SME Advisor Middle East - August 2013 by SME Advisor Middle East

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Publisher Dominic De Sousa Group COO Nadeem Hood Managing Director Richard Judd richard.judd@cpimediagroup.com +971 4 440 9126 EDITORIAL Senior Editor Paul Godfrey paul.godfrey@cpimediagroup.com +971 4 440 9105 Sub Editor Rushika Bhatia rushika.bhatia@cpimediagroup.com +971 4 440 9115 ADVERTISING Commercial Director Chris Stevenson chris.stevenson@cpimediagroup.com +971 4 440 9138 Media Sales Executive Emma Hughes emma.hughes@cpimediagroup.com +971 4 440 9120 Events Sponsorship Manager Gill Fairclough gill.fairclough@cpimediagroup.com +971 4 440 9148 PRODUCTION AND DESIGN Production Manager James P Tharian james.tharian@cpidmediagroup.com +971 4 440 9146 Circulation Manager Rajeesh M rajeesh.nair@cpimediagroup.com +971 4 440 9147 Head of Design Fahed Sabbagh fahed.sabbagh@cpimediagroup.com +971 4 440 9132 Designer Froilan A. Cosgafa IV froilan.cosgafa@cpimediagroup.com +971 4 440 9107 Photographer Jay Colina Abdul Kader Pattambi DIGITAL SERVICES www.smeadvisor.com Digital Services Manager Tristan Troy Maagma Web Developer Abey Mascreen online@cpidubai.com +971 4 440 9100 Published by

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About as vital as the air you breathe...

t’s tempting to assume that Corporate Governance is something that concerns only big - and probably publicly-listed - businesses. Yet the reality is that nothing could be further from the truth. Corporate Governance impacts just about every aspect of how a business works, treats its staff and communicates with its key stakeholders. That’s the kind of agenda that we ignore at our peril, whether we’re running a small outlet that’s looking to build its profile or a burgeoning, mature business that’s aspiring to a NASDAQ listing. In short, it’s a vital topic for every SME - hence the title of our conference on September 4, ‘The Business of Governance’. Corporate Governance is about best practice - about setting benchmarks that become the roadmap for your business and invest it with quality, credibility and consistency. It’s about promoting transparency, fairness and a level playing field mentality that reassures everyone who interacts with the company. In short, best practice can supercharge your business because it impacts the way you manage all your crucial operations - and that includes using key accounting and financial procedures. When it comes to best practice, the moral of the story is that the sooner you start, the better your business will be and the easier and more natural it will be to make those high standards a core part of everything the business does in the future. Clearly, all this isn’t something you can dismiss because you feel the firm isn’t big enough yet or because you think no-one will notice if a few procedures and relationships aren’t working as well as they might. There’s another factor here, too. Corporate Governance embraces many elements that are actually legally enforceable, such as the all-important Health & Safety agenda, the need to keep local partners and majority shareholders fully in the loop and the importance of creating a clear and explicit line of accountability for key directors, defining precisely who’s responsible for what. Not to mention compliance with Fire hazard procedures, the presence of correct Property insurance and the safety of key items of equipment. All too many SMEs find themselves involved in highly costly court cases as a direct result of negligence in these areas, whether wilful or not. The reality is that those SMEs who adopt good Corporate Governance will find it much easier to do all those things that ‘big’ businesses do, not least of which is complying with the requirements of the new Companies Act – which enforces the role of Corporate Governance audit for all publicly-listed firms. You might think this scenario is too far away to worry about - but with your operational procedures reflecting best practice, the Premier league may not be so far away… I hope as many of you as possible will register to attend The Business of Governance! Visit smeadvisor.com/events/successseries. Paul Godfrey Senior Editor Talk to us: E-mail: paul.godfrey@cpimediagroup.com Facebook: www.facebook.com/SMEadvisor

Twitter: @SMEadvisorME LinkedIn group: www.tinyurl.com/smeadvisorme

August 2013

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Issue 93 August 2013

CONTENTS

74 Jai Ho! Local SMEs and the India connection

Editor’s note 03 Paul Godfrey on why Corporate Governance isn’t just for the big names. SHOPTALK 10 News and developments impacting SMEs in the region. FINANCE FOCUS 14 vices.

The latest financing opportunities for SMEs and allied financial ser-

SME ABOUT TOWN 18

Key events attended by SME owners and managers.

BANKING FOR BUSINESS 22

Cyber risks – we review the proactive strategies that can make a world of difference

Movers & Shakers 26 Mom in a million: an interview with MomSouq founder Mona Tavassoli … 30

Wrapt is an extraordinary niche concept: we meet founder Ayesha Buti Moh’d Al Meheeri.

26 August 2013

CONTENTS

managing risk 36 Rob Haden explains how an SME can overcome the critical ‘hotspot’ challenges in its growth. Getting finance 40

A question of priorities: a masterclass from the Alchemy Network’s Simon Hodges on the key steps to getting finance.

44 Second wind: Co-Founder and Managing Director of Eureeca.com, Sam Quawasmi explains what to do when the first batch of finance has been spent…

Workspace 48 The power of technology: Servcorp’s Laudy Lahdo on how a business can supercharge its profits with the raft of modern technology solutions. 52

Sage advice: smart software can help yuor SME raise the bar across all its financial operations. We speak to the experts.

Marketing 56 Fast track: advice from LinkedIn on how to position an effective social media initiative in your promotional mix. Legal 60 Top tips for handling disputes: recommendations from Richard Bell and James Fox of Clyde & Co. Industry watch 62 A focus on retail apparel markets. 63

Business expectations for Q3 2013.

Global Islamic Economy Summit.

Real estate snapshot.

Social media in the Middle East.

Technology on the move.

Technology for business 70 IT trends and tools that are reshaping business in the region. The next level 74 A golden opportunity?: a detailed review of the Indian economy/ Will it be the right time for your SME to invest?

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SHOPTALK

Recognition for SME exporters

UAE

Recognition for SME exporters

op exporting members between January and May 2013 were honoured by Dubai Chamber of Commerce and Industry in an exclusive SME Exporter of the Month ceremony recently. The SME Exporter of the Month initiative was launched in 2009 by Dubai Chamber under the title ‘SME Exporter of the Quarter.’ However, due to its popularity and success, the initiative was changed in 2010 to become a monthly occasion.

New branch in pipeline for DED The Department of Economic Development (DED) in Dubai announced the closure of its Bani Yas branch and urged customers to use the SmartPhone app – available for free upload via Apple Store (dubaided) for their transactions. Alternatively, customers can access

Dubai Chamber launched the SME Exporter of the Month initiative in 2009, under the name SME Exporter of the Quarter. The initiative was changed in 2010 to become a monthly event due to its popularity and success. His Excellency Hamad Buamim, Director General, Dubai Chamber, congratulated the companies and presented their representatives with a certificate of recognition and an SME Exporter of the Month trophy. The recognised companies are: ME Global International for obtaining the highest export value in January; Royal Golden General Trading for achieving the highest number of markets exported to in February; DIA 33, a recent startup which reached the highest export value in March; Schneider Electric for applying for the highest number of certificates of origin

eServices on DED’s website dubaided.gov.ae, or visit the other DED branches to complete their transactions. Customers have easier access to services with over 95 per cent of the Business Registration and Licensing (BRL) services of DED now being available online. DED also revealed plans to expand its customer service network with new branches, including one to be opened soon in Bur Dubai. Customers can

in April; and Ashour Trading FZCO for being the company with the highest export growth rate in May. Expressing the importance of the SME Exporter of the month initiative, HE Buamim said: “Since the inception of our SME Exporter of the Month initiative Dubai Chamber has awarded more than 40 companies. These have been high performing enterprises, which are leading by example and helping to drive growth in Dubai’s trade sector.” He continued, “Trade is a pillar of Dubai’s economy and our SME members play an essential role in its growth and development through their exports and re-exports. Our SME Exporter of the Month initiative encourages our members to improve their performance, which in turn helps to accelerate the emirate’s economic growth.” Top officials of the recipient companies expressed their gratitude and thanked Dubai Chamber for the support provided to them. The recognition that they receive through the platform encourages positive and healthy competition and helps to increase the overall competitiveness of Dubai businesses. Previously recognised companies include: Mercury General Trading Co. LLC (September 2012); Marina Gulf Trading Co. LLC (October 2012); Gerab National Enterprises (November 2012); Alacrity FZCO (December 2012).

continue to visit the main branch in Business Village (Deira) and the branch offices in Al Twar, Dubai Mall and Tecom (for Tecomrelated transactions only) after booking an online appointment. “The Department of Economic Development is streamlining its services and facilitating transactions across diverse channels including SmartPhone app, eServices, branch offices, customer service centres

and legal offices. Such measures are part of DED’s role in enhancing the ease and efficiency of doing business in Dubai,” said Abdullah Al Ka’abi, Director of Customer Relations at DED. Al Ka’abi added that DED will open a new branch in Bur Dubai soon and will explore more service options in line with its strategy to improve service quality and offer more windows to customers.

Growing consumer awareness

Abdul Aziz Bin Hathboor, Director of Consumer Protection at the Commercial Compliance & Consumer Protection (CCCP) sector, in DED

he Department of Economic Development reported a 38 per cent rise in consumer complaints during the first half of 2013, in comparison to the same period in 2012. Furthermore, between the first two quarters of 2013

consumer complaints rose 27 per cent from 2,390 to 3,046. These rising numbers reflect the improved awareness on consumer rights and consumer protection systems among the public and retailers. The highest number of complaints (1,837) was about disagreement between the retailer and consumer on the terms and conditions of sale. Additionally, there were 1,161 complaints of damage and 375 regarding fraudulent practices. Other complaints were mostly regarding fees and exchange and charging more than the advertised price attracted the lowest number of complaints. Abdul Aziz Bin Hathboor, Director of Consumer Protection at the Commercial Compliance & Consumer Protection (CCCP) sector, in DED commented: “Consumer awareness in Dubai is definitely on the rise and the workshops and campaigns being

regularly conducted by the Department of Economic Development have contributed substantially to encouraging consumers to raise issues and seek solutions.” Bin Hathboor added that DED has also opened more avenues through which consumers can voice their opinion and make smart purchase decisions. “The Commercial Compliance and Consumer Protection sector reaches out to consumers across all available platforms including social media. Recently we have also launched Sallety.ae, a Web and App interface where consumers can search for products and compare prices in real time and also make online complaints.” “In most cases the complaints we receive are disposed within four working days. Subsequent to launching Sallety.ae we expect to receive a stronger feedback from traders and consumers, and from our side we will conduct more awareness programmes not only in the malls and leading outlets but also in the traditional markets,” Bin Hathboor said.

Enhancing your shopping experience Consumers can now enjoy added ease while shopping with the launch of a new website and SmartPhone app by the Department of Economic Development (DED) in Dubai. The website, www.sallety.ae, enables consumers to browse through the shelves of leading hypermarkets and stores in Dubai, compare brands as well as price. This in turn helps consumers make their purchase decisions anywhere and at any time. Sallety.ae, the first of its kind in the region, integrates advanced technology to enhance customer convenience and strengthen Dubai’s reputation as a shopping destination. The SmartPhone application, available on the iPhone and

Android platform, will further expand ease of access and utility of the new facility. The website offers several great features to its users – consumers can search by their preferred brand, price or outlet to find all options available and add items to their shopping carts online to find the net price of goods purchased; consumers can stay updated with the mall-wide as well as storewise promotions and offers available on the website; and consumers can submit any complaints they have online. “The Department of Economic Development is looking at all possible service channels where we can integrate smart technology to enhance customer convenience in line with

the vision of His Highness Sheikh Mohammed Bin Rashid Al Maktoum, UAE Vice President and Prime Minister and Ruler of Dubai to transform Dubai into an innovative m-Government. Sallety.ae will complement our efforts in this direction,” said His Excellency Sami Al

Qamzi, Director General, DED. “Sallety.ae brings fastgrowing Internet and mobile technology closer to our daily lives. Since the UAE has a high broadband and SmartPhone penetration rate Sallety.ae will be a handy shopping option for a significant section of the resident population,” remarked Omar Bushahab, Chief Executive Officer, Commercial Compliance and Consumer Protection (CCCP) sector in DED. CCCP will work closely with the retail outlets listed on Sallety.ae to update all information available on the website, including the prices of items, every week and provide accurate information to consumers. More outlets and items will also be added in due course to make the website as comprehensive as possible.

August 2013

SHOPTALK

UAE

New opportunities: DBWC’s new collaboration

ubai Business Women Council (DBWC) entered into a strategic Partnership Agreement with (PwC) – one of the world’s largest professional services firm. Through the agreement, both parties will collaborate on cross-functional business development and provide mutual access to their services. They will use their respective social media channels and portals to jointly promote events, trainings, surveys, and news. Raja Easa Saleh Al Gurg, President, Dubai Business Women Council, said: “Through our partnership with PwC we look forward to opening up various growth opportunities for our members who continue to make value contributions to the socioeconomic development of the UAE through their

In focus Dubai Chamber Dubai Chamber of Commerce and Industry enjoyed solid and consistent growth across all its operations in the first half of 2013. In comparison to the same period in 2012, it saw its members’ exports and re-exports activities increase by seven per cent. The half year figures covering January 1 to June 30, 2013 highlight the continued strong performance of Dubai’s trade sector and the overall positive business environment and confidence of the business community. According to the figures, Dubai Chamber members’ exports and re-exports

Raja Easa Saleh Al Gurg, President, Dubai Business Women Council

roles as inspiring business leaders. By joining forces with PwC, we can also instill a deeper sense of professionalism

amounted to AED 145.2 billion between January and June 2013, compared to AED 136.2 billion during the same period in 2012. Some of the key highlights are: • The monthly total of May 2013 was the highest of the period, reaching AED 25.4 billion, while January was the lowest with a value of AED 23.5 billion. • During the same period, Dubai Chamber issued a total of 418,000 certificates of origin (COs), compared to 372,000 COs in the first half of 2012, marking a 12.2 per cent increase. Again, May was the month with the highest number of certificates issued (74,000), while February was the month with the lowest (63,000). • Between January and June, a total of 7,153 new

and global awareness through PwC’s extensive multinational experiences across multiple industries. Our partnership can make a significant impact in promoting women entrepreneurship and empowering women to achieve their full potential. We look forward to a long and highly productive relationship with PwC.” Founded in 2002, DBWC motivates women to be productive members of the society, while encouraging role models to rise up from the ranks and inspire other women around the world, especially in the Arab region, to discover their true potential. DBWC organises the high-profile monthly event ‘Network Majlis’ to provide information about the latest knowledge, skills and best practices for women entrepreneurs and leaders.

members joined Dubai Chamber, registering a 5.5 per cent increase on the same period in 2012 when 6,780 new members joined. This increased the total number of Dubai Chamber members to over 145,000 by the end of June. Other activities

Dubai Chamber has been continuously proactive in its global initiatives through delegations and active participation in events around the world. Dubai Chamber’s half year figures reflect that during this time the organisation received 139 international delegations, comprised of 503 delegates, including government officials and businessmen, recording an increase of 15 per cent compared to the number of visiting

delegations recorded in the same period last year. Apart from that, Dubai Chamber participated in 29 events around the world, in 22 cities in 20 countries, including the United Kingdom, France, Kazakhstan, Uzbekistan, Tajikistan, Jordan, Poland, Portugal, Qatar, Uganda, Colombia and others, with the objective of promoting Dubai as an international business hub and profitable destination for foreign investment. In the first half of this year, Dubai Chamber organised trade missions to the Commonwealth of Independent States, visiting Kazakhstan and Uzbekistan to discuss investment opportunities in several promising sectors. Each mission included more than 20 businessmen from various industry sectors.

Top honour for DSG Department

During the charity evening

Dubai SME supports key charitable cause

ubai SME raised AED one million at a charity evening held recently with the Emirates Red Crescent as part of the ‘Dress One Million Children’ campaign launched by His Highness Sheikh Mohammed Bin Rashid Al Maktoum, UAE Vice President and Prime Minister and Ruler of Dubai to distribute new clothes to underprivileged children across the world. The ‘Dress One Million Children’ campaign continued till the ‘Emirati Humanitarian Work Day,’ which fell on the 19th day of Ramadan to commemorate the death anniversary of His Highness Sheikh Zayed Bin Sultan Al Nahyan, the founding father of the UAE. During the charity evening, His Excellency Sami Al Qamzi, Director General of DED, announced that the Department of Economic Development and its agencies will make this an annual event. The money collected every year will go towards a deserving charity initiative launched in the UAE. Furthermore, as a part of the programme, religious scholar, Saleh Al Maghamsi, shared valuable insights on the importance of charity. Over 200 people - representing Dubai SME members, companies in SME100, the entrepreneur community and government

departments - attended the charity evening and generously contributed towards the initiative. Abdul Baset Al Janahi, Chief Executive Officer of Dubai SME commented that supporting the Emirati Humanitarian Work Day demonstrates that Dubai SME is not solely focused on entrepreneurship development but also on strengthening the social and humanitarian foundations of the UAE. “Our support to the Dress One Million Children campaign is significant in many ways. It underlines the UAE’s leadership as a donor country and the decision of His Highness Sheikh Mohammed Bin Rashid to increase the number of beneficiaries of the campaign shows the success of the initiative as well as the generosity of the UAE community,” added Al Janahi. The decision to expand the campaign was announced after the AED 40 million target was reached during the first few days of Ramadan. “The campaign has gone beyond all expectations and now we plan to distribute new clothes to children in 46 countries. It shows the substantial impact of the vision of His Highness Sheikh Mohammed Bin Rashid Al Maktoum on communities around the world,” said Mohammed Abdullah Al Zarouni, Director of the Dubai branch of Emirates Red Crescent. Al Zarouni added that new clothes have been distributed to children across Jordan, Uganda, Somalia, Senegal, Iraq, Erbil, Vietnam, Egypt, Yemen, Ethiopia, Zanzibar, Bosnia, Lebanon and the Philippines as part of the campaign with special focus being given to children in Syria.

During the United Nations Public Service Awards 2013, Dubai Smart Government (DSG) Department won an international award under the category ‘Promoting Whole-of-Government Approaches in the Information Age’ for the Western Asia region. This international recognition of excellence in public service was presented to Dubai Smart Government by Wu Hongbo, Under-Secretary General for Economic & Social Affairs at the United Nations (UN). The UN Public Service Awards 2013 is an international event designed to promote and support innovations in public service delivery worldwide. The awards are open to public organisations of all kinds – including government and public-private partnerships involved in delivering services to citizens. The winners of these awards are honoured with a trophy and a certificate of recognition during the UN Public Service Awards ceremony. A team from the Communication and Business Development Department received the award during a special ceremony in Bahrain on June 23, 2013 – United Nations Public Service Day. Previously, the team gave a presentation to the visitors of the exhibition, held on the sidelines of the ceremony, which focused on the electronic shared services (ESS) and SmartPhone applications provided by DSG to government entities in addition to the official portal of the Government of Dubai (dubai.ae), which offers eServices to Dubai government entities in one place. Ahmad Bin Humaidan, DirectorGeneral at Dubai Smart Government, said: “This award is the fruit of our co-operation with our partners of government entities in the eTransformation process since its start in 2000. We were also delighted to note that the UN Secretary-General Ban Ki-Moon in his welcome message on the occasion of United Nations Public Service Day said that the winners of the UN Public Service Award have set an example in improving delivery, promoting accountability and that our innovative approach to public governance was building a better future for all.”

August 2013

FINANCE FOCUS

Financial outlook: Dunia Finance

unia Finance LLC (Dunia) announced its unaudited half year financial results for the six month period ending 30 June 2013. Dunia’s customer-centric strategy drove continued success over the first half of 2013, with 23 per cent growth in customer numbers to 125,267. Customer deposits increased 36 per cent, to AED 436.7 million, which compares to deposits of AED 321.7 million in H1 2012. New customer acquisition, alongside a deepening of relationships with existing customers, helped Dunia deliver strong top line revenue and income growth. Key highlights of the financial results are:

1. During the first half, the company saw revenues of AED 166.4 million, up 27 per cent from AED 131.3 million, and net profit of AED 55.6 million, up 91 per cent from AED 29.1 million for the same period last year. Dunia’s growth was also underpinned by

on-going careful management of the company’s expenses, which remained broadly flat at 69.2 million versus AED 68.2 million in the prior year. 2. Dunia’s balance sheet was further strengthened over the period. The company saw 30.8 per cent growth in total customer asset and liability footings, which reached AED 1,287 million as of 30 June 2013, up from AED 984.1 million at the same time last year. 3. The company continues with its sustainable, prudent approach to future growth, allowing for greater predictability in Dunia’s operational profitability. The approach involves a combination of paced top line revenue development and strategic management of costs. 4. During the first half of 2013, Dunia’s cost of credit decreased from 11 per cent in H1 2012 to 10.3 per cent, representing an improvement in the quality of the overall portfolio. During this period Dunia recorded positive operating leverage of 25.4 per cent over the same period in the prior year, which resulted in Dunia’s cost income ratio improving to an efficient 41.6 per cent from 52 per cent in the prior period. 5. Dunia’s capital adequacy stood at a healthy 37 per cent at the end of June 2013, which remains well above the regulatory requirement, and underlines the company’s focus on sound capital management, while ensuring adequate room for growth. 6. The company announced an interim dividend of AED 16 per share simultaneously with the announcement of the half year financial results for the six months ended June 30, 2013. This interim dividend amount is also equal to the full year dividend of AED 16 per share for financial year 2012, which reflects its strong financial results, continually improving capital base and confidence of continued strong results in the remainder of 2013.

