SME Advisor Middle East - June 2014 by SME Advisor Middle East

Presenting partner

ISSUE 102 strategic SME partner

CELEBRATING RAMADAN A month full of speciAl opportunities for smes

Take the lead

But do you know what a leader does?

Nature or nurture?

Prof. Valerie Lindsay on entrepreneurship education

Now or never

How bootstrapping builds a business

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sme advisor ISSUE 102

EDITORIAL COMMITTEE SME Advisor is delighted to announce that during 2014 we will be working with some of the leading names in the SME space key figures who have kindly agreed to take part in our new Editorial Committee. This panel will play a vital role in channeling the feature content of our magazine and ensuring that we are more topical than ever - analyzing and discussing the ‘real world’ issues of tangible value to our readership and bringing industry-leading expertise across the publication and its raft of prestigious related events. We are delighted to introduce the following SME personalities:

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

Laudy Lahdo Laudy Lahdo is currently the General Manager of Servcorp, an Australian-based global provider of office solutions, in the Middle East region. She joined the company in 2003, after her move from Australia to the United Arab Emirates and as General Manager, has helped grow the company from just one office in Dubai’s Emirates Towers to 11 branches spread across the UAE, Bahrain, Qatar, Kuwait, Lebanon and Turkey. Servcorp provides both small and medium sized enterprises (SMEs), as well as multinationals, with the best locations, facilities, and technology and business support services in over 140 locations worldwide. Simon Hodges Simon has more than 30 years of experience working for international companies at Board level. He has spent over 10 years in the UAE and was previously Corporate Director of Administration of The Jumeirah Group, Senior Executive Officer of Dubai Holding Insurance Services LLC and Head of Governance for ADNEC. He also completed a two-year assignment as head of the health funding project for the Government of Dubai. Since 2011 he has been mentoring business owners from Dubai to enable them to create and then manage effective organisations that support business growth. Hazel Jackson Hazel has built an impressive reputation and successful multimillion dollar business – biz-group FZ LLCduring the past 19

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

MANAGEMENT Dominic De Sousa Chairman Nadeem Hood Group CEO Georgina O’Hara Group COO EDITORIAL Group Director of Editorial Paul Godfrey paul.godfrey@cpimediagroup.com +971 4 440 9105 Group Managing Editor Melanie Mingas melanie.mingas@cpimediagroup.com +971 4 440 9152 Sub Editor Rushika Bhatia rushika.bhatia@cpimediagroup.com +971 4 440 9115 Business Assistant Adelle Louise Geronimo adelle.geronimo@cpimediagroup.com +971 4 440 9160 ADVERTISING Group Director of Sales Carol Owen carol.owen@cpimediagroup.com +971 4 440 9110 Commercial Director - Business Division Chris Stevenson chris.stevenson@cpimediagroup.com +971 4 440 9138 Sales Manager Jason Bowman jason.bowman@cpimediagroup.com +971 4 440 9154 Media Sales Executive Emma Hughes emma.hughes@ cpimediagroup.com +971 4 440 9120 Event Sponsorship Manager Gill Fairclough gill.fairclough@ cpimediagroup.com +971 4 440 9120

FROM THE EDITOR Leadership: as important now as it ever was If you were asked to give an example of someone you believe to be a great leader, who would you choose? This is a key question, because good leadership is the single most important factor in deciding the success or failure of any business. If you have any doubt about this, take a snapshot of the challenges typically facing the majority of SMEs and you’ll see some fairly dangerous and threatening concerns: cashflow, uncertain customer markets, competition, rising costs, compliance and lack of capital being just a few. Now, it’s not a case of simply living with these dangers and ‘ticking over’ - some (if not all) the threats on this list have the potential to wind up the business for good. So they have to be overcome and the SME has to reach an altogether higher level of performance. It will only be able to do this is there is will from the top of the management team and the ability and skillsets available to confront the issues at hand and respond. In other words, leadership is the one and only answer. This is especially true now that we are looking to the SME sector as the primary sector of the economy for delivering volatile growth. Driving and managing growth is a key function of leadership. Growth involves significant responsibilities, such as handling incoming finance, creating better commercial modelling and the ability to leverage fresh opportunities. Classic examples of these opportunities include the chance to service the terrific public/private sector partnerships that Expo 2020 brings in areas such as Construction, Hospitality and Tourism. Again, it will require committed and strong leadership to drive businesses into the profitable pursuit of these objectives and use them to leverage fresh, vibrant growth. Another aspect of this is that it’s important not to confuse the role of leader with that of entrepreneur. The latter is by definition a live-wire ‘doer’ determined to make a mark and build a business - but this might often be achieved at the cost of disgruntled staff and a series of broken supplier relationships. Whereas the leader takes people on the journey and inspires them with a vision of what the future can be like - contrast here Steve Jobs and Barack Obama, for example. It’s this aspect which is going to be especially important as SMEs confront troubling issues likely to impede growth: the true leaders will show their mettle by galvanising everyone’s best efforts into a concerted effort to move the business forward. Just a thought to ponder during Ramadan as we start to prepare our strategies for Q3 and Q4. Enjoy this issue of SME Advisor!

MARKETING Head of Marketing and Events Julia Jagiello julia.jagiello@cpimediagroup.com +971 04 440 9131 DESIGN Head of Design Glenn Roxas

Paul Godfrey Senior Editor

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Contents

The factor pays 75 per cent to 80 per cent of the face value immediately and forwards the remainder (less the discount) when your customer pays.

p20

Bringing your Point of Sale capability up to date is one of the best commercial decisions you can make. p24

Asset re-financing can also be seen as to be a relatively quick method of accessing cash in cases of emergency or as a method to fund expansion. p38

By adopting outsourcing, SMEs become competitive and are able to compete effectively with the larger enterprises. p42

03 Editorial Committee SME personalities bringing industry-leading expertise across the publication and its raft of prestigious events. 05 Editor’s Note Paul Godfrey on why leadership is as important now as it ever was. 08 Data and decision making Our new info graphic section showcases key trends shaping the SME marketplace. Ground level 10 Everything you need to know about ‘Bootstrapping’ We present a detailed overview of the challenges and opportunities… 14 Taking the lead Are you leading your SME to success – or just hoping for the best? Senior Editor Paul Godfrey investigates. 18 Behavioural Finance What are the psychological factors that can twist and contort the decision-making skills of the hardened numbers experts in your SME? Associate Editor Zenifer Khaleel explains this new science…

sme advisor ISSUE 102

Education 30 The importance of entrepreneurship and SMEs Prof. Valerie Lindsay, Dean,PHD, Faculty of Business, UOWD, talks about the vital role that academic institutions play in developing young and aspiring entrepreneurs.

Movers & Shakers 34 A meeting with Jairek Robbins The world-renowned business guru shares excellent insights on growth, leadership and success… Getting Finance 38 Asset Re-financing – defining liquidity and value SME Advisor reviews this important financing strategy.

Workspace 42 Outsourcing – a golden opportunity? We asked Prakash Parab, Director HR Solutions, Dulsco, to share his expert knowledge on this subject.

50 Business Banking 20 Your finance factfile. Building a platform of financial and commercial resources We spoke to National Bank of Abu Dhabi about the major financial instruments that can supercharge business performance. Business Innovation 24 Maximise your POS potential SME Advisor assesses the world of POS connectivity… 28 Getting Started – making sure your business gets results from Day One Etisalat partnered with SME Advisor to create a powerful dialogue on business start-up and success.

Legal 46 Franchising in the Middle East Legal experts Joycia Young, Partner, Clyde & Co, and Ben Smith, Associate, Clyde & Co, set the scene. The next level 50 Social entrepreneur? Good luck with that! Genny Ghanimeh, Managing Director, Pi Slice, provides a roadmap for the avid social entrepreneur. Trade and Export ME 53 We present our new comprehensive section, Trade and Export ME – a practical, informative and incisive guide for the trading community in the region. Tech Trends 84 Fast five. A round-up of five fantastic apps that can supercharge business productivity.

Data and Decision making

Does your cloud have a silver lining? C

CLEAR

CLOUDY

23.5%

5.3 zettabytes

IT cloud services compound annual growth rate (CAGR)

Global cloud traffic

1.2 zettabytes Global cloud traffic

59.7% of revenues Software as a service (SaaS) category - public IT cloud services

2/3 of all work loads will be processed in the cloud

$47.4 billion

Estimated industry size

57%

17%

IT product spending for IT cloud services

$107 billion

Expected industry size

Middle East and Africa cloud traffic growth rate (CAGR)

SOURCES: IDC | Cisco’s third annual Global Cloud Index | Cisco Global Cloud Index: Forecast & Methodology, 2012-2017

What does this mean for your SME? There’s no doubt that cloud services have become ‘the next big thing’, as the statistics above suggest. With significantly lower infrastructure costs and few physical constraints, the cloud has numerous benefits. It reduces the need for a sophisticated IT team thereby helping SMEs further lower their costs. The classic advantage of the cloud, however, is its ability to allow you to connect with your applications from anywhere in the world. With the rapid advancement of technology and fast-paced mobility, cloud services are no longer a luxury – they are an absolute necessity!

What are the industry experts saying? When SME Advisor recently interviewed leading expert Yasser Zeineldin, CEO, eHosting DataFort, he said: “With cloud services, SME owners can reduce their overall risks by paying based on a predictable monthly subscription model. In addition, cloud technology enables an SME to deploy services faster and dynamically provision any additional capacity as and when needed. Moreover, cloud based services are simple to adopt and more accessible as they are over the Internet.”

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GROUND LEVEL

Everything you need to know about ‘Bootstrapping’ BOOTSTRAPPING IS A TERM COMMONLY USED IN THE START-UP AND SME UNIVERSE. BUT, WHAT DOES IT REALLY MEAN? HOW CAN IT HELP YOU TAKE YOUR BUSINESS OFF THE GROUND? IN THE FOLLOWING FEATURE, WE COVER EVERYTHING YOU NEED TO KNOW ABOUT THIS CONCEPT – THE CHALLENGES AND THE OPPORTUNITIES…

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GROUND LEVEL

Banks, VCs, and other investors are often more confident funding businesses that are already backed by their owners.

OxfordDictionaries.com defines bootstrapping as “the technique of starting with existing resources to create something more complex and effective”. In a business context, this means starting (or growing!) your company with little or no financial help from external sources such as banks, venture capitalists and angel investors. Lack of access to finance has led to an increasing number of business owners adopting this method; dipping into their personal savings, or reaching out to family and friends, in the hope of acquiring the funding amounts they need to fuel their companies. In fact, a recent Dubai SME report revealed that 80 per cent of those surveyed indicated personal money/savings as the primary source for commencing their business operations. With such a large number of businesses considering this as a viable option, SME Advisor presents the following practical points, which are critical to understanding – and fully maximising the potential of – bootstrapping. Why do most entrepreneurs bootstrap? Bootstrapping has tremendous advantages, which include but aren’t limited to the following – 1. Working with your money means that you are going to be superefficient with every single penny, which will eventually work in the favour of your business. You are more aware of the costs involved in the day-to-day running of the business and start operating your company on a ‘lean’ business model. A great example of this is the emerging trend of ‘hot-desking’, where entrepreneurs, before setting up their business, share the same office space during different times of the day, week or month depending on their individual business needs. This is a fantastic way to cut down costs and build a strong network

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of contacts in the process! (Note here that this concept is yet to fully develop in a lot of countries and may have its legal implications.) 2. The fact that you don’t have to worry about raising the finance you need will allow you to fully concentrate on the core aspects of your business such as sales, product development, and so on. You can rest assured that you, or your partners, won’t be sidetracked by countless investor meetings, pitching events and other such engagements. 3. Without any external investors in the business, you have full control of the business. It means that you don’t have to depend on any one else when making crucial decisions. It’s basically your (and your partners’, if any) call. You have the independence to ensure that your business is moving in the direction you want, according to your vision and cultural values, without any investor influence. 4. Something that most business owners don’t realise is that building the financial foundations of the business, on your own, is a huge attraction to future investors. Banks, VCs, and other investors are often more confident funding businesses that are already backed by their owners. It shows that the owner fully committed to the business and is willing to give it his or her 100 per cent.

Another interesting advantage that comes with bootstrapping is that your product or service doesn’t necessarily have to be perfect at the time of its launch. Starting, and working, with limited finance gives you the flexibility to begin straight away without worrying about the small glitches in your business proposition. You can get customer feedback 5.

GROUND LEVEL

Growing in popularity, asset re-financing is a fantastic way to free up the cash blocked in your business, even when you aren’t bootstrapping!

instantly and improve the quality of your offer, so that when you are indeed ready for external financing your value proposition is significantly better! 6. Finally, working with limited cash can often force you to explore alternative options, which you might not consider otherwise, such as factoring, asset re-financing, and trade finance. (Find more details on this in the next section!)

Tight cashflows? Don’t sweat it! While bootstrapping is all about making the most of the resources at hand, it doesn’t necessarily limit your options when it comes to building a strong working capital. Take a look at some viable, effective and advantageous solutions that ensure your business has all the cash it needs – • Factoring: This is a solution wherein your company sells its account receivables to a thirdparty company (usually a financial institution), who is then responsible for collecting the funds from the customer. This happens at a mutually agreed discount rate allowing the factoring company to cover its credit risk and collection costs. Factoring enables your business to avail the cash it needs immediately, especially in industries with long receivables cycles.

• Asset refinancing: Growing in popularity, asset re-financing is a fantastic way to free up the cash blocked in your business, even when you aren’t bootstrapping! The challenge with asset re-financing is that it can be useful depending on the kind of assets your company has. If you are a large printing press, it’s likely that this is a suitable financing solution for you. However, for an e-commerce business, it might be difficult to acquire large amounts. • Trade credit: This is simply when a business purchases goods

and services from its suppliers on credit terms. These terms are agreed upon beforehand and allow the company to be flexible in its payment schedule. An online article on Entrepreneur.com explains further, “As a smaller business you may need to incentivise suppliers to give you extended credit terms. Such incentivisation can come in many forms: One online marketing company gave their client a free monthly campaign in return for favourable credit terms while other companies sometimes select their suppliers on the basis of their credit policy.” We should also add here that trade credit comes with a fair warning – you don’t want your business to adopt this as a longterm solution as this may increase your dependency on suppliers that you are used to working with regularly and limit your options. But, my company isn’t a start-up… One of the biggest myths of bootstrapping is that it’s an option available only at the startup stage. However, the reality is that bootstrapping can help your business at the growth stage as well, or any stage really. For instance, when you are looking for that allimportant secondary and tertiary finance to take your business to the next stage, the options that we’ve covered above are great to inject that extra cash into your business! Think it’s going to be easy? Well, think again! While bootstrapping helps you avoid going through the dreaded process of pitching to investors, banks, and so on, it has its fair share of challenges as well. For one, you have the added pressure that all your personal savings are at stake! It also means that you will have to sacrifice a huge portion of your regular income – often re-investing most of the money you make back into your business. Be prepared to

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GROUND LEVEL

Remember, your business may be profitable but if isn’t cash-rich, you are into deep trouble. Cash is always the top priority!

cut back personal expenses and survive a couple of months without any definitive amount of cash coming into your bank account. Another major downside is managing your business cashflow. Starting and running your business with limited financial resources means that there is a possibility that you might find yourself in a sticky cash-strapped situation. Make sure to plan and forecast all your business financials thoroughly (preferably with a certified accountant) so that your company is well-prepared for any such unforeseen circumstances. Remember, your business may be profitable but if isn’t cash-rich, you are into deep trouble. Cash is always the top priority! Moreover, investors – especially VCs and angel investors – infuse more than just cash into the business; they bring with them experience, mentorship and business advice. If you are bootstrapping, it means that you don’t have access to a pool of intellectual resources that could potentially give your business a competitive edge.

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Lastly, if you have borrowed money from family and close friends, be careful to fully understand what they expect in return. When do they see the money coming back? Do they want a share in the business? Is it simply an act of goodwill? Ironing out any such issues at the outset will ensure that your personal relationships aren’t affected by your business decisions, and will give you the peace of mind you need moving forward. Are you ready to make history? Finally, don’t forget that some of the most successful entrepreneurs started by bootstrapping, creating companies that were etched into the history of the business world – most popular examples being those of Bill Gates (Microsoft), Steve Jobs (Apple), Michael Dell and Richard Branson to name a few. The question, then, to ask yourself is – will yours be the next?

For an online version, please visit: www.smeadvisor.com/2014/07/ bootstrapping-all-you-need-to-know/

GROUND LEVEL

Taking the lead are you leading your SME to success - or just hoping for the best?

It’s often said that the glut of challenges that SMEs face can only be overcome by effective leadership. How else can a business navigate its way through shortfalls in cashflow, market competition and tricky overseas expansion initiatives (to name but a few)? The problem is, it’s hard to define what leadership really involves it’s not something that can be crystallised and sold to aspiring managers, but rather, it’s the sum of many other skills and qualities, and we only really know it when we see it in action. Senior Editor Paul Godfrey investigates…

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GROUND LEVEL

“A true leader shines not because of glittering armour, but by understanding the needs of the humblest footsoldier” – Sun-Tzu, The Art of War

However we define it, the fact remains that leadership is a vital role in any organisation. Why? Because without it, the business is literally adrift on a becalmed sea, aimless and lacking in purpose, focus and commitment. Put simply, leadership is all about defining the direction of the teams reporting to you and then communicating that goal to the people in the driving seat motivating, inspiring and empowering them to contribute to the company’s success. The ingredients of effective leadership are complex and vary from one specific situation to the next. They also depend on the difficulty of the tasks, the degree of a leader’s authority and the maturity and capabilities of the reporting teams and personnel. What’s more, leadership skills often take time to learn, because they are multi-faceted, and not easy to transport from job to job, role to role. Another factor is that great leaders tend to attract followers by virtue of example, without having to motivate them with specific incentives or requests. Challenges Make no mistake: becoming an effective leader is a challenging quest. It necessitates an understanding of human psychology, strategic thinking, direction setting and motivation. Yet the rewards are great - leveraging team performance is the surest way to achieving business growth and building recognition, both on a corporate and personal basis. So are there a stable set of criteria that the majority of successful leaders will demonstrate? Well, while good leaders come in many shapes and sizes (and there is no one leadership profile or ‘personality’), certain attributes are commonly found. These include • Positiveness, reliability and a proactive approach • A clear vision of business goals • A firm commitment towards meeting defined goals • An ability to communicate their vision effectively

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The ingredients of effective leadership are complex and vary from one specific situation to the next. They also depend on the difficulty of the tasks, the degree of a leader’s authority and the maturity and capabilities of the reporting teams and personnel.

