. There are some amazing statistics about the average age of the entrepreneurs we work with: in the Western region, it’s 40+. But in RAK, it’s only 16 years old!”. The information SMEs need “One of the most important and practical initiatives we have put in place for the SME is by acquiring the SME Toolkit. This is a really terrific way of translating the entrepreneur’s vision into day-today reality. As the name suggests, it gives comprehensive step-by-step guidance on every aspect of running an SME. You can even go online and find a template of just about any type of business you might want to open - for example, a florist - and learn the costing structures, the set-up procedures, the distribution techniques - everything.

“The information you can gain in a resource of this kind is vital. For example, if you have a successful SME, you might be at the stage of qualifying for lending from a bank. But are you aware of the interest rates that might be put in place to indemnify the risk your business presents? The banks might consider lending, but at what cost would they consider doing so? You need market intelligence, and this is where SME Toolkit really comes into its own. “In terms of building our own expertise as an organization, I take the view that we have to ‘know ourselves’. We have to understand where our strengths lie, and also our weaknesses. That’s why we’ve joined forces with prestigious international brands like the IFC, the OECD and INSME, so that we can build a complementary raft of skillsets, and meet the SME agenda on a 360-degree basis. “It’s also important to say that we not only represent all the basic elements of starting and building a business - getting it running in terms of the operational logistics, and so on - but equally, the ability to do things in the right way. So of course we are champions of Best Practice and good Corporate Governance. It’s often the case that the entrepreneurs themselves don’t have an accurate picture of the financials in their business, and aren’t sure about how to go about changing things. We will show them how to get the help they need, putting them in touch with the right qualified professionals and we also promote the view that the business needs to have a sound working record of its financials from Day One. “This is also very much in line with our view that we never take a proposal on at face value: we do a lot of counselling for our applicants, pre- and post-funding, ensuring that all the basics are right and that they have (at least potentially) a highly workable business model.”

600 projects - and growing! “Many people will be surprised to know that right now, we are working with more than 600 projects. Not bad, given that across the whole of the Khalifa Fund, there are little more than 120 staff! There is also an important range of CSR initiatives which many people may not be aware of. For example, we have a programme for ex-convicts, working with them to tell them about the role of the entrepreneur, and giving them the best routes for making a solid fresh start. Then we provide a programme for drug addicts, and another for people with special care needs - and here, for example, we have provided the money to fund an organic farm, which is both run as a business model and also provides physical therapy. It’s a great way for people to re-enter the community and build strong, working skills they might not otherwise have had. “The common element throughout is that we’re providing a working template that shows how a business can run, and how people can apply themselves to a role that previously, they might not even have considered. The SME sector is a critical element, because it’s the only one whereby most economies today can not only hope to diversify, but deliver quantum growth - and fundamentally, we want people to see how appealing and important an impact that can have on their own lives.”

For an online version, please visit: www.smeadvisor.com/2014/09/fosteringentrepreneurship/

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IN ALLIANCE TO EMPOWER YOUR BUSINESS PreSenting Partner

Strategic SMe Partner

CONFERENCE CENTRE, SaFiNah BallROOm, JumEiRah BEaCh hOTEl, duBai

29th September 2014

Drive your business to success: follow our roadmap for growth How can you minimise risk, avoid cost and wasted time, and get the financial rewards that you want? Roadmap for Growth gives an extremely practical and comprehensive assessment of what SME owners need to do, and when. In a one-day format, it covers key agendas such as: Identifying the right growth model: from branch network to IPO and beyond The role of a strong banking and finance partner How to get hi-tech connectivity and use it to strategic advantage with replicable data for every member of the team, from back office to point of sale This is a large-scale, landmark event - one of the biggest one-day SME occasions ever hosted in the region.

technology partner

Knowledge partner

official publication

organiser/publisher

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Catalyst for success WHAT ARE THE CRITICAL FACTORS THAT MANAGEMENT EDUCATION CAN COMMUNICATE, WHICH PROVIDE THE VITAL SPARK FOR A LIFE OF COMMITTED ENTREPRENEURSHIP? CAN A YOUNG BUSINESS STUDENT ACTUALLY HAVE THE TIME, APTITUDE AND KNOWHOW TO RUN A WORKING, SUCCESSFUL BUSINESS? SME ADVISOR ASKED THESE VERY QUESTIONS TO THE AMERICAN UNIVERSITY IN DUBAI (AUD) - WHO HAD KINDLY PUT US IN TOUCH WITH FOUR STUDENTS AND ALUMNI DETERMINED TO PROVE THAT, IN THE FOOTSTEPS OF STEVE JOBS AND JACK ANDRAKA, YOUTH IS NO BARRIER TO INNOVATION AND LEADERSHIP…

First things first. While a good many colleges in the UAE offer all kinds of business, management and entrepreneurship courses (there are currently no fewer than 410 on offer), it certainly helps if an organisation is actively committed to a culture of innovation and corporate leadership. The students we spoke to at AUD all believed categorically that it was at least partly the fact that the university’s culture was steeped in business administration that they took a special liking to the idea of building their own business from scratch. Certainly, the mission of the School of Business Administration at AUD is to provide UAE, GCC and international students with a forward-looking and careeroriented business education. It’s

also intrinsically part of what remains the leading business community in the world: 76 of the world’s top 100 businesses were founded in the USA, and AUD’s administrative and educational structure positions the quest for business successfully on a par with intellectual and academic prowess. Yet this raises a classic management issue: can entrepreneurship really be taught? Isn’t an entrepreneurial mindset part of individual DNA - and aren’t we confusing the role of the entrepreneur with that of the manager if we believe that it can actually be defined in textbooks and training manuals? Perhaps the best insights into these questions can be gained from reading the stories of the five young entrepreneurs we spoke to…

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providing consultancy and services like branding, product development, business planning and marketing support. So part of our idea was to create the kind of agency that you haven’t seen around. We work with anybody who has a seed stage idea, or a new concept that the market hasn’t witnessed before. It could be either an existing entrepreneur or a recent graduate who has a new concept, or a big and established company that wants to launch new products. We have coined the term ‘idea cultivation’ agency to describe our business concept.

The Basement Project Profile of business: The Basement Project (TBP) is an idea cultivation agency that works with seed stage ideas and nascent business concepts. The Basement Project embraces the whole spectrum of ideas from the UAE community, whether it’s a mobile app idea from a group of university students or a new restaurant concept from an established hospitality group. To make these ideas a reality, The Basement Project builds brand identities, crafts business strategies, provides technical support and creates effective sales and marketing strategies. Tell us more about your company? TBP: The Basement Project is an agency that works with individuals or companies who have start-up ideas. If we like the idea, we invest in the company by

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So basically like ‘incubation’ for new ideas? TBP: Incubation of an idea - yes. But it shouldn’t be confused with the fact that we are incubators, because we are not. Because incubators work in a very specific fashion and we are not that. Incubators give you a certain amount of funding and they take an equity stake in your company, give you a timeline to develop your idea and so on. Whereas we’re more hands-on with our approach. We have in-house teams - a technical team, marketing team, business development team and design team. We take the entrepreneur or company through each step from A to Z in launching their idea or help them with aspects they need help with and we work on it in-house.

The Basement Project team

Also, incubators usually work only with start-ups but you obviously work with big companies as well? TBP: Exactly. But another difference, in addition to that, is that incubators work for equity percentage and that’s not the only way we work. We’re very flexible, we worked with people in the past who didn’t have money and wanted to exchange equity for a certain service, and we also encountered people who weren’t interested in giving you equity but wanted to pay you a certain fee, like a client-agency relationship. There are also some who didn’t want to give away equity but want to work on revenue sharing basis. We are open to all those ideas and our main goal is to make the entrepreneur the ‘ideator’, and be at the forefront of his/her company. When you look back at your journey what are the major challenges that you encountered? TBP: There’s quite a few, but primarily I think it’s when we decided to ‘bootstrap’. In TBP we have not taken any money from family, friends or from any investors. Majority of it is bootstrapped from our freelance work that we did as a team in the past. That was definitely a challenge, especially when we started up since it’s not easy to work with a very small working capital. Also, we didn’t take a steady salary for a while, so maintaining the patience and keeping the faith in your idea, continuing to do all the work, while still being in that state of uncertainty - that’s a huge challenge that a lot of start-ups face and so did we. Focusing on the finance aspect, will you now start looking for investors or angel investments? TBP: The way TBP works is that we as founders, along with the people who work in our company, have ideas of our own. We then find investments for those ideas. We’re always open to hear proposals of investment in The Basement Project itself. We’ve spoken to some people, some friends from AUD, who have

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heard of what we are doing, and they’ve offered a lot of help and offered investment support.There are some offers on the table, but we’re taking our time in considering them, because we think the person we choose should have the same culture as ours and be someone who shares our vision. How many members do you have in your team so far? TBP: Right now we have the three founders and we have recently hired one full-time designer. It’s a very small team. We have three interns right now. We work with a lot of freelancers and sometimes with some external consultants. We have had 10 people in the office at most till now. How do you think your education and your connection with AUD helped you in moving your business forward? Also, do you think that the education that you got helped you as an entrepreneur

or do you think that you were born with those skills? TBP (Disha): I think AUD has cultivated me in a lot of ways. I have been inspired by some professors who I have taken classes with (shout out to Dr. Sara Kamal and Dr. Tarek Mady), not because they’re entrepreneurs, but because they have a great sense of passion for what they do. Also, during my last year in the university I co-founded a studentrun organisation in the university and it’s still there. That was the first time that I created something - and that experience has opened up my mind to entrepreneurship. To answer your second question: if entrepreneurship is innate, for me there’s a lot of natural things that you have in you. But entrepreneurs don’t always have every single one of the abilities or capabilities that ideally, an entrepreneur should have. I think there are some traits that should be innate for an entrepreneur and then some that should be nurtured. TBP (Tanuj): I started web developing out of interest at the age of 13 and later converted that interests into a paying freelance “job” which eventually became a starting

block of The Basement Project. As a student of the School of Engineering, my education gave me the technical skills on how to solve a problem, but it was the extra curricular work that really helped me further enhance my “entrepreneurial” skills, as I do believe that everyone is born with their own. According to me everyone is born with some of the skills that make an entrepreneur, very rarely do we find one who is “born” as a perfect one. Many of the remaining skills can be taught, but the defining factor is their drive and the will to succeed as an entrepreneur, which cannot be taught. This is why some people don’t try starting something of their own, or do it much later in life. I, like everyone else, was born with some of the skills and used them during my upbringing, my university experience and education helped me refine those skills and taught me others. However, the learning never stops. What is the USP of The Basement Project? How is it different from your competitors? TBP: Our concept itself is our USP at this point because no one is approaching start-ups and seed stage ideas in the way we are. The way The Basement Project team brings a mix of creativity, strategy and execution is something that we believe is surely our core strength. Finally, what would be your advice to other aspiring entrepreneurs or current entrepreneurs working on their ideas? TBP: You need to take some element of risks, it can be big or small but you need to do it. Steve Jobs has a very good speech about this at a commencement exercise and he said that you need to be really crazy or be crazy enough. Because no sane person would want ever want to wake up 6am and go to sleep at 2am the next day and call that normal. But for an entrepreneur, to a person who has an idea and passion,

Phil Apaza, Tanuj Damani and Disha Pagarani of The Basement Project

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he/she is ready to do whatever it takes. Being normal will hold you back as an entrepreneur. And when you reach that moment of self-doubt, shut yourself up and go for it and take the risk! Plus, our advice is one word: ‘START’. A lot of people have ideas, a lot of people come to us who have been sitting on an idea for a year or two and the idea is now outdated. So just start! Take the first step, it doesn’t have to be really big. Don’t just sit on it. And that will take you far. The reality is that if ever you came up with a ‘unique’ idea, chances are someone has already thought of that idea. I can guarantee that 99 per cent of the ideas have been thought of but not all of them have been implemented because they didn’t start. So if you have an idea, start!