Added advantage for your SME! What are the two most important needs of business customers? Value for money and reliability. Understanding these needs, du has launched its new offering – Business Advantage Plan – a special plan for SMEs. “Business Advantage Plan is the ultimate loyalty rewards scheme for SME customers – it just keeps getting better, empowering our SME customers more than before. It is an indispensable tool that businesses can’t do without. By opting for Business Advantage Plan, SME owners will be making an informed decision of going with a plan that understands their needs and offers them maximum value,” said Fahad Al Hassawi, Chief Commercial Officer, du. By subscribing to Business Advantage Plan, SMEs can enjoy five years of incremental benefits, price transparency including lower monthly fees, and more national and international minutes. Most importantly, the Plan also provides a commitment of ‘the longer you stay, the lesser you pay’ to its SME Customers. With Business Advantage Plan, SME customers get even more benefits from their monthly spend and the benefits only keep increasing over time. Every year the benefits on each of the Business Advantage Plan (100, 200 and 400) keep increasing. While at the same time, the SME customers’ monthly fee keeps reducing thereby lowering their telecom spend year after year automatically. The benefits of Business Advantage Plan include year on year for five years- lower monthly fee, more national minutes, more international minutes, more national SMS, more international SMS, more data allowance, within the customer’s specified Closed User Group. What’s more? The discounted rates at the end of year five stay increase from 50 per cent to 70 per cent. Business Advantage Plan is also a sound choice for customers with an existing Business Super Plan who can subscribe to it completely free of charge, by sending an SMS “BA” to 1244. For more information, please visit www.du.ae/businessadvantage.

New SME expert in MENA

small business expert firm from India, Possible Business Solutions, is looking to shift its focus to the MENA region after

running operations in India since 1999. Possible currently has three clients in GCC; two in the UAE and one in Muscat,

Oman and it now plans to cover MENA. Rajiv Bakshi, CEO, says, “Our basic services are business growth advisory and we advise on every aspect of business be it sales, marketing, purchase, accounts and finance, recruitment and training, production planning, R&D, quality; irrespective of size, markets, industry and businesses. Strategy formulation and execution are our forte.” He adds, “Countless times we have heard business owners say, ‘I wish I had the wherewithal to be system oriented and build a professional organisation, but I just can’t do it myself.’ That’s where we come in. All our clients are a force

to reckon within the industry. They grow many times over in a very short period.” Testimonials

“Understanding problems, with their decades of business and leadership experience, Possible provided us a platform to grow through additional skills, specific strategies, review system and work delegation,” says Mustafa Bootwala, CMD Metro International, Dubai. “The application of these ideas is different for every company and Possible knows it the best,” says Fahad Mohammed Riaz of Mohammed Riaz and Associates, Muscat, who is undergoing this programme.

Leading honours for ADCB Abu Dhabi Commercial Bank (ADCB) was awarded “Highly Commended Trade Bank in MENA” highlighting its Trade Finance offering. The Bank received this recognition by Trade Finance Magazine during a Trade Finance Awards Ceremony held at the Sheraton Park Lane Hotel, London. ADCB is the first UAE local bank to be amongst the top five ranking banks in the MENA region for its Trade Finance services. The Awards for Excellence by Trade Finance Magazine is an annual landmark poll of the best performing trade finance institutions as voted for by the industry. “The Awards for Excellence by Trade Finance is one of the most prestigious awards in the industry. Over the last twelve months we have worked tirelessly to enhance our offering and to raise the quality and standard of Trade Finance in the UAE and broader region. It is a great honour, and truly rewarding to receive recognition from our peers for our advancements in this regard. At ADCB we understand our clients’ needs and we remain committed to delivering best-in-class products to the market,” commented Krishnakumar Duraiswamy, Head of Trade Finance at ADCB. ADCB’s comprehensive raft of Trade Finance products and solutions are structured around clients’ business needs in imports, exports, re-exports, guarantees and short-term financing. ADCB’s Trade Finance product suite includes

letters of credit, letters of guarantee, confirmation of documentation credits and documentary credit collection, receivables financing and trust receipts. ADCB also provides customers with structured trade solutions and assistance with Export Credit Agencies backed financing. With due emphasis on online real-time channels, the client has access to end-to-end visibility of transaction and account status. In 2010, ADCB launched its online Trade Finance platform, ProTrade, enabling customers to manage their trade transactions from anywhere at any time while at the same time reduces trade cycles, automate supply chains and reduce operating costs, making international trade financing quick, easy and secure.

August 2013

FINANCE FOCUS

The broker’s achievement was displayed prominently at the iconic NASDAQ Tower in New York, New York, US.

Retail broker of the month

ASDAQ Dubai awarded the ‘Retail Broker of the Month

Award’ for the month of June 2013 to the brokerage house – Al Ramz Securities. The value of retail trade handled by Al Ramz for the said period topped USD 2.7 million to account for 32.11 per cent of the total value handled by NASDAQ Dubai members. NASDAQ Dubai’s Retail Broker of the Month Award

recognises the member that is most active in trading on behalf of its retail clients on a monthly basis. Al Ramz has also topped retail trade at the exchange for two consecutive months last year (July and August). Furthermore, Al Ramz led retail trade in the UAE financial markets overall in 2012. “Over half a million regional individual investors and thousands of institutional investors worldwide trade on NASDAQ Dubai so it is indeed an honour for Al Ramz to be once again named by the exchange as its top retail broker of the month. With confidence steadily returning to the local and regional markets, Al Ramz aims to facilitate reenergized trade as the next half of

2013 progresses,” said Mohammad Al Mortada Al Dandashi, Partner & Managing Director, Al Ramz Securities. NASDAQ Dubai enables regional issuers to access regional and international investments. It covers regions including the UAE and the rest of the Gulf Cooperation Council, the wider Middle East and North Africa, Turkey, and the Indian sub-continent. Al Ramz Securities is a member of the Abu Dhabi Securities Exchange (ADX), the Dubai Financial Market (DFM) and NASDAQ Dubai. The Abu Dhabi -based company provides retail and institutional services via branches in Abu Dhabi, Al Ain and Dubai. Al Ramz also provides Margin Trading services for its customers.

Top socially-advanced countries A new Index now provides a ranking of a group of 50 countries according to their social and environmental performance. The Social Progress Index, designed by Professor Michael Porter and the Social Progress Imperative, ranked the UAE as the 19th most socially advanced country in the world. Apart from the UAE, four other countries from the MENA region included Tunisia (28th), Jordan (31st), Morocco (37th), and Egypt (40th). Furthermore, the Index revealed that Sweden is the most socially advanced country globally, followed by Britain at the second position, Germany at fifth, the United States at sixth, and Japan at eighth. The Index was in collaboration with economists at the Massachusetts Institute of Technology (MIT) as well as leading international organisations in social entrepreneurship, business, philanthropy, and academia – Deloitte, Cisco, Skoll Foundation, Fundación AVINA, and Compartamos Banco.

The Social Progress Index is different because it is based completely on social and environmental measures which cover basic human needs, foundations of wellbeing and opportunity. It highlights the areas where nations should focus their efforts in order to improve the wellbeing of their people. “The ‘Arab Spring’ of 2011 and the challenges in Mexico over the last decade have illustrated the shortcomings of economic growth as a proxy for social progress,” said Professor Porter. “In both business and economic development, our understanding of success has been incomplete.” “The Social Progress Index shows that countries with similar levels of GDP can have very different levels of social progress,” explained Michael Green, Executive Director of the Social Progress Imperative. “We expect some surprising transfers of knowledge in the next few years, as standout performers – among

government, civil society, and business – document and share their approaches.” The Social Progress Index, the first project of the Social Progress Imperative, is part of a broader range of initiatives aiming to guide the investment and policy decisions of governments, the private sector, and civil society to have a positive influence on people’s lives.

August 2013

SME ABOUT TOWN

du’s summer training programme

u welcomed a new batch of UAE nationals to the fifth edition of its summer training programme reflecting its dedication towards the UAE community as well as furthering the career prospects of Emiratis. The trainees include high school, Diploma and Bachelor degree students, as well as university graduates. The two-month training programme will

see the trainees join various divisions within du including HR, IT, Operations, Corporate Affairs and Enterprise Sales. Additionally, they will each have individual training plans that will be overseen by du’s National Development team and their Line Manager. Yaser Obaid, Senior Vice President of Human Resources, du, said: “We believe that the most valuable job skills are gained through real-life work experiences, and that, by providing Emiratis with these skills early on, they will have improved job prospects and better workplace integration. This is precisely why we created an allencompassing and comprehensive training programme that covers real-life issues across a wide range of departments and occupations. Our summer training programme is in line with our mission to empower young UAE nationals. We wish them every success on the programme.” du’s summer training programme isn’t all that it has lined up. It also continues

to offer internship opportunities to 30 students annually from universities all across the UAE. du is honoured to support the Majid Bin Mohammed UAE National Training Initiative - the company has participated in it as a strategic partner since 2012. “We are proud to support the Majid Bin Mohammed UAE National Training Initiative, as a demonstration of our commitment towards Emiratisation. The Initiative is a positive effort towards helping Emirati graduates gain industry experience, and we are eager to offer them this as part of our responsibility towards society,” added Yaser Obaid. For 2013, du has signed a contract to take on an additional five trainees, who will work with du for three months. Each trainee will receive a structured work plan that will be overseen and assessed by du’s Human Resources department and the trainee’s line manager. Each work plan is designed to develop personal and professional skills, such as building up their confidence, making them responsible, and developing their communication and presentation skills.

‘The Business of Governance’ - Unlock Best Practice With the new Companies Law in place, the issue of Corporate Governance is becoming increasingly critical for SMEs. Many of the factors coming under the Governance umbrella fall within the jurisdiction of criminal (not civil) law and it’s vital that they’re performed assiduously and well. The Business of Governance assesses the crucial areas of the Governance agenda, looking at factors such as: • The role of internal audit - when to audit, and how • The responsibilities of owner and Board • Obligations to stakeholders • Ensuring transparency • Governance and the family business • Managing risk within the Governance framework • The importance of audited accounts

Discussions are presented by leading names in the field, comprising a wealth of first-hand knowledge, with contributions from the accountancy, banking, consultant, CEO and shareholder communities. The ambition of the Business of Governance is to reach hard, practical

conclusions of real value to business owners and their many stakeholder groups. The event will be held on September 4, 2013 at Habtoor Grand Beach Resort and Spa, Dubai. For more information, please visit: www.smeadvisor.com/ events/successseries/.

Sustainability award for businesses

he prestigious award for innovation in renewable energy and sustainability, the Zayed Future Energy Prize, is awarded annually in five categories (large corporation, small and medium enterprise, nongovernmental organisation,

Sir Richard Branson, Founder of the Virgin Group

lifetime achievement and high schools) to companies, schools and individuals that have made significant contributions to the future of energy, sustainability and climate change. In a recent announcement, it was revealed that Sir Richard Branson, Founder of the Virgin Group, and Ratan N. Tata, Chairman Emeritus, Tata Sons, will be a part of the Zayed Future Energy Prize’s Jury. The Zayed Future Energy Prize Jury meeting is the culmination of a four tier process following the close of submissions. This process involves the due diligence conducted by the Prize research and analysis partners. Furthermore, the first shortlist is done during the meeting of the Review Committee, the second and final shortlist during the

biz-group expands to KSA The business training and development company, biz-group, partnered with Saudi-based management consultancy Fanar Al-Khaleej to bring its biz-ability suite of executive training solutions to the Eastern Province. The agreement came in line with increased domestic demand - particularly within the energy, banking, telecommunications and construction sectors - for training solutions that can improve the way companies approach talent retention, innovation and change management. Fanar Al-Khaleej, running operations for

more than three years in the Kingdom, provides companies with tailor-made business services including market feasibility studies, project operation audits and strategy planning. Under the partnership agreement with biz-group, the company will have exclusive rights to promote three of biz-ability’s internationally-accredited training programmes – Multipliers Leadership, ExperienceChange and Design Thinker – within the Kingdom. However, trainings will continue to be implemented and delivered by biz-ability’s certified consultants.

meeting of the Selection Committee. It concludes with the Jury deliberations where the winners of the Prize are selected. Sir Richard Branson was invited to the Jury for his commitment to identifying entrepreneurial solutions for provoking positive change in the world. Virgin Unite, the non-profit foundation of the Virgin Group established in 2004, tackles tough social and environmental problems and strives to make business a force for good. Ratan N. Tata was the Chairman of Tata Sons, the holding company of the Tata Group, for 21 years until his retirement in 2012. An avid environmentalist and philanthropist, Tata is the chairman of two of the largest private-sector-backed humanitarian trusts in India

and a member of the Indian Prime Minister’s Council on Trade and Industry making him an ideal fit for the role. Chaired by His Excellency Ólafur Ragnar Grímsson, President of the Republic of Iceland, the 2014 judging panel will also include His Excellency Mohamed Nasheed, former President of the Republic of the Maldives; His Excellency Dr. Han Seung-soo, former Prime Minister of Korea; Her Excellency Elizabeth Dipuo Peters, Minister of Transportation and former Minister of Energy for South Africa; Adnan Z. Amin, Director-General of the International Renewable Energy Agency; and His Excellency Ahmed Ali Al Sayegh, Chairman of Masdar. Winners will be announced at the Zayed Future Energy Prize awards ceremony scheduled to be held on 20 January, 2014, as part of the annual Abu Dhabi Sustainability Week.

Nada Al-Dossary, Managing Director at Fanar Al Khaleej said: “Retaining top talent is a significant challenge in the country where shifting demographics and a focus on Saudization are diminishing an already limited talent pool in specialist industries. The Kingdom of Saudi Arabia also has one of the fastest growing economies in the Middle East so there is a clear need for organisations to adapt to constant change and foster cultures of innovation. Our partnership with biz-group allows us to address these needs by offering access to a highly-experienced team of training professionals and award-winning portfolio of training solutions.”

Fanar Al-Khaleej revealed that it has already started receiving strong interest in biz-ability training programmes, particularly among C-level executives. ‘Multipliers’, created by US leadership coach Liz Wiseman, is a workshopbased programme that imparts leaders with specific behaviours that increase their ability to identify, nurture and grow existing talent. ‘ExperienceChange’ and ‘Design Thinker’, developed by global training institute ExperiencePoint, are awardwinning simulations of real-life situations designed to help leaders adapt to change effectively and fasttrack innovation within their organisations.

August 2013

SME ABOUT TOWN

Huawei hosts students from Al Jazirah Institute of Science & Technology

Students enjoy exclusive tour Emirati students from Al Jazirah Institute of Science & Technology got the opportunity to enjoy an exclusive tour of Huawei’s UAE Executive Briefing Centre and gain valuable insights on the latest innovations being deployed in the regional information and communications technology (ICT) sector. This came in line with Huawei’s ongoing commitment towards developing

technology education programmes in the UAE. The Huawei Executive Briefing Centre, launched at the end of 2012, is a first of its kind ICT exhibition facility for Huawei in the Middle East, and was established as a direct response to the growing demand for advanced ICT infrastructure in the region. The group of 20 female students were particularly interested in the new Unified Communications & Collaboration solutions, which empower students and businesses in the UAE to work remotely from mobile devices like media tablets wherever they may be. Other solutions

previewed included the networking and data centre technologies that currently form the backbone of a modern IT network. According to predictions of the research group IDC, Middle East IT spending in 2013 is set to cross USD 32 billion; the UAE - one of the regional leaders - anticipates more than USD seven billion in IT investments. Information technology is also a lucrative employment field with enrollment rising at several of the UAE’s top technology-based universities, colleges and vocational institutes — many catered specifically to women— nurturing a new generation of graduates with the technical skills needed to succeed in both the public and private sector. Huawei has long supported such initiatives in the UAE as part of its global CSR commitment - launching technology education programmes in emerging markets. This includes partnerships with Abu Dhabi Vocational Education & Training Institute (ADVETI), the Higher Colleges of Technology, and Etisalat Academy to encourage more young people into the ICT field. Huawei solutions currently serve one third of the world’s population and are used extensively by governments, private enterprises, and telecom operators across the UAE.

Accelerate the growth of your startup Dubai-based i360accelerator, a rapid-fire incubator programme for early stage startups founded by the consultancy Innovation 360, announced its first graduate – Tech Backpack, a social media management system for journalists and other media professionals. Tech Backpack’s platform enables media professionals to seamlessly “Listen, Manage and Distribute” several news threads from various social media outlets on one single screen. This

consolidated view helps journalists to save time when researching and producing news. Graduating from the i360accelerator gives the founders of Tech Backpack – Usman Naeem and Zulfiqar Ali Soomro – the boost that they have a proven technology and business formula which is on the right track to achieve its growth potential. Kamal Hassan, Innovation 360 Founder and Creator of i360accelerator,

said, “We designed the i360accelerator programme to produce the most viable, investor-worthy startups. In addition to an innovative business idea, you need a strong team, an open mind and dedication.” Since their enrollment in the i360accelerator, the Tech Backpack team has designed, prototyped and validated the feasibility of their business model and an initial release of this productivity tool for the news industry.

Recognising entrepreneurial spirit The launch of the fourth edition of Khalifa Fund Award for Entrepreneurship was announced by the Khalifa Fund for Enterprise Development. This came in line with its goal of instilling a strong spirit of entrepreneurship and fostering a culture of leadership. The initiative will empower entrepreneurs to upgrade their investments and projects, under the umbrella of the development plans and strategies adopted by the government of Abu Dhabi. The Award is a catalyst for the widespread adoption of entrepreneurial values, creating an environment of healthy and positive competition among owners of small and medium enterprises. It will serve as a stimulus for the concepts of creativity and innovation, thereby strengthening candidates’ capabilities. By encouraging and assisting entrepreneurs to transform their innovations into financially viable projects, the business community will

be better positioned to support the development process and evolution of Abu Dhabi. His Excellency Abdullah Saeed Al Darmaki, Chief Executive Officer of the Khalifa Fund, commented: “Our launch of the fourth edition of this prestigious award reflects our ambitious vision and embodies our commitment to facilitating knowledge transfer among entrepreneurs. This will cultivate a strong spirit of competitiveness, leading to stronger entrepreneurial skills, greater efficiency and more prudent investments. The SME sector plays a pivotal role in our economy, and helps to consolidate the emirate’s position as

a magnet for smart entrepreneurship in the region.” The Khalifa Fund’s Entrepreneurs Award rewards the best projects categorised under six programmes: Bedaya programme, Zeyada programme, Khutwa programme, Heritage sector, Membership programme and the Best Emirati Project for non-beneficiaries of the Fund’s services. The deadline to submit your applications is August 29, 2013, and the winning projects will be announced during a special ceremony on October 7, 2013. Selected participants will be honoured with appreciation certificates, shields and souvenirs. The best project in the Heritage sector and the Best Emirati Project will be awarded cash prizes. During the ceremony, the Fund will announce the government agencies that are most supportive of SMEs, based on purchase volumes. HE Al Darmaki also noted that the Fund will urge governmental and semi-governmental entities as well as prominent captains of industry to champion entrepreneurship by allocating a portion of their purchases to the SME sector in order to ensure continuity and support national prosperity.