• A commitment to their team and to their organisation • Skilfulness in planning and developing strategies • A focus on motivation and setting clear directions • The adaptability to engage with the views and needs of team members • An ability to inspire employees to meet goals • A commitment to the happiness and wellbeing of their team • Honesty and openness with the team Developing leadership capabilities requires an individual to understand his or her own strengths and weaknesses and to be willing to continuously improve with experience. Nature or nurture? Are leaders are born or made? It’s commonly believed that certain people are natural leaders, particularly with reference to pivotal historical figures. Yet on the other hand, many people find themselves in management roles where they will need leadership capabilities - and then learn and

GROUND LEVEL

A key factor that we do know about leadership is this: effective leaders listen to the expert views of others.

develop the necessary skills to be a leader. The reality is that good leadership probably results from a combination of personality traits and many specific skills and capabilities learned over time and gained through experience. A key factor that we do know about leadership is this: effective leaders listen to the expert views of others and are adept in tailoring and mixing this knowledge to create a comprehensive solution to a tough and complex challenge. Note, however, this doesn’t mean that leaders are always the smartest person in the team: they may simply be better listeners or have a fairly thorough understanding of the 360-degree challenge ahead (which a super-specialist might not have). Successful leadership allows the specific skills and knowledge of the leader and each of their team members to be brought together in the best way to allow effective directions to be set and good decisions to be made. Are there ‘natural leaders’? A person’s character, personality and attitude may be helpful in assuming a leadership role. But research suggests that the many different styles of leadership are, largely speaking, equally effective and that there is ‘something for everyone’ in terms of growing into a style that feels more natural. A naturally gregarious, social individual might thrive in some leadership settings, but not in others, which might call for a more cautious, modest approach. Some of the basics of good leadership can be self-taught, but many useful skills will be acquired through experience developed over time. Many good leaders have evolved their own style through watching and analysing, seeing what proves effective for others. Is the entrepreneur a leader? Another aspect of this is that it’s important not to confuse the role of leader with that of entrepreneur. The latter is by definition a live-wire ‘doer’

determined to make a mark and build a business - but this might often be achieved at the cost of disgruntled staff and a series of broken supplier relationships. Whereas the leader takes people on the journey and inspires them with a vision of what the future can be like - contrast here Steve Jobs and Barack Obama, for example. It’s this aspect which is going to be especially important as SMEs confront troubling issues likely to impede growth: the true leaders will show their mettle by galvanising everyone’s best efforts into a concerted effort to move the business forward. Let’s dispel a few more myths about the role of the leader. • Firstly, leadership has nothing to do with seniority or one’s position in the hierarchy of a company. Too many people talk about a company’s leadership when referring to the most senior executives in the organisation. Yet leadership doesn’t automatically happen when you reach a certain salary scale. • Leadership has nothing to do with titles. A C-level title doesn’t automatically make you a ‘leader’, but, conversely, you can be a leader in a much more humble role, such as in a local community initiative or a charity franchise. • Most importantly, leadership isn’t management. Leadership and management are not synonymous. You might have 15 people reporting to you and P&L responsibility? This means you’re a manager. Managers need to plan, measure, monitor, coordinate, solve, recruit, regulate, and carry out many other diverse activities. But leaders lead people: the two things are not automatically the same, and indeed, all too rarely are. So - do you have what it takes to be a leader?

For an online version, please visit: www.smeadvisor.com/2014/07/takingthe-lead/

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GROUND LEVEL

Behavioural Finance when emotions influence the numbers

What are the psychological factors that can twist and contort the decision-making skills of the hardened numbers experts in your SME? Are emotional factors endangering the work of your certified and qualified management accountants? In this topical feature, Zenifer Khaleel explains the new science of Behavioural Finance… 18

In the sphere of business, financial accountants are considered to be prudent, flawless and meticulous in the decisions they take. That’s why they’re conferred the role of ‘wealth maximisers’ within the enterprise. Unfortunately, as human beings, they are susceptible to emotional and psychological influences, which can impair, twist and confuse effective decision-making at times. This is where the importance of behavioural finance comes in. It is a relatively new field that seeks to combine behavioural and cognitive psychological theory with conventional economics, to provide explanations for why people make financial decisions which incur losses (or even a whole lot of bad press). Top management believes that most accounting personnel behave in a rational and predictable manner, under any financial situation. However, this assumption doesn’t reflect how they actually operate in terms of their decisions in the real world. In their famous book on the subject, reputed US economists Sendhil Mullainathan and Richard Thaler have described the concept of Behavioural Economics as “the combination of psychology and economics that investigates what happens in markets in which some of the agents display human limitations and complications.” “Financial markets have greater arbitrage opportunities than other markets, so behavioural factors might be thought to be less important here, but we show that even here the limits of arbitrage create anomalies that the psychology of decision making helps explain,” they further add.

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GROUND LEVEL

Behavioural models prove to be tractable and useful in explaining anomalies and making surprising predictions. Factors which lead to detrimental financial decisions Behavioural biases fall into two broad categories, cognitive and emotional, though both yield irrational decisions. As cognitive biases stem from faulty reasoning, better information and advice can often correct them. Conversely, emotional biases originate from impulsive feelings or intuition and they are difficult to correct. Pioneers in the field of behavioural finance have identified a few key areas where accountants seem to make their biggest mistakes. The concept of anchoring which draws on the tendency to attach our thoughts to a reference point - even though it may have no logical relevance to the decision at hand. Anchoring is fairly prevalent in situations where concepts are new. For avoiding anchoring, there’s no substitute other than rigorous critical thinking. Successful investors don’t just base their decisions on one or two benchmarks, they evaluate each company from a variety of perspectives in order to derive the truest picture of the investment landscape. 2. Herd behaviour is the tendency for individuals to mimic the actions of a larger group. Individually, most people would not necessarily make the same choice. The common rationale is that it’s unlikely that such a large group could be wrong. After all, even if you are convinced that a particular idea or course or action is irrational or incorrect, you might still follow the herd, believing they know something that you don’t. This is especially 1.

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prevalent in situations in which an individual has very little experience. 3. Overconfident investors/traders tend to believe they are better than others at choosing the best stocks and best times to enter/exit a position. Unfortunately, traders that conduct the most trades tend, on average, to receive significantly lower yields than the rest of the market. 4. Conditioned thinking is when an individual erroneously believes that the onset of a certain random event is less likely to happen following a decision. This line of thinking is incorrect because past events do not change the probability that certain unpredictable events will occur in the future, under the same set of factors. 5. Often, participants in the stock market predictably overreact to new information, creating a larger-thanappropriate effect on a security’s price. Furthermore, it also appears that this price surge is not a permanent trend - although the price change is usually sudden and sizable, the surge erodes over time. 6. In investing, the confirmation bias suggests that an investor would be more likely to look for information that supports his or her original idea about an investment rather than seek out information that contradicts it. As a result, this bias can often result in faulty decision making because onesided information tends to skew an investor’s frame of reference, leaving them with an incomplete picture of the situation. 7. Traditional economics believes that the net effect of the gains and losses involved with each choice are combined to present an overall evaluation of whether a choice is desirable. However, according to the prospect theory we don’t actually process information in such a rational way. Losses have a bigger impact on emotions than a similar amount of gains. So people tend to react more to losses. Apart from these factors, there are also socio-cultural, communal, sectarian and even religious and political elements that influence the decision making process of an

economist. Most people are willing to invest in ventures or prospects which they ‘trust’ to be a part of their own identity. The feel good factor of familiarity is a big determinant in their finance judgment. Desirable behaviour Behavioural economics generally begins with assumptions rooted in psychological regularity and questions the outcome of those assumptions. An alternative approach is to work backward, regarding a psychological regularity as a conclusion that must be proved, before we fully understand and accept it. Critics have pointed out that behavioural economics is not a unified theory, but instead a collection of tools or ideas based on observation of basic human tendencies. Standard economic models do not derive much predictive power from the single tool of utilitymaximisation. Precision comes from breaking down the utility into smaller bits and analysing each and every segment with a clear analytical mind. The underlying question here is whether the implicit psychology in economics is ultimately good or bad. Behavioural economics is not meant to be a separate approach from main stream economics, in the long run. It should be more like a school of thought or a style of modelling, which will gradually replace simplified models based on stricter rationality. Behavioural models prove to be tractable and useful in explaining anomalies and making surprising predictions. Then, strict rationality assumptions, now considered indispensable in economics, are treated as useful special cases which help to illustrate points grounded in wellestablished theory.

For an online version, please visit: www.smeadvisor.com/2014/07/ behavioural-finance/

BUSINESS BANKING

Your finance factfile

building a platform of financial and commercial resources

When planning the raft of financial support for your SME, how knowledgeable are you about the range of techniques that a bank or finance house can potentially put at your disposal? There is in fact a wide portfolio of options, which together can make your commercial life a good deal simpler, stable and more secure. Senior Editor Paul Godfrey spoke to National Bank of Abu Dhabi about the major financial instruments that can add to a CEO’s peace of mind - and supercharge business performance and opportunity.

In November 2013, Dubai SME compiled a comprehensive survey of the factors which SME owners and directors saw as the key priorities for driving their business forward. The top three issues were: • Boosting cashflow • Achieving growth • Getting working capital If we look at what each of these has in common, the reality is that SMEs are looking to minimize their risks and create a support framework for coping with production costs and expenses, making it easier to leverage growth. Factors such as cashflow - always a concern for SMEs (and indeed, for their much larger Enterprise-level cousins) - will be especially acute for businesses in sectors such as Trade, where there is often no physical correlation between delivery and payment. The reality is

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BUSINESS BANKING

that about 48 per cent of all SMEs in the UAE are indeed involved in this sector to one degree or another. For them, the role of a strong financial partner, such as a Bank, is to advise on the strategies that can minimize trading risks and provide the financial instruments that are best applicable to the current wave of challenges. An example: the role of Trade Finance and what it does Many of the financial techniques that a bank or financial partner can make available will fall under the designation ‘trade finance’. Let’s de-mystify this term and look at the kind of financial products it actually describes. Firstly, you don’t have to be a ‘classic’ trader in the import/export business to benefit from many of the services available as part of the trade finance remit. You might be a retailer, a

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manufacturer, or a service provider like a media or advertising agency. Notwithstanding, while trade finance offers a range of products that can be used for either overseas or domestic trade, some of them have evolved specifically to deal with trade across borders (which by definition can heighten concerns about payments and cashflow). A classic example of this is the ‘Letter of Credit’. A letter of credit is a document issued by a bank or financial institution, which assures payment to the seller of the goods, as long as the seller has provided documents to the bank showing that everything about the sale is correct. The letter of credit serves as a guarantee to you, as seller, that you’ll be paid regardless of whether the buyer pays or not. In this way, the risk that the buyer will fail to pay is transferred from the seller to the

letter of credit’s issuer. This is a very valuable financial tool that can take a good deal of the headache and stress away from cross-borders transactions. Its credibility is enforced by the fact that most letters of credit are governed by rules created by the International Chamber of Commerce, known as Uniform Customs and Practice for Documentary Credits (UCP 600 being the latest version). A letter of credit can also be used to ensure that all the correct quality and specification standards for the goods are met by the supplier - as long as these requirements are reflected in the documents listed in the letter of credit. To receive payment, an exporter or shipper must present the documents required by the letter of credit. Typically, the payee presents a document proving the goods were sent, instead of showing the actual goods.

BUSINESS BANKING

The Original Bill of Lading (BOL) is normally the document accepted by banks as proof that goods have been shipped. However, the list and form of documents is open to negotiation and might contain requirements to present documents issued by a neutral third party, vouching for the quality of the goods shipped, or their place of origin. Typically, the types of documents that might be required include • • • • •

•

Financial Documents Bill of Exchange, Co-accepted Draft Commercial Documents Invoice, Packing list Shipping Documents Transport Document, Insurance Certificate, Commercial, Official or Legal Documents Official Documents Licence, Embassy Legalization, Origin Certificate, Inspection Certificate Transport Documents Bill of Lading (ocean or multimodal or Charter party), Airway bill, Lorry/truck receipt, railway receipt, Forwarder Cargo Receipt, Deliver Challan etc. Insurance documents Insurance policy, or Certificate, but not a cover note.

Trade Credit Insurance - and why it matters Many SMEs are not able to continue their upward drive because they have suffered heavily due to bad debt, stemming out of inadequate credit management of their portfolios. Even a single financial default can disrupt the success of an SME - clouding the company’s outlook for the foreseeable future. How best to take proactive action to prepare any SME which is highly vulnerable to such disruptions in its business life cycle? Usually the largest or the second largest item on a trading company’s balance sheet is the outstanding receivables. In spite of this, it’s quite normal to witness businesses protecting their tangible assets such

as property and plant, while at the same time neglecting their receivables which, at times, can represent 40 per cent or more of their current assets. Trade Credit Insurance (TCI), also known as business credit insurance, export credit insurance or simply credit insurance, is one of the many risk management tools employed by businesses to protect their trade receivables from non-payment or delayed payment. TCI in effect shields both the cash flow and the profitability of an SME. While TCI is often known for protecting foreign trade (and in this capacity it’s often known as Export Credit Insurance), there is also a large segment of the market that uses TCI for safeguarding domestic accounts receivable as well. TCI basically protects businesses against two broad categories of risks: 1) either a buyer does not pay, or 2) a buyer pays very late. A buyer may not be in a position to pay after he has been declared bankrupt or insolvent, if applicable and according to the prevalent bankruptcy laws of any country. Similarly a buyer may opt for a bankruptcy protection arrangement, which permits deferred payments for an extended period. Both instances are covered under a TCI policy. TCI can work in two different ways. Either 1. It will cover all your outstanding invoices; or 2. It can apply only to those larger sums above an agreed threshold. Whichever version you choose, it can ensure that you maintain strong cashflow, and that valuable time is not lost through inefficient or redundant chasing of unpaid sums. There is also the added advantage that your valued customers can be offered advantageous credit terms, in the knowledge that those sums are safe and sound - whereas pressuring them for immediate payment might drive them elsewhere. TCI can be provided by your bank or financial partner, working

The factor pays 75 per cent to 80 per cent of the face value immediately and forwards the remainder (less the discount) when your customer pays.

in a ‘bancassurance’ relationship with a major insurer. There is the additional benefit that the insurer will have a vast amount of trading data and market intelligence about the suppliers in your sector, and so will be able to advise on who is the better credit risk, moving forward. The value of Factoring One of the oldest forms of business financing, factoring is the cashmanagement tool of choice for many companies. Factoring is very common in certain industries, such as the clothing industry, where long receivables are part of the business cycle, and where smaller (SME) suppliers are often at the mercy of much larger and better-resourced multinationals. In a typical factoring arrangement, the client (you) makes a sale, delivers the product or service and generates an invoice. The factor (the funding source) buys the right to collect on that invoice by agreeing to pay you the invoice’s face value less a discount - typically two to six per cent. The factor pays 75 per cent to 80 per cent of the face value immediately and forwards the remainder (less the discount) when your customer pays. Because factors extend credit not to their clients but to their clients’ customers, they are more concerned

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BUSINESS BANKING

about the customers’ ability to pay than the client’s financial status. That means a company with creditworthy customers may be able to factor even if it can’t qualify for a loan. So factoring can be a useful strategic tool for a business that hasn’t yet reached maturity and has an imperfect or incomplete trading history. Because cash is king - the role of Cheque Discounting and Invoice Discounting Note that all of the techniques discussed so far have the intention of boosting cashflow and converting a ‘stuck’ situation into useable funds. This is also the case with Cheque Discounting - an extremely valuable (but often under-used) financing tool, designed to release the value of postdated cheques. If a business has a loyal and trusted customer with a proven trading record (typically six months or more), who has presented a series of post-dated cheques - for example, amortising the cost of hardware or equipment, or paying for a monthly service - the bank can release the value of these cheques as a cash loan, less interest charges. Traditionally a loan of this kind had to be redeemed by the date of the last cheque, but this process has become more flexible in recent years. One of the great attractions of cheque discounting is that it enables a business to offer top customers attractive credit terms, spreading the series of payments, while at the same time releasing the funds to the service provider right at the start of the payment cycle. The key element here is securing the confidence of the bank that the customer is indeed solidly creditworthy and that there is a 100 per cent guarantee of forthcoming cheques being honoured. Meanwhile, Invoice Discounting is a form of short-term borrowing often used to improve a company’s working capital and cash flow position. Invoice discounting allows a business to draw money against its

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sales invoices before the customer has actually paid. To do this, the business borrows a percentage of the value of its sales ledger from a finance company, effectively using the unpaid sales invoices as collateral for the borrowing. Although the end result is the same as for Factoring (the business gets cash from its sales invoices earlier than it otherwise would) the financial arrangement is somewhat different. When a business enters into an invoice discounting arrangement, the finance company will allow the business to draw down a percentage of the outstanding sales invoices usually in the region of 80 per cent. As customers pay their invoices, and new sales invoices are raised, the amount available to be advanced will change so that the maximum drawdown remains at the agreed percentage of the sales ledger. The bank or finance company will charge a monthly fee for the service, and interest on the amount borrowed against sales invoices. In addition, it may refuse to lend against some invoices, for example if it appears that customer is a credit risk, the sales have very long credit terms, or the value of the invoices is very small. Responsibility for raising sales invoices and for credit control stays with the business, and the finance company will often require regular reports on the sales ledger and the credit control process. Invoice discounting is targeted at mid to large-sized SMEs with established systems - and providers will need to be satisfied that the client can manage their own sales ledger administration and credit control facilities. The benefits of invoice discounting include: • The business receives cash as soon as a sales invoice is raised - so it will find that its cash flow and working capital position is improved. • The business will only pay interest on the funds that it borrows, in a similar way to an overdraft - which

makes it more flexible than debt factoring. • Invoice discounting arrangements often have a simplified due diligence process. • Invoice financing can be arranged confidentially, so that customers and suppliers are unaware that the business is borrowing against sales invoices before payment is received. Working smarter, not harder… It’s not too hard to see that a business using a combination of these techniques will have considerable advantage over one that is simply trusting to conventional approaches to profit, loss and cashflow. Products of this kind are a key part of the way that a leading bank, such as National Bank of Abu Dhabi (NBAD) can offer bespoke services to SMEs; the banking partner can present a bespoke combination of finance techniques after getting to know the way your business works and its key areas of risk and liability. The result can be a more robust operation that reaps the benefits of releasing cash into the system as and when required, without resorting to requests for stand-alone loans (either term or asset-based) at a premature stage in its life cycle. The SME owner can also have the peace of mind of knowing that key areas of vulnerability are covered and that the right platform is in place to accelerate growth - and finance market expansion, product development and greater investment in highly skilled personnel.