The Hub Company profile: We’re the first business in the UAE to offer a one stop workshop where all services and/or products are available to serve all design proposals and presentations, as we understand the value and importance of deadlines in all fields of design/ design and build (Architectural, Interior, Marine, Engineering, Petroleum). We have developed the experience and skill to handover in a timely manner, no matter how close deadlines would be - while of course maintaining highest quality and clarity. Tell us a little about your business. Ahmed: First of all, we are located in the Arenco Tower. It’s mainly a workshop for architecture students, or at least that’s how it got started. So here they can find basically all the services or materials and accessories that they need to develop or illustrate their projects, whether it’s for a presentation in the university or for clients. We were the first to do this in the UAE. After doing some research, I also found that we are the only supplier for model making accessories in the UAE as well. From that, we started dealing with model makers themselves and started supplying them with the accessories that

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those materials for us students?’ But then with further research I found out that there’s a gap in the field of modelmaking in the UAE. And of course with the help of my professors I got all the information that I needed. Also my classmates have helped me with all the research. Then, over time I realized that it can become more. My business partners were my father’s business partners; I presented the idea to them and they went for it. A day in the life of Ahmed Awadin

they needed to build the models. We were aiming to start dealing with offices as well, because at the end of the day, students are not a stable enough clientele for a business. Nonetheless, we worked exclusively with students during the first year. This was a great advantage, because it is very hard to develop fast-paced experience with the rate of models a starting model maker would get commissioned. But with students, you have 20-30 models coming in per semester which averages up to 60 models per year, thus the quickly gained experience that enabled us to start working with companies such as RTKL, MC Link and Atkins this year. We have now also branched out to 3D printing which is the new technology for model-making. We also do animations and 3D perspectives and we also customize presentations for projects, and easy transportation solutions for going abroad.

Were you able to get the finance internally – from family and friends? Ahmed: Yes, you can say that.

Ahmed Awadin

What inspired you to start your own business? Was it a planned strategy, have you always wanted to become an entrepreneur? Ahmed: During my first year in the university I realized that there was a big gap for us students: we were having difficulties finding materials or accessories or anything of that kind to deliver our projects. So from there I started thinking: ‘why don’t I provide

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Was that at the initial stage only or do you also plan to look for external funding at some stage? Ahmed: No, it was only required at the very beginning, to start-up the company. Along the way we had some financial issues, of course, due to the fact that we were the first of a kind in the UAE with no previous examples existing. But now the company is doing well and we’re working with nine people at the workshop; a marketing manager, and managing partner (myself). So we don’t need any external funding at this point and hopefully in the future. How did the education at AUD help you towards becoming an entrepreneur? Ahmed: In terms of the business aspect I’m an architecture student, so I really didn’t have the business mind-set. I got more understanding of it after starting up. But the education in the field of architecture has helped me; I can relate more to other architecture consultants and model-makers in the field. This has enabled me to reach other businesses and deal with my competitors. If, say, an AUD student comes up to you and says I have an idea and want to become an entrepreneur, would you suggest that they take up a course or just go for it? Ahmed: I would not suggest that they just ‘go for it’. They need to sit on it, study it, get to know the idea very well and then if you’re really sure about the idea then that’s when you should go for it. Because it can be a major risk especially when you’re funded from outside sources. I would recommend that you push for it but just be careful. In terms of your growth strategy, what have you planned for the next few years and how are you going to stay different from the competition? Ahmed: As I have said, it’s the first one-stop-shop for architecture firms and students. And we are the first and so far the only one in this field. We have competitors coming up recently. In the

model-making field there are quite a few and they are much older than us, but I don’t think we are competing with them at this point: the reality is that some of them have actually started approaching us for joint ventures thus acknowledging our existence in the common market. What would you say were the key factors that you experienced in the university that helped you evolve into the entrepreneur that you are today? Ahmed: I would say that it’s the field of architecture itself; it taught me a lot of things aside from design. It helped me find ways of how I can deal with situations and challenges and go for what I wanted. In terms of the overall view for the region, in your opinion how difficult is it for an entrepreneur to succeed? Ahmed: It can be quite challenging. And for us we were lucky because we started the company late 2011/early 2012 - and it was a great time to start. That was the time when the financial crisis had slowly subsided and things were getting back on track. It’s vital to have the right timing. Don’t do anything out of haste. Take your time with every decision you want to make. Finally, what would be your advice to aspiring entrepreneurs and/or AUD students who are looking into starting their own business? Ahmed: Invest in your time. While you are in the university invest in your time, take the risks now because this is the time for it. Don’t be scared to take risks but you have to be well-prepared.

Rozan Designs (RD) What do you see as the core mission of Rozan as a business? RD: To be the No.1 fashion brand for hijab-wearing ladies. To create fashionable, comfortable and modest

styles that are ideal for business and leisure and attract a truly international clientele. Our brand is for everyone looking for ‘modest fashion’ - as long as people have that goal, we have a market. What was the inspiration behind your business idea? RD: We felt that the hijab-wearer was very neglected. Where can the hijabwearing lady find fashionable, trendy clothes that don’t impinge on her modesty? The options are very limited indeed. What’s more, what is available so often has a lack of practicality - for example, it won’t be suitable for business, or won’t be ideal for the different cultures across the GCC. Looking around, we could see a growing market, because there are now so many people arriving here from the Levant, but there was nowhere for them to buy the clothes that they are most familiar with - especially if they were looking for that extra Dubai style as well! We should also add that we have five brothers in business, so the idea of starting a business wasn’t something strange or distant from us - in fact, you could say it runs in the family! They were a great encouragement to us, and continue to mentor us in in many ways, as the business is starting to take off properly. How helpful was the college environment as an ‘incubator’ for your ideas? RD: It was enormously helpful - there’s real business mentality here that is great in helping de-mystify what a business start-up is all about. Also, students here find that AUD is always about analytical thinking, not about wrote learning, so you’re taught to assess the challenges and get to the crux of the agenda from Day One. How do you sell your clothes to the public: do you have a retail outlet? RD: That is our long-term goal, but at present, all our goods are sold online through social media channels such as Twitter and Instagram (@RozanDesigns) - these are proving to be very effective marketing mediums. Meanwhile, we’re

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building our website (www.rozan. ae), which should be a really complete showcase. As a next, ‘interim’ step, we aim to open a tailor’s shop where customers can go for personal, bespoke fittings. What were the main challenges when starting the business? RD: Well, how about being a woman in Dubai?! We really had to fight to get people to take us seriously. We first started thinking about the business concept more than two years ago - and once we found the courage to ‘take the plunge’, we found that this was the perfect time to experiment with new ideas; a lot of women were bored with the fashion choices that also enabled them to dress modestly. The other factor is that, especially with a clothing line, you have to tackle so many

Rawan Al Sadi and Suzan Al Sadi of Rozan Designs

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different aspects: not just the design, but the fabric cutting, assembly, manufacture and of course, the marketing. Did you get external funding to start the business? RD: No, fortunately the support from our family has been hugely helpful, especially during those vital early days. Well, let’s say family plus an element of pure ‘bootstrapping! Of course, one day we will need to look for external sources of funding - especially if we want to expand the business and branch out into all-important retail sales. We’re actually at the point now where we can use investment to generate new product ideas, but we’re not technically breaking even quite yet. Let’s reach that point before we look further afield for funding, so we can demonstrate real credibility to would-be investors. We also do everything we can to keep our costs to a minimum - for example, we’re the models for all our clothes in the photoshoots you can see online! What do you see as the ‘next steps’ for building the business? There’s no doubt that the most important move will be to take the all-important step of supplying the high street boutiques - especially the up-scale, fashionable stores catering for women who attend a lot of social functions and need stylish wear for special occasions. They don’t necessarily feature a range of ‘modest’ garments at present, and our ‘pitch’ to them means positioning the advantages of that garment line very carefully indeed. Very challenging! Also, we would like to develop a line of sports clothing; again, there really is nothing of this kind available for hijabwearing ladies. This sector can

Check out their exclusive new designs!

be a real ‘first-to-market’ for us. Looking to our broader markets, too, there’s also the fact that our clothes don’t need to be worn with the hijab - and as such, they can be practical, stylish and modest clothes for western or international women travelling in the GCC or MENA countries. This is another real gap in the market. What advice would you give to other would-be entrepreneurs looking to start a business? RD: Probably the most important single thing to say is ‘kill your fear’ - don’t let your own self-doubts get in the way. You have to do everything in your power to make your dream come true. It’s also vital to have patience: understand that not everything can happen straight away. Take time to absorb all the advice you’ve been given and make the most of all the help that everyone might offer. Oh, and one last thing - go to AUD!

For an online version, please visit: www.smeadvisor.com/2014/09/catalystfor-success/

WORKSPACE

START-UP TO IPO

If your business is at the vital intersection between being ‘mediumsized’ and ‘enterpriselevel’, chances are you’ve considered the IPO as a viable option. Going down this route can not only have a liberating impact on your company’s cashflow but can also set you on a path to exponential growth and success. SME Advisor is delighted to present the views of two world-class experts – Kam Mattu, Vice President, Equity Capital Markets, NASDAQ Dubai, and Hisham Farouk, Managing Partner, Grant Thornton UAE.

Hisham Farouk, Managing Partner of Grant Thornton UAE

When is the right time for an SME to go public? Typically, when does a business make the shift to public? Going public varies for each company and its growth agenda, however typically a company may decide to go public when it wants to raise finance and is in the growth stage of its corporate lifecycle. This also allows a company to maximise its shareholder value whilst the market is buoyant within the sector that it operates within. The advantages are that an IPO will strengthen governance, help raise capital and may assist expansion plans. The company must ensure that it issues an IPO at the right phase of its growth lifecycle. If a company issues an IPO too early, it could have a negative effect on the future growth of the business; likewise if a company waits too long they may miss out on the opportunity which a competitor may capitalise on.

What are some of the major challenges to be prepared for? When a dynamic business issues an IPO, the benefits can far outweigh the challenges. However, every change brings internal challenges which need to be addressed. Firstly, internal culture towards an IPO needs to be managed as the ownership model of the business changes, so does the ‘way of doing things’. Secondly, interests and expectations of the minority shareholders need to be taken into consideration, given they have also invested in the business via shares and time. We must also remember that the share price of a company is exposed to fluctuations in the market and thus the level and command of control is shared amongst the shareholders.

How important is it to have an effective communication strategy in place when going public?

An IPO can create resistance to change from within the organisation; therefore once a company has made the decision to go public, it is essential that an effective communication strategy is embedded into the process. This will ensure that all internal stakeholders and employees, who are aligned to the company, understand the benefits of the IPO and that they are brought into the notion of going public, thereby creating acceptance of change. The communication strategy should also consider the external market, which would require a PR agency and an assigned media spokesperson, who is trained and well positioned to manage the key messages that are delivered to the external market.

How important is it to sustain and deliver strong PR in the line-up to an IPO? There are certain regulatory parameters which must be considered and adopted when announcing an IPO, however a PR strategy is equally valuable and essential to the company in question. Through an effective strategic communications plan the firm has an opportunity to reposition itself in the market, announce its growth plans and inform key external stakeholders of the company’s position. An effective PR plan will also provide an opportunity for the company to increase its visibility in the market, thereby attracting external interest and investment into the company, which will provide further funding to aid future growth plans. A PR plan can also deter any negative press or messages from being articulated in the market, therefore a planned and active PR strategy is essential when considering an IPO.

What are the key steps in evaluating the financial health of a company before entering the IPO market? www.smeadvisor.com

WORKSPACE

Before going public, a company needs to ensure that its internal processes and financial management is structured in such a way which will further promote the company. Investors want to make money and the only way to do so, is to invest in a company that will make them money. Therefore, a company should ensure that it has audited financial statements to further illustrate how appealing it is, so that shareholders will invest. The company should then conduct various due diligence assignments such as financial, commercial, legal, tax and corporate governance compliance to further strengthen its financial health before entering the IPO market. You must remember that when a company issues an IPO, you are giving away a piece of the company to the public. Therefore, what they are willing to pay depends on your rate of growth and profit.