Students learn industry trends Through a recent presentation, Frank Courtney, Barloworld Logistics Chief Executive for the EMEA region, highlighted the new trends in the global logistics and supply chain industry to the M.Sc in Logistics class of University of Wollongong in Dubai (UOWD). He presented to an audience of more than 40 students and faculty members during a guest lecture held at the university. He offered a comprehensive overview of the various elements of supply chain and logistics. The focus point of the presentation was the key role of innovation in supply chain. Courtney also highlighted that in current trade and business landscape two pivotal drivers of innovation are ‘entrepreneurship’ and ‘collaboration’. During the course of the lecture, Courtney announced the September

launch of Barloworld Logistics’ GCC supplychainforesight survey 2013 aimed at helping countries, companies and individuals to stay updated with and adapt to the changing dynamics and demands of today’s global market place and to embrace the reality that continuous innovation is vital to achieving sustainable competitive advantage. This GCC logistics study focuses on understanding the thought process of the leaders of logistics in the Middle East in terms of – what are they focusing on and what they believe are the challenges and opportunities for their businesses. To conclude, Courtney explained how a rapidly growing global population alongside factors such as draining natural resources and climate change could impact future generations and the massive affect that will have on supply chains of the future.

Frank Courtney during the lecture at UOWD

As a result, supply chains will have to be more agile and responsive than ever before. He also touched upon the advantages that companies stand to gain by outsourcing their logistics operations to established players such as Barloworld Logistics, including better cost and operational efficiency, greater reliability and flexibility, improved geographical coverage and reduced risks.

August 2013

Banking for business

The first line of defence: don’t let cyber crime destroy your business’ performance You may think that only the corporate giants are impacted by Cyber crime - but the facts show that 31% of attacks are on SMEs. Worse, these attacks aren’t simply attempts to steal data or customer transactions - more than half of them are directed at the business’ banking and accountancy platforms, wreaking havoc and leading to significant financial loss, business interruption or, sadly, closure. Here we look at the key steps that can proactively prevent a Cyber disaster…

hen so-called ‘Hacktivists’ bring down the websites of the likes of Google and Microsoft, it’s headline news around the globe - not to mention humiliating for their victims. But according to a recent survey by KPMG, for every attack of this type there are more than 190,000 Cyber breakins with one - much more commercial - aim in mind: stealing sellable data and transactions from companies all across the globe. Make no mistake: Cyber crime is big business. From Hacktivism to malware to administrative failure, no organisation that stores data or transacts business online is safe from the threats of Cyber related breaches or attacks. There’s more bad news: according to Symantec’s 2013 Internet Security Threat Report, the largest growth area for targeted attacks in 2012 was businesses

with less than 250 employees - 31 per cent of all attacks targeted them. What’s more, there was a 42 per cent increase in targeted attacks in 2012. This is particularly unfortunate, because in the same Symantec survey, it’s apparent that most small businesses believe they are actually immune to attacks. Yet while SMEs may assume that they have nothing a targeted attacker would want to steal, they often forget that they retain customer account information, create intellectual property and keep money in the bank. While it could be argued that the rewards of attacking a small business are less than those that can be gained from a large organisation, this is more than outweighed by the fact that small companies are typically far less careful in their cyber defences. For example, consider the wealth of data you probably keep regarding credit card numbers, bank account information, social

security numbers, medical information, company vehicle registration details, etc. All of this has value on the street where it can be sold on the black market; and can your business really claim to have effective anti-theft safeguards in place - and in place right now? The weapons at your disposal There are basically three key approaches that a business can take to managing Cyber risk. These are: • Changing the way data is stored and altering the culture of data storage in your business. • Insurance: anti-Cyber insurance has reached sophisticated levels and can include proactive risk management protocols. • Liaison with financial providers - such as the bank, accountant or factorer - to create safer, encrypted channels of direct dealing.

Handling sensitive data and keeping the thieves at arm’s length

response capability, instead of solely on preventative security controls.

It’s important to work towards changing the attitudes to data storage that are prevalent in your business. Is everyone aware of the dangers? Have staff received any special training on these concerns? Do you have an IT specialist in-house who you can make the focus of these responsibilities – without the cost of hiring training consultants? The main practical steps you can take include identifying where sensitive data is stored and how it is used; adopting policies that formally communicate how your organisation stores, works with, transmits and destroys sensitive data; making employees an active part of the information security programme; allocating time for reviewing log files; and shifting the organisational focus toward detective controls and incident

The role of insurance and risk management

Ideally, the best way to solve a problem is to prevent it in the first place, but that will not always be possible. In the event that a Cyber intruder does make it through a company’s defences, the more comprehensive insurance products can help by providing elements such as local, dedicated cyber claims specialists,

No organisation that stores data or transacts business online is safe from the threats of Cyber related breaches or attacks

and an extensive vendor network able to provide guidance in relation to legal advice, forensic IT service (and even public relations consultants in the event of a PR crisis!). Good insurance will also cover network interruption, which addresses the loss of revenues stemming from a security failure and/or cyber extortion, and organisations can upgrade their cover as their business or risks expand. Additionally, you will of course find support across the raft of more basic Cyber risks such as – • Sensitive data breaches • Computer hacking • Computer viruses • Employee sabotage or error • Pilferage of information • Identity theft. Working in tandem with putting the right insurance cover in place, you can also conduct simple risk assessments

August 2013

Banking for business

that help you identify what the main risks actually are. These will need to be fairly broadly-based, involving not only IT managers, but data managers, list-builders, subscription staff, and so on. You may also need to consider factors such as the company’s staff hiring policies and vendor management strategies. Similarly, you can link in a risk review with a recognised corporate quality standard such as ISO 27799. You can also access risk management software that helps you construct a stronger defensive wall: products of this kind comprise a single, web based platform that helps SMEs streamline the risk management process. The platform content is highly customizable and can be tailored specifically to meet a number of risk management needs. Examples include: • Assisting in a compliance initiative • E d u c a t i n g e m p l o y e e s o n a n y regulatory requirements • Training staff on security protocols to help prevent human error from causing a potential breach. Good risk management modules also help in terms of security, providing an interface where an IUT department can manage a company’s shunning technology - such as Autoshun ® ,

The largest growth area for targeted attacks in 2012 was businesses with less than 250 employees - 31 per cent of all attacks targeted them

significant raft of highly confidential material, which if dislocated or stolen can seriously impede day-to-day operations - not to mention dramatically undermine staff confidence. Moreover, if this data is manipulated, it could result in severe financial (perhaps unrecoverable) losses. A business can also speak to key commercial partners such as its factorer, about ways to avoid accessible invoice listing, open declaration of margins and reconciliation of receivables. Better safe than sorry

which blocks known cyber criminals from communicating with a company’s network. There is also the training element : you can use pre-populated training content and carry out tests with an online assignment engine to deploy employee training and awareness. Working with your key providers

Another - complementary - strategy is to liaise with your key providers and financial specialists to ensure that your commercial platform is as secure as feasibly possible. For example, your bank can advise you on how to reduce risks on live transactions such as salary placements, online credits and debits and fx data. Taken together, this is a

Cyber crime is a fact of SME life. Recognising the potential for your systems to be breached by Cyber intruders is the first step in effectively reducing the risk of that happening. Using a combination of the three approaches outlined above, an SME may not be immune from the likes of major publicity-seeking ‘hacktivists’ but it will at least dramatically reduce the likelihood of data theft by cyber criminals who so frequently see the SME sector as easy pickings. For an online verison, please visit: www.smeadvisor.com/2013/08/thefirst-line-of-defence

The Business of Governance: your blueprint for change.

Do you aim to be the Best - or simply fear the worst? Are you a Champion of Best Practice? Setting benchmark standards that supercharge your business? Creating transparent systems for dealing with shareholders and investors? Or simply hoping for the best?

Discussions are presented by leading names in the ﬁeld, comprising a wealth of ﬁrst-hand knowledge, with contributions from the accountancy, banking, consultant, CEO and shareholder communities.

For every SME, it’s never been more vital to understand and apply good Corporate Governance. To look at the key operational areas and set benchmarks that are fully in line with international standards and Best Practice.

Plus, it’s free to attend.

Now there’s a unique one-day forum that’s a powerful executive factfile for the Corporate Governance agenda - covering key issues in a practical and highly interactive format. Welcome to The Business of Governance. A high-profile briefing at the Habtoor Grand Beach Resort & Spa, taking place September 4. An A-Z of what you need to know The Business of Governance assesses the crucial areas of the Governance agenda, looking at factors such as: The role of internal audit - when to audit, and how The responsibilities of owner and Board Obligations to stakeholders Ensuring transparency Governance and the family business Managing risk within the Governance framework The impor tance of audited accounts

Here’s how you’ll beneﬁt The Business of Governance can tell you – How to promote excellence at the core of the business in key operational areas - like accounting and ﬁnancial reporting. How to set benchmarks to measure deviation from declared goals and the objectives in your business plan. How to aspire to Best Practice - creating a culture and climate where second best is never good enough. Will you be setting the standards of good governance - leading the SME community from the front?

September 4th, 2013

To register your attendance, please visit: smeadvisor.com/events/successseries/

Habtoor Grand Beach Resort & Spa

MOVERS AND SHAKERS

Mona Tavassoli, Founder, MomSouq

Mom in a million: Mona Tavassoli makes motivation the ‘M’ in SME

Are entrepreneurs born or made? There’s no doubt that some individuals have the mix of charisma, business flair and taste for action that sets them apart: and in the UAE at the moment, there’s surely no better example than Mona Tavassoli - founder of the alreadyfamous MomSouq network and the quintessential ‘mom on a mission’. What are the factors that have created an acclaimed networking brand in less than two years? Or which give Mona an almost quest-like zeal for fresh commercial platforms? SME Advisor met the lady in the news and asked if the word ‘entrepreneur’ was written in her DNA…

ome businesses seem such a natural part of our lives that it’s hard to imagine that they started only recently and have faced, endured and overcome the classic challenges of life as an SME. There’s no better example than the MomSouq brand - which has already become a natural port of call for moms from all backgrounds looking to buy, sell or simply to network with kindred spirits. Yet MomSouq broke the mould in many ways - driven not by a proactive business template and a commitment to a strategic plan of action, but by being purely demand-led and evolving one step at a time. So, what was Mona Tavassoli’s motivation and how did the business begin, change and evolve? We asked her some classic questions about her successful networking model.

Is it the case that MomSouq started out as being demand-led, rather than being a firm business template you put out into the market?

“Yes, that’s right. It all started with a party for my son, when I saw that there was a lot of duplication of presents. I began to explore avenues for selling the other presents, because I was aware that there other moms out there who were looking for good-quality, new and nearlynew goods at a reduced price. “I realised that there was a real demand for a network that helped moms communicate with each other - that gave them choices about what to buy and told them about the best places they could go with their children. Within six months the shape of the business was in place things came together very quickly. But I would add that all this was purely driven

by demand - I didn’t sit down and work out what type of business to create, and how to market it. I simply did things one step at a time and one thing led to another.” Was there ever a time when that demand seemed too little to justify creating a business?

“No, not at all. Demand was always getting better and better. I think I was helped by two important aspects of life in this part of the world. Firstly, you don’t always have all your relatives and families around you here, so you might not have access to baby and children’s items - you have to go and get them from scratch. Also, the baby gift registry isn’t highly developed here, so you won’t always end up with a good supply of the practical items you need. MomSouq meant that there was one definite, easilyaccessible source for all these things. Although, having said that, it wasn’t a firm business model at the beginning: it was later that we thought: ‘how can we make it work as a business in its own right?’” If you had created MomSouq as a business concept from scratch and then launched it into the market, how would it have differed? (Or could it have existed at all?).

“Ah, good question! We wouldn’t have started with the Classifieds only, and we would have had a written Business Plan, for instance! If I went back, I would set up everything right from the start, whereas we spent March to September 2012 really collecting ideas from the community and experimenting with what seemed to work best. This process meant that our model changed several times, but in hindsight we could have finalised and firmedup these aspects before we started.” What is your financial model for MomSouq - in other words, how does a classic networking activity make money?!

“To be honest, at first it didn’t! But then we realised all the sponsorship opportunities by offering businesses and services visibility on the website. We had the advantage in the early days that that we weren’t having to pay for office space, because we’d already set up an advertising agency (it’s called Polar Bear) and we had a lot of the necessary resources and facilities ready on hand.”

August 2013

MOVERS AND SHAKERS

What made you evolve and launch the ‘Mompreneur’ concept and how does it fit with MomSouq as a whole?

MomSouq has grown dramatically - and what you’ve seen is just the beginning!

“This was another example of something growing organically and naturally - and again, it was demand-led. It started with us being approached to promote a baby’s activity event; it was very inspiring to realise that we were now seen as an effective marketing channel that mom-entrepreneurs could use to reach hundreds of like-minded parents. We responded to the demand and created a niche service that was designed to make everything easier for moms with entrepreneurial ambitions and activities. “We recognised that there was a need for a platform whereby moms could talk to each other - not just to me! Mompreneurs Middle East is a totally different template from MomSouq - completely B2B. It thrives on the fact that most mompreneurs have very unique ideas. If you look at their demographics, it’s no surprise that many of them have a very strong executive background. All momentrepreneurs can be a part of this unique platform by signing up at mompreneurs.me” Why do you feel that the majority of your Moms’ network tends to be English-speaking or European?

“I feel the main reason for this is that a large number of the expats in Dubai need this service because they don’t have their families around them - but Emiratis, for example, do, so they don’t need the group in the same way! Having said that, we’re trying to reduce this cultural gap by introducing more and more services that are specifically relevant and of real practical value to moms from local - and other Arabic - backgrounds.” You’re also in the process of lobbying to change the licence requirements for moms working from home: tell us a little about that?

“A long-term goal of ours is to change the licence requirement for women working from home. We can define what it means to be a ‘mom-entrepreneur’ and aim to make a dramatic difference to the traditional regulation, enabling moms to work officially from home. We believe that the UAE has a real opportunity here and can be a leading country in this respect.” Is there a maximum size that you believe MomSouq can reach - for example, can it

Mona Tavassoli, Founder, MomSouq

be rolled out across the GCC?

template?

“MomSouq has grown dramatically - and what you’ve seen is just the beginning! We would like to expand to other countries in the region. To do this, however, we won’t be able to rely on the demand-driven model that got us started. If you’re going to expand to other countries, you need a fixed budget and a very clear Business Plan defining your expectations, key steps and revenue streams. That’s all very different from the way we started, when we had the support of our families, the advertising agency - and nothing else.”

“Of course. Let me give you just one example of where we’re headed. We ’ r e n o w a t t h e p o i n t w h e r e the network can have significant purchasing power, so we’d like to offer our members not only unique opportunities, but the chance to get those offers at preferential rates. So the next logical step will be a loyalty card programme, and we’re looking at this very seriously at the moment. This can be a key step in leveraging a new level of commercial possibilities.” A MomSouq loyalty card? Yes please…

Do you feel the networking template is strong enough in itself to leverage the growth from ‘S’ to ‘M’ in the SME

www.smeadvisor.com/2013/08/mom-ina-million/

For an online version, please visit:

advertorial

MOVERS AND SHAKERS

A peek into the day-to-day operations of Wrapt

It’s a wrap! Is your business lost in the crowd of 72,000 other SMEs in the region? As an SME owner or director, a bitter pill to swallow is – if your SME aspires to be ‘one in a million’, simply getting the job done just doesn’t suffice. You’ll need to get the job done exceedingly well to become the leader of the pack. An SME that has succeeded in this regard by creating a unique offering for its customers and establishing itself as a market innovator and leader is Wrapt. In an exclusive interview with SME Advisor, founder Ayesha Buti Moh’d Al Meheeri tells us how she did it…

“

The most serious mistakes are not being made as a result of wrong answers. The true dangerous thing is asking the wrong question.” - Peter F. Drucker

The right (and fiercely important) question that SME owners are often faced with is – will your SME supercharge its growth by constant innovation to emerge strong on the top? Or, will your

SME continue to do what it’s already doing and stay satisfied being one amongst many? Wrapt has proved to be a strong example of the former; identifying a gap in the market, it not only seized the opportunity but has also established a leading position for itself within the industry. By being different, Ayesha Buti Moh’d Al Meheeri, Founder of Wrapt, was able to take a simple idea

and transform it into an exemplary SME model. However, it doesn’t stop there; she ensures that her brand is constantly evolving on a daily basis… Firstly, tell us about Wrapt and your inspiration behind the idea.

“Wrapt is a fashion based gift wrapping, packaging and corporate gifting company that runs on two wheels: a

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MOVERS AND SHAKERS

retail division including Wrapt stores or kiosks operating in different shopping malls in UAE, Qatar, Oman and Kuwait and; a corporate service offering companies packaging solutions such as branded boxes, bags, paper tissue etc. A bespoke service for corporate gifting is also available. The corporate division also takes care of gifting solutions for weddings, high profile gala functions and all personal occasions. “The idea came about after identifying the absence of such a service. Several gift

Wrapt is a fashion based gift wrapping, packaging and corporate gifting company

wrapping solutions available are basic alternatives, usually offered as an addon service in a store. There’s nothing that is specialised and dedicated to the art – and that’s what I wanted to create.” Do you offer every kind of presentation, e.g. boxes, slip-cases, wallets, as well as wrapping paper?

“At Wrapt, we offer the entire basic gift wrapping solution comprising of accessories and colours; these include boxes, wrapping paper, wrapping tissues, envelopes, cards and ribbons. In addition to that, we have Wrapt signature collections that are also available in store for clients to pick and choose from. “We work on a fashion calendar and create four seasonal styles to our collection that hit the stores four times a year. Additionally, within the seasons’ collections, we break it down further to semi-collections which creates a varied offering for our customers; these are categorised in different styles like origami, classic, haute couture, recycle, furoshiki and so on.” Do you sell other paper products, such as greeting cards, files, folders, etc.? Do you sell writing instruments so that customers can dedicate the gift once it’s wrapped?

“Wrapt offers a variety of gift wrapping options as well as small gifts and writing instruments in stores. However, due to the variety of colours and wrapping options displayed and available in store, customers tend to get distracted and find it difficult to look through the accessories available for them! Therefore, we maintain the courtesy of taking them through the many beautiful items in stock that they can add-on to their gifts.” Who do you identify as your target customer base?

“Everyone that is looking to give a gift and requires special presentation is our client. There are so many occasions that call for gifting exchange and we provide that solution to our clients. We have observed that the Arab nationals

MOVERS AND SHAKERS

The Wrapt team led by its founder - Ayesha Buti Moh’d Al Meheeri

are our primary customers. However, we have received customers from all nationalities and across all age groups; from students, professionals, trendsetters and executives, we cater to them all!” What are key features that differentiate the Wrapt customer experience from any other wrapping store?

“Creativity, presentation and customer care are the defining factors. We sell our creative talent – the team of experts that can take a small gift and breathe life into it, transforming it into a memorable experience.” Do your wrapping services and products change over time with the evolving trends? How do you add variety to the brand?

“We never set boundaries to creativity. At Wrapt, we are continuously designing and creating new wrapping ideas to stay fresh and ‘on season’.

Creativity, presentation and customer care are the defining factors. We sell our creative talent – the team of experts that can take a small gift and breathe life into it, transforming it into a memorable experience. “We look for inspiration everywhere and follow international fashion trends every season to determine key factors like colours, prints, accessories and styles. A lot of hard work is invested into creating a gifting experience and of course our clients are the ones who continue to put

us to the test with their own requirements. But, no challenge is too great for us – we have created astonishing pieces.” How and when did you decide to start franchising your business? How many franchises does Wrapt currently have and are there any upcoming ones?

“When we started back in 2009, Wrapt was a simple gift wrapping destination with big ambitions but those did not necessarily involve franchising in other markets. We were looking at local growth and maintaining the brand’s true spirit. “However, as the brand received positive customer feedback, we started getting enquiries and invitations to open Wrapt in shopping centres which was an eyeopener for us. That’s not all – we received individual interests as well wanting to take the brand to their market. In 2011, we felt ready to share the Wrapt experience and start the brand’s strategic growth. Now –

we have three franchises in Qatar, Oman and Kuwait and, have two more on the discussion table. We are hoping that, by end of year, we will be ready to announce the fourth market in the GCC.” What kind of relationship do you aspire to build with the franchisees? Will they have independent decision making power?

“Wrapt franchisees are our partners in the overall strategic growth of the brand; therefore it is crucial to have a cohesive relationship that is filled with constant communication and idea exchange. We support them through the basic platforms; we provide training programmes for the management and the retail staff. We supply the complete product range of wrapping papers and accessories. Although they have complete freedom within their market, they usually come to us for brainstorming. We listen to their ideas and market need and convert them into creative solutions to suit their client base. We believe that their success is our success.” What are some changes that your business experienced during its transition from a startup to a successful franchising model?