For an online version, please visit: www.smeadvisor.com/2014/07/yourfinance-factfile/

BUSINESS INNOVATION

Maximise your POS potential WHETHER A SIMPLE CASH REGISTER OR A FULLY-INTEGRATED SALES AND INVENTORY SYSTEM, POINT OF SALE TECHNOLOGY HAS PLAYED A CRUCIAL ROLE IN THE DEVELOPMENT OF THE SME SECTOR. THE LATEST INNOVATIONS - AS LED BY PIONEERING SOLUTIONS PROVIDERS SUCH AS ETISALAT - PROMISE A NEVER-SEEN-BEFORE LEVEL OF CONVENIENCE, DATA MANAGEMENT AND AFFORDABILITY. SME ADVISOR INVESTIGATES THE WORLD OF POS CONNECTIVITY…

Choosing - and using - the right Point of Sale (POS) technology is one of the most important strategic decisions an SME can make. Nor is this the case just for retailers: for any business engaging with customers, it pays to think seriously about the ways that your POS capability leverages strong, effective contact. POS systems are critical for aspects such as -

• Reducing your operating costs • Maximising the volume of transactions • Giving customers the full bandwidth of payment options • Ensuring that your business has the flexibility to engage with the customer as and when the customer wants • Ensuring accurate stock control and

inventory management • Giving you a full choice of customer-facing locations - from standard office or store to hi-tech kiosk or ‘hole in the wall’, all with maximum sales potential POS systems have been through three key stages of evolution - and arguably, the most important one is

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BUSINESS INNOVATION

Bringing your POS capability up to date is one of the best commercial decisions you can make.

happening right here, right now. As Govind Rao, VP - Small and Micro Business Sales, Etisalat, comments: “Today’s innovations in POS allow your business to maximise customer opportunity and align the business with the customer’s needs. What’s more, there’s no longer any need for costly investment in software platforms and the like, or a complex

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range of terminals and monitors. Bringing your POS capability up to date is one of the best commercial decisions you can make.” Back to the future Like many of the ways that technology has made inroads into our lives, the development of POS capability has been fast and furious - and

transformed the problems and shortcomings we used to take for granted. Consider this: for more than 40 years, virtually every SME looking to make cash and credit card transactions used a ‘two-tier’ system. Credit card purchases would be made by swiping a card imprint machine, physically recording the card number via an embossed strip, with the purchase value written in by hand. The transaction would then be entered into the cash till separately - coded as ‘card, not cash’ - because there was no integration of any kind between the two systems. It wasn’t until the mid-1980s that the card imprint machine was replaced by an online card swipe unit, often referred to as a ‘PDQ’ machine. This would be connected to the central system of a merchant provider, and accepted a range of card payment options, but again, there had to be manual reconciliation between the records it provided and those made at the cash register. It goes without saying that neither the cash register or the PDQ machine had any record whatsoever of inventory usage and re-order, and still less about purchase trends or delivery timings. They were both simply ways of making a ‘there and then’ purchase - which would have to be relayed manually to the back office systems in order for the finance team to

BUSINESS INNOVATION

Cloud-based POS systems are also created to be compatible with a wide range of POS hardware and even iconic tablets like the iPad.

make any sense of what was selling and what wasn’t. Today, all this has changed: the modern POS system aims to combine all the various stock management and inventory functions with point of sale convenience. There’s no longer any need for separate reconciliation between cash register and card swipe machines - it’s handed by a central computer, which produces a single read-out tagged for card or cash. The system will also include a range of advanced features to cater to different functionality, such as CRM, financials, warehousing, etc., all built into the POS software. One of the key advantages of this approach is that, in avoiding the need for re-keying of data in the back office, it thereby eliminates the risk of entry errors. What’s more, the cash register of yesterday has become a POS monitor, using touch-screen technology for ease of use, with a computer built into the monitor chassis to create an all-in-one unit. One of the great advantages of this is that all-in-one POS units liberate counter space for the retailer. Nor does it end there: that same technology can now be used across a range of devices, including tablet and smart phone. In terms of the system software, today’s POS system can typically handle a vast spectrum of customerbased functions such as sales, returns, exchanges, gift cards, customer loyalty programmes, promotions and discounts. The POS software can also allow for functions such as pre-planned promotional sales, manufacturer coupon validation, foreign currency handling and multiple payment types. The more sophisticated variants can happily process financial reporting schedules, sales trends and cost/price/profit analysis. Customer information may be stored for receivables management, marketing purposes and specific buying analysis. Plus, many retail POS systems include an accounting interface that ‘feeds’ sales and cost of goods information

to independent accounting applications. The quest for mobility: Cloudbased POS One of the constraints of all the hitech solutions discussed above is the relative lack of mobility. Although the ability to process transactions and make sense of them in profit and loss terms is now extremely good, there is still the constraint of where the customer purchases can actually take place. Enter Cloud computing. This opens the possibility of POS systems being deployed on the ‘Software as a Service’ model, where the entire system can be accessed directly from the Internet, using any internet browser. So, Cloud-based POS systems are independent from platform and operating system limitations - but they use the previous advances in the communication protocols for POS’s control of hardware. Cloud-based POS systems are also created to be compatible with a wide range of POS hardware and even iconic tablets like the iPad. Cloud-based POS is thereby helping to push POS systems to mobile devices. It’s also worth bearing in mind that Cloud-based POS systems are different from traditional POS largely because user data, including sales and inventory, are not stored locally, but in a remote server. The POS system is also not run locally, so there’s no installation required. Other key advantages of a cloudbased POS are instant centralization of data (important especially to a branch network), ability to access data from anywhere there is an internet connection, and lower startup costs. The next step - POS through mobile app and mini card reader “Just imagine’, says Govind Rao, “how the current POS technology, is now moving forward a couple of extra steps. It will leverage

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BUSINESS INNOVATION

PAYMENT CARDS ISSUED WORLDWIDE

to reach

18.28 BILLION

13.45

by 2018

PURCHASE VOLUME IN MIDDLE EAST/AFRICA

144 MILLION number of payment cards in the Middle East/Africa

BILLION

issued payment cards worldwide as of 2013

2.36

BILLION

transaction via payment cards

24% GETTING SMART

increase in purchase volume in the region from 2012-13

28.9%

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BILLION value of total spending at merchants as of January 2013

of the total ‘smart’ chip cards accounted for in 2013

This is big news for SMEs, because for the relatively young, smaller business, it gives you a way of controlling costs and maximising transactions and customer appeal.

$187

whole new areas of convenience and flexibility, miniaturizing the hardware and streamlining all the back office function. This will mean that all the accounting transaction is then accessed via your mobile phone or tablet. You don’t even need a fancy smart phone, because you will be able to work on any Android device. Plus, in terms of set-up, technology of this kind couldn’t be easier: you download through a mobile app - once and done. “This really is a great innovation for businesses whose representatives are always ‘on the move’. Let’s say you’re a pizza delivery specialist, and your customer doesn’t have cash. Now you’ve got an instant and totally portable solution for taking cards. Or perhaps you’ve traditionally been a cash-focused business and want the right platform to expand to cards well, this is a wonderful way to start. “Typically, the merchant pays nothing upfront, and gets a minimal charge every month. But of course,

the greatest advantage of all is that you don’t need separate and costly POS software. Take a moment to think how far we’ve come: all the traditional POS elements, like the monitor linked to a big computer and all the back office admin facility, is reduced to a mini card reader and a mobile phone. That’s real mobility at an affordable price.” Govind adds: “Technology of this kind is big news for SMEs, because for the relatively young, smaller business, it gives you a way of controlling costs and maximising transactions and customer appeal. While for the growing, enterprise level operation, it allows a very simple roll-out without heavy investment in additional POS hardware and set-up.”

For an online version, please visit: www.smeadvisor.com/2014/07/maximiseyour-pos-potential/

BUSINESS INNOVATION

Getting Started

Making sure your business gets results from Day One On May 21, 2014, Etisalat – leading telecoms provider in the Middle East and Africa – partnered with SME Advisor magazine to create a powerful dialogue on business start-up and success called ‘Getting Started’.

Held at the prestigious venue of H Hotel, Dubai, ‘Getting Started’ proved to be a landmark occasion for all the SMEs in the region – showcasing a line-up of influential speakers across diverse industry sectors. The event tackled key challenges of business start-up, and offered practical, relevant lessons for success in the first 1000 days of operation. The event attracted an audience of 200 entrepreneurs and SME owners, and had a simple objective – making sure businesses get results right from Day One. With eight keynote speakers and an exclusive panel discussion, the event succeeded in mapping out the crucial steps in the journey of a start-up. Achieving stellar start-up success Every start-up needs the right mix of incubational support, finance and access to advanced technology to achieve success in today’s challenging markets. These were exactly the kind of areas that the three opening speakers of the day addressed. In his welcome keynote, Govind Jaganath Rao, VP – Small and Micro Business Sales, Etisalat, highlighted the pivotal role of connectivity in the start-up process. Govind’s presentation was highly informative and did a fantastic job of underling Etisalat’s strong expertise in business innovation and connectivity.

This was followed by a superb presentation by the honourable Essa Ali Al Zaabi, Senior Vice President - Support Services, Dubai Chamber of Commerce & Industry, on the crucial topic of SME and start-up financing. Enriched with latest statistics and top industry trends, Al Zaabi’s engaging address left the audience feeling empowered and better informed about critical protocols. Access to finance continues to be one of the primary concerns of start-up and SME owners in the region. ‘Getting Started’ very much focused on this aspect answering questions like: ‘how do I find the finance to put my ideas into practice?’ or ‘How can I approach banks with a well-defined business plan? This was also resonated in a presentation given by Nilanjan Ray, Managing Director and Head of Commercial Banking, NBAD, on the critical subject of ‘The need for secondary and tertiary finance: next steps for your SME’. His direct, straightforward approach was very well-received by the audience and attracted significant praise and applause. Surviving the first 1000 days Research shows that the odds are massively stacked against a business surviving the first five years. While this might seem shocking and de-motivating, Alexandar Williams, Director – Strategy & Policy Division, Dubai SME, reassured

During the event

The insightful panel discussion

business owners in the audience with his enriching paper titled ‘Strategies for survival – what kind of SMEs do best in the market’. Speaking in a similar vein, Stuart Curtis, General Manager, Synergy, shed light on the day-to-day challenges of doing business in Dubai. In what was perceived as one of most data-rich

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BUSINESS INNOVATION

Govind Jaganath Rao, VP – Small and Micro Business Sales, Etisalat

presentations of the day, Stuart provided an overall view of the start-up and business climate in the region. While surviving the first 1000 days needs a sound understanding of the current state of business, it also needs a clear vision for the future in order to stay ahead of the curve. In his paper called ‘The Future of Work’, Kory

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Thompson, Country Manager, Regus – UAE, gave the audience a visionary view of what the business culture might look like in the years to come. He stressed the need for start-ups to build innovative strategies from the get-go and suggested that this was a critical aspect businesses need to look at in order to survive in today’s competitive business landscape.

Event highpoints Other event highlights included a superb presentation by Genny Ghanimeh, Managing Director, PiSlice, who shared her inspirational start-up success story. Genny delivered what was arguably one of the best-received speeches of the day. Her insights on micro-finance were exceptional and left the audience feeling motivated and empowered. Another exciting element of the event was the engaging panel discussion led by moderator Patrick Crosbie, Managing Director, Virtuzone, on the topic of ‘Innovate to succeed: don’t overlook the first priority’. The panel featured leading experts including Govind Jaganath Rao, VP – Small and Micro Business Sales, Etisalat; Randa El Hemeiri, Owner of Petit Bout’Chou and Co-Founder of Potentiel; Anas Halabi, Managing Partner, Prediam Partners; Richard Schofield, Managing Director, RKS Strategic Marketing & Communications; and Archie Berens, Partner & Managing Director, Bell Pottinger ME. Finally, the day ended on another high note with a presentation on one of the most important topics of the day – ‘Outsourcing the essentials of business start-up: the legal and operational framework’. Led by Ayman Al Awadhi, Managing Director, Corporate Business Services, this session was by far the best in its ability to offer ‘ground level’ messaging with tips that business owners were able to implement into their business straight away. The event was brought together by Strategic SME Partner Etisalat, Commercial Banking Partner NBAD, and Silver Partners – Regus, Virtuzone, Synergy and Corporate Business Services. ‘Getting Started’ was successful in being a terrific platform for the SME community, and will be remembered for its highly-interactive, persuasive and thought-provoking insights. All in all, a comprehensive roadmap for all aspiring entrepreneurs.

For an online version, please visit: www.smeadvisor.com/2014/07/gettingstarted/

EDUCATION

The Importance of Entrepreneurship and SMEs Over the years, the University of Wollongong Dubai (UOWD), one of the oldest and most prestigious universities in the UAE, has produced a group of young and promising entrepreneurs. They have also proved their commitment to supporting their students by working in close collaboration with businesses and initiating activities that will help enhance the university’s overall educational proposition. In the following feature, Dr. Valerie Lindsay, Dean, Faculty of Business, UOWD, talks about the vital role that academic institutions, and in a larger sense education, play in developing young and aspiring entrepreneurs.

What is entrepreneurship? When business gurus, like Bill Gates and Richard Branson, started their businesses, they began as entrepreneurs turning their ideas into brand new ventures. Today, they own among the largest companies in the world, and they remain as leading entrepreneurs, continuing to develop their own ideas and also helping others to succeed with new businesses. Entrepreneurship is usually associated with SMEs thus it’s fair to say that entrepreneurs are the bedrock of SMEs, which, in turn, become the kernel for the development of much larger firms. Entrepreneurship is increasingly recognised in a variety of contexts, which have, accordingly, acquired specific ‘labels’. Social entrepreneurship (or social enterprise) has gained considerable recognition over recent years as a major contributor to social, as well as economic development. Social entrepreneurial ventures are seen across a wide range of sectors including healthcare, energy, to culture and language. International entrepreneurship is the development of entrepreneurial ventures across borders. Often, internationalising is the only way that small ventures can grow, particularly if they serve a fairly specialised market segment or customer-base. The importance of ‘going global’ is well recognised in the business world, and this applies equally to SMEs as it does to large firms.

Entrepreneurship and SME development: Why are they important? There are various reasons why entrepreneurship and SME development are important. First, they are the ‘lifeblood’ of most economies, including the UAE and countries of the GCC region. On average, around 95 per cent of companies in the developed world are SMEs. They also account for up to 60 per cent of the employment and contribute significant proportions of their countries’ GDP. Second, they are the seedbed for innovation – critical to economic development and well-being, as well as to the creation of new technologies, environmental sustainability solutions, and social development. Third, they provide the majority of inputs into the supply chain of large firms. Without smaller firms and innovative entrepreneurs, the viability and competitiveness of large

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EDUCATION

firms would be compromised. A good illustration is Boeing, which has thousands of small supplier firms, each specialising in specific detailed components of Boeing’s supply chain, from design to manufacturing and service inputs. Tom Dillon, Boeing Corporate Finance Director, said in a recent interview with the US magazine Global Trade Review, “Increasingly Boeing has called on small business to help us in sustaining export-related jobs. The supplier financing programme is a great tool to encourage this key growth area to prosper. Small businesses can truly join larger exporters in working together to grow much-needed jobs supported by demand for American products the world wants.” One advantage of SMEs is the ability to specialise and invest talent in areas that large firms cannot easily resource. SMEs are much more flexible, agile and responsive to changes in customer needs. Entrepreneurs who develop into SMEs are, therefore, an essential part of the business ecosystem of any economy. But, ironically, they are often the least resourced, least understood, and most challenged, as compared to larger firms. Dr Valerie Lindsay, Dean, Faculty of Business Professor in Strategy and International Business

Entrepreneurs who develop into SMEs are, therefore, an essential part of the business ecosystem of any economy. www.smeadvisorme.com

Importance in the UAE & GCC region The UAE boasts some of the largest and most successful companies in the world, and attracts most of the Fortune 500 companies to operate in the country. This has been an essential element to the achievement of the extraordinary economic growth and development of the UAE, and SMEs have played an important role in this development. Only quite recently, though, has the importance of SMEs and entrepreneurship become prominent in this part of the world. And now, there are many organisations and mechanisms supporting SME development and growth in the UAE, including government organisations, such as Dubai SME, the Chambers of Commerce and more. Attention is focusing more on the contribution that the SME sector can make to the future economic growth

of the UAE and region. Especially with the Expo 2020 coming up where it is expected to generate approximately 300,000 direct jobs and around a million indirect jobs in the UAE, many of which coming from the SME sector. Entrepreneurship and SME development are seen as providing opportunities for the development of local talent and human capital, and is being encouraged as a way for young Emiratis to engage directly with economic growth. Challenges and opportunities in entrepreneurship While the debate on the question “Can anyone be an entrepreneur?” will continue, there are particular characteristics commonly identified in entrepreneurs and SME owners. It is important that aspiring entrepreneurs are aware of the characteristics that help lead to success. These characteristics include risk-taking, innovativeness, proactiveness and perseverance. There are also many challenges to overcome as an entrepreneurial venture develops, and these tend to be similar no matter where in the world a company is. Access to capital and maintaining cash flow are among the biggest known challenges that they face. Others include the need for mentorship and networks of business people to share ideas and issues. However, as the venture develops, they become more focused around the issues of managing business growth. The subsequent phases of growth into an established SME then bring challenges relating to managing the speed of growth, expansion and human resource management, internationalisation and succession planning. Given the characteristics and skills needed for successful entrepreneurship and SME development there is a great opportunity to facilitate and support the growth of SMEs. For one, government organisations, banks and investors can help provide access to finance and mentoring. Business incubators and large firms can enable new ventures to connect with the wider business community

EDUCATION

and establish valuable networks that can positively impact the development process. Also, building awareness and celebrating success through events, media promotion and awards an excellent vehicles for championing the importance of SMEs and entrepreneurship. UOWD championing young entrepreneurs Education will play a major role in the development of entrepreneurs and the SME sector in the UAE in the long run. Already, schools and the tertiary sector are becoming active in this area. Evidence from around the world shows that entrepreneurs develop their skills at a young age, so it is critical that primary and secondary schools grow and champion the talents of their young students. Competitions and ‘real-life’ projects are some of the experiences that are being provided to school-age children to inspire them to become aspiring entrepreneurs. As well as promoting technological, scientific and innovative capabilities, the tertiary education sector is an ideal forum to develop the business skills and acumen needed to take entrepreneurial ideas to the next level. With sound business understanding, these ideas can and do become a reality. At the University of Wollongong Dubai (UOWD), both undergraduate and postgraduate students have established their own new business ventures on

graduating, having nurtured their ideas and gained business skills during their study. Ventures have included the development of apps, fashion design, robotics, disability support equipment, and consulting businesses. As a recent graduate, who built a successful app design company within a few years after graduating, noted: “I had the idea, but it would not have been possible to develop the business without the knowledge that I gained in my studies. I’m able to put so much of into practice, and I’m also learning a whole new set of skills that I never thought I’d need. But my university education gave me the ability to be open to this learning, as well.” At UOWD we encourage our students to become more exposed to the possibilities of entrepreneurship. For example, the experience that students at UOWD gain by engaging in internships and workplace experience often whets their appetite to develop their own business. Students also engage in international case competitions, where they learn how new and growing businesses build success and deal with challenges. In the technology area, they participate in competitions designing products across a range of areas, including robotics, engineering and information systems. Combining these talents with business studies provides an ideal platform for graduates to then become entrepreneurs and successful SME owner-managers.