A shift from private to public can have a huge impact on business culture. How can SMEs ensure that there’s a smooth transition? When a company goes public it will inevitably have an impact on the business culture as the ownership model changes, impacting every internal stakeholder and member of staff. Therefore, as mentioned earlier, this needs to be managed by ensuring there is an effective communication strategy in place both internally and externally to keep them informed at all stages as this will require a level of change management. Any company wanting to make the shift should appoint lead bankers and advisors, who will work collectively to ensure the company is transitioned effectively and can continue to support the SME post-IPO to further implement and support the change that will be required internally.

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What would you say are regional trends in terms of IPO listings? Do you see significant potential? The recent economic developments in the region have led to greater potential in relation to IPOs. The IPO market is relatively strong in the MENA region recovering from the economic downturn, with increased potential predominately in Dubai, Qatar and Saudi Arabia. These GCC countries have attracted large IPOs, due to reasonable valuations which continue to drive the activity. There is significant potential across the ME market, if approached and managed effectively. We have witnessed an increased appetite to IPOs in the real estate & construction, financial services and retailing sectors in Dubai - which is positive and further reinforces the proposed growth within the region.

What would be the right way to approach current investors when looking at an IPO listing? Current investors should be approached through a prospectus driven by a lead arranger.

Could you share with us top factors an SME needs to keep in mind when looking to go public? I would recommend that SMEs consider the following when looking to go public. These are all factors which an advisor can support with, in order to ensure that the IPO is effectively managed: 1. Choice of market and timing 2. Tax and legal structures 3. Transparency and corporate governance

4. Financial reporting & track record auditing requirements 5. Appointment of experts & advisors 6. Strategy & funding requirement

What are some of the prime advantages that an SME can enjoy as a result of going public? As mentioned earlier, there are great advantages to going public if the transition is managed effectively. Nonetheless, the prime advantages are as follows: • Access to capital to fund expansion and growth (used for R&D, fund capital expenditure etc.) • Creation of liquidity & potential exit for current owners • Maximise value of the company • Improvement in debt finance terms • Enhanced loyalty of key personnel • Increased public awareness due to brand awareness Subsequently, the above may lead to an increase in market share for the company or may be used by founding individuals as an exit strategy.

What transparency and disclosure policies does the business need to set in place at the IPO listing stage? The business needs to ensure that it is transparent at the IPO listing stage. Going public will require a great level of transparency as the business will need to share its financial details to the public and its shareholders on a quarterly basis. This will mean more stringent management and ensuring that this element of change is managed internally. Furthermore, the board will be required to share its decisions and disclose agreements more openly than before. Therefore, the business must ensure that it has a clear transparency and disclosure policy at the onset.

WORKSPACE

Is there any need to put into place a document entailing shareholder rights? When listing the company, it is advised that a shareholder is effectively communicated to, with the duties and power clearly mentioned.

Is there a negative impact for existing Directors, in that they see their shareholding dramatically diluted? As mentioned earlier, the company must ensure that they manage this change effectively internally. Initially, Directors may feel that this will have a negative

FROM THE Expert When is the right time for an SME to go public? Typically, when does a business make the shift to public? There is no magic number that qualifies a private company into becoming a public one. It’s more about evaluating the options for growth and the viability of an IPO. It depends very much on the rationale for an intended IPO. The listing could be used to raise capital to finance an acquisition and enter new markets, or to provide an exit strategy for owners and shareholders alike, or to simply add kudos and credibility to the firm. The decision should be driven from management; however it is important to engage with advisers to help determine the right structure, reporting financials and whether the story would be viable to investors.

Kam Mattu, Vice President, Equity Capital Markets, NASDAQ Dubai

impact internally especially when considering the possible dilution of autonomy and the increased risk and responsibilities that may be presented to them daily. However, when looking at the advantages of IPO, which far outweigh the disadvantages, the change management that is required will inform these key stakeholders of the benefit to them and the business. Increased profits means increased share value, which will impact them directly should they invest in the business. This model will also allow each member of staff, who subscribes to the shares, to feel like they are a direct stakeholder. The more they put into the business, in terms of effort and drive, the greater the financial reward for everyone.

What are some of the major challenges to be prepared for? An IPO has clear benefits; however, in most cases the process is underestimated in terms of management’s commitment to the IPO process which can take time and effort. An IPO can take anything up to 12-18 months from the initial preparation phase right through to the listing date. A company should start by conducting a readiness assessment and engaging with an Exchange, such as NASDAQ Dubai at the outset to help guide them on the process. Being in the public domain requires greater transparency, from publishing financial accounts to disclosing material information and some firms may find this demanding. It is a mindset change, whilst shareholders are giving up a proportion of their business through the listing of shares; there are also several advantages that can be sought from going public, such as accessing capital, increased company profile and public trust, just to mention a few. How important is it to have effective communication ability in place when going public? This is crucial. A clear communications strategy is imperative when building the equity story around the IPO. It is important to ensure an open dialogue with your stakeholders. You should engage with public relations who are experts in IPO communications strategy, preparing management for investor and

Why do you think that IPOs are so relatively rare in the GCC? The GCC, particularly Dubai, was founded largely by family-owned businesses. The first generation may be resistant to change or fear that an IPO will mean relinquishing control as external shareholders begin to own a part of the business that they founded and established. This ownership model is now seeing the emergence of the second generation, who have witnessed and seen other western companies go from organisations to large conglomerates as a result of IPO. Therefore, regionally businesses have begun to

media meetings, as well as, providing ongoing support post listing. Investors are looking for well-managed companies with strong balance sheets and good prospects for growth. Benefits of enhanced publicity come with the increased responsibility of communicating appropriately, as well as leveraging the media; basically all means to be visible. How important is it to sustain and deliver strong PR in the run-up to an IPO? The success of an IPO depends on the companies’ ability in communicating its business operations, outlining their competitive edge in a way that is compelling and attractive. This means giving details of the company’s value proposition, activities and plans, through its website, press releases and social media. Press conferences by executives and one-on-one interviews with journalists can also add value. Building a good relationship with the media should be established well before an IPO. A programme of positive and compelling announcements should then be made in the weeks before the IPO to increase the momentum, including the intention to list announcement and this should continue after listing to ensure interest in the company. A shift from private to public can have a huge impact on business culture. How can SMEs ensure that there’s a smooth transition?

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WORKSPACE

embrace the change and consider IPOs to further strengthen and support business growth. Grant Thornton provides IPO readiness assessments and acts as a sponsor to companies seeking to list; we have seen several UAE family businesses evaluating listing opportunities in the effort to seek capital injections and to raise their profile regionally. A well-known Abu Dhabi bank expects six companies to go public in 2014, which is estimated to raise USD 2 billion. In 2013, the only sizable local IPO was Damac Properties, however it’s Management opted to list on the London Stock Exchange being valued at USD 2.65 billion post-offering. The last significant IPO which was valued over USD 1 billion, which was 15 times

oversubscribed, was the port operator DP World Ltd, raising USD 4.96 billion in November 2007. After a seven year retreat, it is widely anticipated that there will be a return to this kind of IPO activity within the local market.

Preparation is key. Going public often involves a change of mindset towards greater transparency in dealing with the outside world. That can be adopted well before the IPO, including creating a more balanced board of directors through new hires and having the right advisory team onboard in advance. Companies can also practice preparing their accounts to standards required for public companies before their IPO. A company must have internal controls, systems and procedures in place to support the demands associated with both the process of going public and the requirements to report financial information to investors following the IPO.

decision a company can make. The advantages of going public can be substantial; however it takes commitment from the management, time and thorough preparation from the outset. It is important to hire strong board members, those who have experience in the IPO or served in a public company previously. Do your homework; speak to advisors and other listed companies who can provide insights into their own experience of an IPO. It is important to have sound corporate governance in place. This means having audited financial statements, in addition to other factors, such as a proper corporate structure and framework. An IPO process is difficult for an SME to manage on its own. It will need a team of advisors that ensures that the company has the policies, processes and documentation in place to meet the requirements of the Exchange and regulator. How long the IPO process takes can vary across businesses, but the bulk of the time is typically spent in the preparation phase.

What would you say are regional trends in terms of IPO listings? Do you see significant potential? NASDAQ Dubai hosted Dubai’s first IPO for more than five years in April, with the successful listing of Emirates REIT which raised $201m and was 3.1 times oversubscribed. Other companies have since announced plans to IPO in Dubai as well, and more are likely to follow from a diverse range of sectors. The prospects look good for a sustained revival of IPO activity in the UAE, supported by strong growth in the economy. What are the key factors an SME must consider when going public? Going public is among the most critical

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Do you believe we will see the creation of an IPO funding in Dubai in the same way as there is in Qatar? In May 2014, the UAE was upgraded to emerging market status which we believe will further support the IPO market within the region, increasing investor confidence and creating greater traction. In Qatar, the Mesaieed Petrochemical

What are some of the prime advantages that an SME can enjoy as a result of going public? SMEs are the backbone of the economy and represent more than 90% of Dubai businesses. They play an essential role and contribute significantly to employment and economic activity in Dubai and the UAE. Raising new capital is key. NASDAQ Dubai offers the key advantage, unlike many other exchanges,

Holding company launched the region’s largest issue, which raised $903 million (Jan 2014). When looking at the IPO activity in the UAE, the appetite for growth and the improved valuation has further contributed to a better IPO market in the region. The equation is simple and one which many businesses within the region have begun to consider - the better your growth and profit projection, the higher the price you will get for your stock, the less equity you will have to sell, and the more money you will raise, supporting business growth and expansion.

For an online version, please visit: www.smeadvisor.com/2014/09/start-upto-ipo/

of allowing owners to keep control of their business, since no more than 25% of the shares need to be floated. Through listing, a company can access an eclectic mix of institutional and retail investors, within the GCC and worldwide. The recent upgrade of UAE to ‘emerging market’ status will see passive funds’ inflows to UAE by c.US$ 400 million thereby increasing the investor reach. Through our NASDAQ brand, a listing gives companies instant recognition worldwide, in turn raising a company’s profile with customers and business partners. What factors would investors consider when investing in an SME during the IPO? Investors tend to look for well-managed companies with strong balance sheets and good prospects for growth. There are a number of financial factors such as earnings per share (EPS), growth, debt to equity ratio, return on equity (ROE) and profitability. There are non-financials factors, such as quality of management, corporate strategy and corporate governance. Having direct access to senior management is very important, which can be achieved through holding regular meetings with stakeholders. Equity research coverage is also a good way for companies to keep an ongoing dialogue between investors and sell-side analysts. Companies should remain realistic about appropriate performance expectations, be open and honest; don’t overpromise and under deliver.

THE NEXT LEVEL

The taste of success THROUGH THE PAGES OF OUR REGULAR SECTION ‘THE NEXT LEVEL’, WE’VE OFTEN FEATURED BUSINESSES THAT ARE UNDERGOING FAST EXPANSION, ENJOYING UNBEATABLE GROWTH OR BREAKING BARRIERS TO ACHIEVE NEW HEIGHTS OF SUCCESS. THIS MONTH WE MET UP WITH A BUSINESS THAT HAS NOT ONLY MANAGED TO TICK ALL THESE BOXES BUT HAS NOW POSITIONED ITSELF TO TACKLE FRESH CHALLENGES. IN AN EXCLUSIVE INTERVIEW WITH SME ADVISOR, MARK CARROLL AND ANDREAS BORGMANN – THE COFOUNDERS OF KCAL – SHARE THEIR AUDACIOUS EXPANSION PLANS AND THEIR VISION TO DOMINATE THE HEALTHY FAST FOOD INDUSTRY…

Kcal has recently unveiled plans to enter the franchising market. How did this come about?

Mark: We started receiving franchising inquiries from the Day One i.e. since we opened our first branch. Although it was very humbling (and surprising!), we weren’t ready for it. About a year ago, we made the decision to explore franchising as an option and began meeting with potential franchising partners. We knew that we had reached a stage with Kcal, where we could look at international expansion, and after a lot of research we opted for franchising. Andreas: Franchising will allow us to build on the brand image we’ve successfully managed to create for Kcal, here in Dubai. We want to take this and elevate it to an international level using a strong raft of franchising partners. However, we are currently looking at franchising only for international growth, we want to continue to be completely involved in the local market.