“From day one, the concept was to develop a brand that could easily be replicated in different environments. Whether a small space or a large retail area – every detail was necessary to ensure smooth operation. We formed manuals of processes and procedures for the office as well as stores that allow easy references for the staff. We strived for best practice right from the start – we ensured professionalism was at the core of the business. “When we started franchising the transition was easy because the foundation was solid. With time, Wrapt grew to build relationships with strategic partners, customers, and organisations thus creating our own DNA.” Being a premium gift wrapping store, how do you ensure that your ‘top’ quality is maintained throughout all your outlets?

“This is definitely challenging and, as the business grows, quality control becomes a tedious operation. We offer training programmes constantly to ensure every detail is registered and we encourage the team to continuously strive on producing quality work. I always say “people forget how fast you did a job – but they remember how well you did it” and emphasise this within my team who have embodied the values of the brand.”

in such a saturated and competitive environment. Another major hindrance is the cost of setting up; rents are very high, investment for human capital is high because you need to consider the visa processes and labour contract fees in addition to salaries; these processes eat up a lot of the budget. There are several hidden costs that one may not be aware of when deciding to venture out – these become a huge burden even before the doors to the business are opened.”

Do wrapping tastes change from area to area, requiring different stock in different franchise units?

What is your vision for the future? Five years from now, what kind of growth can customers expect to see in your business?

“Absolutely, the tastes change from location to location, city to city and, most definitely, from market to market. Throughout our franchising units, we see increased demands on certain items and styles which, in some instances, are different from what we offer. This challenge is one that we face constantly and are working to understand and learn by experience.” What is the biggest challenge of being an SME owner?

“Cash flow and managing that is the most challenging aspect – especially if

We offer training programmes constantly to ensure every detail is registered and we encourage the team to continuously strive on producing quality work there’s no investment solution. In order for a business to grow, it needs to have access to funding through banks or angel investors. These solutions are available only if you meet the predefined criteria which, at times, is unreasonable and unrealistic. “Furthermore, the lack of a marketing budget proves to be a roadblock in terms of building and maintaining a brand

“Wrapt’s ambitions are huge. My vision is to build an internationally recognised brand that becomes a household name in gift wrapping service. “Celebrating and gifting in style is a part of every culture and the idea is to have a presence in every strategic market around the world and extend our global reach. As a product offering, I would like to create a store that provides solutions to all types of services and packaging requirements – be it as small as a watch or jewellery box or a large cargo box! “Additionally, the possibility of owning our own land and building Wrapt’s factory and headquarters is something I would very much like to pursue. Finally, becoming the preferred distributor for all gift items and gift wrapping solutions across the region and North Africa would certainly confirm the brand’s market share.” Conclusion

So the question remains – will your SME supercharge its growth by constant innovation to emerge strong on the top? Or, will your SME continue to do what it is doing and stay satisfied being one amongst many? The answer, simply put in the words of management guru – Tom Peters, is “distinct…or extinct”. For an online version, please visit:

www.smeadvisor.com/2013/08/its-a-wrap/

August 2013

MANAGING RISK

Going for growth -

perils and opportunities The growth of a business might appear to be something that’s necessarily good in its own right: but the reality is that the quest for growth can invite a multitude of roadblocks and challenges – and the secret of a top management team is recognising the pitfalls and taking proactive action to avoid them. Rob Haden, Director of Strategy, bizgroup, plots the roadmap that will take the smart business to the destination of its choice

t critical points in the life of a business, the wise business owner will take time out to contemplate their strategy for growth. At start-up, a key question to consider is whether growth is, indeed, going to be a driver for the company at all. Some business owners have a vision to remain small, both in terms of revenue and numbers of staff. They opt to develop niche or lifestyle businesses. You, on the other hand, may be the sort of person who relishes the challenge of growing your business. You dream of moving your organisation up the corporate ladder from small to medium to large enterprise. You delight in honing your sales

process so the leads-to-deals conveyor belt runs smoothly and consistently weekin, week-out. You seek out new markets for your products and services with the relentless intensity of a heat-seeking missile locked onto its target. In other words, you make growth happen. Alternatively, you may have had to react because growth has been thrust upon you. Perhaps you have suddenly been faced with the happy prospect of your product or service becoming a must-have throughout the Middle East, and you have had to respond to the demand. Or maybe you have found yourself involved in a merger or acquisition, and your medium-sized business has become a large one almost overnight.

Catalysts and challenges

Whichever catalyst is the driver for your company’s growth, it will bring its own challenges. Let’s consider three possible scenarios: injection of finance; access to new markets; recruitment of better quality senior staff to galvanise growth. Additional finance might become available to a business in a number of ways. It might have begun to operate in a smarter way internally, and freed up extra liquidity. It might have taken a strategic decision to borrow to fund growth. It might have acquired fresh funds via an acquisition or new investment partner. A critical requirement (often overlooked in the excitement of becoming cash-rich!)

is the need for the person heading up the financial side of the business to be competent in handling big numbers. The long-serving CFO of a small-to-medium-sized company may have done an excellent job to date. However, unless they are equipped to deal with the complexities of strategizing and manipulating the large sums of money involved in maintaining and growing a bigger business, they may become a liability. Opening up a new market, close to home or overseas, is an exciting prospect. However, it needs to be done in such a way that the business’s core functions, products, services and markets do not suffer. Inevitably, when a company is attempting to forge a new path through uncharted territory, a great deal of resources, time, energy and budget are likely to be consumed (often far more than is anticipated) and to the detriment of the established business. Sometimes the entrepreneurial owner, by their very nature, will veer off in a new direction because an opportunity has arisen that is “just too good to miss”. It is at those moments that they need their senior team to have the courage to challenge and check that the new route is indeed a highway and not a dead end. To propel itself into a bigger league, an SME might choose to recruit more talented and experienced players into its leadership team. This can bring an instant improvement in performance, but it can also incur a high price if the newcomers are not carefully chosen to align with the company’s values and size. It is essential that all staff members, whatever their position in the company, are recruited for their alignment with the company’s values and not just for their competence. This is even more critical when recruiting into the leadership team. If a leader does not align with, and demonstrate through their behaviours, the company’s values, they will cause chaos. Why should staff be expected to behave in a particular way when a leader is not doing so? That person becomes a liability and a danger to the organisation’s quest for growth. It is also critical that the new recruit into the leadership team has experience of working with the dynamics of an SME. They might have huge expertise and knowledge in their field, but if their experience has been developed working in big corporates there will be a mismatch. When attempts are made to overlay big-company policies and procedures onto SME-sized organisation,

Inevitably, when a company is attempting to forge a new path through uncharted territory, a great deal of resources, time, energy and budget are likely to be consumed. the results are often confusion, resentment and the retardation (rather than the acceleration) of growth. Barriers to growth

In his book “Mastering the Rockefeller Habits” (an analysis of the strategies used by John D. Rockefeller to dominate the early oil industry), Verne Harnish identifies three key barriers to business growth: “…the need for the executive team to grow as leaders in their ability to delegate and predict; the need for systems and structures to handle the complexity that comes with growth; and the need to navigate the increasingly tricky market dynamics that mark the arrival in a larger marketplace.” Delegation

Many entrepreneurs report that they do not like working with other people! They do not find it easy to delegate, yet, if their enterprise is to grow, they will need to learn to do so. There comes a time when they have to realise that if they are not willing (or cannot afford) to bring on board people to run the business for them, then all they have is a job – they do not have a business. Delegation is as crucial as management thinkers tell us it is. Founders of businesses need tried and trusted people in place who will release them to play the role that only they can play – that of leader and visionary. Getting the right people in the right roles doing the right things is critical to business growth. The founder needs to be able to delegate to their management team, confident in the knowledge that its members have the collective wisdom, knowledge and decisionmaking ability (in other words, competence) to guide the business confidently and safely. If the founder has not taken the time, trouble and care to recruit the best, there is every chance that he or she will have to

remain hands-on and heavily involved in the day-to-day running of the business, to compensate for the management team’s lack of competence. The outcome of this will be two-fold. Firstly, the founder will not be released to do what they do best as leader, visionary and strategic thinker. Secondly, their suspicions and reservations about delegating will be confirmed, they will cease their attempts at delegation, and the company’s growth will be terminally stunted. With the right people in place, delegation becomes a four-step process: identify precisely what they are to do, create a measurement system for monitoring progress, give feedback, and provide appropriately timed recognition and reward. Founders would do well, therefore, to remember an old leadership motto: “Don’t do… delegate!” They would also do well to remember that there is a big difference between delegating and dumping; they need to learn to delegate effectively. Systems and structure

With a management structure in place, the implementation of organisational systems will not be far behind. Systemisation is a logical response to the increase in complexity that growth brings. That complexity should not be underestimated. There are mathematical formulae that show that a move from two to four people, products or sites causes complexity to increase by a factor of 12. To prevent an organisation from being overwhelmed by growth, it needs to anticipate how to deal with the accompanying increase in complexity. Going from two to ten people may primarily mean more phone systems and a more structured use of space. At 50 people you still need phones and space, but you also need to invest in sophisticated accounting systems that tell you more precisely about which and how products, projects and customers are making money (or not). Above 50 people, all the information technology systems typically need upgrading. The cost of growth can therefore be large, and companies underestimate it at their peril. It is easy to get carried away with the excitement that growth brings, as a company anticipates being even more successful. Yet it is at these growth points, just as a company seems to be becoming stronger, that it may be at its most vulnerable. The financial cost associated with the impending growth may

August 2013

MANAGING RISK

be so large as to sink an unwary organisation. A company needs to invest wisely in systems that will allow it to measure accurately, and as simply as possible, the numbers that will indicate whether it is thriving or hemorrhaging as it grows: revenue, gross margin, profit and cash.

monthly, weekly) it is the daily huddle that will prove itself to be the most valuable in maintaining staff focus and alignment. It quickly becomes the acknowledged heartbeat of the company. Market dynamics

Prediction

The investment in structures and systems has a critical aim: to improve the quality of data available for making predictions about how the business is performing. Unless a company can predict as accurately as possible where it is likely to be over the coming weeks, months and years, it will not know if it is on course for growth, stagnation or decline. It will not know if it is even on track to survive. The timeliness, as well as the accuracy, of data available to the executive team is critical. If the leaders (the strategic decision-makers) in a company do not have the right data available at the right time, how are they to make decisions that are right for their organisation? Many companies have strong “lag” indicators in place, which show retrospectively how well they have been doing. Looking back at the end of a quarter, a Sales Director may be justifiably pleased with the results produced by the Sales Team. However, that same Sales Director needs also to be aware that the rate at which leads have been added to the pipeline has slowed considerably during the quarter, threatening sales in the next quarter. Robust “lead” indicators are, arguably, more important than “lag” indicators. Driving a business forward using only “lag” indicators is like driving a car by solely looking in the rearview mirror: pretty soon, you will run off the road. A company needs to find a mixture of “lead” and “lag” indicators that is right for that particular company. These are the “Critical Numbers” that the company needs to focus on day-today. Once, identified, everyone within the organisation needs to know what they are and how they personally make a contribution to them. Only then will a company have the chance of growing with staff in alignment. Staff alignment

When a company is small, it is straightforward to let staff know what the Critical Numbers are and how they contribute to them. Complexity caused by growth can create confusion

Rob Haden, Director of Strategy and Executive Coach at biz-group FZ LLC

The market can make you look smart or stupid. When it’s going your way, it covers your mistakes. When it’s going against you, all your weaknesses can seem exposed. There’s a counter-intuitive aspect to growing a business. When you’re under $10 million in revenue and a little more internal focus on organisational habits would establish a platform for growth, there’s a tendency to focus externally. As the company passes the $10 million point, the increase in organisational complexity draws the attention of the executive team inwards, just when it’s important for the team to focus on the new marketplace in which they have started to operate. To help growing companies keep their eyes on the market, Verne Harnish recommends that an executive team uses SWeT (Strengths, Weaknesses and Trends) rather than SWOT (Strengths, Weaknesses, Opportunities, Threats) to snapshot their organisation. SWOT can still be usefully deployed by middle-managers; however, it is the focus on local, global and industry sector Trends that can reveal insights critical to strategic decision-making.

and misalignment; being clear about what people need to focus on, and communicating those focal-points unambiguously, is another key element in a successful strategy for growth. Identifying and communicating the “Top 5 Priorities” for a quarter can strip away confusion and make it crystal clear where the organisation needs to devote its energy in the coming 12 weeks. Having a “Top 1 of 5” priority makes the focus even more obvious. Imagine leading a company of 80 people, all of whom know that for the next 12 weeks they have to contribute day-byday to the achievement of a single project that will move their company forward: what leader would not want to be at the helm of In summary that organisation! Growth can be catalyzed in various ways One of the most successful practices a – a financial injection, access to new markets, growing company can implement is the and recruitment to drive growth are three daily “huddle” – a ten minute meeting at examples. Whatever drives a company’s which team members share their priorities growth, the business will need to overcome for the day. In larger companies, leaders three barriers: the need for the executive and managers may attend two huddles – team to lead, delegate and predict more one with their peers and one with the teams effectively; the need for systems and they lead. These meetings are not designed structures to handle the complexity that to solve problems; they are conducted comes with growth; and the need to learn concisely, with participants standing, so how to navigate the marketplace into which that every member of the company gets the growing company is moving. daily visibility of the Critical Numbers, The good news (and it is, indeed, very shares their focus for the day, and asks good news) is that the barriers can be for help to unstick any problems they are identified, anticipated and planned for. having. By taking the right steps at the right time, Executives, managers and staff not used a business can make the breakthroughs to the discipline of this daily meeting that will enable it to cross the borders from may grumble at first at the investment of small to medium to big business. time required. However, one ten minute meeting, once a day, for one month, For an online version, please visit: soon persuades them that it is time well www.smeadvisor.com/2013/08/going-forspent. Of all meetings (annual, quarterly, growth

July 2013

Getting finance

A question of priorities

It’s a simple fact: getting finance is the single most challenging and important issue that most SMEs face. While it’s notoriously tough for a startup to get any kind of official funding at all, it’s not much easier for a medium-sized firm to get second-round investment to supercharge growth or pave the way for a successful IPO. Here, we’re delighted to present the views of one of the region’s top businessmen - Simon Hodges, CEO of the Alchemy Network Middle East. Simon’s views are frank, forthright and extremely practical, and reflect his 20 years in the most active and effective boardrooms around the world.

hy does it pay to listen to Simon Hodges’ advice? Because Alchemy Network Consultants have to pass the ‘acid test’ of being paid by taking a share of the profits that they help to generate. They operate as business investors by giving their time and expertise to help company owners achieve their goals - an approach that’s proved not only to be a successful formula worldwide, but the basis for rapid growth of the Middle East network across the UAE, Bahrain, Egypt, Iran, Iraq, Jordan, Kuwait, Lebanon, Morocco, Oman, Qatar and Saudi Arabia.

The effect of this working strategy is that rather than ‘getting by’, business owners are encouraged to put in place the processes that will revolutionise the

company’s core functions, helping them stay focused on driving the business to the next stage of expansion. So if we apply this formula to the whole question of getting finance, what are the key steps that emerge? What are the ‘how to’ stages which Simon sees as the tried and tested routes to getting the money your business needs? Here are his answers to the 10 key questions that every SME needs to address. What are the critical ‘hotspot’ moments in the development and growth of an SME for which I’m likely to need finance? Is there a ‘typical’ growth template that will help me anticipate these changes?

when an SME needs financing is at the start. Planning for the amount and where to source this amount is a significant challenge. The amount should be sufficient to allow the time to grow sales revenues to reach the point when it becomes self- supporting but not too large that it results in overstressing the business with high financing costs. Ideally, initial finance should come from family and/ or friends (or government if you are a UAE National) where the interest rates (notional or otherwise) are kept very low. Remember banks in the UAE are currently charging up to 20 per cent for commercial loans, which for a loan of AED one million is going to add AED 200,000 per annum to your costs.

“These are the critical ‘hotspots and the approaches they require: START UP: The most obvious moment

DEVELOPMENT: Once the business has shown it has the ability to achieve

sustainable revenues, usually after three years, it then becomes necessary for the owner to decide whether to grow the business further. This can take two broad directions: first, growth relies on internal resources; and second, outside sources of financing are sought to accelerate growth. To justify all the issues relating to the raising significant amounts of outside finance, owners should target to achieve annual revenues in excess of AED15 million by the fifth year. Financing such growth should not be taken lightly as businesses achieving revenues of this size will require the establishment of an organisation accompanied by the requisite management skills that are not the same as those required to start the business. MATURITY: Businesses become mature once they have traded for five years. By this stage a good track record will have been established with hopefully proper financial statements to back this up. Additional financing will need to be supported by an appropriate amount invested in the business by the owner, represented by share capital and retained earnings. Financing sources will depend on the size of investment required but will involve the same type of institutions as during the Development Phase. Building sound relationships with these people at the outset is therefore an investment in your future. This phase will continue until such time as the business requires longer term financing, such as the issue of Bonds or an IPO. How do I go about securing further finance if the initial sum has already been spent? Indeed, should I do so?

“Each time a business owner needs to seek additional financing for anything other than to fund significant growth their credibility weakens. For startup businesses realistically it is unlikely that third party funds will be available beyond the first three years of trading if the historical financial performance cannot support future plans. To manage this risk, the initial financing request should include clearly thought-out assumptions behind the forecast of revenues and costs so that it is clear when the break-even point and the eventual repayment of the loan is to be achieved so that the correct amount can be asked for. In most cases your initial financing will fall short of your target, in which case you will need

Simon Hodges, CEO of the Alchemy Network Middle East

Each time a business owner needs to seek additional financing for anything other than to fund significant growth their credibility weakens to understand how you can adjust your plans to the realities without destroying your objectives. It may also help your case if it does become necessary to ask for more money!” If the business model is proving unsuccessful at the nine-month stage, it is a good idea to persevere?

“Most businesses take at least three years to reach a point when they are making revenues that meet all the business costs and provide a suitable income to the owner. Therefore owners should not lose heart if the business does not achieve instant success. Financing the business properly at the outset will give the necessary time to establish it. However, controlling costs such as salaries and rent are difficult over the short term and therefore need to be carefully considered as the business develops to avoid overstressing it in the early years. Credibility in the financial world depends on the approach at this time.” Does my business require a ‘USP’ even if I’m in a well-recognised and busy market sector? Will this help me secure finance?

“Particularly in a well-recognised and busy market sector, business owners need to ask themselves why customers should buy from their business and not from a competitor. People will more often than not opt for the seller who stands out from the rest. Remember however, that a USP is all about perception and therefore it is not enough to simply have a USP your customers must easily and quickly SEE and EXPERIENCE that you stand out. Successful marketing in itself can only ever achieve short term benefits but if it is backed up by an organisation capable of delivering its marketing promise on a sustainable basis, your business will improve and hence your credibility in achieving future objectives will be enhanced. This is an attractive proposition to financiers.” How do I know if it’s the right moment to expand my business and seek finance for doing so?

“Expansion should be contemplated when there is a reasonable chance of success, as it’s potentially risking what has been achieved so far. Identifying your chosen market niche will allow an understanding of your customers - and hence where and how many of them there are - so that you can realistically set targets. In establishing an aggressive objective for the business over a three year horizon, the timing of the development of additional resources necessary to deliver your product or service to your customers will become apparent. As the milestones along the way near, planning can be made well in advance so that when the right moment arrives all the necessary resources are available. Remember however, growing too fast can be as dangerous to a company as not growing!” Why is so much emphasis put on the role of the business plan and the presence of audited accounts in raising finance?

“Third parties who provide financial assistance to a business do so on the basis that it will be repaid. The person providing the financing assesses the risk of this happening and this is reflected either in financing being refused or the interest rates being charged. In reaching their decision, lenders can only rely on information that is made available to

August 2013

Getting finance them by the owner. To assist business owners, financiers have established a process to provide this information but strangely many business leaders seem to resist using these tools. Where no finance is required, owners are free to do what they want. However, once a third party has been requested to provide funds, owners should simply accept that they will be required to provide a business plan and audited statements and accordingly prepare them as accurately as possible. A business plan provides information on the future, while the provision of audited statements provides an independent confirmation that the historical performance is accurate.” What are the key steps that will help minimise risk in Year One?