UOWD programmes relevant to entrepreneurs and SMEs In addition to understanding the needs of small businesses, general marketing and management skills, including leadership, are essential for entrepreneurs and SME managers. A variety of courses currently run at UOWD, at both undergraduate and postgraduate level, are relevant to entrepreneurship and SMEs. These include:

• Small Business Management • Entrepreneurial Finance • Management of Change • Marketing Strategy

• Consumer Behaviour • International Marketing • Competitive Analysis • Managing People

Opportunities to network and interact with professionals across a range of business areas, and to work on real-life practical issues, are among the highlights of the university’s Master level courses.

There is considerable scope for universities in the UAE to broaden their curricula and include programmes on entrepreneurship, and to work with schools to ensure a coherent approach to knowledge and talent development in this area. Incorporation of SME perspectives into standard business programmes in universities is also an aspect that could be addressed, as most conventional courses tend to focus on large firms. Looking forward Entrepreneurs and SMEs will play a key role in the future development of the UAE and the achievement of the UAE vision. It is clear that there is considerable opportunity for many stakeholders to contribute to the potential of the SME sector to contribute to the future of the country and wider region. Fundamental is the business ecosystem that supports entrepreneurship and SME development. Within this, many players have a role and responsibility to help achieve the goals for the SME sector. Education is an essential component, with opportunities to contribute many facets of entrepreneurship and SME growth. First, it can help to develop talented and competent entrepreneurs and mangers, as well as address information and knowledge gaps among the entrepreneur and SME communities. Through research and research-related activities, universities can share leading-edge knowledge and ideas with industry and the SME sector, as well as policy makers. The UAE Vision 2021 states: “A diversified and flexible knowledgebased economy will be powered by skilled Emiratis and strengthened by world-class talent to ensure long-term prosperity for the UAE.” Enhancing entrepreneurship and SME development through education will undoubtedly contribute significantly to the achievement of this goal. For an online version, please visit: www.smeadvisor.com/2014/07/theimportance-of-entrepreneurship/

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MOVERS & SHAKERS

A meeting with Jairek Robbins MOTIVATION IS SOMETHING THAT KEEPS MOST OF US GOING. AND, THIS IS ESPECIALLY TRUE FOR ENTREPRENEURS AND BUSINESS OWNERS IN THE REGION LOOKING TO MOVE TO THE NEXT LEVEL AND TAKE THEIR BUSINESSES TO NEW HEIGHTS. THIS IS EXACTLY WHY SME ADVISOR MET WITH WORLD-RENOWNED MOTIVATIONAL SPEAKER, LEADERSHIP COACH AND BUSINESS GURU JAIREK ROBBINS. IN AN EXCLUSIVE CHAT WITH US, JAIREK SHARES EXCELLENT INSIGHTS ON GROWTH, LEADERSHIP AND SUCCESS…

In terms of the business culture, do you think Dubai is different from rest of the world? If yes, what would you say are key differences? I have always been fascinated how the people of Dubai were able to take their vision of such an incredible city and turn it into reality! I teach people how to do this with their life, it fascinates me when someone is able to do it with an entire city! Our partner “Right Selection” has done an amazing job at reaching out and connecting us with some of the most innovative and forward thinking entrepreneurs, corporate executives and business owners. We are very excited to bring a fresh new and innovative set of ideas and strategies to share with them!

What are some common traits that you find in every entrepreneur? Is there is a pre-defined template? I love this question! There is no predefined template for an entrepreneur, but there are certainly a couple traits, which all entrepreneurs have in common, which greatly set them apart from your average manager

and even C-level executives. A true entrepreneur has a crystal clear vision, a high level of risk tolerance, insane passion for their product or service and are incredibly resilient, meaning they would rather fail over and over again before giving up a project they truly believe in. The resilience piece is the most important this day in age because we have become so used to ‘instant gratification’ that the idea of truly sticking it out has lost a lot of its meaning. Nowadays, there are not immediate results or returns, many quit and move onto the next project. A successful entrepreneur doesn’t bounce around, they know how to stick it out, how to make people get behind your vision, and how to make it work.

Do you think being an entrepreneur is perceived as being ‘glamorous’ in today’s age? Entrepreneur is definitely glamorised these days and it’s NOT necessarily a good thing. While I work with many entrepreneurs and help people turn their dreams into reality, it’s no easy feat. The problem is, when entrepreneurship appears glamorous, it’s kind of like false advertisement because

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MOVERS & SHAKERS

A successful entrepreneur doesnâ&#x20AC;&#x2122;t bounce around, they know how to stick it out, how to make people get behind your vision, and how to make it work.

Jairek Robbins

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MOVERS & SHAKERS

Like a race car cannot move without gas, you need emotional rocket fuel to keep you going through the wins and losses of business.

it’s starting or owning your own business is not always easy or and it’s certainly not always glamorous, ask any entrepreneur. To think you can quit your job and have a successful business “overnight”, couldn’t be farther from the truth. In fact, the likelihood of overnight success probably has comparable odds to winning the lottery, possibly worse considering that 95 per cent of business fail in the first five years. The truth is, even businesses that appear to have overnight success were in fact YEARS in the making. Even Dubai wasn’t an overnight success, it took years to build and grow and it still hasn’t reached its full potential. The beauty in a greater awareness and attraction to entrepreneurship is that it does give people hope and show them what is possible. It’s simply a matter of having appropriate expectations of what life and business is like as an early entrepreneur that is important.

What, according to you, is the formula for unstoppable business growth? This is a great question and something I talk about extensively in my book, Live it, available for presale on

Amazon.com. In summary, the formula for unstoppable business growth would be three things: 1. Crystal clear vision of what it is you want and how you’re going to make it happen. 2. Emotional rocket fuel. Like a race car cannot move without gas, you need emotional rocket fuel to keep you going through the wins and losses of business. 3. Raving Fans. This means people want to get behind your product and are ambassadors of it. When you have a ‘pull system’ in place versus a ‘push system’, the masses will want and demand your product or service instead of you having to force them into liking it.

The word ‘innovation’ is being increasingly used across the business community worldwide. What does innovation mean to you? Today, I believe innovation is forward thinking and creativity that knows no limits or boundaries. Innovation used to be just taking what has been done and making it better. Now, innovation is truly RE-inventing the greatest ideas on the planet, or innovating on innovations to come, that’s how far ahead a great ‘innovator’ thinks.

What tips would you give to a business looking to embrace innovation? First and foremost, if you’re a business NOT willing to embrace innovation, your business is dead or dying. So for any business looking to stay alive and grow you must have a hunger for knowledge and growth and a willingness to adapt quickly. The most important thing to remember is this “the only thing certain, is that there is no certainty.”

meaning all things are likely to change, and your ability to adapt equals your ability to grow.

Have you been able to develop a particular ‘toolkit’ or ‘success strategy’ that’s available to business professionals who want to boost their own leadership potential and performance?

Absolutely! We have a couple options depending on your needs. We offer performance and accountability coaching, leadership training, rapid results workshops and digital coaching programmes. I only offer training, services and products which has proven success within my own business and other businesses I work with. Therefore, every person (from business owners, C-level execs, and sales reps) has been wildly successful utilising any of our services. Depending on your need you can find out more at JairekRobbins.com for coaching and products. For events and training please connect with Right Selection (www.JRobbinsDubai.com) for trainings in the Gulf Coast region.

If you had three ‘top tips’ for aspiring entrepreneurs, what would they be? a. You have a unique gift, know and understand what that gift is. Then, share it fearlessly with the world! b. Remember life doesn’t owe you anything. If you want to want be successful, it’s not about what you can get from life, it’s about what you will give to life. I believe “Life supports that, which supports Life.” c. Study “influence” obsessively. Having the ability to influence is comparable to having a superpower.

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MOVERS & SHAKERS

Having worked with some of the leading companies in the world, what would you say are the biggest challenges that hinder growth in businesses? How can businesses overcome these hurdles? As mentioned before, it’s important to have a crystal clear vision which people believe in and want to get behind. Do your people know your mission? Do they believe in it? If not, you have a problem. Likewise, you must have a hunger for growth, not just growth in profits, but especially the personal growth of each employee. When an employee doesn’t feel valued, guess what? They won’t value YOU or the business. This is a MAJOR problem for the business, culture, morale, and is certainly affecting your profitability. When you combine these two forces of having a mission and vision along with personal development within your organisation, you’ve created a culture that fuels growth, innovation, and prosperous future.

What advice would you give to business owners trying to achieve a work-life balance? This is actually one of the most common reasons business owners come to me for one on one coaching. It really varies case by case, but in the simplest of terms I’d say start with designing your ideal day (visit JairekRobbins.com for a free ideal day design kit). From there, figure out what needs to change to start living your ideal day. Then create an action plan: this starts with a 1, 5, and 10 vision for your life. After creating your vision, set goals to compliment them. Ask yourself these questions, “what needs to change, why it needs to change, by when does it need to

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change, and how will I change it.” It’s really about breaking down the big picture vision into smaller action items. Piece by piece, goal by goal, you’ll start to transform your life from wherever you are now to living your ideal day. I’ll never forget the day one of my coaching clients, from a top five global financial firm, told me on a call that after working together for a couple years, he was truly living his ideal deal, he did it! It took focus and dedication to his plan and never before did he feel more alive.

Tell us a little about your very popular ‘Learn it, Live it, Give it’ mantra. What are some lessons business owners can take away from it and implement within their businesses? A personal philosophy of mine is “Learn it. Live it. Give it”, the “Give it” piece certainly does encompass the “pay it forward” concept. However, this is just one of three pieces of what I believe truly leads to achieving success with purpose. • Learn it. Go out and learn what it takes to turn your dreams into reality! • Live it. Apply what you learned and LIVE IT like you really mean it. You may talk the talk, but do you walk the walk? This is a vital piece to truly living with purpose! • Give it. Pay it forward by helping others learn the tools which helped you achieve success so that others can do the same!

What attracted you to the field of motivational speaking? At what point did you decide to share your insights and become a pioneering coach and world-renowned leadership figure?

So for any business looking to stay alive and grow you must have a hunger for knowledge and growth and a willingness to adapt quickly. I wasn’t initially looking to become a motivational speaker. I knew I loved coaching and I LOVED helping people. However, it was a real wakeup call that happened in my life, a couple actually. The first was when I was in Africa and told I had five days left to live. The second was when I found myself completely miserable with my job and unhappy with my health. I knew I need to take massive action to change and that there was more to life that stuffing boxes in a warehouse. More importantly, in Africa, I realised you’re not guaranteed a tomorrow. It was that moment, that I decided to live life on my terms, start truly living, and to do what I believe I want meant to put on this planet to do. Today, my mission is to travel the world and help people. I believe my purpose on this planet is to help as many people as possible turn their dreams into reality and live to their fullest potential as well.

Who is your personal inspiration? My Fiancée, she inspires me every day to be the best man I can be!

For an online version, please visit: www.smeadvisor.com/2014/07/ameeting-with-jairek-robbins/

GETTING FINANCE

Asset re-financing defining liquidity and value

While it may be the case that remortgaging assets runs counter to the entrepreneurâ&#x20AC;&#x2122;s quest for ownership, releasing dormant value is the wise and obvious step for ensuring strong cashflow and facilitating growth. Associate Editor Zenifer Khaleel reviews this important financing strategyâ&#x20AC;Ś

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GETTING FINANCE

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GETTING FINANCE

Rajiv Shah, Chief Executive Officer, Gulf Investment Consultants

Asset refinance boosts business cash flow by releasing cash against the value of a company’s existing assets. 40

To put it in a nutshell: investment in assets offers dead value to a company, because the cash flow is generated only from the usage of the assets themselves. Asset refinance is the act of remortgaging or repledging the asset in order to release the equity or the underlying value at the current market rates. This enables the business to inject cash when capital is tied up in assets. It essentially involves refinancing equipment, vehicles, financial investments, real estate, etc. which are either owned by the company outright or are subject to an existing finance arrangement. Asset refinance boosts business cash flow by releasing cash against the value of a company’s existing assets. Refinancing provides a convenient form of cash supply as assets are used to free up the capital a company already owns, which is then repaid over several years. Companies benefit from knowing exactly what payments are to be made, assisting with budgets and forecasts, as well as retaining the use of the asset throughout. The asset can continue generating profits even before the first payment is due. Unlike an overdraft, a refinancing package will run for the whole term agreed and cannot be called in. This enables the company to plan and manage the cash flow with confidence. Generally, the following categories of assets qualify for refinance: • Property/Real Estate • Plant & Machinery, Equipment • Technology • Shares (listed on stock exchange) In case of the refinance, the asset is pledged to the lender and the facility can be repaid over an agreed time period with regular payments at an agreed interest cost. The asset is valued by an independent valuation professional and the loan granted ranges from 70 per cent to 90 per cent of the asset value. In

such cases, the repayment capacity of the borrower is ascertained and the facility will be subject to necessary approvals from the credit department of the lender. Benefits of asset refinance • Boost cash flow of the business • Reduce the cost of existing borrowing • Reduce existing monthly repayment liability by increasing tenure of the facility • Raise capital in order to purchase other assets required in business For the lender, this is a secured term loan. It boosts business cash flow by releasing cash against the value of a company’s existing assets. You therefore sell an asset to the leasing company for the current value, which then leases it back to you. Additionally, asset refinance also protects the business from asset depreciation. Asset re-financing can also be considered to be a relatively quick method of accessing cash in cases of emergency or as a method to fund expansion. Companies which are planning major strategic changes, like expansion into overseas markets, product R&D and innovation, up-scaling payrolls or structured M&A activity, can resort to the ‘quick money’ influx method of refinancing. With refinancing, the business can continue to use the asset without any interruption in operation. Asset refinance payments are treated as a business expense rather than a business debt, so the profit/loss equation is not affected. Financial directors often favour asset refinance to avoid hefty depreciation allowances. Methods prevalent in the UAE “Asset refinance is a popular method of obtaining bank finance in the Middle East, specially the UAE. It is being offered by most local banks and is very popular in the real estate

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GETTING FINANCE

Asset re-financing can also be considered to be a relatively quick method of accessing cash in cases of emergency or as a method to fund expansion.

market. With increasing market prices and reduced interest rates, this has become a favoured source for obtaining finance by property owners. All major types of asset can be refinanced by the UAE banks,” says Rajiv Shah, Chief Executive Officer, Gulf Investment Consultants. “UAE banks are keen on the cash flows emanating from the asset which are assigned to the banks to ensure repayment of principal and interest. The amount to be lent by the banks depends on the cash flows from the asset and not so much from the market value of the asset. “For instance, for a real estate property, the cost of property up to AED 1 million will be ignored by banks. Market value of property up to AED 2 million will not be very relevant, but loan amount will be restricted to 70 per cent to 80 per cent. If the property is self-occupied, and used for business, it will be difficult to get a loan against the property. If the property is given on lease, the loan amount will depend on the rent being generated by the owner from the lease. The rent amount should be enough to cover the principal repayment and interest for a year,” he further adds. A few guidelines The pitfalls of asset refinancing are: • The borrower will pay back more than the original price of the asset. • Asset refinance contracts tend to be rigid, set over a fixed term. • Interest rates are generally fixed. • Personal guarantees are often required from the businesses owners or directors to secure the asset refinance.

process. In order to create the best impression in the valuation process and get the optimum deal for their assets; all previous backlog should be cleared. Contact different lenders The difference between interest rates for the best and worst deals can be as much as a full percentage point, but in the long term, it can prove to be detrimental to the costs. Loan costs also can vary substantially. Getting estimates from multiple lenders can give you ammunition to negotiate a better deal. Relationships can make all the difference Banks may remain cautious about lending, but some show will show a good deal more flexibility to their better customers. Eventually all relationships are built on trust and there’s no doubt you can extract the best deals from long standing and stable relationships. The cash that asset refinance generates can be reinvested into further asset growth. Important, because having the cash to move fast and decisively is often the determining factor between success and failure. A structured refinance plan can help the company grow, take advantage of a situation or simply help survival without getting banks involved. More importantly, it can keep your existing credit lines free and bring the peace of mind of seeing the day-to-day business running smoothly.

In order to employ the best refinancing strategies, the following steps are to be considered: Credit control Companies should ensure that their credit balance is minimal before beginning the refinancing

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For an online version, please visit: www.smeadvisor.com/2014/07/asset-refinancing-defining-liquidity-and-value/

WORKSPACE

Outsourcing

a golden opportunity?

An increasing number of SMEs are looking to delegate a large portion of their operational procedures to external companies, in other words, outsource key functions to trusted partners. While this allows SMEs to concentrate on their core business activities, does it take away from the company’s culture? And, what effect does it have on the cost of operations? We asked Prakash Parab, Director, HR Solutions, Dulsco, to address these critical questions and share his expert knowledge on the subject…

Prakash Parab, Director, HR Solutions, Dulsco

What functions can an SME look to outsource profitably? SMEs are the lifeblood of any economy. Adequate support is required for the SMEs to flourish and the right kind of support will therefore have an impact on the overall economy. Today, one of the key challenges facing SMEs is not only becoming competitive but also maintaining the level of competitiveness in the market. Outsourcing has become a key strategic decision for SMEs to maintain their competitive edge. Outsourcing has become increasingly attractive for many organisations and we believe that outsourcing is one of the key trends that will shape the future of HR. Dulsco is one of the pioneers in

the industry when it comes to HR outsourcing. Some of the other functions which are commonly outsourced profitably in the market are payroll processing, marketing, information technology, and customer service. Experience shows that, when effectively implemented, outsourcing can deliver major benefits, from reducing costs and improving quality control and compliance, to creating the environment for a host of service delivery innovations.