Where and when can we expect the first franchising units to be set up?

In terms of local expansion and growth, what do you have in the pipeline? Mark: We want to revisit certain divisions within the company that haven’t yet reached their full potential. For instance, Kcal has a dedicated catering unit, which we are looking to revamp in the months to come. Fuelling further expansion will be our new kitchen in DIP that will significantly boost our capacity. Andreas: Abu Dhabi is a key market for us and there are a lot of talks underway to introduce several branches there. We are aware that we have a fairly large customer following in the capital and we want to cater to their needs.

Quality benchmarking plays a pivotal role when undergoing fast expansion. How do you ensure that proper standards are maintained within all of your outlets?

Mark: We are very pleased to say that we have partnered with the reputed franchising consultant – Francorp Middle East. Working alongside them, we are working towards implementing a sustainable franchising model.

Mark: Within our franchises, we have area coordinators and a franchise team, which will ensure proper quality standards are being adhered to. In fact, we have a detailed franchising manual describing operational procedures, marketing strategies, hiring policies and everything else that needs to be kept in mind about the Kcal brand.

Andreas: When we started looking at Egypt, it wasn’t a great time. To be frank, we were slightly reluctant at first, but what changed our minds was actually visiting the place. After a thorough market study, which involved analysing demographics, consumer behaviour trends and competitors, we realised Egypt was perfect for Kcal.

Andreas: When it comes to our local branches, it is quite a difficult task. However, having the right team makes it so much easier. Our staff members are trained regularly so that they are fully aware of the quality benchmarks. We also avoid micro-managing as it can be quite detrimental to an employee’s performance. We allow them to treat Kcal as their own brand

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the next level

Mark Carroll and Andreas Borgmann, the cofounders of Kcal

so that they are constantly motivated to work for the betterment of the business. At the end of the day, we are all part of the huge Kcal family.

How easy or difficult was the process of acquiring finance? Mark: Several investors have approached us at different stages of the business looking to partner with us. However, Andreas and I have invested our personal funds into the business and that’s how it all started. Today, we continue to pump our company profits back into the business in order to fuel and sustain growth. We like to keep the business to ourselves.

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Are there any new and exciting initiatives that customers can expect to see in the next few months? Mark: Yes, absolutely! Our much awaited Kcal FM will soon be launched, which is like a radio station unique to Kcal and plays across all our stores – including our new franchises. It is also available for live streaming via our website. Andreas: Customers can also expect a brand new website and two mobile apps – to be launched very soon! These new and improved platforms will help

us connect with our customers in a more effective way. The user experience will also be quite refreshing.

You’ve recently launched a new menu. Tell us a little about that. Mark: Our new menu has an Arabic influence, with dishes catering to the masses. We have options for vegetarians, protein lovers and much more. Andreas: We look to introduce a new menu every six to nine months so that our regular customers can enjoy a new variation. Keeping in mind that a vast majority of our

THE NEXT LEVEL

I think the biggest challenge is definitely getting access to the right staff members – you need to have a solid team that understands and fully implements your company’s vision. clientele is constantly coming back to us, we don’t want them get bored of the same flavour combinations.

How would you describe the ‘science’ that goes into creating the Kcal dishes? Do you work with a certified nutritionist or dietician? Andreas: This is a very lengthy and tedious process. But, it is something that needs to be done in order to put together an exciting menu for our customers. We have a group of certified nutritionists and chefs, who we sit down and discuss different options with. We are conscious of the fact that people have different palettes and varied tastes – therefore, we experiment to create a lot of new things and come up with dishes that would appeal to the masses.

What, according to you, are prime factors essential for success in your industry? Andreas: I think the biggest challenge is definitely getting access to the right staff members – you need to have a solid team that understands and fully

implements your company’s vision. This is one area in which we’ve invested a lot of time as well as effort – and rightly so! Mark: In light of the growing emphasis on customer service in the region, we continually train our staff and ensure that they are aligned with the corporate culture at Kcal. Another major initiative we’re currently undertaking is setting up a central customer service centre for Kcal, which will allow all customer calls to be routed via one call centre. This will help streamline all customer orders and ensure smooth, efficient delivery. You’d also be surprised to know that we take customer feedback very seriously – in fact all the messages that come through our portals are delivered directly to Andreas and myself.

What would you say is Kcal’s USP? What sets you apart from your competition? Andreas: I think Kcal, as a brand, has evolved to become much more than just nutrition. When people think of Kcal, they associate it with a healthy lifestyle. We are essentially a no-nonsense healthy food brand! Mark: There are several areas that make Kcal different such as the healthy and affordable food, the special attention we pay to customer service and the fact that we are constantly innovating. It’s crucial for any SME to be on its toes and not get complacent in order to survive in this competitive environment.

can guide you in the right direction. This can save you a lot of time, money and resources. Additionally, don’t forget to research – not just your competitors but global leaders as well. Andreas: Ensure that you have the right team with you because without passionate people no business can get to the next level!

How involved do you like to be in the day-to-day operations of the business? Mark: The fact that Kcal is making a difference to the lives of our customers is a huge motivation for me to stay constantly involved in the business. Both Andreas and I are very hands-on and like to be in touch with all aspects of the business. Andreas: I was on holiday recently – but couldn’t wait to get back into the Kcal offices! Being an entrepreneur means you are constantly thinking about ways to better your company, and if you are truly passionate about what you are doing, it doesn’t seem like work at all.

Finally, in one sentence, how would you describe your entrepreneurial journey with Kcal? Mark: A scary, yet exhilarating, rollercoaster – full of interesting twists and turns! Andreas: A huge learning curve!

What advice would you give to fellow SME owners looking to fuel expansion and growth? Mark: Plan your expansion ahead of time and have a strategy in place that

For an online version, please visit: www.smeadvisor.com/2014/09/the-taste-ofsuccess/

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presents

BUSINESS INTELLIGENCE FOR INTERNATIONAL TRADE www.tradeandexportme.com

Contents

58 ADVISORY BOARD Key personalities sharing their expertise to ensure that we bring you the latest trends and issues in the field of trade. Hospitality & tourism 60 SHARIA ‘FRIENDLY’ – OR ONLY LUKE-WARM? We take a look at how the hospitality sector adapts to Dubai’s ambition of becoming a regional capital for the Islamic economy. Trade & growth 62 Right on track – Dubai’s growing logistics sector Mustapha Kawam, Managing Director, GES, shares his views on the growth opportunities in this prolific sector.

IP and trademarking are extremely important protections for companies. p72

TRADE AND EXPORT MIDDLE EAST

66 BRICKS, CLICKS – AND THE WAR ON WASTE Steven Speter, Managing Director, 36 Strategies, reveals how hospitality procurement teams can simplify lengthy processes down to a simple click. Market trends 68 Follow the Silk Road A snapshot of the latest developments in the UAE’s non-oil sector, with special spotlight on the apparel and textile industry – one of the fastest-growing non-oil trading sector in the UAE. VIP interview 72 Local SMEs, global aspirations Sarah Cocker shares exclusive insights on Just Falafel’s world-

Steady signs of a strengthening US economy have caught Federal Reserve officials’ ATTENTION and have the central bank on course to end its bond buying stimulus in October and raise interest rates next year. p76

spanning ambition, her role as Head of Communications and Investor Relations, and expansion strategies that can help every SME widen its horizons… Finance 76 Money watch The team at Western Union Business Solutions provides a comprehensive outlook on the three major currencies in the market – the USD, EUR and GBP. Legal 80 Selling products in the Middle East and North Africa: opportunity or minefield? Legal experts Richard Bell, Partner, Clyde & Co, and Rebecca Soquier, Associate, Clyde & Co, investigate.

TRADE and export middle east

ADVISORY BOARD Trade and Export Middle East presents a dynamic group of industry experts and leaders as part of its Advisory Board. The following key personalities will help add value to our analysis and ensure that we bring you the latest trends and issues in the field of trade.

H.E Saed Al Awadi CEO, Dubai Exports, Department of Economic Development, Dubai

Dr. Adeeb AlAfeefi Director, Foreign Trade & Export Support International Economic Relations Sector, Department of Economic Development, Abu Dhabi

Khalil Saqer Bin Gharib Corporate Communications Director, Dubai Customs

Lakshmanan Sankaran Chairman, Regional Banking Commission (MENA)- ICC Paris

Moin Anwar Trade & Investment Commissioner (Middle East), New South Wales Government, Australia

Peter Fort CEO, Ras Al Khaimah Free Trade Zone

For more information, please visit www.tradeandexportme.com

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19 - 20 NOVEMBER 2014

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MEYDAN HOTEL, DUBAI, UAE

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WOMENOMICS the next emerging market TAKE PART in making change happen UNITE with business and through leaders from across the globe PARTICIPATE to the expansion of a modern and inclusive economy

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HOSPITALITY & TOURISM

SHARIA ‘FRIENDLY’ OR ONLY LUKE-WARM? Eight months after Dubai announced ambitions to become a regional capital for the Islamic economy, the results are beginning to trickle down into the hospitality sector, following the launch of the first certified Sharia compliant hospitality development this year. But where are the other Sharia certified hotels?

An international hospitality market in an Islamic culture such as the UAE, was almost pre-destined to face a certain amount of soul searching, specifically if looking to attract upwards of 30 million visitors, nationwide, from around the world. Creating a cultural melting pot, is more difficult than it looks, and no more so that in creating hospitality experiences which fully embrace Islamic principles. The development of specific Islamic hospitality brands to date has seen stunted growth, the reasons for which are widely debated and contrary to the enormous influx of GCC travellers to the country. Yet, from the UAE’s first Islamic branded operator, Tamini, to the first certified Sharia compliant brand,

Constella, there is a growing number of hotels, apartments and even tour operators offering services that do not compromise the religious duties of Muslim travellers. Explains Galadari Law partner, Mojahed Al Sebae: “Although an entire book could be written about this, I think Sharia hotels may be simply defined as ‘any hotel that does not breach sharia in any way, including but not limited to, its design, financing and operations’. Sharia hotels maintain certain facilities that enable Muslim travellers to perform their religious duties.” It’s a selling point which has gained further significance since the announcement of Dubai as a capital of the Islamic Economy, and a trickledown effect is beginning. This year, real estate developer DAMAC, which has maintained an interest in serviced apartments for some time, announced the opening of Constella, the first hotel brand which meets a strict 15-point check list devised by Dubai Islamic Bank entity, Dar Al Sharia. The hotel, to be developed in the emirate’s Jumeirah Village Triangle, marks the first time a Dubai hotel will not just be ‘dry’, but even funded and designed according to Islamic principles. “The Sharia compliant hotels you see today are dry hotels. They are not designed or managed as Sharia. We do not know how big the Sharia segment is today, but we have taken the risk to develop hotels that have been imagined from the very earliest stage, as fully Sharia compliant,” DAMAC MD Ziad El Chaar disclosed to Hospitality Business when the Constella project was announced in May of this year. The brand will cater to visitors from the GCC, Pakistan, India, UAE and also Indonesia and Malaysia.

Yet for all the progress Constella marks, it is literally one hotel in a pipeline that will supply in Dubai alone increase by 8.6 per cent this year, according to STR Global’s June figures. Comments Sebae: “In my view, the shortfall in Sharia hotels could be due to several reasons including the conservative nature and investment approach of the majority of investors in this region. “The hotel industry, until recently, has not been a very attractive investment due to the Sharia compliance issues of lack of financing and the misperception that a sharia compliant hotel may not be profitable, or may be less profitable, than ordinary hotels.”