“The mind-set of the owner is absolutely critical to the success of the business. Many business owners understand their product or service but don’t really know enough about the other key areas of business such as finance, marketing and management. Although they are easy enough to learn, particularly in the beginning, many choose not to do so - and the first of those is understanding the need for a business plan. “Let’s say, for example, that you have your desired business activity and a notion that you want it to succeed so as to provide enough income to you and your family and now you just want to get on with it! “However, if you had to get from Dubai to Fujeirah City by car for the first time would you use a map? “Yes”, you say - “How else would I get there?” “Well, that’s exactly what a business plan is for - it’s a map laying out how your business is going to get to its destination so that third parties who are going to deal with your business understand what is in your mind.

through the application of the interest rate. Payment of the principle and interest is not dependent on performance but in order to get their payments these lenders will typically be more risk averse than investors. “It might therefore be more attractive to find investors but be aware they tend to want to have a say in how the business is run and this is often more than simply accepting the role of mentor or non-executive director. Like everything there are pluses and minuses that business owners need to juggle so that they can achieve what they want.”

Owners should target to achieve annual revenues in excess of AED15 million by the fifth year plan so they can be reviewed regularly. • Ensure your plan accommodates change - Think of your plan as a series of guideposts to focus attention on, and as a sequence of targets to aim for. If opportunities arise that make sense to you then take them, if things no longer make sense in the plan then adjust your plan. • Review the plan periodically - You should review the plan and stay flexible and open to change. Update it when necessary. “There are numerous well thought-out guides about how to prepare a business plans. If the process for completing a plan outlined in these guides is followed, you will identify all the necessary actions to direct your business in its first year. These items will include establishing your USP and market niche, identifying suitable premises and location and the number of staff required to achieve your strategic objectives.”

“Here are a few things to bear in mind about your plan:

How can I decide whether I need a ‘risk finance’ partner like a bank, or an actual investor?

• Begin with what’s important to you - A mediocre plan you’re passionate about is better than a highly professionallyproduced plan you don’t feel strongly about. • Planning is more of an art than a science - Your plan is educated guesswork and make sure you detail your assumptions in your

“At the outset, the honest answer is that you may not have the choice. However, as a guide an investor should bring something to the business other than simply money and therefore because they contribute to the success of the business their reward is largely based on the performance. A risk finance partner, such as a bank will look to ensure they are repaid and their profit is made

How do the startup priorities change if I’m heading up the branch of an international business, rather than going it alone?

“Mature businesses operating in other countries that are perhaps looking enviously at the growth of the UAE economy and wish to establish operations here need to think about many of the same things that a new startup has to consider. This is because to the UAE market they are in effect a new business. “First, why would anyone want to buy their product or service and what is the size of the target market in the UAE? Just because they are a success at home does not automatically mean they will succeed in the Middle East. Foreign companies should carry out considerable research into the market place and establish a business plan that includes the provision of sufficient finance to support it. Similar to new startups, foreign operations tend to take about three years to break even. Remember, significant investment is required up-front to cover licensing, premises and the cost of employing people; so parent companies will want to ensure their hard-earned resources are wisely invested.” If I’m falling behind on my finance repayments, what should I do?

“Simply talk to your lender! If you chose a financier at the outset who is genuinely interested in your success, they will want to work with you to reschedule your repayments. Ideally you should raise this well in advance of it becoming a real problem; this is one of those circumstances when you will reap the reward from your investment in keeping your financier appraised of business progress.” For an online version, please visit:

www.smeadvisor.com/2013/08/a-questionof-priorities/

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Getting finance

A face in the crowd or one in a million? The growth of your SME may seem like a runaway train but – what happens when it loses steam due to lack of sufficient finances? Being the Co-Founder and Managing Director of the crowdinvesting platform Eureeca.com, Sam Quawasmi feels the growing financial pains of an SME in the region. Speaking out of experience, he explains the top dos and don’ts of financing, highlights how to attract potential investors and offers sound lessons on the new financing solution – crowdinvesting…

sk any SME owner today – what are their top three challenges? The response is, not very surprisingly, finance, finance and finance! While finance – or the lack of it – is a crucial concern, another major issue is the dearth of good advice; SMEs are desperate to get an investor’s perspective they are eager to gain answers to key questions such as – what aspects of the business’ financial approach need to be tweaked in order to draw investor interest? Or, what boxes does the business need to tick before approaching a potential financial investor? To help simplify this process and assist SMEs in their quest for finance, we explore the major dos and don’ts. Here’s a checklist to consider while getting finance for your SME…

1. Do invest in a great management team “Many factors go into what investors look at but a few key things stand out. First and foremost is the management team – it’s vital for any investor to know who they are investing in and what the management team has to offer, not only in terms of their passion for their business but a clear focus and future growth strategy. Ultimately, people invest in people as much as they do in a business,” explains Sam. The first step to building a solid management team is usually the appointment of the CEO and COO; these are people that lead the business from the front, and in reality, are also responsible for hiring and managing the rest of the management team. For instance, the profile of the CEO of an SME will typically follow the template below:

L to R: Sam Quawasmi, Managing Director and Co-Fouder, Eureeca; Dr. Nasser Saidi, Deputy Chairman, Eureeca; Chris Thomas, CEO and Co-Founder, Eureeca

role of the business in the larger operating sector.

Some of the important factors that businesses need to keep in mind while planning your exit strategy are: an attractive portfolio of assets, strong financial records, wellrecognised brand value in the market, and of course a profitability which comes alongside a consistent revenue model.

And – the profile of the COO of an SME could look like the below:

CEO

COO

Responsibilities: a) Strategy making b) Hiring the senior-level management team c) Major decision making processes Skills: a) Have a larger focus – ensure the overall wellbeing of the business. b) Vision for growth – predict the future market conditions and have an effective strategy for the long-term. c) People management – work with the senior management team and ensure that the business has a team of people that are able to get the job done. d) Be outward facing – securing the

Responsibilities: a) Day-to-day operational activities b) Coordination of all the business operations Skills: a) Performance measurement b) Strong leadership and management c) Be inward facing – controlling the day-to-day operations of the business and what it’s like to work in. Not to forget – the appointment of a certified accountant in your management team can give you the much needed edge when approaching investors and help boost investor confidence.

2. Do take time to plan out an end-point or exit strategy In his online article, What’s Your End Game?, on Inc.com, Eric V. Holtzclaw explains, “In my experience advising startup founders who don’t have the end in mind, the failure to define an ultimate goal leads to dissatisfaction and even fallout because the driving forces behind the organisation are not in agreement. “And it’s not just about long-term planning. The desired ultimate outcome has a farreaching impact on how a company is run day-to-day and what investments are appropriate at a given point or milestone in a company’s creation.” Sam adds, “Another important consideration for investors is the capacity for growth and the exit strategy. Businesses in the MENA region are truly catching up to be on par with SMEs elsewhere in the world. With the emergence of accelerators and incubators like Oasis 500 and Endeavour, businesses are becoming much better at structuring themselves to get ‘fit for funding’.” Some of the important factors that business owners need to keep in mind while planning their exit strategy are: an attractive portfolio of assets, strong financial records, well-recognised brand value in the market, and of course a profitability which comes alongside consistent revenue model. 3. Don’t complicate your business plan Sam says, “I would say a common mistake is not keeping your business plan simple and showing a clear ROI. Ultimately, investors want to better understand how a business can grow and create an ROI for them. Whether that is financial or for the betterment of the ecosystem, the ROI should be clearly stated.” He adds, “By being clear, simple and focused, an SME can truly showcase the power of what they are trying to achieve. In addition,

August 2013

Getting finance

How important is it to have a strong existing network when crowdinvesting? “It is vital. Businesses that succeed through crowdinvesting on platforms like Eureeca W hat are main advantag es and have strong networks that they can engage disadvantages of crowdinvesting? with during their funding campaign. However, Sam says, “Crowdinvesting really allows a network goes far beyond your circle of close businesses at the growth level to access friends and family. Most business owners a new asset class for raising funds. All would be surprised to see how far-reaching businesses need capital to continue their network is. These are people who growing and doing the good work that they know or have heard about your business do and yet in the world we are in today, the such as clients, fans, subscribers, people who traditional means in which businesses get know the management team and believe in funds don’t work anymore. Crowdinvesting them including previous colleagues, friends, provides a viable option for a business to friends of friends, business associates and so go out to a crowd of people that believe in on. The point is that when people think of them and their business to pool together investment they often think of people within smaller sums of money and invest. This their closest circle and geographical sphere. is a powerful concept – no longer are The beauty of crowdinvesting is that it no longer limits you to your current location or people you are comfortable reaching out to – through the power of social media you Crowdinvesting really can now reach out to your full network that crosses many facets of your life,” explains Sam. allows businesses at However, if the business is unable to meet its funding target, all the amount collected is returned to the investor accounts.

Sam Quawasmi, Managing Director and Co-founder of Eureeca

by developing clear structured business plans, forecasts and documentation, an SME will be able to showcase the benefits of investing for the long run.” 4. Don’t bite off more than you can chew “Biting off more than they can chew is another mistake that is common among entrepreneurs. It’s impossible for entrepreneurs to have 100 conversations at any one time with 100 different investors. We created Eureeca.com to solve that – to provide an easy and accessible platform where an entrepreneur can have conversations with multiple people at once, saving time and increasing transparency,” explains Sam. Wisdom of the crowd

So, what is crowdinvesting and what is Eureeca.com? Crowdinvesting is a new and emerging financial solution for SMEs in the region starved for alternative financing options. It enables SMEs to reach out to a vast number of investors through one single platform. Businesses can post their profile on the platform and attract potential investors – as simple as that! The process starts with businesses uploading information such as their executive summary, business plan, financial projections and videos or images of their business. Following this, the business sets a funding target to be reached within 90 days. Investors then get a chance to start funding the business that interests them. If the target amount is reached, the business receives its funding and the investors get the agreed equity.

the growth level to access a new asset class for raising funds.

businesses limited to only getting one or two investors to help them grow but now the crowd has a lower barrier to entry in being able to invest smaller amounts. Investments now are open to people who have $10,000, $1000 or even $100 to invest.” He continues, “Also an SME that crowdinvests either the entire amount they need or a portion that they saved for their fans will benefit from the network effect that gets created by going on a crowdinvesting platform like Eureeca. Entrepreneurs need to attract the crowd (made up of clients, fans, friends, subscribers, ex-colleagues) to their business and they do so by engaging with them and thereby creating a network of brand ambassadors who will buy your product, promote it, share it and refer it to their friends and so on. This viral effect that crowdinvesting creates is so valuable in the social age we live in. “It provides businesses with the capacity to access capital to help them grow, expand and scale as well as raise awareness of their business among their core network and beyond. Crowd investors also act as brand ambassadors who have a vested interest in the growth of the business and will take steps to make it grow and succeed.”

Do you agree that through crowdinvesting startups lose out on the mentorship/ guidance from investors? “Not at all. We at Eureeca ensure that we offer a lot more than just a platform to any SME listed on our website. We work with entrepreneurs on various things including their documentation and, marketing and digital strategies for their crowdfunding campaign. Given our team of experts, we ensure that each SME that comes on our platform really is as ready as possible to achieve their funding goal,” says Sam. “After an SME signs up to come on to Eureeca.com, they are able to access quite a few educational videos and documents that walk them through various elements of putting their funding campaign together. “Lastly, let’s not forget the wisdom of the crowd. On each and every funding proposal an SME will have investors and potential investors ask them questions, discuss and debate the assumptions set out. The crowd can also offer additional help to any SME and have private conversations via Eureeca.com. The crowd of investors then continue to provide support, guidance, feedback and referrals even after the funding goal has been met,” he concludes. For an online version, please visit: www.smeadvisor.com/2013/08/a-face-inthe-crowd/

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August 2013

Workspace

The power of technology Strategies for leveraging success Every SME owner knows that time is money. Working with modern technology can multiply opportunity, dramatically enhance customer contact and supercharge business volume and we struggle on without it at our peril. A good first step is to ensure that your working environment comes complete with the raft of integrated technology solutions you need: and here, Laudy Lahdo, General Manager at Servcorp for the Middle East, looks at the tremendous benefits to be accrued from a fully-equipped technology platformâ&#x20AC;Ś

he power of technology. What does this really mean for a freelance designer, a copywriter, a working mom, an entrepreneur, a home business or an SME? Every entrepreneur eventually realises that without the right communication tools and software they can’t run their business effectively. The trick is to consider your business requirements, research your options and then decide what kind of solutions you should invest in. One of the ways that a company can leverage the benefits of technology is to work in an environment where all the necessary elements are openly available. So an excellent example of how digital tools can truly add value to your business is to work from serviced and virtual offices, which provide advanced IT networks without the huge overhead costs. Mobility: the first imperative

Today, mobility is the name of the game. At the end of 2012, there were 6.8 billion global mobile subscribers, equivalent to 96 per cent of the world’s 7.1 billion population. By the end of this year, there will be more mobileconnected devices than people!* The most significant advantage of incorporating information technology into the routine of a business, is speed. An online presence is a key factor for success for any business in today’s highly competitive global environment. With something as simple as a website stating a company’s core values and products, a business is automatically guaranteed a larger client footprint. As the flow of information between the business and the consumer becomes stronger, the number of people exposed to this information also grows, and you have instant, easy networking. For small companies especially, this means business is no longer limited by geographical boundaries and multinational corporations no longer dominate the market. Very often, one of the major costs for a small company, especially if it’s the local branch of an international SME, can be long-duration conference calls between division heads, team members or even clients. A business can stand or fall by its smart use of technology, so if you feel that yours is in a situation where it may benefit from advice or back-up in this area, it could be well worth it to consider support avenues.

Laudy Lahdo, General Manager at Servcorp for the Middle East

One of the ways that a company can leverage the benefits of technology is to work in an environment where all the necessary elements are openly available Staying up to date – effortlessly?

Nowadays, a wide range of business applications are available, and it may be difficult to remain up-to-date with the latest gadgets and resources to stay ahead of your competition. If a company wants to update or try a different hardware or software, this usually involves training. During this transition phase of implementation, it may be difficult to retain customers or maintain efficiency, because ‘new’ can sometimes create chaos. All of this can be easily avoided with the expert support of a service provider with a proprietary infrastructure and technical experience which makes any transition

August 2013

Workspace

seamless. It’s worth noting that smaller businesses have an unbeatable advantage for taking this approach - implementing systemic change is more efficient here than in a large organisation with a large hierarchy of team members. Someexamplesofthesebusinessapplications include online communication services. They instantly connect you to multi-media platforms; take the cost-effectiveness of a text and video instant messaging program like Skype, or the more corporate appeal of videoconferencing. In cases like this, the facilities provided by a company with advanced IT solutions can be especially effective. Fielding every call

Have you ever been at a grocery store and missed an important call by the time your arms were free? Or have you missed a call because your receptionist took a break and didn’t have a back up? In cases like this, the facilities provided by a company with advanced IT solutions can be especially beneficial. Some of the new communication solutions will allow you to make your office truly portable, taking your extension with you wherever you are and being able to manage your transfer options while on the go. You can take advantage of an integrated communication feature that allows you to use a single business number enabling you to make calls from anywhere in the world at local rates. Other solutions that you can consider are an online receptionist to answer your calls professionally, an interactive voicemail system with multiple call diversion options or even an application which allows you to receive your voicemail messages in your

Some of the new communication solutions will allow you to make your office truly portable, taking your extension with you wherever you are and being able to manage your transfer options while on the go email account. E-mail also allows for quick intra-departmental communication and some providers can even offer a function with reminders about pending messages to keep you on track. Now, there are also ways to send and receive faxes directly from your computer, so you don’t sit around waiting for one that you thought never came through because it was forgotten at the machine. This also means it is safe from prying eyes and it appears in your e-mail inbox instantly, electronically filed, saving you time and money. Your reduced paper usage will also contribute to a greener future.

This is typically included in many solutions. However it is essential to customise your own package by picking and choosing features and programmes or working with a dedicated IT professional to assist with this and any network or hardware issues, which are usually on a pay-as-you-go basis. Let’s not ignore the power of the Internet which no business can operate without. A fast system from a reliable service provider means that your data speeds should be constant with no ‘peak traffic’ during certain hours, made possible through new fiber optics. Ideally, files should be able to go directly from your computer to your printer, which saves an extra step in setting up with a boost to overall efficiency. Do note, you can take advantage of mobile devices but these have memory and speed limitations. Luckily, there are plenty of cloud services to take advantage of. Interestingly, global cloud applications will account for 84 per cent of total mobile data traffic by 2017, compared to the 74 per cent it was in 2012**. Time, space and money

Businesses today use technology in many different ways. The use of social networking, video conferencing and access to an international interactive infrastructure have helped improve communication and made it easier to reach a wider customer base. These tools have not only increased companies’ productivity, but tools such as digital filing, online invoices and inthe-cloud document storage have saved them time, space and money issues for many companies. A business can now set up its presence anywhere in the world at a minor cost. Modern technology has become a necessity rather than the luxury it was only 10 years ago. The use of technology has removed all boundaries, improved communications and made information easily accessible. Businesses can no longer afford to operate within the old ways of pen and paper and should jump on the technology train today.

*Source: Cisco Visual Networking Index: Global Mobile Data Traffic Forecast Update, To optimise the use of technology for your 2012-2017 business, you should seek options that grant **Source: Cisco Visual Networking Index you online control over your business. It’s ideal to be able to use this portal to also For an online version, please visit: view invoices online or book boardrooms, www.smeadvisor.com/2013/08/the-powerextra equipment or administrative support. of-technology/ Take control!

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Workspace

Sage advice Struggling to keep the important financials of your SME in place with the help of your Excel sheet? There are far more powerful options, like a range of specialist business software that has been available for more than a decade and which brings smart professional solutions to your business accounts. We spoke to market leader – Sage. Easy-to-use, scalable and secure – Sage software solutions and products can make your life easier. Here’s how…

or most SME owners, the default option to keep track of the day-today business records is an Excel sheet – its familiar design, easy functionality and low cost make it a safe haven for basic book-keeping. So, why should your small business invest time, effort and – most importantly – money in business software? The simple answer is – implementing business software helps your company keep track of daily activities (financials, purchasing, inventories, and so on), measure and improve the productivity

of your staff, increase operational efficiency, cut back on paper processes and reduce costs.

And – how does business software do this? Different kinds of business software can enable businesses to perform various functions. For instance, accounting software can help businesses store and measure sales, costs, and profit margins. Additionally, it also generates invoices, order forms and other basic business memos. What’s more, it allows you to put your accounts together in compliance with regional international standards.

At this point, if you are already sold to the idea of a business software, that’s great news! But – for those of you who need further persuading, here’s a list of top reasons to consider getting business software for your SME: 1. Encourages best practice: the implementation of business software right from the start of your business forms the foundation of how things will be done in the future. For instance, if your practice is that you always collect the cash payment before the service is offered to your customer, the

software ensures that this happens. Or, if you have a Sunday payment cycle, the software can implement claims and flag-up. 2. Increases accuracy: using business software reduces human error and thereby ensures that your business information is more accurate. 3. Gives the opportunity to learn: business software can often guide you about something that you didn’t know before; this could be as simple as understanding the standard format of an order form. 4. Takes your business to the next level: after you have implemented business software, you can combine this with additional advanced business intelligence software to analyse consumer behaviour and use data analytics. This can give your business a competitive edge over its peers! Once your business has made the decision to go ahead with business software, the next natural step is to establish the best software to suit your business needs. However, this process doesn’t need to be very complex and timeconsuming. At the very entry level, SMEs need simple accounting and financial software that fulfil their basic needs and something that is intuitive to use and understand. An expert in this capacity is the market leader Sage – with over 250 ERP products and solutions – the firm is a top choice for businesses, especially small businesses. We spoke to Keith Fenner, Senior Vice President Sales - Sage ERP Africa and Middle East, about the options Sage has to offer… First things first. What is Sage and what does it offer to SMEs?

Explaining Sage’s position in the MENA region, Fenner says, “We see the Middle East region as a hub and, as a hub, you need to be international which means you must be able to deploy global software.” He continues, “Our Sage 50 solution is a start point for SMEs; it can typically start with one user and offers simple financial solutions which can grow with your business to include inventories, purchasing and so on. “The next stage is the Sage 300 suite. An SME can very well start with this and, many SMEs in this region do begin with this solution. Again, it offers a single user option and a platform to grow bigger. The Sage 300 starts where the Sage 50

Keith Fenner, Senior Vice President Sales - Sage ERP Africa and Middle East

ends and, in reality, this could go all the way to a multinational business. It adds competency such as customer relationship management, e-commerce, and mobility – these kind of areas become very important for a business starting up and growing. “Above that, we have the Sage ERP X3. Taking a look at the market, you may find a top-end SME that requires a product like the Sage ERP X3. They want to have a web-base, real time option or require international access and other complexities of these kinds.”

What are some of the day-to-day functions that Sage software can be used for?