How can an SME ensure best product service and quality when outsourcing certain operational processes? Remember, your business may be profitable but if isn’t cash-rich,

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WORKSPACE

you are into deep trouble. Cash is always the top priority!

How cost-effective can this method be? Today, a hugely diverse range of SMEs, delegate key back-office functions to trusted partners, allowing them to focus their resources on core business activities. This helps the organisation to grow in the long run. Indeed, engaging with an effective outsourcing partner has proven to be a critical component in the successful up-scaling and expansion of many world-renowned companies in recent years.

The outsourcing service you choose should be customised to provide you with access to the knowledge, expertise and capacity you need - when you actually need it.

What are the benefits of outsourcing? A genuine outsourcing partnership will facilitate a continuous stream of improvement that will, costeffectively and measurably, outperform any internal backoffice function. The most obvious benefit that outsourcing can offer is demonstrable cost and time savings. This is achieved through scalability and flexibility; standardisation; and clearly defined pricing models. The outsourcing service you choose should be customised to provide you with access to the knowledge, expertise and capacity you need - when you actually need it. Effective outsourcing mechanism is not just a process but should be viewed as a relationship â&#x20AC;&#x201C; one that should provide you with access to evolving industry knowledge, best practice and bright new ideas. Outsourcing has been endorsed as one of the most influential trends in the management of human resource activities. The logic for outsourcing HR practices covers a plethora of benefits which includes monetary savings, boosted ability to focus on

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core issues, and an ability to claim improved and quantitative service levels. Recruitment, selection and training are among the most outsourced HR practices.

Do you think outsourcing helps level the playing field between small firms and larger enterprises? Yes, outsourcing definitely does bridge the gap between small organisations and large firms. The common challenge faced by SMEs in comparison to larger enterprises is limited resource availability. By adopting outsourcing, SMEs become competitive and are able to compete effectively with the larger enterprises. Although SMEs may not match the business outputs realised by multinationals, they are not far behind as indicated by the current market trends. The SMEs need to build up their image by favourably responding to the market scenario for which outsourcing can come

WORKSPACE

The acid test

We asked Vikram Shroff, Director, Regal Group Holdings, to share his thoughts on outsourcing and its practical aspects. Vikram is an SME owner and leading expert in the SME sector.

As an SME, do you look at outsourcing as a profitable solution? What are some functions within your business that you currently outsource or look to outsource in the near future? On the flip side, are there certain functions that you think most definitely won’t work if outsourced? Absolutely! Currently in one of our divisions we outsource the logistics and storage while another division has outsourced its fleet management. I think sensitive areas such as finance and accounts should not be outsourced as that is required to get a pulse of the company on a day-to-day basis. Has outsourcing helped your SME’s overall bottom line? Definitely – as less cash is tied up in nonstrategic investments such as cars and storage space. Therefore, that cash can be used to purchase more product and allow us to sell more to our clients. Do you think outsourcing helps level the playing field between small firms and larger enterprises? Yes it does. Even large firms tend to outsource many aspects of their operations from IT to entire office facility management. Each company needs to focus on putting their time and money on their core competencies and look to outsource parts of their business to another company whose strength is THAT part of the business. Does mobility play a crucial role in facilitating connectivity between a business and its outsourcing firm? Do you think we will see an increase in outsourcing with the rise in mobility? I think so as with the world is shrinking in terms of trade and when you make a call, the call centre operation is probably outsourced. Customer experience has

to be managed and monitored and the interaction between a business and outsourcing firm has to be constant (regardless of where they are in the world). What are ways to ensure that the outsourcing agency is aligned with the cultural values of the business? For instance, are they following the best practice procedures you’ve set in place for your SME? The only way to do that is to have someone in your organisation who keeps reminding and instilling the company values in the outsourcing agency. If the company feels the same values are not been adhered to, they need to seriously consider changing the agency. Do you foresee outsourcing helping your business in international expansion and growth? Yes, when you go into a new country it is very difficult to do everything yourself both in terms of time, money, and human resource management. Hence, it is better to keep the exposure low from the beginning and outsource as much as possible and then keep reassessing periodically if some areas of the business can be ‘in sourced’ or not. Do you outsource projects which have a particular time span or cost value, or any project which demands skills and resources not available in-house? Yes – certain projects that are time bound and special skills bound are outsourced with clear conditions. However, the company outsourcing the project should not wash their hands of the responsibility as they are still responsible for the final product. Like in making a building there are many sub-contractors but finally the main contractor is to blame if the building doesn’t turn out right!

By adopting outsourcing, SMEs become competitive and are able to compete effectively with the larger enterprises.

to their rescue. Outsourcing can be a game-changer for SMEs who can match their level and walk at par with larger enterprises.

What are ways to ensure that the outsourcing agency is aligned with the cultural values of the business? For instance, are they following the best practice procedures you’ve set in place for your SME? The outsourcing partner selected must understand the business model of the SME and communicate how they are going to deliver the results. If they understand the SME’s model well they can sustain and deliver the desired output in the long run. Beyond understanding the nature of the SME’s business, the outsourcing partner must understand and be compatible with the corporate culture irrespective of the SME’s size. Also there should be a core team from the outsourcing company who is trained with all the do’s and don’ts with regard to the SME’s business operations. A reference check on the outsourcing agency would be better which would help gain insights on their customer’s relationship with them.

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What are key factors to consider before selecting an outsourcing firm? What are the evaluation criteria/selection procedures for choosing an outsourcing provider? When selecting an ideal outsourcing partner certain parameters if kept in mind will help the SME go a long way. The track record of the outsourcing partner must be good enough in terms of meeting quality, price and logistical commitments. After including the costs of doing business with the outsourcing partner, the question needs to be asked if they are still a cost effective preference. The outsourcing partner must meet the SME’s product quality standards apart from being consistent. The trade regulations with the country where the SME wishes to outsource must be free from any problems and shouldn’t affect the operations. Payment and delivery terms including Service Level Agreements (SLAs) must be carefully evaluated. The outsourcing partner’s time to market must be flexible and should be better than the SME’s competitor. The potential outsourcing partner must have the technological setup apart from a seamless information and communication systems which should integrate with the SME’s processes. The benefits and limitations of doing business with the outsourcing partner’s location must be carefully evaluated.

Does mobility play a crucial role in facilitating connectivity between a business and its outsourcing firm? Do you think we will see an increase in outsourcing with the rise in mobility? Yes, mobility is key and everything today needs to be done on a real time basis. Faster response times create more room for extra set of activities to be performed. So mobility will be instrumental in the growth of the outsourcing industry.

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Do you foresee outsourcing being able to help SMEs in international growth and expansion? Outsourcing with the right partner can put SMEs in the same league as of many world-class businesses. A businessfocused outsourcing partner will support strategic introductions that may evolve into new business relationships. Outsourcing is the next step to increase productivity in a given short span of time as it boosts international competitiveness. It is a boon for SMEs to curb costs, bolster relational ties, serve customers more effectively, free up limited resources and leverage capabilities of foreign partners through outsourcing operations. You have greater security in your business continuity and the ability to scale up in tandem with your business growth. SMEs can tailor their outsourcing requirements to meet the specific needs, evolving over time to agreed key performance indicators and service-level agreements.

What are the challenges of outsourcing? Challenges in outsourcing need to be kept in mind before venturing into outsourcing processes of the organisation. The limitations include lack of managerial control as it may be difficult to manage external hires as compared to own employees. The lack of quality control can affect the business as faulty products can dent the organisation’s image. The outsourcing provider should be stable and if it goes bankrupt, quick action has to be taken to keep the SMEs business process running. Sometimes even though cost reduction is the sole criteria for outsourcing, it might be an expensive proposition for SME’s. Data security and other ethical issues may pop up if there are no

The potential outsourcing partner must have the technological setup apart from a seamless information and communication system which should integrate with the SME’s processes. proper undertakings signed by the SME and the outsourcing partner. Easy communication may also seem a difficulty due to time zone differences. Keeping these challenges in mind, SMEs can spearhead into the market by addressing the limitations the right way.

When you outsource, do you also outsource the responsibility for delivering the project correctly? Outsourcing the responsibility of delivering the project correctly may be undertaken provided the SME is ready to take the risk. The SME needs to look at the track record of the potential outsourcing partner with which it wishes to tie up and then take the leap. SMEs looking to opt for outsourcing need to evaluate the fact if they are able to focus on their core competencies by outsourcing the responsibility of the project to be delivered. They need to ensure that proper agreements are signed and projects are implemented in time. If the risk factor is an issue the SME can operate internally with the same cost and thereby achieving the objective of delivering the project correctly.

For an online version, please visit: www.smeadvisor.com/2014/07/ outsourcing-a-golden-opportunity/

LEGAL

Franchising in the Middle East: taking advantage of opportunity (carefully)

The Middle East presents a tremendous opportunity for businesses looking to expand in a challenging global economic environment. The Global Intelligence Alliance reports that the Middle East and North Africa region has a combined gross domestic product of over US$ 1.4 trillion and an expanding population of 315 million people. Moreover, franchise models are proving increasingly popular as a tool to leverage corporate growth. What are the legal ramifications and the challenges facing businesses keen to launch a franchise model? Joycia Young, Partner, Clyde & Co and Ben Smith, Associate, Clyde & Co, investigate. 46

For many potential franchisors and franchisees, the affluent consumer base and (relatively) businessfriendly environment in the member states of the Gulf Cooperation Council proves a particularly attractive destination in the Middle East region. The franchising model finds a natural home in the retail, hospitality and food and beverage sectors. In the GCC, each of these sectors has experienced significant growth in recent years. While presenting an exciting and potentially lucrative opportunity,

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LEGAL

significant capital investment that are often associated (and justifiably so) with establishing a presence â&#x20AC;&#x153;on the groundâ&#x20AC;? directly. This update focuses on some of the legal and regulatory risks that potential franchisors should consider when looking to award a franchise (or multiple franchises) in the GCC. There are, of course, fundamental commercial factors that franchisors will need to bear in mind; for example, finding the right franchisee, ensuring that the business model can support expansion into the GCC market and understanding regional cultural sensitivities are a few of the many commercial factors that a franchisor will need to address.

expansion into GCC markets also poses a number of challenges that need to be approached carefully and with measured caution. Some of these challenges are faced by businesses looking to expand into any new geography, others are regionally specific. Franchising continues to be a popular model for regional expansion, and for many good reasons; a franchisor can expand its business quickly into a growing economy while mitigating some of the commercial risks and

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Structuring arrangements The corporate licensing regime in the GCC is relatively complex. Foreign ownership is often restricted and companies in the GCC are often subject to licensing restrictions which can limit the scope of their operations. The potential risk and exposure to franchisors that do not structure their arrangements in the GCC to take account of regionally specific issues can be significant. Many franchisors hoping to secure multi-outlet commitments will look to identify a single franchisee which will be able to commit to a schedule of expansion throughout the GCC. In practice, and in light of corporate licensing restrictions, such arrangements have to be carefully structured to ensure regulatory compliance. Master franchise arrangements, pursuant to which a master franchisee will sub-franchise rights in jurisdictions in which it cannot operate, are common. Such arrangements present franchisors with a number of issues, including how, and the extent to which, they exercise control on the appointment, operation and termination of sub-franchisees. These issues can be, and commonly are, addressed

The potential risk and exposure to franchisors that do not structure their arrangements in the GCC to take account of regionally specific issues can be significant. in the contractual arrangements entered into by franchisors, master franchisees and sub-franchisees. Legislation There are not, at present, specific franchise laws in force in any of the member states of the GCC (although draft franchise laws have been circulated in the past). There are, however, a number of laws applicable in each of the GCC member states that have a significant impact on franchise arrangements. Addressing the issues presented by these laws is often of such fundamental importance to franchisors that negotiations with franchisees can collapse if those franchisees will not accept certain franchisor requirements. Commercial agency legislation is in place in each of the GCC member states. While the nuances of the agency legislation applicable in each of the GCC member states differ, the principles of the legislation are broadly similar. In essence, a franchisee will often be considered as an agent for the purposes of the legislation. Commercial agency legislation in the GCC states provide agents with a number of statutory rights which often include, among other things, the right to an exclusive appointment and the right to receive compensation in the event that agreements with principals terminate or expire. The amount of that compensation can often be substantial. Many franchisors are not willing to accept the potential risks and

LEGAL

The opportunities for franchisors that structure arrangements with franchisees in the GCC carefully, appropriately and in the context of regionally specific requirements are tremendous. liabilities that can arise under the various commercial agency laws in the GCC if certain criteria are not satisfied by franchisees. As such, franchisors should consider carefully how they structure their arrangements to ensure that, where possible, risk and exposure to commercial agency legislation is managed appropriately and to the extent possible. In addition to commercial agency legislation, franchisors also need to be mindful and cognisant of the broader legislative environment in the GCC. Labour and company legislation will impact the granting and operation of a franchise in each of the GCC states. Tax legislation may be relevant in some of the GCC states. And a large number of other laws, regulations and decrees may be relevant depending on the nature of the franchise being granted, the identity and corporate structure of the franchisee and the specific location(s) in which the franchisee is granted rights. Intellectual property For franchisors, trade marks and trade names are at the forefront of brand protection. Franchisors need to be acutely aware of the nuances associated with protecting and enforcing their brands in the

GCC. While most of the member states of the GCC are party to key international treaties for the protection of IP, the enforcement of IP rights must be addressed at a national level. In their haste to secure a franchise and establish a foothold in the GCC, franchisors often allow franchisees to register trade marks and trade names in advance of the franchise documentation being agreed. While commercial expediency is the obvious driver in these circumstances, this practice poses serious risk, even in circumstances where franchise arrangements are subsequently formalised and appropriately documented. In many GCC states, trade marks cannot be assigned until they are registered and franchisors often struggle to wrest control of a registered trade name away from a franchisee, irrespective of whether that trade name is internationally known and associated with the franchisor. Franchisors considering multicountry franchise operations in the GCC are faced with a number of competing concerns which will affect their brand protection strategies. These include identifying key markets and structuring arrangements such that the use of a brand by a franchisee will accrue to the franchisor. The costs associated with securing trade mark registrations in the GCC are among the highest in the world. As such, it is crucial for franchisors to develop an effective regional strategy for trade mark registration and brand protection at the outset of their expansion into the region. A well defended IP portfolio is only as strong as its foundations and brand protection issues will directly impact on the ability of franchisors to properly capitalise on the opportunities presented in the GCC. Enforcement The effective enforcement of rights, judgments and awards poses a number of challenges in the GCC. As

a result, franchisors should conduct rigorous legal, commercial and financial due diligence on prospective franchisees. Franchise agreements should be carefully drafted in an effort to ensure that choice of law provisions are acceptable to franchisors and appropriate for the arrangements contemplated. Of perhaps more importance is identifying a dispute resolution forum that allows for proceedings in a convenient location and language and effective enforcement against wayward franchisees. A prudent franchisor should be aware of, and understand, the legal and regulatory environment in the GCC when structuring and negotiating its arrangements with franchisees. Taking legal advice as early as possible in the franchising process will, on the basis of past experience, save a franchisor time and costs that may otherwise be incurred in renegotiating franchise agreements once signed, or settling disputes with franchisees. The opportunities for franchisors that structure arrangements with franchisees in the GCC carefully, appropriately and in the context of regionally specific requirements are tremendous. Further information If you would like further information on any issue raised in this update please contact: Joycia Young, Partner E: joycia.young@clydeco.com Ben Smith, Associate E: ben.smith@clydeco.com Clyde & Co LLP PO Box 7001 Level 15, Rolex Tower Sheikh Zayed Road Dubai, United Arab Emirates T: +971 4 384 4000 F: +971 4 384 4004 Clyde & Co accepts no responsibility for loss

For an online version, please visit: www.smeadvisor.com/2014/07/franchisingin-the-middle-east/

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Social entrepreneur? Good luck with that!

Social ventures are starting to be one of the foremost routes for tackling society’s ills - and a number have achieved iconic status and volatile growth. Yet they involve many of the challenges of conventional start-ups, while offering a narrower range of funding opportunities and often perplexing commercial limitations. We asked Genny Ghanimeh, Managing Director, Pi Slice, to provide a roadmap for the avid social entrepreneur… If you’re planning to launch a social venture, oh wow! You’re in for a rough ride! NGOs and charity organisations are no longer the only options for alleviating the social ills of the world. In today’s interconnected universe, we face complex issues that require more innovative and sustainable solutions. This has led to the rapid rise of social entrepreneurship where socially conscious entrepreneurs tackle global challenges while generating profits. It is said that “Social ventures have at their core a strategy to deliver explicit social impact in combination with sustainable business growth, recognising the power of business in tackling social issues around the world” (John Green). In theory, the concept of social entrepreneurship is amazing in its own right but the practical process in progressing from idea solution to business operation has its most critical challenges during the start up financing stage.

This is where the initial challenge for social ventures resides: how to get the initial financing? Startups typically turn to the following channels of capital: network

investments, banking, equity debt, convertible debt, crowd funding etc. Amazing - so there are revenue options available. However, social ventures don’t have the same flexibility in their identity structure on leveraging capital the same way as regular startup ventures do. First, equity or VC financing usually expects an exit strategy that does not automatically exist in social ventures that plan on generating impact for the long haul. Second, the risk appetite for investors adjusts with the existence of proof of concept models, however, social ventures, exacerbate the challenge of assessing risk, given the unique nature of cultural and business resource issues and investor networks. Thirdly, and most importantly, investors usually depend upon comparable investment activity that helps validate and support an investment thesis around market opportunity and valuation levels. That backup and peer justification doesn’t exist in many social venture markets, where activity is far more sporadic and those markets have yet to demonstrate clear trends in delivering investor returns. All of this limits the availability of capital in social ventures.

How do social ventures get over the financing challenge globally?