Sharia ‘friendly’ snapshot Tamani – The UAE’s first branded Islamic operator, across its 55 storeys Tamani hotel offers two pools and a female only floor. Gloria – Family focused, rather than defined as Sharia, Gloria plans to spread its message of dry hospitality to every major GCC city within five years Constella – the first certified Sharia compliant hotel, according to a 15-point check list that covers everything from separate fitness and dining facilities to the funding model of the building HMH – the first hotel chain in the UAE to offer alcohol-free accommodation Rotana – diversifying its offering, Rotana has a number of brands for both the apartment and dry hotel element of its 50+ hotel portfolio Amlak Hotels and Tourism Investment Company – Jordanian chain to open hotels in every GCC country by 2017

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HOSPITALITY & TOURISM

Striking a balance on this issue, hotels operated by Dubai-based HMH class themselves as ‘Halal friendly’ and report no impact on the bottom line. Rather than being ‘Sharia’ hotels, while there is no alcohol served on the premises, guests are permitted to bring their own. COO Lauren Voivenel explains: “It isn’t an obstacle to do business. We average a very decent GOP in all our hotels and we perform as well as the brands who do serve alcohol. He adds: “People come to our hotels looking for a safe, family environment, this isn’t about exclusively looking after the Middle East market.” Non-official rating In waiting for the concept of Sharia hotels to take off, the idea of ‘Halal friendly’ hospitality has slowly made its way around the globe, not only spurred by outbound tourists from the GCC, but also Malaysia, Indonesia and Turkey. Supporting the sector globally – and in the absence of take up for strict Islamic hospitality principles outside of Saudi Arabia – Crescent Rating devised its own three tiered system, covering aspects from prayer facilities, to the provision of Halal food in the hotel, or directions to a nearby Halal restaurant. Hotels must meet the minimum criteria across a number of categories with the entire system applicable to cruises, theme parks, airports and even travel agents. Founder and CEO of Crescent Rating and sister company HalalTrip, Fazal Bahardeen, explains: “We allow hotels to target this segment without the need to brand themselves as Halal or Sharia compliant properties. Through both Crescent Rating and HalalTrip, we help them reach out to their target market and this allows the hotel to cater to a wider range of clients while still catering to the Halal conscious Muslim traveller.” Bahardeen, who himself has authored a number of articles on the subject, says the understanding of the faith-based needs of Muslim travellers will not only spur tourism in a destination, but also support the industry’s verticals and therefore a country’s SMEs.

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Embracing Sharia But while the less regimented concept of Halal friendly tourism has cultivated a Muslim-friendly global hospitality sector, the provision of strictly Sharia compliant hotels in the UAE, akin to the principles which are mandatory in Saudi Arabia, is still lacking. The potential for the UAE, should these opportunities be explored, could see a significant rise in the number of stop over tourists who visit Saudi Arabia for pilgrimage and wish to see Dubai, Abu Dhabi or the UAE’s other emirates, while in the region. Consider that in 2013, Saudi Arabia was ranked 13 in a list of 15 countries with the highest growth in tourism receipts last year and the total number of Saudi Arabian nationals visiting the UAE over the same period topped 1.5m, spending $420.4 million on their Visa cards in the process, according to data released by the bank earlier this year. Says Bahardeen: “The hotel brands in the Middle East have a huge opportunity to cater to the needs of the Muslim traveller. Already being in a setting which is Muslim friendly, allows them to target this segment without much effort. However, he does add, that specific compliance may not require promotion. He says: “In my opinion it is not really necessary to start branding yourself as a Sharia Compliant Hotel, but to ensure you have the services that this market is looking for and reach out to them through right channels.”

Over recent months, Dubai government specifically has instructed a number of authorities to develop regulations, standards and guidelines for the industry as a whole when it comes to the development, and prominence, of Sharia compliant hotels. Despite the potential management challenges, it is this which Sebae believes will act as the catalyst for a wave of hospitality establishments which embrace the region’s predominant religion, in a way that is reflective of the local culture. “I believe clear and simple yet specific regulation, guidelines or standards should be issued by the local authorities in order to support and simplify the sharia hotel development local and regionally.” When it comes to the impact on management and development of the UAE’s hotels, the implications could be significant. Unlike Bahrain, which last month reinforced its blanket ban on the service of alcohol at any of the country’s 3-star hotels, Dubai is famous for its support of a free economy, and such measures could almost be ruled out with a guarantee. However, depending upon the success of the first Sharia certified hotel, the lead taken by other emirates could, in future, create a very different landscape. For an online version, please visit: www.tradeandexportme.com/2014/09/shariafriendly-or-only-luke-warm/

TRADE & GROWTH

Right on track Dubai’s growing logistics sector

Being at the crossroads of international trade and commerce, located between the Far East and Europe, the United Arab Emirates and Dubai is the perfect gateway to the East and West. There is no question that Dubai is positioned as a hub for international trade and is now advancing to become a hub for international transport and logistics. Trade and Export Middle East looks into this development and speaks to Mustapha Kawam, Managing Director, Globe Express Services about his views on this sector and its future growth. 62

Dubai’s geographic location has helped it gain access to prominent markets such as Africa, India and China. Dubai has also grown at a phenomenal rate over the years, and has been positioned as the top third export and re-export hub following Hong Kong and Singapore. It is also home to one of the largest and fastest-growing ports in the world. As the UAE – and Dubai – further diversifies its economy, significant amounts of investments are being put in place to fast-track the development of state-of-the-art infrastructure and logistics facilities in the country.

A recent report by Frost & Sullivan indicated that the total logistics market in the UAE in 2013 was estimated to have reached USD 23.4 billion, contributing six per cent to the gross domestic product (GDP) of the country. The consulting firm also highlighted that following the surge in import and trade volumes and the steady upward trend of local manufacturing, the value of the UAE’s logistics sector is likely to increase by about 15.4 per cent reaching USD 27.0 billion by the year 2015.

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TRADE & GROWTH

THE logistics market in the UAE in 2013 was estimated to have reached USD 23.4 billion, contributing six per cent to the gross domestic product (GDP) of the country.

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With the development in Dubai’s logistics sector such as the expansion of Jebel Ali Port and Jebel Ali Free Zone (JAFZA) together with mega-complex Dubai World Central (DWC), home to Al Maktoum International Airport and Logistics City, the UAE is right on track to strenghten its status as an international logistics hub. Mustapha Kawam, Managing Director of Globe Express Services, echoed this sentiment. We asked him about how he sees the logistics industry developing in the future and to this he said, “The UAE logistics business in general will

remain on the rise in terms of growth, ably demonstrated by the entry of new projects being developed and is estimated to be worth AED 27 billion by 2015.” “Today, Dubai is the unquestioned trade and logistics hub serving a region that houses a population of over two billion people, where 14 per cent of UAE’s GDP is contributed by the Supply Chain and Logistics industry. Overall, the GCC logistics sector is estimated at around AED 129 billion, where Saudi Arabia, the UAE and Oman contribute 85 per cent of this share,” he added. Globe Express Services, (GES), being one of the world’s top 100 global logistics providers, has played a pivotal role in supporting the growth of the UAE’s logistics sector. Mustapha Kawam further highlighted that GES has made great efforts in realising the growth of the country’s logistics sector. “We are doing our best in complementing this growth. This is evident in the recently completed AED 35 million development project that we did, which consists of an industrial warehouse and accompanying office in Dubai’s Jebel Ali Free Zone. This project further expands its supply chain solutions covering warehousing and packing services, specialty handling and lifecycle management. GES also opened a new office in Abu Dhabi to help develop new business and industry verticals in the country.” GES offers a robust, wellrounded suite of logistics services to companies doing business in Asia, Europe, the Middle East, North America, Latin America and around the world. Over the years it has been providing services such as ocean & air freight forwarding, overland transport, Customs brokerage & compliance consulting, cargo consolidation, warehousing & distribution, specialty cargo handling and project logistics. Its state-of-the-art technology platform provides outstanding

TRADE & GROWTH

The upcoming Expo 2020 is also expected to boost the industrial sector of Dubai, thus complementing the logistics segment of the economy. Mustapha Kawam, Managing Director, Globe Express Services

visibility, flexibility and customisation potential, while its highly trained personnel shares a commitment to providing the ultimate customer service. The success of the UAE and Dubai as international logistics hub reflects on the success of companies such as GES, their achievements further supporting the country’s vision for globalization. Mustapha Kawam has been a driving force behind GES’s success, helping strengthen its stronghold in Kuwait and its further expansion in the region. Speaking more about the company, he made mention of its accomplishments over the past year, “Globe Express Services had many recent achievements especially in the last year (2013). The company’s gross revenue for its UAE operations in 2013 has increased by 27 per cent compared to 2012, while in Kuwait increased by 38 per cent in comparison to the previous year. The key achievement for 2013 was the company’s UAE office being awarded the Certificate of Approval by the Bureau of Assessment Services, recognising the company’s compliance with the international standards of ISO 9001:2008. This Quality Management System is applicable to the company’s full array of services that include logistics, cargo transport by heavy trucks, customs brokerage, cargo loading & unloading, cargo packaging, air cargo services, general warehousing, and sea cargo services.” “Some other achievements of the company were being honoured

Key developments in the UAE’s logistics sector: Jebel Ali Port and Jebel Ali Free Zone expansion

Dubai World Central (DWC) – opening of Al Maktoum International Airport and Logistic City

DWC link to Jebel Ali Port and JAFZA via Dubai Logistics Corridor

Midfield Terminal Complex development at Abu Dhabi International Airport

with the Platinum Award by Maersk Line Shipping, the world’s largest ocean carrier and the most reliable container shipping company and their appointment of V4 Advisors, an environmental advisory services company with extensive experience in the field of emission reduction, energy and water audit, air pollution, and renewable energy, to significantly reduce its Greenhouse Gas emissions, which was part of the company’s plan to define and implement their environmental strategy,” he said. The power of Expo 2020 The upcoming Expo 2020 is also expected to boost the industrial sector of Dubai thus complementing the logistics segment of the economy. The much awaited event will trigger huge investments in airports, roads, ports which will bring significant benefits to the transport and logistics sector of the country. We then asked Mustapha Kawam on how he thinks the Expo 2020 can affect the growth of UAE’s logistics segment, and to this he responded, “In preparation of World Expo 2020 in the next six years, we should expect a complete modernisation and fine tuning of every single aspect of business in Dubai and also expect a huge and continuous growth in the cargo and logistics sector as well. Dubai Maritime City Authority (DMCA), the government authority charged with regulating, coordinating and supervising all aspects of the maritime sector in Dubai, recently announced its firm commitment to support the Dubai Maritime Vision 2030 plan of creating a vibrant and safe maritime environment in the next two decades – thereby establishing Dubai as a leading global maritime hub.” Furthermore, he mentioned that the DMCA says that Maritime Vision 2030 will elevate Dubai’s status as a prime international logistical gateway and a transshipment

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TRADE & GROWTH

15.4%

logistics sector’s GDP share - USD 23.4 billion (estimated value)

projected growth by 2015 to reach USD 27 billion

LOGISTICS MARKET SEGMENTS BY REVENUE CONTRIBUTION:

62%

18%

freight forwarding

transportation

16%

warehousing

4% value added logistics services (packaging & labelling)

Source: Frost & Sullivan

hub backed by rapidly increasing passenger and freight transport volumes and a multifaceted trade corridor. Breaking barriers The success of any industry does not go without facing challenges. Speaking about the bottlenecks that the logistics sector is facing in the region, Mustapha Kawam emphasized that as this industry continues to grow, local logistics players should not be lulled into complacency. “We need to ensure that we continue to build on our success. For starters, we need to be more committed to innovation and keep up with technology. At Globe Express we count optimum use of cutting-edge technologies among our core competencies, because there will always be better ways of doing things.”

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“Supply chain and logistics services rely on the proper coordination of several parties, from the consignee to the freight forwarder, for successful execution. Our industry needs to constantly strengthen ties between all the actors involved; thus fostering productive partnerships between clients and logistics providers on one hand, and freight forwarders and carriers on the other. Easier said than done in this fast-paced industry of ours,” he added. Moreover he emphasized that given today’s highly competitive markets, customers will lean towards companies that can think out of the box and deliver tailored solutions. Industry players need to take into account the changing needs and beliefs of our serviced markets. Clients want to wait less and yet receive more. Failing to adjust to market trends and consumer

preferences is a perfect recipe for failure in this sector where the customer is king. “GES has continued to support the growth of the logistics sector in the UAE and the Gulf region in general. We have opened three new branch offices in the US (Chicago, Boston and Baltimore) and four sales offices in China as part of our global expansion efforts. We will continue our goals in office expansion in the coming few years especially as the Expo 2020 nears closer, to further compliment the growth of this sector,” he concluded.