“I think the most important thing for a small business is cash. It’s the bloodline of the business. The entry level solutions include cash management, invoicing, collections – essentially all the steps in the process of ‘order to cash’. “The second biggest function is managing stock – to see if you have too much or too little. This is where your cash flow is invested. The software enables managing inventory in a way that makes sense and ensures that all the cash flow of the business isn’t blocked

August 2013

Workspace

which is needed to obviously reinvest and grow,” says Fenner. As an SME owner/director, why would I consider Sage products and solutions?

Fenner lists the top reasons: 1. Sage is, undisputedly, the biggest provider of software for SMEs. 2. The main focus of Sage is making good software for SMEs. That’s all they do and, do it pretty well! 3. At Sage, a primary goal is easing the process for small businesses to do business. 4. Sage offers scalable software that you can grow with and move with anywhere in the world. 5. Sage is truly ‘Glocal’. It makes a global piece of software locally available to businesses. What happens after you buy the software? What kind of after-sales support do you offer?

He adds, “In terms of support, our website offers learning exercises and information about products and add-ons for different industries and solutions. But ultimately, we understand that you always need a local touch and we have a very established partner base in the UAE. There is always someone to reach out to – whether it’s a local call asking a simple query or visiting our partner and discussing important questions such as – ‘Am I using the product correctly?’ or ‘Have I outgrown the product?’.” What is the cost?

“The price starts from USD 350 for an entry level software piece.” Do you need a dedicated person to manage the software?

“Definitely not. SMEs have very limited resources and hence we offer a very unique product for this market. You get in, and use it and automatically understand it. That’s what we do with our entry level software – you should be able to buy it off the shelf, load it on your computer and it should be intuitive to use. The good news, however, is that if you really need someone, you do have someone you can reach out to,” explains Fenner. When is the right time to start using such software?

Fenner says, “Day one. If you get these basics wrong at the beginning, then there is the problem of going back correcting what has happened. But – you are so busy running your business that you can never catch up. This entry level software is consciously reasonable in price

Sage enables firms to send statements and invoices electronically – which is a huge advantage. Additionally, they can procure electronically; sending purchase orders to suppliers

very appealing for an SME for two reasons. Firstly, there is a cash flow advantage so you pay on a (per user per month) basis. Secondly, the cost is low as we, at Sage, are ensuring that the data is on a server and secure. It’s quite obvious that being a global giant, the database that we build will come with security that an SME can’t afford to have in place. And – the upside is that you can still scale using the cloud.” To what extent does having a software cut back on traditional paper processes?

“I don’t think it’s possible to remove all paper. It will take a long time to be replaced. There are a lot of things that need to be so that a business can implement it at an early considered such as where will you put the stage. However, if you leave the software for a data, where are you going to store it and later stage, then you need to employ people how are you going to scan it,” he explains. to catch up and that is expensive. Using Sage, SMEs can reduce paper “Furthermore, if you talk to a bank or processes especially in the process of cash financier, they like to see that you have a collection. business software in place. It ensures best He continues, “Sage enables firms to practice – Sage has this built into it – this send statements and invoices electronically helps you understand the right processes – which is a huge advantage. Additionally, to follow while doing business.” they can procure electronically; sending purchase orders to suppliers. Take the example of an SME that started “For example, if you are a local Olive Oil off as a team of three and has now grown maker that wants to deal with the likes of into a bigger office with 10 people. Is the Carrefour, you most probably have to send software still relevant to me and does and receive data electronically. Through Sage it help the business transition through software, this is possible. We are focused on different growth phases? enabling the small business to do the big deal.” Fenner says, “The products offer add-ons and features that allow you to grow. You Is this software applicable across all have the option to introduce slightly higher industries? complexities like managing different prices “Yes, I think it is very much, especially for different customers or discounting for at the entry level, because at this stage all different customers. processes are quite similar. It is ‘order to “The good news is if you happen to completely cash’ or ‘procure to pay’. As and when you outgrow the software, there is another Sage grow bigger, you have the choice to use a product waiting for you that you can implement. bigger piece of Sage software,” adds Fenner. If you start as a ‘one man business’ which later grows to a larger scale, Sage is still applicable.” How does using Sage software within How secure is the software?

an SME facilitate the business decisionmaking process?

Fenner explains, “The problem is always physical security versus software security. Is our software encrypted and the data safe in a robust industry standard database? Yes, of course. Our process to deliver a robust secure software is a given, as a software vendor of choice. But – physical security is more of a concern within an SME. If you put your data on a laptop and leave it in a coffee shop – there’s not much we can do about it. This is where the cloud becomes very relevant. “We will be introducing a Sage cloud offering in the Middle East in the near future. This is

“Even at the entry level, you have intelligence concepts built into the software. You are able to look at the data in the system and interrogate it to make future decisions. As your business grows and, our software gets bigger and bigger, more interesting tools are introduced. But even at the basic level, you have all the reporting you need to make decisions,” concludes Fenner. Time to hit the delete button on your Excel sheet? For an online version, please visit: www.smeadvidor.com/2013/08/sageadvice

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• Saudi Arabia: Alhamrani United Co., Jeddah, Tel: +966 2 6696690 • Dubai & Northern Emirates: Arabian Automobiles, Tel: +971 4 2952222 • Abu Dhabi & Al Ain: Al Masaood Automobiles, Tel: +971 2 6811118 • Kuwait: Abdulmohsen Abdulaziz Al Babtain Co., Tel: +965 1804888 • Oman: Suhail Bahwan Automobiles, Tel: +968 24560111 • Qatar: Saleh Al Hamad Al Mana Co., Tel: +974 4 4283333 • Bahrain: Y.K. Almoayyed & Sons BSC(C), Tel: +973 1 7732732 • Lebanon: Rasamny – Younis Motor Co. S.A.L. – RYMCO, Beirut, Tel:+9611 273333 • Jordan: Bustami & Saheb Trading Co.L.T.D., Amman, Tel: +962 6 5532456

marketing

When setting up a physical space for your business, the mantra for success typically is location, location and location. So, what happens when you try to create a virtual space for your business? There’s a simple formula – interaction, interaction and interaction! If your SME is in the process of creating an online presence, then connecting and interacting with potential clients, investors and suppliers through a business platform is crucial. And – this is where, the social media platform, LinkedIn comes into play. SME Advisor spoke to Fredrik Bernsel, Sales Director, EMEA + LATAM Partners, LinkedIn and discovered the best ways to use LinkedIn to fast-track the growth of your SME. Does your SME need to:

• create an online presence and build a strong footing for its brand through social media? • maintain a solid network of business contacts through an easy online medium? • interact with its clients in a professional way and offer them detailed information about the company without having to invest into a website? • get valuable feedback from clients, business partners and peers in a constructive manner?

Example; let’s take a look at two different scenarios: Scene one: Your SME has successfully set up its LinkedIn page and has published fairly useful company information to generate exposure. That was the easy part. However, now your business is struggling to make meaningful interaction and is lost amongst the large volume of feeds. Scene two: Your SME doesn’t find it necessary to invest time, money and energy

into a LinkedIn page and you often find yourself asking – ‘What does LinkedIn have to do with my business growth?’ If your answer to any of the questions above is ‘yes’ and, if your SME does fall under either category mentioned above, it’s worth taking a look at our quick, simple and effective guide on ‘LinkedIn for SMEs’ which can help reshape the online marketing strategy of your business! We explore the top 10 questions on every SME owner’s mind…

1. Why LinkedIn?

There’s no shortage of social media websites or solutions; Facebook and Google ads are very popular options, especially for SMEs. However, LinkedIn is different. Fredrik Bernsel, Sales Director, EMEA + LATAM Partners, LinkedIn, explains, “LinkedIn is the world’s largest online professional network with over 225 million members globally and five million in the Middle East and North Africa (MENA) region. With the help of our suite of free tools as well as paid services through LinkedIn Marketing Solutions, we have enabled opportunities for SMEs to generate awareness and reach an influential, affluent, educated audience and engage directly with customers in a business context to build meaningful brand relationships.” That’s not all. He continues, “LinkedIn helps connect you to the right audience. Using the power of their network, small business owners can reach out to second and third degree connections. This reduces the risk of cold calls and builds credibility. It’s never been easier for SMEs and entrepreneurs to engage with professionals in decision making capacities. This not only saves time for SMEs but keeps costs low, helping them become productive and successful.” We let the statistics do the talking. “Just three per cent of 835 business owners surveyed by The Wall Street Journal and Vistage International said Twitter had the most potential to help their companies. Professionalnetworking service LinkedIn Corp. topped the survey, with 41 per cent of respondents singling it out as potentially beneficial to their company. 16 per cent picked YouTube, the video service owned by Google Inc., and 14 per cent chose social network Facebook Inc.,” explain Emily Maltby and Shira Ovide in their article on online.wsj.com.

Fredrik Bernsel, Sales Director, EMEA + LATAM Partners, LinkedIn

within your marketplace.” She continues, “If your company isn’t already a top Google search result, your LinkedIn page can actually act as your webpage that more people have access to view. It doesn’t work like Facebook, where your company can be an individual entity like one of your friends. Instead, on LinkedIn, you are able to present your team as a set of accomplished — and good-looking — individuals.” Bernsel adds, “Using LinkedIn Marketing Solutions, SMEs have a number of options available to them. Our various tools help build customised campaigns that engage audiences relevant to a brand. Sponsored content drives thought leadership and helps you to be seen in by the right audiences using groups, polls and company pages. Social ads and display ads can be targeted to specific members based on their profile data.

2. What can LinkedIn do for my business?

Jennifer Riggins talks about the primary advantages of LinkedIn in her online article, How to Use LinkedIn as Your Marketing BFF, “I believe you’ll be hard-pressed to get your business out there on the Internet faster or cheaper than via the world’s third largest social network. With it, you aren’t left worrying about how your new or old business is Googling. You’re not putting up ads. You’re not spending marketing funds on a website design. Anyone that is viewing your profile is pre-qualified as a potential business contact. I believe it’s the perfect way to connect your small business

“While the Middle East has a relatively smaller number of SMEs when compared to western markets, we are confident that this sector will see growth in the region.”

“LinkedIn not only lets you target ads but also provides measurable results. You can measure new followers, engagement and impressions. The availability of in-depth results helps measure success and evaluate ROI.” 3. Define the steps in setting up a LinkedIn page for my business.

Bernsel lays down the simple steps: “I don’t think there could be a defined process for SMEs to follow on LinkedIn when building their brand. However, we do believe it is important to check a few boxes and ensure that they start out on the right foot: a. Establish your profile: Potential business partners always want to know ‘who’ is behind a business. As a business owner on LinkedIn, before building your brand, you need to have a profile that establishes your own credibility. b. Create a Company Page: Increase the visibility of your business by creating a Company Page. Company Pages give members an opportunity to view information about each company, such as its description, number of employees and the industry it operates in. Develop your Company Page with a logo, locations and feed from your company blog. Explore tools like Targeted Updates and Follower Insights to help you segment and engage your followers even better. c. Grow and monitor your network: Import your existing contact lists from your mail client to find out which of your contacts are already on LinkedIn. LinkedIn automatically recommends people you might know based on your details and existing

August 2013

marketing

contacts, and you should regularly look through your existing contacts for people you might want to connect with. Offering to connect with everyone from customers to clients and vendors is a great idea because it shows your customers you are online, and gives you an edge on the competition which is probably not engaging customers in the same way. d. Get recommendations and endorsements: Recommendations are one of the best ways to secure new clients because this is the feature looked for most when viewing a new profile. They enhance your professional credibility and create a great impression on people reading your profile. Ensure you request LinkedIn recommendations from happy customers willing to provide testimonials. e. Engage with your connections through LinkedIn Groups and Polls: Join a “small business” Group to engage with likeminded people who can provide you support and answer your business-specific questions. SMEs also use LinkedIn polls to generate free insights, discuss ideas, strategize and even identify members who could potentially act as consultants and help in lead-building.” 4. What kind of information should the page include?

Bernsel says, “LinkedIn is built on trust and credibility. Your LinkedIn Company Page can help position you with the right audiences. As an SME, when you’re just starting out, you need to be transparent and not make claims that cannot be supported. “Use LinkedIn to put out as much information about your product and services. Always tailor content specifically for individuals you plan to connect with. Try and be as visual as possible but don’t overload connections with content and information. People always want to know what ‘someone like me’ thinks about a product or service and this is where LinkedIn recommendations help to spread the word about your business in people’s networks.” 5. How can my business interact with the right audience on LinkedIn?

“Your LinkedIn Company Page is dynamically rendered. So we make sure that the right people see your page, content and engage with you. Once people start following your company page, we’ve given page managers the option to target updates. Another way to drive traffic to your LinkedIn Company Page is to use the links on your LinkedIn Profile, company website, and even email signatures,” says Bernsel.

According to data released by LinkedIn in

September 2012 there were more than

15 million

Small Business professionals who are LinkedIn members. 6. Is it important, if necessary at all, for an SME owner or director to be on LinkedIn?

“Having a presence on LinkedIn is easy but it’s important to sustain it. Small business owners need to effectively engage with their audiences and deliver relevant content. LinkedIn members are looking to be productive and successful, so they need to see the value you provide to them. Once you have your content in place, it is also importantto engageconsistently. With a number ofcompetitorsvyingforyouraudiences’attention, you need to be able to provide information and updates at regular intervals,” says Bernsel. 7. Do I need any resources to manage the page?

“Having a dedicated resource to manage your LinkedIn engagement depends on the level of activity you have going on. In most cases, it’s much more efficient to have prescheduled updates and pre-draft to help make engagement easier. You must aim to respond within 24 hours. If done in a well-planned and structured manner, engagement on LinkedIn will not need a dedicated manager and will help SMEs keep their costs down,” explains Bernsel. 8. How can an SME effectively monitor its brand on LinkedIn?

Bernsel says, “On LinkedIn, conversations about your brand and company are already taking place. Given the quality and relevance of the audience, you already know that these individuals are part of your target audience. The next step is not just monitoring to ‘listen’ to their conversations, but using insights to engage with them. “Using LinkedIn Signal, you can monitor what your network is saying about your brand, competitors or industry. With LinkedIn Signal, you can filter results to a region, industry, by time and even seniority. You can also identify

the top groups that matter to your business and monitor conversations there. As an advertiser on LinkedIn, you can also get statistics and data on page views, follower insights and other engagement metrics.” 9. How would you compare LinkedIn as a platform for B2B marketing vs. marketing to your consumers?

Bernsel explains, “LinkedIn as a platform provides brands with the ability to conduct B2B campaigns or reach out directly to consumers. Our LinkedIn Marketing Solutions teams work with businesses of all sizes to help understand what their marketing objectives are and then develop a campaign that will help them achieve goals. Once objectives are defined and using insights from LinkedIn, we work with businesses to reach audiences that matter to them. So you could have a consumer campaign like Etihad Airway’s ‘Mapped Out’ or a B2B campaign like one that Philips conducted to build credibility with audiences in the healthcare and lighting industries.” 10. The process of building a brand is not just about marketing. It could include processes like networking, recruitment and sales as well. What kind of role does LinkedIn play in this context?

Bernsel answers, “It has never been more important than now for brands to go where their audiences are. For years, brands followed a one-size-suits-all policy. But with the rise of social media and the availability of big data, it has become easy for brands, irrespective of their size, to tailor their communication at specific audiences.” “That is why LinkedIn has become the one platform where established businesses, SMEs or entrepreneurs can hire, market and sell. Whether it’s finding the right talent, engaging the right professionals to build their brand or use their network to facilitate an introduction that helps them sell their product or service. By providing our members with business insights, we are enabling them to engage more closely with audiences and develop relevant and contextual content which will help them scale growth,” he concludes. Now that your business is all set with its LinkedIn page, don’t forget to add us on LinkedIn! (www.linkedin.com/groups/SMEAdvisor-3690567) For an online version, please visit:

www.smeadvisor.com/2013/08/linkedin-101/

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LEGAL

Top tips for Handling

disputes in the UAE

No business wants to enter into a dispute. Disputes are often costly, tie up management time and distract staff from profitable work. What’s more, for an SME, a dispute can have a catastrophic impact, potentially derailing the business for good. It’s also true that in the UAE - where a civil dispute is sometimes accompanied by a criminal complaint - a dispute can have a significant impact on key staff, including travel bans and the stress of facing criminal charges. SME Advisor is delighted to present the following guide to minimising the dangers, courtesy of Richard Bell and James Fox of Clyde & Co.

here’s no doubt that taking the right action from the beginning of a dispute can help to resolve the dispute faster, more efficiently and at less cost. So we set out below our list of top tips to consider when a dispute arises. This is based on our experience in dealing with a wide range of contentious issues throughout the region in diverse industry sectors. While a dispute can have serious consequences, it also represents an opportunity. If key decision makers for both parties treat the dispute as an opportunity to consider their relationship and where it went wrong, this can assist the parties to restructure the relationship in a way that not only prevents disputes in the future, but is ultimately more lucrative. This is more likely to be achieved when your business is negotiating from a position of strength - a position our top tips will help you achieve. The key things you should consider are: The one and only

Choose one person in your organisation to manage the dispute. That person should, as far as possible, not have been involved in the circumstances that led to the dispute. Often when disputes arise, personalities get in the way which can distract the parties from

considering the key issues at stake. Tasking one individual to manage the dispute in your business will not only mean one person has the responsibility to take care of the actions below, it will give the other individuals within your business a central point of contact, and mean that one person will have perspective on all the issues. It is also more cost efficient. It means that the lawyers instructed don’t receive conflicting instructions and will not have to explain the same point a number of times - all of which saves you money. Documents are king

The UAE is a civil law jurisdiction. Civil law jurisdictions place far greater reliance on what can be proven by the documents than jurisdictions such as England, the USA or other common law countries where oral witness evidence is favoured. This means it is essential that you pay very close attention to the documents that are exchanged with the other side in the lead up to a dispute. It also means it is very important that you locate and save all relevant documents that have been created by the individuals involved. This includes all correspondence (including letters, emails, text messages, BBM messages, iPhone messages

etc.), meeting notes (both internal and external), photographic evidence, and any documents you may be able to get from the other side (it is likely to be easier to obtain this before the dispute becomes more advanced). If the dispute relates to something physical, get photos and video evidence if possible. Consider appointing one person within your business to manage and collate the documents and evidence. Do not touch

It may be the case that you are aware that critical evidence is held on a particular computer –maybetheworkcomputerofaformeremployee involved in the dispute, you may suspect some evidence has been deleted. If this is the case, do not try to find it yourself. It is incredibly difficult to permanently delete data from a computer but if it has been deleted, everything you do, even turning the computer on, may reduce the chance of being able to recover the data. It is possible to use forensic methods to access the data without having any impact on the evidence and preserving it in a way that is persuasive before a court or arbitral tribunal. We have acted on many cases where we have been able to sourceveryimportantevidencethroughforensic examination of computers.