To address these concerns, social ventures can do several things, including intensive market research to prove need and execution capabilities to access the previous capital streams mentioned before. If capital roadblocks still exist then they can do the following three options: leveraging partnerships, philanthropy organisations and social cause competitions and funds. Revenue Sharing Partnerships: Candidly, sometimes the best value one can get is not in the form of capital but in the form of a partnership. In recognising this scarcity of capital, entrepreneurs subsequently identify partnerships that offer direct economic benefits to both parties. It is equivalent to having capital without having to struggle through valuation and expected returns. Both parties would share the upside. Philanthropy Money: In the past, donating one’s money was the way to engage with causes you care about. Today, social enterprises question this handout model and challenge the global public to focus on a more robust sustainable business model. As such, today, people and organisations want to invest instead of donate their money. For entrepreneurs, this source of capital is advantageous in that it requires lower than market rate interest or return targets - and for the foundation, a principle attraction in that the returned capital can be recycled into other charitable activities. It must be noted that the concept of impact investing is still evolving and as such needs more time to expand to accommodate for the growing number social enterprises. Competitions, Accelerators, Angel Investors and Impact Funds: This goes without saying, but business competitions are always a go-to option since they not only provide capital, but also exposure and mentorship that indirectly leads to more capital investment. Numerous sources of start-up capital do exist, from business

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the next level

school competitions, to accelerators, to angel investors, like Echoing Green, Unreasonable Institute, Endeavor Global, the Global Social Venture Competition and the Hult Prize. Since most of these initiatives exist so far on committed and passionate donors, the challenge would be to yet identify sustainable models.

What is happening in MENA – Social Investors, Social Activists and Social Ventures? In analysing the capital flow for social enterprises, the picture behind this reality around the world adjusts depending on what region you go to. In the western markets such as the US or Europe, capital structures are becoming more inclusive for social enterprises. What’s happening in regions such as MENA? Well, we collected some views from Social Investors and Activists to reflect the social financing landscape in MENA, and here is what we got: Badr Jaafar - Crescent Group of Companies “It’s tough. The funding circles in our region do not yet see this space as a robust enough asset class to warrant serious attention. There is a broad perception that there is a definite trade-off between social impact and financial returns, and so I have heard many investors argue that they would rather contribute to social gains through straight charity without mixing it up with profit seeking. For this reason, I always advise budding social entrepreneurs in MENA seeking financing not to overly pitch the social aspect of their ventures and instead to focus on financial metrics when presenting their ideas. I do envisage this will change gradually over time as the investment community increasingly appreciates the collective value of the triple bottom line, but we are not there yet.”

Genny Ghanimeh, Managing Director, Pi Slice

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Alexandar Williams - Dubai SME “The equity financing landscape in MENA is starting to take root. The space includes social entrepreneurship and

THE NEXT LEVEL

the development of innovative sociobusiness models. There are very good quality start-ups emerging helmed by talented people, ready to scale with the right amount of smart money and mentorship. Governments should enhance their roles to support such start-ups on a co-development basis with the private sector investors. I believe new innovative support models from the government and private sector will emerge to help foster a conducive start-up ecosystem MENA. The conversations and actions on this front must be sustained.” Ali El Idrissi - J.P. Morgan Social Finance “In MENA there has been a flurry of new initiatives supporting entrepreneurship from competitions such as the Hult Prize, the MIT Enterprise Forum Arab Startup Competition or the MIT Global Startup Workshop to accelerators and incubators such as Oasis500 in Jordan, Flat6Labs in Egypt and international networks like Endeavor and Ashoka expanding their MENA footprint. However, the amount and diversity of funding still lags behind other emerging markets and there is a significant opportunity for high-quality MENA social enterprises to tap into international networks and funding sources, which rarely have access to such investment opportunities. In parallel, philanthropic capital in the region should be used in a more strategic way and provide early stage funding for social businesses. There is an opportunity for large philanthropic organisations and corporates to act as pioneers in providing this type of capital.” Soushiant Zanganehpour - Skoll Centre for Social Entrepreneurship, University of Oxford “From my experience advising in the region, I see a range of options available to social entrepreneurs for their first financing. Regional competitions like MIT Arab Business Plan or Acumen Dubai’s regional social venture challenge provide chances for those with a bit more than a simple idea to compete for early stage pre-seed funding. Those

with just a pitch, a nimble business plan or small working prototype can access the local accelerators (like Oasis500 and Flat6labs) for early stage business development support and funding, usually for a 10-15 per cent equity swap. Bootstrapping is another option that many social entrepreneurs rely on; there is no quicker way of testing a value proposition and an idea’s efficiency when you’re using your own funds. Finally, some social entrepreneurs do engage an emerging and informal angel network of high net worth individuals for seed or pre-seed financing in their home countries. Success and the existence of these networks very much depends on the level of local social entrepreneurial activities, the status of the ecosystem (i.e. awareness about the concept), as well as the entrepreneur’s ability to penetrate into various social networks.”

A Model Example - How did we get funded at Pi Slice? So the question might be - what model examples do we have of social venture start-ups who are securing financing? Well, at Pi Slice, when we went for our first funding rounds, we learnt from meeting diverse investors to rely on all funding channels. From the beginning we had some pre-seed angel money that helped us to just get started and allowed us with Microworld.org from the group PlanetFinance.org to build a revenue sharing partnership model - we’re big fans of partnerships and creating shared value at Pi Slice. We also participated in different entrepreneurship competitions, as much as time and timing allowed us to - the exercise of preparing for a competition, being mentored and presenting the case to the jury is very beneficial to reassess the model whether one gets funded or not. We still needed cash money, so we approached philanthropy capital while still pitching the project focusing on financial and operational metrics- at the end of the day, social investors or

philanthropists, like any investors, need to know that you can be sustainable, scalable and that you won’t require any other emergency rounds of financing. Finally, we also engaged with VCs and set together future milestones to pitch them at a time when they would be interested to come in - this is a very useful exercise to set standards and milestones achievements in foreseeing the growth of the venture.

The Future of Social Venture Financing. Are we there yet? Let’s be realistic, the MENA region needs jobs and we can create them today through small start-ups. The problem is that startups struggle with access to talent, markets and of course capital. The landscape is slowly changing and we’re witnessing private and governmental initiatives for budding entrepreneurship ecosystems in almost all countries in MENA, fostering positive trends related to these challenges, but the gap between the capital need by these start-ups and available seed money and support by investors or institutions is still too big, all more very so for social ventures even though they are the most needed to solve, innovate and disrupt societal issues and challenges around. We can only hope that this change happens sooner than later, since the change is happening anyway and more and more people are realising the value of supporting such start-ups while creating impact for the wider community. Maybe the MENA region is still not there yet in terms of global standards and networks for social ventures, but the societal issues and the will and commitment to solve them are definitely there and sometimes this is all it takes for a movement to be in motion and for the change to leapfrog.

For an online version, please visit: www.smeadvisor.com/2014/07/socialentrepreneur-good-luck-with-that/

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BUSINESS INTELLIGENCE FOR INTERNATIONAL TRADE www.tradeandexportme.com

Contents

56 ADVISORY BOARD Key personalities sharing their expertise to ensure that we bring you the latest trends and issues in the field of trade. Hospitality & tourism 58 Building Brand Qatar Noted industry commentator Melanie Mingas evaluates the remarkable opportunities in the Qatari hospitality sector.

TRADE AND EXPORT MIDDLE EAST

Trade & growth 62 Dubai – the rising financial capital. The Emirate’s role as a key trade hub is well-established, but a subtle transition has taken place, whereby Dubai is earning credentials as a world-class centre of financial services. Associate Editor Zennifer Khaleel investigates… Strategy 66 Culture and Exporting Dr Ashraf Mahate, Head, Market Intelligence, Dubai Exports lays out a simple guide to help you avoid cultural conflicts in doing business with other countries and make your company more globally competitive.. VIP interview 70 A record of achievement Ahmed bin Sulayem, Executive Chairman, Dubai Multi Commodities Centre, in an exclusive interview shares his vision towards attaining greater achievements.

Success has no nationality, just as commodities have no nationality. We service the world and we are focused on competing on the global stage against the biggest multi-nationals and most successful economies of our time. p72

Finance 74 Money in motion The Western Union Business Solutions team gives us their highly polished update on currency movements for the month of July. Event spotlight 78 The SME Evolution Programme The recent SME Evolution Programme event, proved to be a melting pot for entrepreneurial ideas and exciting SME insights. We bring you the highlights of the event. Economic insight 80 Ramadan Economics Find out what the actual picture is when it comes to the financial performance of different sectors during the holy month of Ramadan.

TRADE and export middle east

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

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

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

Khalil Saqer Bin Gharib Corporate Communications Director, Dubai Customs

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

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

Peter Fort CEO, Ras Al Khaimah Free Trade Zone

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HOSPITALITY & TOURISM

Building Brand Qatar Identifying an “untapped resource” in tourism, Qatar is laying the foundations to diversify from its carbon controlled economy. Support is strong as the largest operators from Hilton to Starwood, vie for prime positioning across the country but with huge increases in supply and a high concentration of corporate guests. Noted industry commentator Melanie Mingas evaluates the true opportunities.

In February of this year, Qatar Tourism Authority chair Issa Al Mohannadi publically pledged the 2030 National Tourism Sector Strategy would receive a cash injection of USD 45 billion to support ambitions to increase international inbound visitor numbers by almost four-fold; create an additional 100,000 jobs; and increase GDP contributions from less than one per cent to eight per cent. With a context of diversification from the Gulf state’s carbon dependent economy, Al Mohannadi referred to tourism as an untapped resource. In the months since, major hotel and resort developments have been

5.2%

9,251

projected RevPAR increase, 2014

rooms in Qatar currently

1.9% projected occupancy increase in 2015

7.1m target for international tourist arrivals, by 2030

$45bn investment pledged by Qatar Tourism Authority

announced by Kempinski, Hilton World Wide, The Rezidor Hotel Group and others, with many of the largest players naming Qatar as a key focus. The country’s total confirmed pipeline currently stands at 38 properties, with a total of 9,251 rooms according to data from STR Global and with a current stock of 74 properties totalling 13,596 rooms, the impact will be significant. Before the end of 2014, 3,000 keys will enter the market, operated by the likes of Accor’s Pullman, Hilton’s Garden Inn and Starwood’s Westin, among others. By the end of 2015, that number will have surged to 4,759 keys.

However, where other markets with large supply increases struggle to find an equilibrium with demand, Qatar is buoyed by a strong corporate market and growth in the demand for extended stay products. “The growth in the corporate market is largely driven by the growing number of large-scale projects in the country, requiring consultants, project workers and engineers to travel to Doha more regularly,” explains Filippo Sona, International Director and Head of Hotels, Colliers MENA, who quotes a 20 per cent YoY occupancy increase in the suites and serviced apartments sector in 2013.

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HOSPITALITY & TOURISM

Snapshot: The key developments

$274.5m Q1 hotel revenue, 2014

4,759

33.7% mid-market hotel share

keys to be added to stock by 2015 end

17%

YoY occupancy increase in suites and serviced apartments

That’s not to say the market is without concern, as PwC director Alison Cashmore highlights, “Finding that hotels recorded 1.3 million visitors in 2013, which is an increase of 8.3 per cent from 2012, our research has found ongoing rate reductions resulting from high levels of competition led to a decline in ADR over the period 2012 to 2013 by almost 20 per cent, which in turn has driven down the RevPAR by 11 per cent.” It’s a similar tale to that of Abu Dhabi, which unlike its neighbouring Dubai, struggled when experiencing a surge in room keys and delays to anchor projects on Saadiyat Island.

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Curio – A Collection by Hilton • 207-guest room hotel • 19 suites • Co-located with Mall of Qatar • Positioned in new development, Al Rayyan Gate Pullman Doha West Bay • 468 room • 97 apartments • Opening 2015 Westin Hotels and Resorts • To debut in Qatar 2014 • 365 guest rooms • 92 executive suites • 2,900m event space

growth in 5-star market since 2009

20%

Hilton Salwa Beach Resort and Villas • 97Km outside of Doha • 362 keys • 104-hectare development • Surrounded by waterpark, a luxury marina and yacht club, a dive centre, cinemas, a wealth of premier retail shopping and numerous restaurants

35% of hotel stock could be due renovation

A May 2014 report by JLL, found ADR and occupancy declines (of 20 per cent and six per cent respectively) resulted in a RevPAR contraction of 25 per cent, only recovering in the last 12 months. Seasoned General Manager Gordon MacKenzie, who has lived in Doha for 22 years, was at the helm of the city’s largest hotel, currently branded as Radisson Blu, and warns that, regardless of the supply demand dynamic, cutting rates to create the perception of strong performance creates a dangerous precedent. He says, “The market does not dictate that you are going to get

JW Marriott, Qatar • First JW Marriott in Doha • Opening ear marked for 2017 Hotel Missoni • Designed by Rosita Missoni • 200 rooms and 70 apartments • Opening 2015

another 100 or 100,000 bookings because you have cut the rate, or packaged the deal.” Reporting performance was at its highest in 2009, he attributes this to global recession and limited hotel stock locally. He adds, “Qatar is a completely different market to other GCC cities. F&B revenues in Qatar often match the revenue generated by rooms and with 22 outlets in this hotel alone it is always possible to supplement performance.” However, Sona warns that a 17 per cent growth in the 5-star segment since 2009 has increased competition at the top end of the market and created a

HOSPITALITY & TOURISM

In June 2014, Hilton Worldwide announced the development of Qatar’s largest beach resort, with investors Al-Rayyan Hospitality.

Age of hotel stock

10+ years 17%

7 – 9 years 19%

0 – 3 years 51%

4 – 6 years 13% Source: Colliers International

compression effect that echoes through all segments. “All new hotels in Doha are mostly competing for the same target market of corporate travellers, which has increased the bargaining power of this segment since they have more hotels to choose from.” Staying ahead Concern appears relative. In Q1 2014, hotels generated USD 274.5 million in revenues, with occupancy up from 68 per cent to 75 per cent, supported by the closing of almost two per cent of total stock due to renovations. In an ever competitive market, the need to constantly renew offerings is integral to success, especially for the 17 per cent of Doha’s hotel stock aged 10 years or older (see chart). Working on a standard refurbishment cycle of seven years, it can be calculated that 36 per cent of Doha’s stock could be ripe for renovation today and the iconic, 32 year old Sheraton is the latest to close its doors for such work with upper budget cap of USD 192 million. MacKenzie’s tenure at Radisson Blu coincided with a USD 25 million refurbishment of the hotel’s 324 West Wing rooms. The eighth refurbishment and opening assignment of his career, he reports the key to a successful projects is to pick and mix contractor services. He shares, “We recognised years ago that, if you don’t innovate you die.”

“We had four contractors and designers create four different mock up rooms and we paid them USD 50,000 each. At the end of that process we selected one supplier but also took the best of each of the rooms and amalgamated it into one,” he recalls. Changing tastes Driven by a rise in the number of mid-market properties, which currently account for a mere 33.7 per cent share of the total market, over the coming decade Sona predicts the mid-market will slowly gain pace against the 46 per cent market share held by luxury, upper-upscale and upscale properties. The evolution will be driven by what Sona refers to as sports tourism, as well as leisure destinations such as Qatar Mall and Doha Zoo. Again the changing guest profile will demand the development of a different hotel product; a diversification he notes is already tangible. But the operators aren’t hedging bets. In June 2014, Hilton Worldwide announced the development of Qatar’s largest beach resort, with investors Al-Rayyan Hospitality. The 362 key Hilton Salwa Beach Resort and Villas will be set on 104 hectares of land, located 97Km outside Doha and colocated with a waterpark, marina, dive centre and retail development. It’s a significant contribution to the product type leisure tourism will demand and

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HOSPITALITY & TOURISM

Doha by class Market Class

Property Count

Room Count

Luxury Class

3,051

Upper Upscale Class

3,353

Upscale Class

2,389

Upper Midscale Class

996

Midscale Class

2,945

Economy Class

862

The phenomenon of planning and constructing mega urban developments may be second nature in the Middle East, but success isn’t without its peaks and troughs.

Source: STR Global

the arrival of other Hilton products such as Garden Inn, back this. However, Hilton has also chosen Doha for the regional debut of its ultraluxury Curio Collection. This 207 key hotel will be co-located with the underconstruction Mall of Qatar and is being developed with investors Al Jaryan Trading and Contracting. Says Hilton VP of development, Carlos Khneisser, “In Qatar we are not looking to 2022, we are looking for sustainable business. Our management contracts can be up to 25 years’ long, so we look at locations and products which we know will be good for growth. We are developing five of our 10 brands in Qatar and that portfolio will also include Double Tree and Waldorf Astoria. “Qatar is one of our three target markets in this region, alongside UAE and Saudi Arabia,” he adds. Hotels and ‘Brand Qatar’ If leisure is the future, or at least an essential diversification from the corporate heavy focus experienced to date, the main growth drivers for this critical sector will stem from the creation, development and maintenance of Brand Qatar. Akin to the strategy implemented in Dubai, it’s an element Sona predicts will come from the growth of Qatar’s key stakeholders namely Qatar Airways, Hamad International Airport and Al Jazeera, in addition to the promise and legacy of major events.