For an online version, please visit: www.tradeandexportme.com/2014/09/righton-track-dubais-growing-logistics-sector/

TRADE & GROWTH

BRICKS, CLICKS – AND THE WAR ON WASTE Steven Speter, Managing Director, 36 Strategies, reveals how hospitality procurement teams can simplify lengthy processes down to a simple click, and lends four top tips for those looking to optimise procurement operations. Industry correspondent Sophie McCarrick reports.

With offices in Dubai and Muscat, 36 Strategies provides procurement solutions across the region, delivering savings to their customers while embedding compliance in the day-to-day operations; all with a simple platform that employees actually enjoy using via a smart-phone, laptop or tablet. The firm’s Managing Director, Steven Speter, reveals that when competing in the region’s ever-growing hospitality industry, the importance of maintaining strict adherence within a procurement team and its operations becomes vital to the success of a brand. “Procurement sits on 25 to 60 per cent of the total cost of a company depending on the industry, yet often there is no proportionate amount of organisational focus on it. So getting it right can unleash great potential which can be turned into a competitive advantage,” explains Speter. Through 36 Strategies’ E-procurement platform, procurement teams are able to simplify the procurement process down to a click of a finger, and retrieve

speedy purchase order (PO) approvals, wherever and whenever they like. The platform, which brings the traditional paper-based procurement process online and mobile, has proven to cut out the cycle time (from when a purchasing requisition is raised until it is approved and a PO is issued to the supplier) from days to minutes, thanks to the mobile app which allows managers to approve orders real time no matter where they are. He says: “Not only is the admin cost of processing orders saved but greater contract compliance is achieved because only the approved suppliers and products are made available for

Typical implementation by 36 Strategies can achieve

18% Steven Speter, Managing Director, 36 Strategies

Immediate procurement cost reduction

99.8%

Guaranteed delivery performance of orders being ‘Delivered On Time In Full’ (DOTIF)

38%

Improvement in procurement cycle time, from order placement to delivery

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TRADE & GROWTH

Four top tips to cut waste from procurement

Manageable operations Consolidating procurement processes, when companies source and procure through 36 Strategies they will only have one reliable supplier to deal with, making operations more manageable. Speter comments: “We procure and deliver more than 800 consumables and products in categories catered to

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TIP

ordering. Because the cycle time vastly improves, it restores trust in the supply and further cost is saved as employees will not have the need to turn to petty cash and maverick spend to get the items delivered on time.” The 36 Strategies platform takes four weeks to implement into a procurement department, generating both time and cost savings immediately after. “Our cloud-based solution takes away the complexity of the entire procurement and supply chain process, allowing our clients to focus on their core businesses. The paperless process reduces administration and management, resulting in substantial cost savings for the entire business,” Speter comments.

Consolidate your suppliers and set up framework agreements

Needless to say, consolidating your suppliers will give you better buying power and therefore a better price. But this is also about creating a win-win relationship with your suppliers. For example, framework agreements that

the hospitality industry in addition to facilities management and construction sectors. “We have a quality control in place to ensure that all products are delivered in the promised quantity and quality, so there is no more time wasted on phone calls and e-mails with multiple suppliers,” he adds. Clamping down on late deliveries and un-reachable stock, Speter explains that with a dedicated fleet of trucks and a warehouse holding three week worth of inventory, 36 Strategies

TIP

Knowing the exact specifications of the products you procure, and being able to consistently articulate those to the suppliers will eliminate the risk of receiving the wrong quality or type of product. If not managed tightly, you place your product quality and availability in the hands of your supplier, risking the wrong items showing up at your door with unnecessary time and money spend as a result. The aim is to make sure the supplier delivers you the right product at the right time so no time or money is wasted.

include volume forecast or indications will allow suppliers to plan to prevent out of stock situations.

Make sure your supply chain fulfils your delivery needs

Do you have a reliable and efficient supply chain set up? Do you have tens or hundreds of suppliers each delivering products to you every day or do you have consolidated deliveries? Think about how you would like to receive your deliveries and ensure the logistics are set up in a way to accommodate it.

TIP

Communicate specific requirements to suppliers to ensure you get the right product - every time

Make it easy for your employees to execute tips 1, 2 and 3

These tips all sound good on paper but the biggest challenge is to make sure everyone in your organisation executes them. Implement an e-Procurement platform and make it easy for your employees to comply with the governance and framework you have set up. It will make everyone’s lives much easier.

is able to guarantee delivery within 72 hours of placing an order. With a focus on quality, Speter concludes: “We are committed to meeting and maintaining world standards for quality, continuous improvement, and customer satisfaction, and we are certified in accordance with ISO 9001, ISO 14001, and ISO 18001.”

For an online version, please visit: www.tradeandexportme.com/2014/09/bricksclicks-and-the-war-on-waste/

MARKET TRENDS

Follow the silk road The non-oil sector in the UAE is continuously witnessing a strong performance; according to the latest data released by Federal Customs Authority, UAEâ&#x20AC;&#x2122;s non-oil trade reached AED 256 billion during the first quarter of 2014 alone. In the following feature, Trade and Export Middle East takes a look at the latest development in this sector and gives an overview on the apparel and textile industry one of the fastest-growing nonoil sector in the UAE.

10% US and Carribbean

TOP TRADE PARTNERS (NON-OIL TRADE VOLUME): Asia-Pacific and Australia

As reported by the Dubai Statistics Centre, data released by the Federal Customs Authority (FCA) further showed that imports accounted for 65 per cent or AED 166.4 billion of the non-oil trade, while exports and re-exports accounted for 11.8 per cent (AED 30.2 billion) and 23.2 per cent (AED 59.4 billion) respectively. The data reflects the strong growth in the non-oil trade sector in the UAE and mirrors the sound economic and trade policies in the UAE.

Europe MENA US and Carribbean West and Central Africa East and South Africa

Source: Federal Customs Authority

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MARKET TRENDS

27% 14%

Europe

MENA

43%

Asia-Pacific and Australia

West and Central Africa

East and South Africa

14%

(AED 3.2 billion)

14%

26.4%

(AED 3.2 billion)

(AED 6 billion)

Kuwait

36.2%

(AED 8.3 billion)

Oman

NON-OIL TRADE WITH GCC STATES

9.4%

Qatar

(AED 2.2 billion)

Focusing on the Gulf Cooperation Council (GCC) countries, the FCA data highlighted that non-oil trade between the UAE and GCC members reached AED 22.9 billion during the first quarter of the year. GCC imports accounted for AED 7.4 billion, while exports and re-exports represented AED 7.7 billion each.

Saudi Arabia

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Bahrain

MARKET TRENDS

UAE’s textile industry reached approximately USD 13.2 billion in revenues in 2011

UAE textile imports: UAE has imported most of its textile and textile products in 2011 from the following: CHINA valued at USD 2.2 billlion

The UAE has grown at a phenomenal rate over the years. To date it is has one of the most competitive and diverse economies in the Middle East as it continues to invest in the growth of its non-oil industries. The textile industry in the UAE remains to be one of the most significant industrial sectors, and is one of the biggest contributor of employment in the country. In fact, recent reports reveal that it is the second largest trading industry in the UAE next to oil. Recent reports also say that the UAE controls 5.5 per cent of the world’s textile market, as clothing emerges as the world’s fourth largest trading segment in fashion and apparel. Data released by the Dubai Statistics Centre revealed that in 2011 revenues from UAE textile industry reached approximately USD 13.2 billion (AED 48.5 billion), and recorded an annual cumulative growth of 9.9 per cent between 2006 and 2011. UAE is one of the major textile markets of the world which includes fibres, fabrics, cloth, apparels, outerwear and several others. For an online version, please visit: www.tradeandexportme.com/2014/09/ follow-the-silk-road/

GERMANY with USD 55.8 million

JAPAN

USA

valued at USD 146.2 million

with USD 102 million

INDIA valued at USD 874.7 million

Re-export markets: UAE re-export of textiles and textile products in 2011 was directed to: IRAN with a value of USD 922.9 million

CHINA with USD 10.3 million

Germany USA

with USD 6.6 million

with USD 4.1 million

INDIA with USD 39.9 million

Source: Dubai Statistics Centre

Analysts from market intelligence unit Euromonitor International report the following trends within the UAE apparel-textile industry: Growing number of international apparel brands entering United Arab Emirates

Apparel specialists lead sales but department stores and hypermarkets are gaining ground

The competitive environment in 2012 was characterised by a rising number of brands entering the country, with apparel sales becoming increasingly consolidated towards the end of the review period. Nonetheless, consolidation slowed down during 2012 as a number of high end luxury retailers also entered the market. Moreover, most new apparel brands in the country are franchised by existing leading players.

Consolidation was also linked to on-going retail developments in the United Arab Emirates during the review period due to the growing popularity of shopping malls. Apart from open markets (included within other non-grocery retailers), apparel specialist retailers remains the most important distribution channel for apparel. As shopping is increasingly regarded as a leisure pursuit, both for domestic consumers and the large number of incoming tourists, many consumers are switching from buying from independent specialist retailers to buying products from leading brands in air conditioned shopping malls. In addition, department stores and hypermarkets also continue to gain share.

Rising demand expected during forecast period Forecast period growth will be higher than during the review period in both volume and constant value terms. Growth in apparel will be linked to ongoing economic growth in the United Arab Emirates, with a growing local population as well as rising disposable income levels encouraging consumers to spend more. Growth is also expected to be supported by a further increase in tourism, with the United Arab Emirates remaining a popular shopping hub in the region.

Source: Dubai Trade | Dubai Statistics Centre | Zawya | Euromonitor International

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Local SMEs, Global aspirations Is your SME entering new markets and eyeing international expansion?

In an exciting interview with Trade and Export ME, Sarah Cocker shares exclusive insights on Just Falafel’s worldspanning ambition, her role as Head of Communications and Investor Relations and expansion strategies that can help every SME widen its horizons… 72

What was the biggest challenge that Just Falafel faced when undergoing international expansion? Making sure that we had the right people deployed in geographic and operational areas to support our expansion; this is a crucial area that must be watched and meticulously planned for.

A lot of businesses fail to customise their offer to best suit the expectations of the foreign market they are in. What are key considerations to bear in mind? Research is of paramount importance here as is local knowledge. For example, we are just about to open in India in November and we have already carried out extensive research and revised our core menu to take account of local tastes. Also, you have to assure that you have sound supply chains and of course great partners to set up with you. Even then there will be surprises! Like any new venture, you cannot completely eliminate risk but you can minimise it.

How important is the role of a ‘brand image’ for a company looking at international expansion? Brand image is important from your first day as an operating company until your last. The difficulty of expanding at home or abroad is to keep everyone aligned with your brand and more importantly your brand values. This should come from your core brand values. You have to know very clearly who you are and what you are trying to achieve. Then everything flows from this. At Just Falafel, we are on a journey with our customers to redefine street food; offering eating enjoyment by escaping to old world flavours. We want to do this with the finest ingredients at a good price whilst being part of our community. Our mission is to “Feed the Hungry”, which obviously plays to our intentions as a food group but is core to our objective of working with the UN World Food Programme. Your brand values have to percolate through your organisation otherwise they are hollow and ineffective. For instance, Mohammed Bitar, who is the Managing Director here at Just Falafel, does not want us to clock in and out but to treat the Just Falafel brand as our own. We don’t just come to work and then leave; it’s more like a start-up mentality with pizza feasts and cable TV. If you are working till late, it feels like you are essentially ‘hanging out’ because you have work to get done rather than watching the clock and escaping as soon as you can.

Do you think PR and marketing can be crucial to a company entering a new market? PR and marketing are crucial to a company entering or growing in a market. However, it goes without saying that your product or service

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Listed or not, transparency is key especially with social media effectively acting as a global regulator for companies and their actions. has to be the best otherwise you will soon be found out. Marketing can “boost” awareness of your product but it cannot “make” it a good product.