Beware of without prejudice

Without prejudice correspondence is a common means to attempt to resolve a dispute in other jurisdictions. The basic principle is that if you mark a document as being without prejudice you can make concessions in that document for the purpose of seeking a resolution, and the other side will not be able to use those concessions against you in a court or arbitral tribunal. The principle of without prejudice does not have the same standing in the UAE. Be careful not to write anything in correspondence to the other side that you would not want to see produced in a court. We have even known some businesses to try and trick an unwary opponent by writing a without prejudice letter (which is not detrimental to their position) in the hope that the other side will respond with full and frank offer in the interests of resolving the dispute. They can then use that correspondence to support their case by labelling it an admission of liability. Get statements while you can

It’s important to gather as much evidence as you can as quickly as you can. Getting initial witnessstatementsintheearlystagesofadispute is advisable for a number of reasons. Expatriate workerstendtostayintheUAEforlimitedperiods of time. Get their evidence while you can and keep their contact details. If they are important to your dispute make sure (if possible) that when they leave your business they depart on good terms, in case you need to ask for their help in the future. It is also an unfortunate reality that key witnesses can pass away and at least if you have a witness statement you will have some evidence to put forward from them, albeit that evidence may not carry the weight of a witness that has been cross-examined. We should point out here that when we refer to witness evidence being used, this would generally be in the context of arbitration (an alternative form of dispute resolution carried on outside the court system) as the UAE courts do not rely on witness evidence as a rule. Notwithstanding this, it will assist internal understanding of the dispute and for this reason we recommend you do take preliminary statements from all parties involved, even if the dispute will be before the courts of the UAE. One potential exception to this advice is in circumstances where the other side has, or you believe they intend to, make a criminal complaint. If the prosecutor does choose to prosecute a case against you, the police may potentially seize documents from your premises. In these circumstances you do not

Avoid entering into “tit for tat” correspondence with the other side. If there is a procedure in your contract for resolving a dispute, follow it

have undesirable consequences including severely limiting the financial recovery you are ultimately able to make. Have a clear informed negotiation strategy

Avoid entering into “tit for tat” correspondence with the other side. If there is a procedure in your contract for resolving a dispute, follow it. If the contract requires you to send notice to a particular individual by fax do not correspond to another individual by email. If the other party makes serious necessarily want to have created potentially allegations about your conduct, you may need incriminating evidence that may be ultimately to respond, but a response should only deal used against your business. So you get your with the key issues and avoid any irrelevant lawyers in early to deal with these aspects. or extraneous points that will only lead to a “war of correspondence”. Don’t forget about that performance guarantee or cheque you agreed to at the beginning of the contract

Itisacommonfeatureofcommercialcontracts in the UAE that one party will require the other to provide an on demand bank guarantee or alternatively an undated cheque. If your business has done this, you may have entered intoacontractwhichsetsdownconditionsunder which the guarantee can be called or the cheque can be cashed. In the event of a dispute this will not necessarily protect you. We have dealt with manycaseswhereonepartyhasusedaguarantee or cheque as a negotiating tactic. The position in relation to cheques is potentially even more serious, as traditionally the courts do not pay heed to the terms of any agreement governing when a cheque may be cashed. Dishonouring a cheque is a criminal offence in the UAE. The signatory on the cheque is likely to be imprisoned, usually until the sums to honour the cheque are deposited into court. In the event that you have provided a performance guarantee and the other side is threatening to call it without justification, all is not lost. It is possible to apply to court on an urgent basis to have the bank guarantee attached, so that the funds are not released to the other side. We have done this successfully in the past, but the chances of success depend on the particular circumstances and such action can be costly and can lead to full blown litigation on this aspect of the case. The risks of termination

Your contract may give you the right to terminate on notice. Be very careful before exercising this option and always seek advice before doing so. Just because you have a termination for convenience clause in your contract does not mean that your termination will have legal effect. Further, terminating may

Always check the documents you are signing

If someone arrives at your office and requests that you sign for a document, or if a court bailiff attempts to serve a court document on you, always make sure that you read it, before signing for it. If it is in a language that you do not understand, always get somebody who does understand to read it. This is especially important with the service of court documents. We have been involved in cases where service of a proceeding was deemed to have been made on an overseas company when it was unwittingly signed for by the overseas company’s local distributor. Train your reception staff to be aware of these issues. And finally…

Instruct lawyers as early in the dispute as possible. We know from our experience the sooner lawyers get involved in a dispute the betterpositionourclientwillbein.Theearlieryou get advice on both the strengths and weaknesses of your position, the more likely you are able to resolve the issue without the costs of court proceedings or arbitration, both of which can be expensive. You will also be more likely to reestablish your relationship with the other side, hopefully on a more profitable basis than before. This will not always be the case and sometimes litigation is inevitable. However, getting the best advice from the beginning will without fail put you in a better position going forward. If you would like further information on any issue raised in this update please contact: Richard Bell, Partner E: richard.bell@clydeco.com James Fox, Senior Associate E: james.fox@clydeco.com For an online version, please visit:

www.smeadvisor.com/2013/08/top-tips/

August 2013

INDUSTRY WATCH

Industry focus: retail apparel markets Several countries from the Middle East were ranked on the A.T Kearney Retail Apparel Index including the UAE (second position), Kuwait (fourth position) and Saudi Arabia (sixth position).

Many retailers are testing their operations in the UAE before expanding to other Middle East countries due to its ease of doing business, sizeable retail segment, large expat community, and tourism. market: the rise of e-commerce, a boom in fast fashion, and the evolution of the luxury market. Over the last year, several fast fashion retailers have aggressively expanded in China. Uniqlo opened 65 stores in China in fiscal year 2012, bringing its total count to 145, and it plans to add 100 stores a year to reach 1,000 stores. H&M opened 52 stores in 2012 and Zara opened 37 stores. Gap has plans to open 35 stores in 2013. Dr. Martin Fabel, A.T. Kearney Partner

he Retail Apparel Index identifies the top 10 developing countries ranked in the A.T. Kearney Global Retail Development Index in terms of market attractiveness, retail development, and country risk for their clothing retail industries. Key highlights:

I. China China, on the first position, remains the top apparel market due to its market size and strong growth in clothing sales. Three trends have shaped China’s apparel

Three trends have shaped China’s apparel market: the rise of e-commerce, a boom in fast fashion, and the evolution of the luxury market.

China’s luxury market remains strong – it surpassed Japan to become the second largest luxury market in the world in 2012 – but it’s not growing as fast as it has in the past. A key reason being that a large portion of luxury purchases are made abroad, due to lower prices and a strong Renminbi. II. Middle East The Middle East region remains an attractive retail apparel market with the UAE (#2), Kuwait (#4), and Saudi Arabia (#6) ranking in the Index. Many retailers are testing their operations in the UAE before expanding to other Middle East countries due to its ease of doing business, sizeable retail segment, large expat community, and tourism. Several notable apparel openings occurred in the UAE in 2012, including Level Shore District, Prada, Muji, COS, Gap, Calvin Klein, Juicy Couture, and Destination Maternity. Dr. Martin Fabel, A.T. Kearney Partner said, “Over the past years, ME markets have demonstrated to be a great development opportunity for apparel retailers. A key component for such success has been and will be the selection of local partners with the ability to operate in multiple countries in the Middle-East.”

Business expectations for Q3 2013 A recent business confidence survey conducted by the DED measured the pulse of the business community in Dubai. optimism for hiring, while trading firms are most optimistic on volumes sold. 2. Sales revenues: The survey shows that 43 per cent businesses expect an improvement in their sales revenue in Q3 2013 while another 40 per cent see stable outcomes. The increase in sales revenues will continue to be driven by an increase in real business activity (volumes) as prices are expected to remain largely stable, with 79 per cent businesses expecting no change in their product prices.

His Excellency Sami Al Qamzi, Director General of DED

he composite Business Confidence Index (BCI), for the second quarter of this year, reached 120.7 points in Dubai. This 14.6 points increase over the same period in 2012 was primarily due to a stable business outlook and improvement in the business environment. BCI has also grown by 6.7 points between the first two quarters of 2013 as seen in the quarterly business confidence survey conducted by the Department of Economic Development (DED) in Dubai. Conducted in collaboration with the global consultancy firm Dun & Bradstreet, the quarterly survey uses a rigorous sampling approach that ensures adequate representation of small, medium, and large enterprises across the manufacturing, trading, and services sectors, while giving due attention to the perceptions of the exporting firms in Dubai. Export firms and larger enterprises in general are more confident about sales volumes, profitability and prices in comparison to small and medium enterprises (SMEs). “Dubai has placed considerable emphasis on aligning its business environment with the best in the world and such efforts are translated into growing confidence among businesses. As per current estimates, Dubai’s real GDP grew by 4.1 per cent in the first quarter of 2013, followed by 4.7 per cent in Q2 as trade and other non-oil sectors flourished and the prevailing trends confirm that such growth is here to stay,” commented His Excellency Sami Al Qamzi, Director General of DED. Key highlights:

1. Overall business outlook: The overall business outlook for Q3 2013 remains steady with 93 per cent respondents reporting either an improvement or stability in business conditions. Businesses in the manufacturing sector are more optimistic with respect to profits; service firms have indicated higher

3. Profits: Profitability expectations are in line with the overall sales expectations, with 43 per cent expecting an increase based on the expectation of winning new contracts with better profit margins. 4. Volumes sold: With respect to volumes sold, 44 per cent of the respondents expect an increase during Q3 2013. It has also led to 40 per cent businesses looking to increase purchase orders in the next quarter in anticipation of new projects and the usual rise in demand after the end of Ramadan. In terms of new purchase orders, 40 per cent of the respondents expect them while 43 per cent plan no such changes as they have sufficient stocks. 5. Technology: Technology upgrades are in the agenda for 53 per cent compared to 31 per cent last year. 6. Jobs: Optimism among businesses is lending stability to jobs too as 82 per cent of the businesses expect ‘no change’ in their workforce while another 16 per cent to increase their headcount in the next quarter, compared to 11 per cent in Q2 2012. Service firms are more optimistic with respect to hiring compared to their manufacturing and trading counterparts. Challenges While 21 per cent of the respondents cited no challenges impacting their businesses in Q2 2012, their strength grew to 22 per cent in Q2 2013. For the remaining, the topmost challenge in Q2 2013 was competition, much like the previous quarter. Other challenges include slowing demand and government fees adversely impacting profit margins. Larger firms pointed to availability of skilled labour as their second biggest challenge after competition. Improvements in the ease of doing business in Dubai are bringing growth into focus as 74 per cent of the respondents said they would invest in expansion compared to 30 per cent in Q2, 2012.

August 2013

INDUSTRY WATCH

Event: Global Islamic Economy Summit Dubai Chamber of Commerce and Industry, in partnership with Thomson Reuters, is organising the first Global Islamic Economy Summit in Dubai on November 25 and 26, 2013.

HE Mohammed Abdullah Gergawi, Minister of Cabinet Affairs, United Arab Emirates

he move came following the launch of Dubai: Capital of Islamic Economy by His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai. Under the patronage of His Highness, the Summit will gather leading thinkers, policy makers and stakeholders from around the world to lead a discussion on the future of the USD four trillion Islamic economy. With a consumer base of 1.6 billion Muslims, the promise that the Islamic world holds for economic growth and profitability is constantly discussed. Yet very little transformative dialogue has been undertaken to assess the scale of opportunities and challenges within the global Islamic Economy. Discussions will focus on six major pillars of the Islamic economy: Islamic Finance; Halal Food; Halal Lifestyle; Halal Travel; SME Development; and Islamic Economy Infrastructure. Islamic Finance will cover: Islamic banking, Islamic asset management, Takaful and Retakaful, Sukuk and capital markets and Waqf endowments; Halal Food: agriculture, ingredients and manufacturing, retail, logistics, research and product development and food services; Halal Lifestyle: cosmetics, personal care, pharmaceuticals, fashion, entertainment; art and design and media; Halal Travel: hospitality, tourism, meetings incentives conferences and exhibitions (MICE), healthcare and Hajj/Umrah; SME Development: technology and innovation, venture capital

financing, incubation and training; Islamic Economy Infrastructure: training and education, compliance, standardisation, research, Muslim consumer marketing and research and government services. The event will feature the launch of several innovations relating to the Islamic economy, including ground-breaking market studies and announcements from Dubai: Capital of Islamic Economy. His Excellency Mohammed Abdullah Gergawi, Minister of Cabinet Affairs, United Arab Emirates and Chairman of the Executive Office of His Highness Sheikh Mohammed Bin Rashid Al Maktoum said: “As part of the Dubai: Capital of Islamic Economy initiative, the Global Islamic Economy Summit 2013 offers that one point of focus highlighting a world of opportunities in the Islamic economy. And there’s no better place to do it than Dubai, the geographic and economic nexus of the Islamic world and a melting pot of citizens from hundreds of countries and dozens of cultures.” His Excellency Abdul Rahman Saif Al Ghurair, Chairman, Dubai Chamber, said: “As a growing global business and leisure destination, Dubai is an ideal choice to become the capital of the Islamic economy. The UAE is already one of the biggest markets in the region for Islamic banking and we see major opportunities to enhance the halal food industry, develop trade policies and commercial laws, and Islamic tourism among other sectors. The Global Islamic Economy Summit will be the ideal platform to explore these ideas and begin a constructive dialogue for future growth and development.”

HE Abdul Rahman Saif Al Ghurair-Chairman-Dubai Chamber

INDUSTRY WATCH

Real estate snapshot Property markets in the UAE – particularly those of Abu Dhabi and Dubai – look optimistic as the year progresses

ASWEEK Real Estate Development and Marketing issued its latest detailed market intelligence report which revealed good progress for both emirates with rising property sales, steady supply, and growing investor confidence. Masood Al Awar, TASWEEK CEO, explains that the renewed confidence is the result of two major factors: strong returns on investments and the improving ability among developers and owners to meet their financial commitments. Abu Dhabi

Abu Dhabi is expected to enter a coming decade of steady real estate growth and development. Focus is currently on Abu Dhabi Island projects such as Reem Island, Al Raha Beach, Saadiyat Island and Yas Island which are attracting significant investor interest. Recent turnovers such as the second batch of luxury Eastern Mangroves apartments indicate end-to-end market expansion. Over the past six months of price fluctuations, prime properties within Al Raha Beach, Saadiyat Island and the Corniche area have witnessed rental growth of between two and eight per cent for new leases. There has been a marked shift among residents towards more modern developments, contributing to lower rents in older areas by five per cent. This trend has been encouraging people commuting to Abu Dhabi from Dubai for work to relocate. Overall, lease rates across the capital are expected to steadily increase from the second half of the year to further energise the local markets. Other factors that are expected to further drive local market growth are: the allocation of AED 330 billion by the Abu Dhabi Government for various projects across multiple sectors, which has placed the emirate among the top investment destinations in the world; and the announcement that staff of companies owned by the Abu

Masood Al Awar, CEO of TASWEEK

Dhabi Government have to relocate to the capital before September to retain their housing allowance. Dubai

After being declared by Forbes as the second hottest property market in the world in 2012, Dubai once again proved its rebounding appeal among global real estate investors by posting its 16th consecutive monthly increase in property prices and rents in 2013. This indicates the local property market’s steady and sustained recovery. The value of property sales in Dubai rose 63 per cent for 2013, with an average of 32 transactions completed every hour. Demand grew from end to end, with luxury properties in even the most exclusive parts of the emirate posting strong sales. Dubai’s buyers and sellers engaged in a total of 14,260 transactions for the first half, collectively valued at AED 44 billion. Dubai is currently a profitable market due to its higher population growth rate and stronger investor pull. March 2013 property prices in the emirate climbed 18.3 per cent over the previous year, with Dubai ranking among the top five best performing real estate markets in the world. The Dubai Government has expressed full support in increasing global confidence for the local property market.

INDUSTRY WATCH

Social media in the Middle East Networking websites continue to impact our lives in more ways than one. A survey by Performics MENA underlined the influence it has on users in the Middle East. 52 per cent are more comfortable engaging with people online than in person and; 51 per cent would choose social networks over telephone communication. These statistics highlight the influence of social media on the way people interact with one another; social media has inevitably created paradigm shifts in relationships. Other key findings:

1. In regard to online activities in general, the analysis showed that most participants log on to the Internet to use search tools, for research projects and for access to entertainment. 2. Looking at the nature of the posts on the social media channels – 50 per cent share jokes, cartoons or memes and 49 per cent write ‘status updates’. Religious content is also posted by half of the respondents.

recent study, Life on Demand, conducted by Performics MENA highlighted the increasing role of social media in the Middle East and its continual impact on daily life. The survey reported that 61 per cent of respondents said that they have more than two social media accounts and 60 per cent stated that they visit a social networking platform daily – this revealed the importance of social media in people’s lives across the Middle East. “Social media is gaining popularity – at incredible speed – here in the Middle East,” said Jamil Zablah, Managing Director of Performics MENA. “It has redefined communication and reconfigured many aspects of our lives including our daily activities, how we conduct business and how we engage with each other. The study indicates that people in the Middle East are quickly embracing social media and its ability to keep us increasingly connected as well as make life happen ‘on demand’.” The study also reported that people across the Middle East are currently joining Twitter faster than any other social media network. Additionally, it found that most respondents prefer to interact with each other via social media channels over other modes of communication – 64 per cent would rather talk to distant friends on social networks; 51 per cent even favor social networking to talk to close friends;

3. The survey revealed that more than 30 per cent of participants ‘Like’ a brand on Facebook because they are regular customers, want to be updated with new offerings, are looking for insider information or are searching for recent company and brand posts. Furthermore, on average, people ‘Like’ a total of five brands. 4. In response to the question – How likely are you to engage with each of the following types of posts when they come from a brand you ‘Like’? – 70 per cent of participants went with pictures, 58 per cent chose videos, 52 per cent opted for jokes, cartoons or memes, 52 per cent selected status updates and, 50 per cent veered towards links to articles.

The survey reported that 61 per cent of respondents said that they have more than two social media accounts and 60 per cent stated that they visit a social networking platform daily – this revealed the importance of social media in people’s lives across the Middle East.

Technology ON THE MOVE A recent study by Visa revealed what technological gadgets travellers prefer to take along with them on a holiday.

The statistics reveal that travellers have the constant need to stay connected no matter where they are; technology has become a strong companion for leisure travellers in this regard.

isa’s Global Travel Intentions Study 2013 reported that phones are the top choice as a holiday companion (84 per cent), followed by computers (60 per cent), cameras (55 per cent), and entertainment devices (23 per cent) for travellers form the Africa and Middle East region (Egypt, Kuwait, Morocco, Saudi Arabia, South Africa and the UAE). The statistics reveal that travellers have the constant need to stay connected no matter where they are;

The weight of the gadget (39 per cent) and Internet capability (34 per cent) are important factors that determine which gadgets to bring on holiday – although the top consideration is simply because AMEA travellers are addicted and cannot live with their gadgets (43 per cent). technology has become a strong companion for leisure travellers in this regard. Gadgets make it easy to find essential information and share travel experiences with friends and family; this was reflected in the fact that 71 per cent of

travellers in the Africa and the Middle East (AMEA) region take a SmartPhone with them. Furthermore, the study revealed that 33 per cent of travellers choose to use their devices to check-in online while abroad. The weight of the gadget (39 per cent) and internet capability (34 per cent) are important factors that determine which gadgets to bring on holiday – although the top consideration is simply because AMEA travellers are addicted and cannot live with their gadgets (43 per cent). First-time travellers, however, seem to prefer to travel light as they picked the weight of their gadget as being the most important factor (50 per cent). Online sources such as travel review, service provider and official tourism websites are used by 42 percent of AMEA travellers for trip planning, 37 percent for bookings of independent travel and 33 percent for information while traveling. Travellers from Asia Pacific are the most tech-savvy, with these numbers increasing to 80 per cent, 76 per cent and 73 per cent respectively. “Technology has impacted every aspect of our lives, and the way that we plan and enjoy holidays is no different. While traditional word of mouth reviews from friends, relatives and guidebooks are still used – especially among travellers from Africa and the Middle East – online resources that offer reviews from frequent travellers as well as a host of other information such as currency converters, pictures, booking and discount facilities are becoming the first source of information for most global travellers. In a positive sign for providers who are offering both information and booking solutions online, global travellers are saying that online booking processes are fast and getting easier. Visa understands this and provides a number of e-commerce solutions to make online payments secure and convenient for both merchants and customers,” said Marcello Baricordi, General Manager UAE and Global Accounts Lead at Visa Inc.

August 2013

TECHNOLOGY FOR BUSINESS

Event: Gov Tech Middle East Abu Dhabi National Exhibition Centre (ADNEC) will host the largest government technology exhibition in the Middle East in the UAE capital next year.

he technology exhibition will be attended by representatives of government departments, ministries and authorities from across the GCC. Organised by Terrapinn, the inaugural Gov Tech Middle East will take place from April 8 to 9, 2014. Gov Tech will provide a world class platform for ICT professionals to interact, share knowledge and spark innovation within the government services sector. Showcasing the latest cutting-edge technology and

digital solutions designed to support the development of e-government services, Gov Tech will address security and efficiency challenges related to government services. Expected to attract thousands of attendees, Gov Tech will include a visionary keynote conference, free-to-attend on-floor technical seminars, workshops and an industry awards ceremony. Humaid Matar Al Dhaheri, Chief Commercial Officer at ADNEC, said: “We are delighted to host this high profile and unique event for the first time in the Middle East. At ADNEC, we continuously seek to attract new and innovative events to the emirate through the development of strategic partnerships with organisers and highlighting our world-class facilities and services. “The ICT industry is and continues to be a significant contributor to our economic development in the UAE, which makes Gov Tech ME a key event in the region. With a surge in global IT spending, we anticipate strong attendance for this event that

LinkedIn’s new initiative Businesses can now use LinkedIn Sponsored Updates to leverage their online marketing strategies. Sponsored Updates are a part of the LinkedIn Marketing Solutions offering for companies looking to build relationships with the world’s professionals. Companies can promote updates in 20 languages across 200 countries and territories. With the launch of LinkedIn Sponsored

Updates, brands have a new way to effectively build relationships with followers and non-followers alike on the world’s largest profeassional network. Sponsored Updates will allow companies to promote business content including, but not limited to, videos, presentations and product news in the newsfeed of LinkedIn members, extending the reach of their page and

further underscores ADNEC’s growth as a regional hub for conferences and exhibitions.” Matthew Williams, Managing Director of Terrapinn Middle East, said: “It is an incredibly exciting time for governments across the Middle East as they explore new ways of engaging and serving their citizens. The UAE and other regional government organisations are striving for better efficiency and productivity across the board. More and more IT leaders are actively looking for new ideas and the latest technology in pursuit of these goals. “We are excited to launch an event where the government IT sector can meet to help shape the future of their industry and solve some of the biggest issues facing regional governments today.” Gov Tech Middle East will also highlight organisational IT efficiency and productivity, IT protection against data and cyber-attacks, and the delivery of new services to citizens through investment in new technologies.

allowing them to engage with new audiences. “Content marketing is at the heart of LinkedIn’s Marketing Solutions strategy and enables businesses to engage with a high quality audience,” said Fredrik Bernsel, Marketing Solutions in EMEA for LinkedIn. “As we aim to achieve our goal of developing a definitive professional publishing platform we want to create opportunities for marketers to drive business results by sharing relevant content with our members.” Clearly marked as “sponsored”, Sponsored Updates will be seen in members’ feeds on their LinkedIn homepage.