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With an ambition to increase the GDP contribution of tourism from 1.1 per cent to eight per cent by 2030 and the huge financial commitments made by Qatar Tourism Authority, the backing of private sector stakeholders is unlikely to wane. “These factors reinforce the hospitality sector’s positioning as an important economic pillar within the country,” he observes. “Development of hotels and hotel apartments is a key element within the National Development Strategy 2011 to 2016, Qatar National Vision 2030 and Qatar National Tourism Sector Strategy 2030 working in parallel with Qatar Airways, and its expansion plans, to position Qatar as a tourism destination,” he adds. The phenomenon of planning and constructing mega urban developments may be second nature in the Middle East, but success isn’t without its peaks and troughs. In such markets, despite undisputed and unprecedented wealth, exposure to market forces is still a sobering reality. Having observed the rise and fall and rise again of Abu Dhabi and Dubai from across the Gulf, Qatar would benefit from remembering that economic diversification is more than replacing one source of wealth with another. For an online version, please visit: www.tradeandexportme.com/2014/07/ building-brand-qatar/

TRADE AND GROWTH

Dubai

the rising financial capital

The Emirate’s role as a key trade hub is well-established, but a subtle transition has taken place, whereby Dubai is earning credentials as a world-class centre of financial services. What are the factors influencing this sea-change - and which are now putting ‘clear blue water’ beyond Dubai and the traditional financial centres of the GCC? Associate Editor Zenifer Khaleel investigates… Siddharth Balachandran, Managing Director, UMGA Group

Since the turn of the century, Dubai has been rising steadily as the undisputed entrepreneurial capital of the Middle East. Due to its integrated infrastructure and openness to business, it attracts investors, world-class advisors and, of course, entrepreneurs. Recently, it has opened the flood gates to investment companies and the banking sector, as it attempts to become the key financial capital of the Middle East. Many global financial institutions are rushing to open regional offices here and

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TRADE AND GROWTH

a number of the major names are already present. Unlike other sectors such as oil or construction, the development of a financial centre is an evolutionary process of strategically building sophisticated human and institutional infrastructure to foster economic growth. It requires the careful management of both the demand and supply of financial services. Participation of domestic and international entities must be encouraged while aggressively improving the financial ecosystem

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in parallel to carefully monitoring and controlling systemic risk. â&#x20AC;&#x153;Dubai has made the transition from a metropolis to a teeming megalopolis, and very smoothly at that. This ease of transition has been facilitated by an unstinting focus on the basic fundamentals of successful commerce and entrepreneurial development,â&#x20AC;? says Siddharth Balachandran, Managing Director of the BUMGA Group, based in Dubai. â&#x20AC;&#x153;The Dubai government has understood, (with great clarity if I

may add) that for holistic success, it is imperative that the financial service sector be promoted and supported unhindered. Though the development index of any city is generally dominated by improvements in the capital goods, construction and the manufacturing sectors, the glue that binds all these pivotal sectors together is the financial services sector. Dubai has realised this very early and hence established entities such as the DIFC, DMCC and the likes. Naturally, with

TRADE AND GROWTH

the importance of the financial services sector, it is even more important for this sector to be manned by the right personnel, in terms of mindset, ideals, talent and qualification. I believe that the next decade is going to be a glowing testament to this ‘fundamentals first’ approach very rightfully adopted by Dubai,” he adds. Rise of the banking sector The British Bank of the Middle East was the first bank to be established in Dubai in 1946. Since then, there has been a burgeoning number of leading international and local banks in the Emirate. According to the 2015 Dubai Strategic Plan , financial services is one of the sectors that qualified to be part of the future growth plan of the Emirate. The development of the financial services industry has gone hand in hand with the evolution of Dubai as a trading hub for the region. IIF, the Washington-based global association of financial institutions, recently stated that the soundness indicators of the UAE banking system have further improved this year with strong improvement in capitalisation levels, increase in profitability and further easing of liquidity situation. The renewed interest in establishing Dubai as a financial hub can be attributed to these strong macroeconomic fundamentals. Dubai’s role has progressed immensely, with the government’s timely financial and institutional reforms, including the rehabilitation of bank balance sheets, restructuring of the nonbanking financial sector, tangible improvements in corporate governance and transparency, and strengthening of federal fiscal and monetary institutions. DIFC Established in 2004, the Dubai International Finance Centre

(DIFC) is a sophisticated enterprise that provides a full range of financial services which evolve to meet, anticipate, and create demand through its financial innovation. The DIFC has meticulously risen to the challenge of placing Dubai to the pinnacle of financial steadiness, by creating an integrated network of banks, securities firms, financial intermediaries, clearing houses, brokers, institutional investors, insurance companies, and mutual funds. DIFC incentives include zero taxes on income and profit, 100 per cent foreign ownership, and no restrictions on foreign exchange and profit repatriation. Secondary benefits include specialised supporting infrastructure and services. It has its own set of civil and commercial laws that are independent from the rest of Dubai and are consistent with the English Common law. DIFC

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TRADE AND GROWTH

also houses its own courts within its premises, facilitating the speedy issuance of licences and completion of legal proceedings. The DIFCâ&#x20AC;&#x2122;s unique infrastructure, internationally recognised legislative and regulatory framework, and dynamic business environment have positioned the centre to become a self-sufficient financial enterprise.

According to the 2015 Dubai Strategic Plan, financial services IS one of the sectors that qualified to be part of the future growth plan of the emirate. The development of the financial services industry has gone hand in hand with the evolution of Dubai as a trading hub for the region.

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Services and infrastructure Dubaiâ&#x20AC;&#x2122;s policy of investing heavily in its transport, telecommunications, energy and industrial infrastructure has significantly enhanced its attractiveness in the international business scene. The Emirate has seven industrial areas, one Business Park and three highly successful specialised free zones. Its transportation network consists of two world-class seaports, a major international airport and cargo village and the closely connected Dubai Metro. All these assets deliver efficiency, flexibility, reliability and cost-efficiency. Complementing its world-class infrastructure is a sophisticated service sector that features leading regional and international freight forwarders, shipping companies, insurers, international hotels, banks and financial service firms and many more. Islamic finance In a bid to strengthen its inherent Islamic roots, the Dubai government has already undertaken plans to position the city as an Islamic financial hub as well. It is also working to develop international standards of practice for Islamic commerce and industry and will establish a centre for Shariacompliant quality standards similar to the International Organisation for Standardisation. The government is actively promoting Islamic banking and insurance, Islamic financial

products and other areas including the arbitration of Islamic contracts and the setting of quality standards for halal food. Islamic finance, based on principles such as bans on interest and on pure monetary speculation, has grown rapidly around the world over the last several years, although it remains much smaller than conventional finance. Islamic banks now command a roughly 25 per cent share of the banking market in the six countries of the Gulf Cooperation Council, (according to an estimate by Ernst & Young). Visionary leadership, strategic foresight and expedited action in areas of progress, have given Dubai a remarkable edge to achieve its goals of becoming the financial capital of the Middle East. With steady and meticulous planning, the city can also plan a position for itself in the global platform. The factors in its advantage are multinational clientele, excellent infrastructure and geographical position. Add to this lenient government laws and a general ease of business transactions, and the city is a just a few strides away from achieving its goals.

For an online version, please visit: www.tradeandexportme.com/2014/07/ dubai-the-rising-financial-capital/

Strategy

Culture and exporting CULTURE IS AN ESSENTIAL ELEMENT IN DOING BUSINESS AND CAN IMPACT THE STRATEGIC DIRECTION OF A COMPANY. IN MANY WAYS IT IS DIFFERENT IN EVERY COUNTRY AND IT EVOLVES OVER TIME. CULTURE ALSO AFFECTS VARIOUS ASPECTS OF BUSINESS SUCH AS MANAGEMENT AND DECISION-MAKING, AND OTHER BUSINESS FUNCTIONS FROM ACCOUNTING TO PRODUCTION. HAVING SAID THIS, IT IS IMPERATIVE THAT ONE IS CULTURALLY SENSITIVE WHEN DOING BUSINESS IN OTHER COUNTRIES. IN THE FOLLOWING FEATURE DR ASHRAF MAHATE, HEAD, MARKET INTELLIGENCE, DUBAI EXPORTS, LAYS OUT A SIMPLE GUIDE TO HELP YOU AVOID CULTURAL CONFLICTS THUS MAKING YOUR COMPANY MORE GLOBALLY COMPETITIVE.

One important issue that affects a SME’s performance in global markets is cultural differences between countries. More formally, culture is defined as a comprehensive system of behaviour patterns that tend to be learnt as opposed to being inherited. These behaviour patterns differentiate members of a particular society to another. The behaviour patterns can include a range of aspects such as customs, religion, language, material artifacts to those of a psychological nature like attitudes and feelings. Due to the integrated nature of culture it is not always easy to understand all its various aspects. Of course, one would not expect a business owner or manager to be a master of all the cultures across the globe. Nevertheless, it is important to be aware of the key aspects of a country’s culture which a company has selected to target as a potential export market. However, globalisation and increased level of tourism have opened once closed countries thereby making people more aware of different cultures. At the same time the Internet, and media have tended to reduce cultural differences. Even though cultural differences have been reduced, they nevertheless exist and as a general rule exporters should respect the culture and traditions of the country with which they wish to do business with. The golden rule of business etiquette is to be open-minded, non-judgmental, and flexible. While travelling abroad, exporters should keep the following points in mind:

Language All business issues especially financial ones are very much affected by language. At the basic level, business negotiations which include the price, delivery dates, shipping methods, and method of payment can be misunderstood if one of the parties involved is not fluent in the other party’s language. Even if both parties speak a common language misunderstanding can take place based on the general understanding of certain words. For example, English is spoken in the UK, USA, Australia, Canada, South Africa, and New Zealand amongst other countries. However, in each country there are small differences in usage. More important is the interpretation of words that may actually differ from country to country. For instance, the Spanish word “mañana” from a literal context actually means “tomorrow”, however in general business usage it tends to imply “not today”. In other cultures one tends not to use certain words in order to avoid embarrassment. For example, in many Asian countries one would not say “no” directly as it is considered to be rude. In these circumstances the exporter will need to be able to correctly interpret if a “yes” is an actual answer or simply one provided so as not to be rude. Therefore, in many cases it’s important to know and understand the nuances of a culture so as to correctly interpret its meaning.

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Strategy

Punctuality Being punctual shows respect for a business partnerâ&#x20AC;&#x2122;s time and commitment. Even when it is culturally acceptable to be late, the exporter should always be on time for appointments.

Addressing individuals Different countries have different practices for addressing people. In some countries, using first names is acceptable immediately, in others, this would be seen as highly improper, and interpreted as rude or insulting. An exporter should never use first names unless invited to do so. The correct pronunciation of the names of each business contact should also be practised beforehand in order to avoid embarrassment for both parties. Special rules about addressing women should always be adhered to.

Dress codes Dress codes vary from country to country, in some it is formal, and in others, informal or casual. Special note of dress conventions for women should be taken into consideration. Sometimes formal discussions are followed by informal dinners, or get-togethers. Here again, customs differ on how to dress for different occasions.

Greetings Different forms of greetings are used in different places. Shaking hands may be acceptable in one country, but frowned upon in another, where as bowing

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may be the formal greeting in some countries. Exporters should be sure that they know the right manner or practice for greeting women.

Conversation Some societies are serious by nature and are not in the habit of cracking jokes, or narrating anecdotes during business discussions, while others would consider conversations dry and uninteresting otherwise. It is a good idea to be wellinformed about sensitive topics which need to be avoided (political situation, recent scandals and the likes), and of topics to which it would be polite to refer to (World Cup victory, health of the President and so on).

Socialising In some cultures, business people frequently invite clients to their homes and extend hospitality, while others keep the personal side of their lives away from all business transactions. It is important to be aware of the accepted practice to avoid accusations of attempted bribery. If invited to a social affair, exporters should accept the invitation as a sign of respect. Many countries consider after-hours events a way of getting to know more about the exporterâ&#x20AC;&#x2122;s background. An exporter can contact embassies, or High Commissions for any country-specific information required on business etiquette.

Gift Giving Many countries practice this custom. The exporter must know whether a gift is expected or not, and to whom the gift

The golden rule of business etiquette is to be open-minded, non-judgmental, and flexible.

should be offered (e.g., the host, the wife of host, the family, the business contact, or the company head). A gift to a government official may appear to be a bribe, therefore it is important to make sure the gift is appropriate and will be well-received before giving it.

Negotiating styles Some countries habitually enjoy negotiating and like to haggle over the terms of any transaction. Others prefer a firm and precise proposal which they can seriously evaluate and respond to. This is an important consideration, when preparing for a visit.

Business Card An exporter should always carry business cards with information printed in the native language on the reverse side. In some countries, business cards are treated quite reverently, as a declaration of the status of that person. It is important not to bend, write on, or put away the business card while in the company of the presenter of the card.

Strategy

Businesses around the world have lowered barriers to women who now occupy senior management positions.

Religion In a number of countries business and religion are interrelated, both in terms of holidays as well as the legal and commercial contracts. Religion can also make a difference in the way business is carried out as well as in the products that can be sold.

Corruption Generally speaking corruption is defined as any form of financial or non-financial inducement offered by one person to another. The most common example of corruption is bribery which in some countries tends to be the normal order of activities while in others it is punishable offence. There are two aspects to corruption: First the company has to make a decision as to whether they wish to operate or export to a country with ‘high’ level of corruption. The level of corruption can be determined from the Corruption Perceptions Index produced by Transparency International. Second, if the company decides to operate in a country with a high level of corruption then it needs

to know how to conduct business in such an environment. Of primary importance there are the likely costs of making such “grease payments” as well as ensuring such payments can be made legally.

Government Involvement and Legal Framework The culture of a country also impacts on the involvement of the government in the corporate sector. The culture of a country also determines the level of protection provided to foreign companies through its legal system. For example, in some countries the law is based on code law while in others it is common law. Similarly, the development of law differs whereby in some countries the laws are well established whilst in others it is being created almost daily.

Women in BusinesS

Dr. Mahate received his doctorate from Cass City University Business School in London (UK). He read Economics at University College London, followed by a Masters in International Economics and Banking at the University of Wales in Cardiff. Dr. Mahate is a professional educator and received his training at the Institute of Education (University of London). He is a member of the Chartered Institute of Managers (UK) and a Member of the Institute of Commercial Management (UK). He is also a member of the Association of Certified Anti-Money Laundering Specialists (ACAMS). He can be reached at ashraf.mahate@ dedc.gov.ae.

Discrimination based on gender is, for the most part, no longer made when conducting business negotiations. Businesses around the world have lowered barriers to women who now occupy senior management positions. However, in some cultures, history, tradition and social norms may still deny women true equality in the international business world. Business practices based on gender differences may be more pronounced in the case of SMEs who usually conduct business on a personal level. It is important to note that the treatment of women who are residents of a particular country does not necessarily indicate how foreign business women will be treated.

For an online version, please visit: www.tradeandexportme.com/2014/07/ culture-and-exporting/

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VIP interview

A record of achievement The Dubai Multi Commodities Centre (DMCC) has rapidly become established as one of the leading dedicated trade hubs in the GCC, fulfilling the vision of its Executive Chairman, Ahmed Bin Sulayem - as well as having true ‘landmark’ status with its home in Almas Tower, one of the 10 highest buildings in the GCC. In an exclusive interview with Shane Phillips for Trade and Export ME, we learn more about the vision that is now set on ever-bigger achievements… 70

When asking Ahmed Bin Sulayem, Executive Chairman of DMCC, about how confident he is he can deliver the world’s largest commercial tower - to be named “Burj 2020” - he says, “I’m 100 times more confident about building this tower than I was about building Almas tower. When we started Almas Tower in 2004/2005 no one wanted to finance us. We were a free zone tower and the banks at the time were lukewarm on how DMCC was going to do. Back then we only had 400 members and our revenue model was not proven, whereas today we have 8,000 members. Furthermore, our other businesses have matured, making DMCC a unique global eco-system for commodities. “When we built Almas Tower we created a Sukuk that you could redeem in cash or gold, and we raised $200 million. That was the second government bond to get an A rating by S&P. So that was a big win and to be fair, it was not easy. A lot of people had doubts that Almas Tower was going to be a success, but the results were quite the opposite. So we have gone through the process a few times already with all the towers we have built and we know how to approach the issues at hand. Now we have a track record, we have a history, we are the fastest growing free zone in the United Arab Emirates and people want to invest in us. That was not the story in 2004.” Breaking records “Today we are not just doing well but we are breaking records. In 2004 to

2005 gold trade through Dubai was about US$10 billion and today we are looking at over US$70 billion in gold traded. We also went from US$5 or US$6 million in diamond trading in 2003 to today, when we are ranked as one of the top three largest diamond traders in the world. Also, in tea trading we were not even on the map, and today, we are the world’s largest re-exporter of tea. So in terms of financing the Burj 2020 we are very confident” says Ahmed Bin Sulayem. Making history “The Burj 2020 is already attracting a lot of attention with a few big MNCs vying for 20 to 30 floors at a time. Once we announced that it was going to be the tallest commercial tower in the world, our financing costs went down and everyone’s interest in the project increased. So yes, I am 100 times more confident about this tower than any other tower DMCC has ever made in its history. We have had positive responses from a range of partners, including providers of steel and insurance providers, who are quite willing to underwrite the entire risk given DMCC’s track record. We have only had positive responses from all parties. “We are talking to a company who were primary builders of the Olympic city in London. I like them as they put a real emphasis on health and safety in their projects. They built the entire Olympic City without the loss of one life. I think it is very important to work with ethical

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VIP interview

operators and to continue to ensure that Dubai is a benchmark for professionalism and ethical business in this region of the world.”

Ahmed Bin Sulayem, Executive Chairman, Dubai Multi Commodities Centre

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The finance imperative As Ahmed embarks on what will not only be a landmark moment for DMCC but a milestone for the Emirate of Dubai, one cannot ignore the significance that his financial team will play in the success of Burj 2020. So, what does he look for in his CFO and Financial Team? “There are two types of CFOs, there is the one who sticks to his job description and then there is the one who goes beyond. We at DMCC look for the professional who will go beyond. I see the CFO as the gatekeeper; if a project does not add up it is him or her who needs to shut it down or stop it before it starts. With the size of projects we are doing at DMCC we don’t need a ‘rubber stamp’ CFO.” Ahmed is focused on creating a management team where the members continually challenge each other to raise the bar everhigher, and in this mix, the CFO especially should be the one asking the toughest questions and pushing the team - ensuring due diligence has been executed to the highest standard. “Attitude is a small thing that makes a big difference”, says Ahmed. “Many people think that it is vision and strategy that help catapult the CFO into a CEO, but that is not enough. They need to have passion, they need a fire in the belly, they need to really love the brand and want to push DMCC to the next level. In my opinion that is where the edge is. If you have that type of fire, that kind of passion then you will do whatever it takes to get the skills you need to make that contribution to the team.” “Those may be strategic skills, maybe they are communication skills, perhaps your ability to create consensus, or maybe it is leadership? Whatever it is, your skill set as a CFO is secondary to your attitude and to the spirit of your work.”