For companies looking to expand overseas, how important is it to have a division dedicated to investor relations? Is it necessary at all? Investor Relations is most traditionally associated with listed companies. However, in my role as Head of Communications and Investor Relations, my job is to make sure investors, customers, partners and employees all understand what our strategy is and what part they play in that, which is what makes it so fascinating. Investor relations, especially for a listed company, is a sign that the company takes its obligations to shareholders very seriously. However, listed or not, transparency is key especially with social media effectively acting as a global regulator for companies and their actions.

Dealing with local investors can be quite different from international investors. How do you maintain a healthy balance?

Sarah Cocker, Head of Communications and Investor Relations, Just Falafel

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All investors – public, private, local, international – are all people that have invested in your company as they

VIP interview

IP and trademarking are extremely important for companies to protect themselves.

believe in you. Therefore, in any jurisdiction they should be treated equally and properly, despite differing legislative requirements. They are backing you and can move their money elsewhere, so treating them correctly is key.

What top tips would you give SMEs to effectively manage investor relations? Good relationships with investors and banks (risk-partners) are often key to an SME’s success. Building such strong relationships means that these entities are familiarised with the management and personality of the brand really well so you are not starting from zero when you really

need funds, advice and so on. Dubai has several entities that can help SMEs understand their roles and obligations such as the Middle East Investor Relations Society.

How do you use social media and digital platforms to benefit the company’s investment proposition? Social media and digital platforms have been instrumental in Just Falafel’s growth, as you know Facebook has done two cases studies on our use of social media to elevate and engage people with our brand. That said it is just not possible to engage as a company anymore, especially a global company unless

The different stages of an SME’s growth cycle

Within SMEs there are very specific stages of growth, quite similar to those of growing children. In both scenarios, at every stage, there are challenges and, not to forget, huge rewards! Here, we present an overview of the different stages:

Another challenging aspect is hiring the right talent as they are still buying into the company’s story and the management. At this stage, you are essentially playing the balancing act as the wrong hire can negatively affect your small team or if you do not hire quickly enough, your expansion can be affected as you do not have enough manpower get things done.

Baby stage This is the stage wherein your SME is operating one store/ restaurant and you take care of its every need. You oversee every aspect, which is a great learning process and enables you to understand the nuances of your business very well. This stands you in good stead for your next stage. It’s emotionally exhausting, you learn a lot but once you are through it you are wiser and more relaxed leader. Toddler stage At this stage, the business is more mature – operating around three to four stores or restaurants – and requires you to devise operating systems that can oversee your new business and are also strong enough to withstand the next stage of growth which can be domestic or international. Like a toddler, they can run away from you every now and then so you have to keep a close eye and make sure that you don’t run into trouble. You also have to learn at this point how to let go and delegate certain functions and start to hire specialists wherever financially and strategically possible.

Teen stage This is where you need to make certain rules and stick to them. That does not mean being rigid and unwilling to change – because the market place is dynamic. However, putting into place key frameworks, checks and balances and standards will help safeguard future expansion. This is quite frankly where mistakes will be made, as any parent will tell you, as you try to calibrate constantly to make sure your organisation is operating and communicating fluidly and no black holes are developing.

Adulthood stage By the time you’ve reached this stage, all the lessons you have learnt along the way – both good and bad – come to fruition. You start to become more focused and confident of your objectives. If your systems are strong, you can tolerate extremely high rates of growth.

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VIP interview

you have the kind of reach that this medium affords you. These platforms have become an essential tool enabling all parts of your business to communicate. Although such activity needs to be closely managed with the correct guidelines in place. We are often humbled at Just Falafel by the number of people that want to get to know our brand better be that potential investors, franchise partners or customers. We feel honoured by that. By nature of our extensive expansion plans, our brand has been receiving vast exposure. In fact, we currently have two million followers on Facebook.

How do you manage to work around the different cultural sensitivities when doing business overseas? We are very lucky to have the UAE as a base for our HQ because it is an international hub for business and pleasure with literally the whole world in one place. As a result, it is such a great test bed for new concepts and new menu items as you automatically have a global audience. That said we of course seek advice on the ground and do our homework before we enter new markets to make sure we have a deep cultural understanding of our customers’ and partners’ needs and tastes.

Intellectual Property (IP), and its proper management, can be a major concern for investors and other stakeholders. What is the best way to tackle issues surrounding IP? IP and trademarking are extremely important for companies to protect themselves. In many countries a

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FAST FIVE WITH SARAH – quick tips on international expansion • Hire the right people, who have international experience and industry knowledge. • Link up with local partners wherever appropriate – this can be the key to success. • Implement systems that can tolerate increased volumes – be they financial, operational or communications. • Know your strategy and don’t get carried away. Make a strategy and ensure that you can support it either via external partners or with in-house talent. • Do your research but don’t also become paralysed by fear. trademark is obligatory before you can even begin to operate. This can be a costly process and can therefore be a barrier to the global ambitions of smaller SMEs.

In light of the fact that the Just Falafel family is rapidly growing, how important has creating and maintaining the corporate culture been? The beating heart of a company is its core values. Without those a company can be operating but will never achieve true success in my view. The reason being that if you do not know who you are, or what you stand for, how will you be clear on where you are going? This has huge ramifications for your company strategy, policy and employee alignment etc.

Just Falafel is of course a privately owned company, but it has expressed interest in being publicly listed. What are key considerations to bear in mind before taking this big step?

A lot of times you find that SMEs are on a trail to publicly list themselves and see this as the ultimate goal, when in fact being listed does not necessarily suit every business and its owners. For instance, some local businesses do not want to relinquish the control. Often it is the promise of liquidity or marketing purposes that drives this but maintenance of your shareholder base is a large responsibility that requires management time and resources so it should not be undertaken lightly as any slip ups, which you have seen with many companies around the world, can devastate your share price.

For an online version, please visit: www.tradeandexportme.com/2014/09/localsmes-global-aspirations/

FINANCE

Money watch

The team at Western Union Business Solutions shares with us a comprehensive outlook on the three major currencies in the market â&#x20AC;&#x201C; the USD, EUR and GBP.

USD The forecast calls for smoother sailing for the US currency which has been on a tear for the better part of the summer. The US economy has regained a bounce in its step, thanks to the strongest stretch of monthly hiring in more than a decade. Moreover, trends in housing have been positive and could add another tailwind to the economy over the balance of this year. Consumers continue to spend and growth continues to quicken for manufacturing and services companies. Steady signs of a strengthening US economy have caught Federal Reserve officialsâ&#x20AC;&#x2122; eyes and have the

central bank on course to end its bond buying stimulus in October and raise interest rates next year. Mounting US optimism has rewarded the Dollar with its most meaningful rally in a while and has it poised for ongoing appreciation. The buckâ&#x20AC;&#x2122;s outperformance also traces back to weakness abroad in places like Europe and Japan. The Eurozone economy flat-lined during the second quarter while Japan shifted into reverse and contracted nearly seven per cent. Sputtering growth abroad points to more stimulus overseas at a time when the Fed is leaning the other way and contemplating when to raise rates from record lows. Bear in mind, though, that risks remain and lurk near the surface for

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FINANCE

the US Dollar. Take US bond yields, for instance. They help shape how attractive investors perceive the US currency. The yield on the 10-year note recently sank below 2.40 per cent, the lowest in more than a year. The longer yields hover lower, the more of a drag they can be on the Dollar, limiting its upward mobility. Hurdles ahead of the Dollar in September include the monthly jobs report on September 5, and a Federal Reserve meeting on September 16 to 17. Further improvement on the jobs front would keep the Fed on a path to raising rates next year, which at the very least keep a sturdy floor under the Dollar. Critical data September 2: US August ISM Index September 5: US August Nonfarm Payrolls, Unemployment September 12: US August Retail Sales September 17: US August CPI September 17: US September FOMC Announcement

Economic Indicators 3-month deposit: 0.23% GDP: 4.0% (ann.) Q2 Inflation: 2.0% July Unemployment: 6.2% Jul Trade deficit: -US$ 41.5 billion June

EUR What will the end of the third quarter hold? There are a number of variables that will continue to sway currency markets towards the end of the third quarter, but ultimately the euro’s direction should come from the European Central Bank’s monetary policy outlook. It should not be forgotten that the September ECB’s policy announcement will need to be taken in the context of what investors are

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facing in the months ahead. There still remains a high degree of external risk stemming from geopolitical concerns (Ukraine, Iraq, Gaza) as well as the Scottish referendum on the 18th of the month. Furthermore, speculation over the outcome of the ECB’s stress tests/ asset quality review on European banks going into October could sway markets temporarily. Once markets get past geopolitical risk, referendums and stress test results, focus will continue to fall back on where the Eurozone economy is headed and what will need to be done to support it. At the central bank’s August meeting, policy makers acknowledged the external downside growth risks for the economy, but also said that it was too soon to measure any prolonged negative impact. Perhaps that was slightly optimistic. While Russia is only Germany’s eleventh largest trading partner, the government announced that exports fell 15.5 per cent in the first half of this year. The pace of export declines to Russia picked up over the second quarter, which certainly did not help growth figures. Growth in Italy and France turned negative over the second quarter, while Germany’s 0.7 per cent q/q growth rate seen earlier this year dropped to zero per cent. The Eurozone growth outlook remains weak according to economic data. At the end of August flash PMI surveys, which monitor growth in the manufacturing and service sectors, came in below forecast suggesting a slower pace of growth for the Eurozone continues and that the recovery process remains hampered. What was more disturbing was that the inflation component of the PMI survey showed firms cutting prices for the 29th consecutive month, despite the extraordinary easing practices taken by the ECB in June to halt deflationary tendencies. Indeed, the lack of private sector loan growth and slack in the economy remain a primary threat to deflationary tendencies that may already be occurring.

FINANCE

Consumer prices rose 0.4 per cent y/y in July, which is the same level that was seen at the height of the financial crisis in 2009 and well below the central bank’s two per cent target rate. The bigger problem is that inflation has remained low for a long period of time, which can influence inflation expectations. Currency markets are already pricing in the possibility of a move towards quantitative easing measures by the ECB early next year. The month of September might actually see some investors bringing forward the timeline for policy action by the ECB, which would ultimately help to weaken the currency or at least limit its upside from here. Upcoming Critical Events September 01: EUR August Manufacturing PMI September 02: EUR July PPI September 03: EUR August Services PMI and July Retail Trade September 04: EUR ECB Monetary Policy Committee Meeting September 12: EUR July Industrial Production September 15: EUR July Trade Balance September 17: EUR August HICP September 30: EUR August Unemployment

EUR Economic Indicators 3-Month Deposit Rate: 0.19% GDP (annual rate): 0.70% Inflation (annual rate): 0.40% Unemployment: 11.5% Trade Balance: EUR 16.8 billion

GBP Coming into August some analysts were predicting that it is now “game over” for Sterling following some aggressive selling in July. Was

Steady signs of a strengthening US economy have caught Federal Reserve officials’ eyes and have the central bank on course to end its bond buying stimulus in October and raise interest rates next year. this fall really the beginning of a deeper correction lower or just a temporary levelling out? Mark Carney’s latest monetary policy guidance ahead of September’s Scottish Independence vote are currently pointing to more potential losses for the Pound in the coming weeks. Sterling suffered its biggest one-day fall in nearly six months after the Bank of England’s Quarterly Inflation Report in August caused markets to unwind bets on Governor Carney raising interest rates before 2015. The Bank of England said that with wage growth still so weak, it was not in any hurry to begin hiking borrowing costs. The news coincided with figures showing that British wages fell for the first time since 2009, despite the UK’s unemployment rate hitting its lowest point since 2008. More losses for Sterling followed later in August, triggered by unexpectedly weak UK inflation data which gives the BoE more room to hold off on raising rates. Sterling has plunged six cents in the space of just five weeks against the Dollar, coming close to five-month lows towards the end

of August. This has also created problems for Sterling against other currencies including the Euro. The latest UK wage growth and inflation figures will be key focal points again in September while minutes from the BoE’s September meeting, due to be released on September 17, are likely to be overshadowed somewhat by the Scotland vote a day later. Nevertheless, the minutes could help Sterling build part of a recovery. In August, two BoE MPC members voted for higher interest rates. If this 7-2 vote becomes 6-3, and Scotland also votes against breaking away, then the Pound could snap back. Key Events September 03: GB August Services PMI Survey September 04: BoE Interest Rate Decision September 16: GB August Inflation September 17: BoE September Meeting Minutes September 18: Scotland Vote on Independence

Economic Indicators BoE Interest Rate: 0.5% GDP: 0.8% Q2 (q/q) Inflation: 1.6% July Unemployment: 6.4% June

For an online version, please visit: www.tradeandexportme.com/2014/09/ money-watch/

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LEGAL

Selling products in the Middle East and North Africa: opportunity or minefield?