Posts will appear across desktop, tablet and mobile and will be available to marketers both on a CPM and CPC basis via a bid-based auction. That’s not all. If companies want to the track the effectiveness of the post or campaign, they can do so using comprehensive analytics. This will enable businesses to collect insights and fine-tune their strategy in real time. The member experience will be seamless with a combination of organic and sponsored content in their newsfeed. Members can engage with the content via “Like,” “Share,” and “Comment” options and they can also “Follow” the company that generated it.

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TECHNOLOGY FOR BUSINESS

Top tech project released by PhD student A device by Masdar Institute student converts a SmartPhone into a multipurpose tool for engineers and scientists.

Ericsson to acquire Telcocell Ericsson broadens ITS Systems Integration capabilities for BSS in North America.

ricsson has signed an agreement to acquire Telcocell, a Canada-based consulting and systems integration firm specialising in Business Support Systems (BSS), as well as its subsidiaries. Through the acquisition, approximately 200 services employees and consultants are expected to join Ericsson. Ericsson’s raft of comprehensive services and broad software portfolio supports customers in transforming their operations and IT environments, improving the user experience as well as increasing efficiency and enabling service innovation. Furthermore, Ericsson has 15,000 consulting and systems integration professionals who deliver more than 1,500 consulting, systems integrations and learning services projects in multi-vendor and multi-technology environments each year. Ericsson stands to gain from Telcocell’s consulting and systems integration experience in converged charging, custom development, quality assurance and production support for BSS. The acquisition complements Ericsson’s existing comprehensive BSS product portfolio and expertise in these fields. Additionally, it will further strengthen the company’s

customer relations and BSS transformation capabilities, primarily in North America. Paolo Colella, Head of Consulting and Systems Integration at Ericsson said: “Multi-vendor BSS integration and consulting is of high strategic importance for Ericsson worldwide. Acquiring capabilities from Telcocell will further strengthen our ability to offer full ICT transformation capabilities to our customers, and Ericsson’s competitiveness at the intersection where IT meets telecom.” Mickey Weizmann, CEO, Founder and Managing Partner at Telcocell said: “To truly transform operators’ businesses and improve consumer experience, a combination of strong services capabilities and a comprehensive software portfolio is needed. Telcocell’s multi-vendor BSS consulting and systems integration expertise will broaden Ericsson’s services capabilities. From Telcocell’s side, the team will benefit from joining a company of approximately 64,000 services employees with global scale and presence.” The acquisition is expected to close by the end of the third quarter of 2013, subject to customary closing conditions.

Masdar Institute of Science and Technology, an independent, research-driven graduate-level university focused on advanced energy and sustainable technologies, announced that one of its PhD students has developed an integrated device that can turn a SmartPhone into a powerful multipurpose tool for engineers and scientists at a cost of only USD 10. The ‘UltraSmart’ project developed by Alaeddine Mokri, a PhD student and Research Assistant in the Inter-Disciplinary Doctoral Degree Programme at Masdar Institute, has become one of the four winners in the Intel Business Challenge Middle East & North Africa 2013 regional finals ceremony held in Abu Dhabi. UltraSmart is a combination of a measuring device and a corresponding adapter. When used together with the appropriate SmartPhone application, UltraSmart will be able to be combined with any SmartPhone to enable new functions, demonstrating four innovative features. For example, the device will enable the smartphone to perform 3D scanning, as well as scanning of plots and charts to gather data. It can also be used to measure the distance, curvature, or the surface area of a given object. In addition, it can be used as a computer mouse with extra features that do not exist in standard computer control devices. The integrated SmartPhone tool will also help developers of applications (for SmartPhones and tablets) to address the needs of scientists and engineers, especially in industrial design. They can take measurements and create drawings with their SmartPhones. The device can also prove fruitful to designers and manufacturers of solar cells, as well as applications specific to nanotechnology and nano-science.

TECHNOLOGY FOR BUSINESS

Advanced solutions assist Qatari banking sector The launch of new specialised solutions for Automated Teller Machines (ATMs) by Mackeen Technology will aid Qatar’s rapidly expanding banking sector.

o set the scene of Qatar’s banking industry, here are a few statistics:

The net profit of Qatari banks rose 7.5 per cent to USD 4.4 billion in 2012 and is expected to maintain momentum through 2014. The total assets of the country’s banking sector stood at USD 225 billion, ranking third in the GCC. The time is right for such an initiative with banks currently evaluating the quality of ancillary segments such as ATMs, regarded as indispensable to modern-day banking, to differentiate themselves from increasing competitive markets. Mackeen Technology began complete enterprise technology and

Top spamrelaying countries Sophos revealed the latest ‘Dirty Dozen’ of spam relaying countries, covering the second quarter of 2013. Looking at the ‘Dirty Dozen’ in terms of population, China and India make it to the list with more than a billion people and an increasing demand for Internet access in both countries. US leads on the top of the list with more than 300 million people and a huge chunk of the world’s internet connectivity. ‘Dirty Dozen’ denotes the extent to which a country’s

computers are used for delivering spam but it doesn’t identify where the spammers themselves are located. The reason being that most spam is sent indirectly these days, especially if it is overtly malevolent, such as: • Phishing emails: These try to lure you into entering passwords into mock-ups of a real site such as your bank or your webmail account. • Malware links: These urge you to click links that put you directly in harm’s way by taking your browser to hacked websites. • Malware deliveries: These use false pretences, such as fake invoices, to trick you into opening infected attachments. • Identity theft: These invite you to reply with

system integration solutions in 2010. Its core services include Security and Integration, Documents Archiving, ATM Monitoring and Management, IP Telephony and Contact Centre Services, and Channel Development and Outsourcing. The company manages overseas branches in Saudi Arabia and Sudan and is eyeing other Middle Eastern growth markets. Mackeen Technology is rolling out various solutions in response to the rising demand for advanced ATM support within the Qatari banking sector. It offers full ATM monitoring 24/7, inclusive of Incident Management, On-Call and Proactive Maintenance, System Supplies and Control Centre functions, among others. A team of Mackeen experts can maintain all technical aspects of ATMs, from software to screen care. The scope of work can extend to surrounding ATM elements such as lighting and cooling. Moreover, Mackeen Technology also offers innovative tailor-made archiving solutions for activities such as Document and Enterprise Work Flow Management.

personally identifiable information, often by claiming to offer work from home opportunities. • Investment scams: These talk up investment plans that are at best unregulated and at worst completely fraudulent. • Advance fee fraud: These promise wealth but there are

all sorts of fees, bribes and payments to hand over first. “Remember that the ‘Dirty Dozen’ doesn’t tell us from where the spam originates,” said Paul Ducklin, Sophos Security Evangelist. “It tells us how spam gets relayed from the crooks to their potential victims.

August 2013

THE NEXT LEVEL

A GOLDEN OPPORTUNITY? The Indian economy can still supercharge business growth, but it’s not for the unwary About 65 per cent of SME staff and directors in the UAE are from the Indian subcontinent - maintaining strong ties with the nation that looks increasingly ready to become a global Top Five economy. So this issue of SME Advisor dedicates ‘The Next Level’ forum to an assessment of whether India is truly ready for the quantum economic leap - and what that could mean for your business. We asked leading capital markets expert Sourajit Aiyer to offer his in-depth comments…

he Indian economy has certainly seen its share of pressure during the last year or so, as the headwinds which impacted in FY 2012 (Apr 2011-Mar 2012), continued to pose a downside risk in FY 2013 and FY 2014 to date. Reviving the growth rate is a major challenge confronting policy makers, as GDP growth, which hovered around the seven to nine per cent mark per annum in recent years, fell below ~6.5 per cent in FY 2012 and is ~five per cent in FY 2013 - the lowest in the decade. Widening current account deficit, inflation, manufacturing and services slowdown, fiscal pressures, policy slowdown and the pressure on the Indian Rupee (INR) are major concerns. However, returning to historical growth rates is imperative for a country of this magnitude. Amongst all the negative news-flow, there were a few positive ones as well, especially in the second half of the year. Easing in manufacturing inflation/WPI, some action on the reforms

front, as well as regulatory changes to increase savings flows also triggered short bursts of optimism. Slicing into GDP segments, agriculture GDP growth was impacted in FY 2013 mainly due to less than normal monsoon rains. The overall slowdown in the industrial output hit manufacturing GDP growth. The India story’s biggest driver and the largest piece of its GDP - the Services sector - also saw moderation. This segment has been one of the major contributors to the overall slowdown in GDP, of late. Services segment growth was largely impacted by the trade, hotel, transport sector (comprising almost half of the Services pie), as these activities are linked to the first two segments, viz industrial and agriculture. Inflation has been a pain in recent months, owing to price trends in global crude, precious metals, commodities, electricity tariff hikes, supply side inefficiencies, changes in the diet towards protein and better cereal variants, and the revision of

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THE NEXT LEVEL

agriculture product MSPs (minimum support price). The WPI (Wholesale price index) was over ~seven-eight per cent through most of FY 2013 as fuel and commodity prices exerted pressure. CPI (Consumer price index) was above ~nine-10 per cent throughout the last fiscal. This was largely on account of the higher weightage of food within CPI, which was impacted due to weak monsoons, supply-side constraints, higher MSP and input costs. India’s central bank, Reserve Bank of India (RBI) maintained an anti-inflation stance in the growth-vs.inflation dilemma. Nevertheless, a reduction in WPI from March 2013 onwards to ~five per cent due to easing in the global commodity prices has been a positive development. CPI also saw some stability around the ~10 per cent mark, from the 11per cent plus figures it had notched up between Dec 2012 and Mar 2013. These developments in inflation trends ushered in hopes of interest rate cuts, which would eventually revive investment cycles and growth rates. RBI reduced the key policy rates (repo rate and reverse repo rates) in its policy review meetings in January, March and May 2013. But the country faces two challenges at this juncture. The depreciating INR has exerted current account deficit pressures in recent months. This brings the spotlight back on the growth-vs.-inflation dilemma, with expectations that RBI may hold back any further interest rate cuts until the currency situation eases slightly. This continues to impact growth expectations. Secondly, the rate cuts that were done have not really transmitted into a commensurate reduction in lending rates so far, as liquidity remained tight. India’s current account troubles owing to the balance of payments situation have not boosted its forex reserves, which has also impacted its ability to infuse liquidity. Base rates of major commercial banks have hardly reduced commensurate with the central bank’s rate cuts. Finding a balance

Coming to reforms, the need to balance coalition politics took its toll on the speed of the reforms’ execution. Environment clearance issues, regulatory delays, inflation and the global slowdown contributed to the slowdown in the investment cycle by companies. The high cost of borrowing remained a deterrent, as has the increased focus of banks on the NPA (net performing assets) aspect. Infrastructure development was slow due to regulatory delays, challenges of PPP models (Public-Private Partnership) and long-term funding sources. New projects slowed down and a number of existing projects are currently stalled facing delays.

Industrial output remained subdued for the most part in recent months, as output in segments like mining, coal, fertilizers and natural gas faltered. This consequently impacted demand for capital goods, commercial vehicles, equipments etc. The government also set up a Cabinet Committee of Investment as a single window to clear large projects, and is further working towards public spending projects. As inflation stability sustains and liquidity improves, this can lead to further monetary easing and eventually help to lower the cost of borrowing and revive the investment cycle.

price rise cannot be passed to the consumers, especially in fuel products. Companies who borrowed via ECB route (external commercial; borrowings) face profitability pressures. Nevertheless, the government is working on regulations to curb gold imports and address the needs for domestic oil & gas upstream activities. India is a global production hub for automobiles, consumer non-durables etc. The country also needs to improve the relative competitiveness of exports and expand into new export geographies outside its traditional export markets, especially targeting the frontier markets. The government has been actively trying for trade-agreements with a number of geographies. India has a competitive edge in knowledge sectors like pharmaceuticals, healthcare, automobiles and ancillary owing to its large talent base in these disciplines. Fluctuations

Sourajit Aiyer, Capital markets expert

On the current account/balance of payments front, India’s growing integration with the global economy meant that continued global economic weaknesses impacted demand for its exports. This is more so given that its major export markets are US and Europe which have undergone their own share of woes in recent years. The import bill was impacted due to price and demand trends in oil, gold, coal, etc. Oil imports are ~80 per cent of total oil demand. The demand for gold also shot up due to its perception as a relatively better investment. The trade deficit is now about 10 per cent of nominal GDP, and the forex reserves have stagnated around the USD290bn mark in recent months. Current account deficit as a percent of GDP increased from a historic average of ~one-two per cent to over four per cent. On top of this, the depreciation in the Indian Rupee is hanging like a Sword of Damocles, impacting the current account situation. INR depreciation impacts the import prices of key commodities and negates the positive impact that any easing in global commodity prices could have brought about. Prices of products using such imported inputs also come under pressure. It also exerts fiscal pressure if the entire

Continuing on the currency conundrum, from a historical average of ~Rs 45 in the last decade, the INR/US$ exchange rate breached the Rs 50 mark in FY 2012, the Rs 55 mark in FY 2013, and the Rs 60 mark during YTD FY 2014. Action on the reforms front in Sept-Oct 2012 had improved sentiments and the INR appreciated to ~Rs 53. But it subsequently moved back below ~Rs 55 and towards ~Rs 60 as the current account deficit continued to exert pressure. During the fiscal year FY 2013, the INR depreciated against currencies like Chinese Yuan, Thai Baht, Korean Won and Malaysian Ringgit, apart from USD and Euro. Exports have been a key growth driver in most of these Asian peers, and the current currency trends may increase India’s relative export competitiveness. Any uptick in manufacturing sector exports specifically would benefit from the current trends in the INR. On the other hand, the INR appreciated or remained flat this year against other emerging market peers like Brazilian Real, Russian Rouble, as well as the Pound Sterling and the Japanese Yen. Apart from stability in prices of import goods, another possible catalyst for INR appreciation would be to increase foreign direct investment (FDI), as it is a more stable and long-term source of foreign capital. Capital inflows from foreign portfolio investors (FII in Indian parlance) have given some cushion. FII inflows into Indian equities have been robust during most recent months, especially during the months which saw some reforms action. FIIs now comprise the second largest chunk of shareholders in Indian companies after the promoters, holding about ~20 per cent of market capitalization and over ~40 per cent

THE NEXT LEVEL

of free-float market capitalization. However, these flows are inherently volatile. Recent news flow relating to the USA possibly pulling back on its quantitative easing programme had an effect of pull-out of FII money, although this was mainly from Indian debt. One of the fall-outs of the depreciating INR on foreign investors which might pinch currently is that it impacts the investment returns earned post conversion. In terms of the fiscal situation, the government announced in its recent Budget, as well as in various roadshows, to rein in fiscal deficit to ~sub-five per cent in the coming year. There has been some reforms action since Sept 2012. The cap on LPG subsidies and the deregulation of diesel prices should ease the subsidy burden to some extent. Tax earnings might be impacted on lower excise earnings, corporate taxes etc as corporate demand and earnings remain muted. However, the net tax-GDP ratio should typically move towards historical averages as the GDP growth shows signs of recovery. While the recent Union Budget kept the tax structure as largely unchanged (except for a couple of surcharges on corporate and wealthy taxes), the government is also expected to earn from non-tax sources. These include its disinvestment programme, sale of spectrum and other resources like mines, land etc, as well as possible cash dividends from the cash-rich government-owned companies (PSUs). It has already approved disinvestment of four PSUs and strategic sale in a couple of firms. However, initial estimates of earnings from disinvestment might seem over-ambitious given the muted investor participation levels in the markets, hence updates in this segment will be closely watched. Opening up of FDI avenues should bring in further long-term capital. Recent announcements included liberalising FDI norms in sectors like retail, aviation and broadcasting, as well as proposals in pension and insurance. FDI inflow would go a long way in addressing the capital shortfall in meeting deficit targets. On the expenditure side, the Budget also announced a hefty 29 per cent rise in planned spending, given the need to spur growth in the context of the current slowdown. However, the challenge will be to meet the estimated revenue targets from tax earnings and disinvestment and spectrum sales. In the event of lower than expected revenues, expenditures may need to be appropriately managed to help keep fiscal deficit within comfort limits.

Opportunities

India’s growing integration with the global economy meant that continued global economic weaknesses impacted demand for its exports The role of savings

India has traditionally been a savingsoriented country. However, gross domestic savings as a percent of GDP has declined from the last five-year historical average of ~33-34 per cent to ~31 per cent in the last couple of fiscal years. The country needs to shift from consumption to savings and investment. Within households, the share of financial savings has declined in recent years while that of physical savings has risen, coinciding with the increased demand for gold and real estate which are increasingly viewed as safe-havens by Indian households vis. A. vis. Financial saving options. In order to spur retail inflows into financial savings, the government has engaged with asset management companies by initiating several measures like Rajiv Gandhi Equity Savings Scheme to bring in new equity investors, direct mutual fund plans to reduce fund costs, reviving distributor interest through incentives, expansion into small towns by increasing fund expense, flexibility in fund charges, investor awareness initiatives, amongst others. Institutionalisation of retail savings has been a key mobilizer towards investment flows, as seen in mature markets like USA, Korea etc. These regulatory initiatives, along with possible growth in disposable income should encourage flows into financial assets further. Apart from India’s strength in its demographic size and structure, a major aspect that needs special mention here is the criticality to build skilled workforce. India has the advantage of having a established knowledge-oriented talent pool which is well recognised globally. Apart from leveraging on its existing talent, the need is also to ensure a supply in the years to come. Skilling of the population is necessary to move up the work value-chain and move up to higher income levels that the population aspires for. In fact, its an opportunity the country needs to pounce on, as it would also go a long way in enhancing the competitive edge of the country as a preferred base of operations by global corporations ahead of other emerging market peers.

In conclusion, very few countries match up to the sheer demographic scale that India offers, and the size of this market would be tough to find elsewhere. Its short term woes do not diminish the long term opportunity that the country offers. Its demographic is still hungry for new, innovative products that give an opportunity for an enhanced lifestyle. From the economy’s perspective, it has faced tough economic times before and has always managed to navigate itself and emerge stronger. Even in the years immediately following the global financial crises, India showed resilience by clocking nine per cent per annum growth in GDP in both FY 2010 and 2011. While the recent reforms initiatives boosted sentiments, it is also imperative to address regulatory delays, governance of projects and inflation. The recent interest rate cuts have not really led to a reduction in lending rates so far, as liquidity was a concern. Despite stability in inflation now, the current account deficit and INR situation has placed watchful eyes on the growth vs. inflation dilemma once again. Going forward, the action plan is essentially about: • Reviving the investment cycle • Sustaining reforms action • Combating inflation • Reining in fiscal and current account deficits • Creating skilled jobs and enhancing labour productivity • Expanding export geographies • Attempting import substitution • Removing infrastructure bottlenecks • Reducing borrowing costs This is - needless to say - a challenging agenda, but one with finite and substantive goals. The good news is that the scale of opportunity still glitters brightly: will your business be among those happy to take its chances in these fastmoving waters in the months to come?

Sourajit Aiyer is Sr Manager - Investor Relations at a leading capital markets company based in India The views expressed are entirely personal and may not represent those of the company. This article is meant for information purposes only, and does not construe to be any investment advice or solicitation for any financial instrument. For an online version, please visit:

http://www.smeadvisor.com/2013/08/thegolden-opportunity/

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