More and more international manufacturers are looking to the MENA region as a burgeoning growth market - and locallybased SMEs will often look to the region’s tried and tested export routes as a traditional way of taking their business to the next level. Yet the linkage between manufacturer and local distributor can be complex and weighted towards local interests. Richard Bell, Partner, Clyde & Co, and Rebecca Soquier, Associate, Clyde & Co, investigate.

With its oil wealth, population growth and strong demand for all manner of industrial and consumer goods, the Middle East and North Africa (MENA) region is an attractive market for many manufacturers. There are, however, potential pitfalls in doing business in the region, particularly when it comes to appointing local agents to distribute products in the region. Many states in the MENA region have enacted commercial agency laws which provide that products may only be distributed in that country by a local company or agent. In some states, the commercial agency laws grant local distributors significant statutory protections which override the express terms of a distribution or agency agreement. This can often come as an unpleasant surprise to manufacturers seeking to re organise their distribution arrangements. For the purposes of this update, we refer to commercial agency agreements and distribution contracts interchangeably as “distribution agreements” (although in some

jurisdictions there are differences between the two terms) and local agents as “distributors”. We will examine the types of commercial agency laws manufacturers typically encounter in the MENA region. For ease of reference, we have classified the different commercial agency regimes into three categories: • Protectionist: this category includes states which have commercial agency laws that heavily favour the local distributor; • Moderate: this category includes states which have commercial agency laws that grant the local distributor a certain degree of statutory protection while maintaining some flexibility for the manufacturer to terminate the distribution agreement and appoint other distributors; • Free market: this category includes states which do not have commercial agency laws and where the courts will generally uphold the manufacturer’s

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LEGAL

contractual right to terminate the distribution agreement and appoint other distributors. For each category, we consider the common traits in the laws, focusing in particular on the rules relating to termination of the agreement, the remedies available to the local distributor and the possibility to contract out of application of the laws. We also highlight some issues manufacturers should be aware of when entering into or terminating a distribution agreement. Protectionist states In countries such as the UAE, Syria, Egypt and Yemen, local distributors who have been granted exclusive distribution rights to a specific product have the right to register their agreement with the state’s commercial agency registry. Upon registration, the local distributor will (with some minor variations) be granted the following rights and protections:

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• Referral of disputes to the local courts: the local courts will have exclusive jurisdiction over any dispute arising under the distribution agreement. A clause providing that disputes will be referred to arbitration or to a court in a foreign jurisdiction will generally be unenforceable. • Application of local law: the local courts will apply the provisions of the national law irrespective of the governing law provisions in the agreement. Governing law clauses providing for the application of a foreign law will be unenforceable. • Restriction on the manufacturer’s right to terminate: the distribution agreement will generally only be able to be terminated by mutual consent or by order of the court.This will be the case even if the agreement has expired in accordance with its terms. Further the manufacturer will not be able to terminate the agreement by giving simple notice, even if this is provided for in the agreement itself and even if the local distributor is in breach. • Right to seek a block on the import of products: where a manufacturer has sought to terminate the distribution agreement and appoint a new distributor, the “registered” local distributor may apply to block the import of products through the new distributor. This can effectively prevent the manufacturer from supplying the market through anyone other than the registered distributor. • Right to compensation: if the manufacturer seeks to terminate the distribution agreement through the courts, the local distributor will be entitled to seek compensation. As a general rule, the courts will award damages to the distributor for direct costs incurred (such as hiring and training staff, advertising costs and finance costs on loan facilities), capital investment in the business (setting up showrooms, shops and service facilities) and, in many cases, loss of profit. In assessing a claim for loss of profit, the courts will usually look at net profit generated by the

In some states, the commercial agency laws grant local distributors significant statutory protections which override the express terms of a distribution or agency agreement. local distributor over previous years and use this as a basis to calculate the net profit that would have been earned had the agreement not been terminated. Often, compensation will be awarded even if the local distributor has breached the terms of the agreement, such as by failing to reach agreed sales targets or failing to adequately promote the products. Moderate states This category includes countries such as Saudi Arabia, Kuwait, Jordan, Iraq, Libya and Bahrain where the commercial agency laws provide certain statutory provisions favourable to local distributors but allow the manufacturer some flexibility to terminate an existing distribution agreement and/or appoint a new distributor. The typical features of these moderate regimes are as follows: • Foreign law and arbitration clauses are generally accepted: as a general rule, the courts will uphold and enforce clauses that provide for a foreign governing law and for disputes to be referred to the courts of a foreign jurisdiction or to arbitration. • Possibility to de-register the agreement upon the expiration of the term: while the local distributor will be entitled to register the

LEGAL

agreement, this does not necessarily prohibit the manufacturer from terminating the agreement. In Saudi Arabia for example, once the term of an agreement has expired, the courts will generally accept that the manufacturer may exercise its right to not renew the agreement without having to provide further justification. • Unlikely for the products to be blocked at customs: there are no legal provisions or mechanisms which allow a local distributor to request a block of the import of products into the state. There may, however, be informal mechanisms that allow the distributor to disrupt the relationship with customers or interfere with market access. • Limited rights for compensation: The local distributor will generally have a right to compensation on the termination or expiry of the distribution agreement but this will usually be limited to damages to actual costs incurred rather than speculative loss of profits or punitive damages. Free market states This category includes countries such as the territory of Palestine and Algeria where there are no specific commercial agency laws and the manufacturer has a largely unfettered right to terminate and appoint distributors in accordance with the terms of the agreement. The typical features of these free market jurisdictions are as follows: • The right to choose foreign law and arbitration clauses as a general rule, the courts will uphold and enforce contractual clauses that provide for a foreign governing law and for disputes to be referred to the courts of a foreign jurisdiction or to arbitration. • The right to terminate the agreement in accordance with the terms of the agreement: the parties are generally allowed to agree on the circumstances under which the agreement may be terminated. Even if the agreement is terminated

without justifiable cause, the courts will not force the manufacturer to remain a party to the agreement, although the distributor may still have a contractual right to claim damages. • A limited right to seek compensation from the manufacturer: should the distributor wish to seek compensation from the manufacturer for breach or wrongful termination of the distribution agreement, damages will be assessed in accordance with general rules of contract law rather than in accordance with some statutory formula. • No right to block imports: the distributor does not have the ability to block the manufacturer from importing products into the market through another distributor. Key issues for manufacturers In entering into and terminating distribution contracts in the MENA region, it is important for manufacturers to be familiar with the applicable laws and seek advice when appropriate. In protectionist states, the application of draconian commercial agency laws can often be avoided by careful drafting of the agreement and due diligence on the distributor. Where an agreement has been registered, however, it will usually be very difficult to terminate and deregister it unless the distributor agrees. While it may be possible for the manufacturer to obtain a court order terminating and deregistering the agreement, court proceedings can be lengthy and expensive and the manufacturer may be ordered to pay compensation to the distributor at the end of the case. Moreover, the distributor may be blocked from accessing the market while the court proceedings are ongoing. As a result, it is important for manufacturers to approach the termination of a distribution agreement in a protectionist jurisdiction very carefully and, where possible, try and negotiate a settlement. In moderate and free market jurisdictions, the manufacturer may be able to adopt a more robust approach,

although caution is still advised. In our experience, regardless of the jurisdiction, a disgruntled distributor will almost always threaten to sue the manufacturer when the prospect of termination is raised. The key is to assess whether, in light of the applicable law, that threat is a credible one and act accordingly. In light of the legal risks involved, manufacturers selling products in across the MENA region are well advised to look at each jurisdiction individually and seek advice before entering into, or terminating a distribution agreement. Author’s note: At the time of writing this article, Oman had just issued a decree amending its commercial agency laws. On its face value, the decree alters Oman’s status from a protectionist state to a moderate state. We will be publishing a separate article on Oman when the effect of the law change is more fully understood.

Further information If you would like further information on any issue raised in this update please contact: Richard Bell, Partner E: richard.bell@clydeco.com Rebecca Soquier, Associate E: rebecca.soquier@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.tradeandexportme.com/2014/09/ selling-products-in-the-middle-east-anopportunity-or-a-minefield/

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TECH TRENDS

Appealing apps for the ardent entrepreneur download now! Rushika Bhatia ,s view...

Citymapper This widely acclaimed app is your perfect companion when travelling to large metropolitan cities. When you are on a business trip, navigating through busy roads and looking for the best means of transportation is the last thing on your mind. This travel app lets you plan your journey from your starting point to your preferred destination; it recommends the best routes, suitable means of getting there (walking, bus, metro, etc.) and predicts the approximate travel time. The app also adds in an extra element for the user with its â&#x20AC;&#x2DC;calories burnedâ&#x20AC;&#x2122; tracking feature. Currently, this app covers major cities such as New York, Boston, Paris, London, Madrid and many more. All in all, use Citymapper to avoid congested areas and enjoy real-time travel data while on-the-go!

Available on: App Store and Google Play Cost: Free.

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TECH TRENDS

Wickr With rising security concerns across the cyber world, Wickr introduces a sound solution. This messaging app allows users to encrypt messages that they send out in order to protect confidential information. Only the intended receiver is able to decrypt these messages. Users also have the option of selecting a certain time period during which their message and media will be available – following this all messages will expire and be deleted. Another advanced feature offered by Wickr is the ‘shredder’, which ensures that all the files you’ve deleted from your device are completely erased. The app requires little to no personal information at the time of signing up, which definitely adds to its appeal!

Available on: App Store and Google Play Cost: Free

Flipboard Flipboard is a fantastic app that brings together all the content you are interested in to one single platform. The app allows users to select their preferred sources of information such as leading magazines and newspapers. You can also select different topics of interest based on which the app will customise stories into your feed. A differentiating feature of Flipboard is its ability to reformat stories in a more attractive way enhancing the overall user experience. Additionally, the app lets you integrate popular social media portals such as Facebook and Twitter into your feed; you can share stories with friends and colleagues online. So, the next time you find yourself dealing with a case of information overload – especially on the Internet – use Flipboard to enjoy relevant and useful content.

Available on: App Store,Google Play, Windows Store and BlackBerry World Cost: Free

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TECH TRENDS

avast! Mobile security With a raft of advanced features, this app is a one-stop-solution for all your security needs. The endless list of user benefits make this app hard to ignore. Download the app to get protection against malware, viruses, phishing and so much more. Some of its notable features include tracking misplaced mobile devices, filtering calls and SMS, blocking unwanted calls, creating backups and accessing data remotely. Note that some of these features are available on a premium paid version – and are of course totally worth it! If you carry a lot of business information on your phone, this app is ideal to stay secure and protected. After all, it’s better to be safe than sorry!

Available through: Google Play Cost: Free

Ministry of Labour (MOL) UAE This app is particularly useful for those residing in the UAE. The handy app offers functions such as renewal of labour cards, processing payments for work permits, enabling electronic absconding case registrations and much more. Some of these responsibilities can take up a huge chunk of a business owner’s time and being able to complete them through a mobile app is definitely a relief! For an online version, please visit: www.smeadvisor.com/2014/09/appealingapps-download-now/

Available through: Google Play and Apple Store Cost: Free

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TECH TRENDS

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