VIP interview

“When Sheikh Rashid opened Jebel Ali port many of the Emiratis in town hated the port. They did not want the port, in fact my Father, Sultan Bin Sulayem worked there, and he was reporting to the CEO who was running it. He was in shock when his boss would say “Bury this port, it is useless!” Today our port business is one of the jewels in the crown of Dubai. We did not know anything about running ports when we started but today Dubai Ports is ranked in the top five if not top three largest port operators in the world. It is the vision and passion that got us there. This is the same for anyone’s career, it is not how good you are, it’s how good do you want to be and how hard you are willing to work for it.” “So to get back to my point about what makes a good CFO, it is not your skill set. Yes, your skill set has to be there but I can show you a hundred highly qualified CFOs who I would not work with if you paid me, because they don’t believe in the vision of His Highness Sheikh Mohammed and they are simply not willing to do what it takes to climb this mountain.” A global race “I would not underestimate the Arab businessman as we are not interested in a national race, we are in a global one. Success has no nationality, just as commodities have no nationality. We service the world and we are focused on competing on the global stage against the biggest multi-nationals and most successful economies of our time. Abu Dhabi has its sights set on much higher and loftier targets, just as Dubai does. No one cares about being the biggest or the best in the UAE, we want to be regionally and globally recognised for our efforts. We want to be the best in the world.” As an expatriate one could not agree with Ahmed more, as Dubai is proven to be a city where the

impossible becomes possible. It is rumoured that you can go to almost any country in the world, and travel to any backwater village, and the villagers there may not have a TV or any education, but they will know about Dubai and where it is on the map. How many people can say that about their home town? The question that remains, however: is what is it that makes a person move from ordinary to extraordinary? What are the traits required to become the best in the world? “To be successful I think the most important thing is knowing how to prioritize. Knowing what order to do things in and where to put them. This is one very important skill set. The other is knowing your limitations and not over-extending yourself. You have to know what you can deliver. Thirdly I think you need to be agile and you need to be able to develop new skills and new competencies as the market moves and morphs into new dynamics.” “So in closing, whether you want to be a successful Chief Financial Officer, successful business or successful nation, you firstly need the right attitude, the passion to make you go above and beyond, you need to be focused on what your priorities are - and finally, you need to be agile and able to adapt to the changes the 21st Century is bringing us. I like to say ‘don’t look at how challenging the opportunity is but rather look for the opportunity in the challenge’.” Ahmed Bin Sulayem is focused on delivering the world’s largest commercial tower, set to be completed by 2020. Surely, a fitting tribute to his view that: “it’s not how good you are” that’s important, but rather, “how good do you want to be?” That is the real question.

For an online version, please visit: www.tradeandexportme.com/2014/07/arecord-of-achievement/

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19 - 20 NOVEMBER 2014

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Finance

MONEY IN MOTION The Western Union Business Solutions team brings us an update on the movements in the three major currencies the USD, GBP and EUR to help you trade better in the month of July.

USD The Dollar and its big rivals should continue their manhunt for a compelling catalyst during the course of July. The buck has maintained its mixed faring of late, enjoying sturdy support against the Euro, but enduring pressure against peers from Britain and Canada. What continues to govern the greenback’s prospects is the Federal Reserve and its perceived road ahead for monetary policy. The Fed laid down some USD speed bumps in mid-June when bankers concluded a meeting in dovish fashion by downgrading their growth forecast this year. The Fed now sees a deep hole for the economy to climb out of following the first quarter growth contraction. The bank now predicts mundane growth of around two per cent for 2014, down markedly from previous forecasts of closer to three per cent. As long as the Fed seems in no hurry to deviate from its lowrate policies, the buck’s handle on appreciation could prove slippery, and leave it at risk of a renewed downturn. To gauge the Fed’s next steps, market players will keep close tabs on US employment and inflation, two critical sectors of the economy that bankers are monitoring to decide when to embark on a rate rise. Could fireworks be on the cards for the next jobs report? It actually comes due the day before the Fourth of July holiday. Another

month of robust US job creation in excess of 200,000 would mark the fifth in as many months. That would be a reassuring sign for the economy’s health and help strengthen the case for a Fed rate hike, supporting the Dollar. Will US inflation continue to warm and rob some leeway from the Fed to hold down lending rates? That answer will arrive with the next reading of America’s consumer price index on July 22. The CPI jumped 0.4 per cent in May from April, the fastest since February 2013. In the interim, the Dollar looks stuck at a fork in the road. That may remain the case for a while but lurking near the surface remains an improving US economy. Once growth snaps back, the Dollar should enjoy more lasting appreciation. Upcoming Critical Events July 3: Non-farm Payrolls and Unemployment (June) July 9: FOMC Releases Meeting Minutes (June) July 15: Retail Sales (June) July 22: CPI (June) July 30: Q2 GDP Advance

Economic Indicators 3-month deposit: 0.23%) GDP: -1.0% Q1 (annual growth) Inflation: 2.1% (May) Unemployment: 6.3% (May) Trade balance: -US$ 713.5 (April)

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Finance

The buck has maintained its mixed faring of late, enjoying sturdy support against the Euro, but enduring pressure against peers from Britain and Canada.

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Finance

Sterling touched new multi-year highs in June after unexpected forward guidance from the Bank of England brought forward UK interest rate predictions.

GBP Sterling touched new multi-year highs in June after unexpected forward guidance from the Bank of England brought forward UK interest rate predictions. With both the US Dollar and Euro still missing strong backing from economic data, the Pound could take another step higher to reach new peaks against its main rivals over the coming weeks. If Sterling continues to struggle to make a sustained break through current levels of resistance, however, profit-taking could be the theme for the Pound in July. If the UK currency won’t go up, it must come down. Despite the BoE’s insistence that low wage inflation and spare capacity will keep interest rates at record lows until next year, Governor Mark Carney shocked markets in June with a surprise speech suggesting that rates could rise sooner than markets expect. The news sent the Pound soaring through key price levels towards six-year highs against the US Dollar. Against the Euro, Sterling climbed to a 19-month peak although much of these gains came earlier following the European Central Bank’s historic interest rate cuts on June 5th. How upcoming UK economic data on employment, inflation, wages and the Financial Policy Committee’s announcement regarding housing market risks influence UK interest rate expectations will be important talking points for Sterling. How the BoE interpret these developments in its July policy meeting will be key. Minutes from the meeting will be published on July 23rd and investors will look for how members are likely to vote on rates come August or September. Britain’s second quarter GDP, set to be released on July 25th, will also influence Sterling trade. UK monetary policy will not be the only focus. Geo-political concerns continue to mount and pose risks to financial market stability, which could easily undo currency

market developments. In addition, Britain’s negotiations with the EU and its problems over the European Commission’s new leadership could be factors to watch. The build-up ahead of the Scottish Referendum could also prove unsettling for the Pound. The Pound has now risen by almost 22 cents against the US Dollar since last summer and many experts believe investors will be looking for reasons to cash-in on this rally. More signals of future interest rate hikes seem more probable at this stage, however, which suggests the possibility of an even stronger Pound in July. Low currency volatility also reduces the threat of a sharp reversal for Sterling unless the Federal Reserve unexpectedly adjusts its position on US monetary policy. This would have a big and potentially aggressive impact on currency markets in the way the Fed’s stimulus taper news did last year. Upcoming critical events July 10: RICS House Price Survey (June) July 10: BOE Monetary Policy Decision July 15: Inflation (June) July 16: Unemployment & Wages (May) July 23: BOE Meeting Minutes (July) July 25: Q2 GDP 1st Estimate

Economic Indicators BoE Interest Rate: 0.5% GDP: 0.8% Q1 (q/q) Inflation: 1.5% (May) Unemployment: 6.6% (April) Trade Balance: GBP -9.6 (April)

EUR The European Central Bank (ECB) threw the proverbial ‘kitchen sink’ at the markets in June. The fallout from the historic change in the Central Bank’s monetary policy should continue to be felt throughout the month of July.

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Finance

Reserve diversification out of USD and into EUR, banks repatriating in preparation for the Asset Quality Review (AQR) in the third quarter, an improving growth outlook and yield appeal for peripheral Euro Zone bonds has helped the Euro maintain higher levels, much to the dismay of the Central Bank.

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To review, the ECB not only cut all three of its interest rates, but also took its deposit rate into negative territory, basically charging banks to hold reserves at the ECB above the minimum reserve requirement. In additional to cutting interest rates in an effort to fight against deflationary forces, the ECB announced it would offer targeted longer-term refinancing operations. These will be offered in September and December of this year. Lastly, the Central Bank said policy makers are paving a path towards asset-backed purchases, suggesting that the possibility of outright quantitative easing measures, such as the ones that have been used in the UK, US and Japan, could be around the corner. The head of the Central Bank, Mario Draghi, said that the ‘lower bounds of interest rates have been achieved.’ That would suggest that the Central Bank has reached their limits in using interest rates to control price stability and are now moving towards extraordinary measures such a quantitative easing. When we take a step back and look at the pillars that have supported the currency so far this year, the direction that the Central Bank is now taking to maintain price stability seems likely to have negative consequences for the Euro. Reserve diversification out of USD and into EUR, banks repatriating in preparation for the Asset Quality Review (AQR) in the third quarter, an improving growth outlook and yield appeal for peripheral Euro Zone bonds has helped the Euro maintain higher levels, much to the dismay of the Central Bank. These pillars are slowly starting to crumble. The repatriation by banks for their AQR in the third quarter could mostly be completed soon. After the ECB June decision, yield appeal for peripheral Eurozone bonds has waned as demand has slipped. In addition, the improving Eurozone outlook continues to be hampered by very soft growth figures. The flash PMI manufacturing and services survey

released for June suggests that the second quarter growth came at a weak 0.4 per cent quarter-on-quarter. That more or less leaves diversification flows that have been seen coming out of the Middle East, Korea and China supporting the Euro. Given the ECB’s ‘prepared’ direction and the mix of geopolitical instability that has started to intensify over the second quarter, the aforementioned diversification process by sovereigns could take a bit of a pause over the summer months, in which case the Euro’s ability to hold onto higher levels is likely to diminish. Upcoming Critical Events July 01: Manufacturing PMI and May Unemployment (June) July 02: PPI (May) July 03: Services PMI and May Retail Trade (June) July 03: ECB Monetary Policy Committee Meeting July 14: Industrial Production (May) July 16: Trade Balance (May) July 17: HICP (June) July 24: Flash PMI Surveys (July) July 30: Business Climate Index (July)

Economic Indicators 3-Month Deposit Rate: 0.11% GDP: (annual rate) 0.90% Inflation: (annual rate) 0.70% Unemployment: 11.7% Trade Balance: EUR 15.7 billion

For an online version, please visit: www.tradeandexportme.com/2014/07/ money-in-motion/

EVENT SPOTLIGHT

Innovation... a key component of success FOR your business a look at the sme evolution program

The audience enjoyed an insightful session

THE RECENT SME EVOLUTION PROGRAM EVENT, HELD AT THE FANTASTIC VENUE OF RITZ CARLTON JBR DUBAI, PROVED TO BE A MELTING POT OF ENTREPRENEURIAL IDEAS AND EXCITING SME INSIGHTS. WITH KEYNOTE PRESENTATIONS BY LEADING EXPERTS ACROSS DIVERSE INDUSTRY SECTORS, THE EVENT WAS SUCCESSFUL IN HIGHLIGHTING CURRENT REGIONAL TRENDS AND SHARING USEFUL GUIDELINES FOR SME GROWTH…

Held on June 10, 2014, the SME Evolution Program event was powered by Potential, in partnership with Etisalat, Aramex and Dell. Business owners and General Managers who attended, had the chance to learn from leading international experts, interact with like-minded business leaders and access exclusive business offers and funding opportunities. The event was themed “Innovation – a key component of success to your business” and commenced with the announcement of the innovation challenge and welcoming speeches delivered by top experts from Potential and Aramex. This was followed by a powerful lineup of speakers, who led several inspiring presentations underlining key SME topics such as – “Telecom innovations that help you save and grow”, “Innovation design thinking”, “Leadership role in driving innovation in organisations”, “How does the SME toolkit help with developing

innovative skills”, “Observations from innovative start-ups” and so on. Shadi Banna, Potential’s Managing Partner, captured the attention of the audience with an inspirational talk on “Innovation Design Thinking”. As part of his paper, he spoke about a very interesting topic called ‘open innovation’. He said: “Traditionally, companies have focused on their internal efforts to produce innovation. Open innovation helps organisations tap into the ‘wisdom of the crowd’.” Potential is a leading international business catalyst developing entrepreneurs, SMEs and established organisations, and accelerating their growth through innovative and interactive programmes. For more information on the event, please visit: https://www.facebook. com/PotentialCom or https://twitter. com/PotentialCom. For an online version, please visit: www.tradeandexportme.com/2014/07/ the-sme-evolution-programme/

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EVENT SPOTLIGHT

Viza Rizq, Founder, Aflamnah

Attendees maximised all the networking opportunities

Shadi Banna, Potential’s Managing Partner, captured the attention of the audience with an inspirational talk on “Innovation Design Thinking”. www.tradeandexportme.com

The dynamic team during the successful event

During the event

ECONOMIC INSIGHT

Ramadan economics how different businesses adapt to the holy month

Despite the appearance that many aspects of the economy slow down during Ramadan, what is the actual picture when it comes to the financial performance of different sectors? The reality is a little more complex than even the most seasoned financial pundit might imagine - and we asked Associate Editor Zenifer Khaleel to investigate… 80

The onset of Ramadan brings a complete turnaround of economic activities in the country, affecting different sectors in different ways. Symbolically, it is the time of the year to reflect over your lifestyle and abstain from materialistic pleasures. Financials of the past year are reviewed and ‘cleansed’ by giving the obligatory ‘Zakat’ (charity). Officially, the country is in ‘stand by’ mode. Office timings are shortened, official phone calls unanswered, tourists stay away and major deals are put on hold. But despite the impression created of

lower economic activity, the reality is rather more complex. While many businesses experience a severe meltdown, some areas, such as spending on food and other consumables show a significant increase in activity. In effect, the character of the economies changes, with a rise in consumer spending helping to make up for the fall in other areas. The Ramadan effect on different sectors Ramadan has changed from a religious ritual to a festive season marked by

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ECONOMIC INSIGHT

Ramadan promotes heightened social awareness. As a fundamental shared experience, it brings about a sense of solidarity among Muslims, enhances their satisfaction with life and encourages optimistic beliefs.

a strong sense of materialism and significantly higher consumer spending. The holy month has a pervasive effect on the spending habits of Muslims. Stock markets across the Gulf region show returns of up to nine times higher in predominantly Muslim countries. Traders use simple market timing strategy to encash on the goodwill of the season. Ramadan promotes heightened social awareness. As a fundamental shared experience, it brings about a sense of solidarity among Muslims, enhances their satisfaction with life and encourages optimistic beliefs. This optimism affects

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investor sentiment and decisions leading to the price run-ups. Shortened working hours may spell doom for some sectors. But for CLEANCO, the premier cleaning service company in the region, it is business as usual. Their working hours for Ramadan are from 9am-3pm. However, being in the service industry, some projects are operational round the clock. “Overall business is affected during the holy month due to the reduced working hours and on this occasion, the fact that it takes place during the hottest month of the year’, says

Samer Hani, General Manager of Business Development and Operations at Cleanco. “The working hours are reduced to six, and we have to complete our whole operations during these hours. Normally, the overall business decreases by 20-30 per cent. But we consider Ramadan the time when we prepare the annual budget, and revise our business strategy accordingly.” “Personally my productivity during the holy month doesn’t decrease as Ramadan is the best month to work and control my food and health. The positive side of the less working hours is that it gives more time to our staff to enjoy the holy month, be with the family and to pray in the evening time. So after Ramadan they are back with rejuvenated spirits (even if they are not Muslims).” Farah World LLC is a freight forwarding and logistic company based in Dubai. In their five years of establishment, they have witnessed an increase in export, mainly of foodstuff and clothes, predominantly to Muslim populated countries. “This increases our revenue considerably,” says Fairuz Basheer, Business Development Director of Farah World. “However, the main

ECONOMIC INSIGHT

Though some sectors experience a slowdown you will find that, because of the social habits during the month of Ramadan, spending on food is in fact higher than in the normal months.

issue we face during Ramadan is with the labour force who works outdoors. With longer hours of fasting plus the heat, it becomes quite a task to manage outside jobs. The sea freight container loading becomes quite tedious. We shift the pending work to night hours for which we are required to pay overtime.” “Another issue is the lag in communication. Since most of our suppliers work shorter hours, response time increases. This in turn affects our service to end customers. Being in a world network many countries are yet to understand the shorter working schedule and sensitivity of Ramadan in the Gulf. We have to constantly remind them of the same to avoid unhappy clients.” “Despite these challenges, we hope to make this our most operationally efficient Ramadan with the experience garnered during the years,” she adds. The booming sectors Though some sectors experience a slowdown you will find that, because of the social habits during the month of Ramadan, spending on food is in fact higher than in the normal months. Although during the daytime things can get a little slow, in the evenings, particularly in the malls, there is a lot of activity. The food and catering industry is one which undergoes a drastic change in Ramadan. Essentially night and day activities are interchanged during the month. The lull that is prevalent in the daytime is more than compensated by frenetic activity during the evening. Sugata Bakshi, Brand Operations Manager at the SFC Groups, states that productivity of workers sees a remarkable increase during the renewed rush hour at night as they have ample rest during the afternoons. “Most of our outlets are open till 2:30 am. Though we lose our corporate lunch clients, we are amply compensated by Iftar clients and other diners. Delivery and take away improves by 15 per cent. We focus on

staff training during this period, to make up for the long day time.” Clothing retailers, jewellers, electronics shops, mall operators and online stores, have all been reaping significant profits during Ramadan. The scorching heat outside makes people resort to the air-conditioned convenience of malls, which are open till the wee hours of the morning. To add to the spending pressure, there are promotions, sales and offers which last throughout the month. The sales are high on gifting items across all categories especially perfumes, cosmetics, delicatessen and confectionary. The sales of Arabic sweets and dates are noteworthy during Ramadan when compared to rest of the year. This rise in consumer spending can create its own problems, however, in particular leading to an increase in inflationary pressures. This happens both during Ramadan itself and in the months leading up to it, as households build up their stocks of food and other supplies. According to last year’s online YouGov Ramadan Survey, (which surveyed 1,520 Muslims living in the MENA region), 80 per cent of online respondents in the UAE prefer to break their fast at home, with another seven per cent preferring to eat at a family member’s home. For many families, this translates to a sharp increase in their weekly grocery budget. The UAE government has responded to unwarranted price increases with a mix of formal price caps and informal pressure on retailers to dissuade them from raising prices too much. Last year the government reached an agreement with more than 20 outlets to discount the prices of over 200 commodities by 30 per cent.

For an online version, please visit: www.tradeandexportme.com/2014/07/ ramadan-economics/

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TECH TRENDS

Fast five. Rushika Bhatia offers a round-up of five fantastic business apps that are an absolute must-have...all in five minutes!

CamCard If you have a pile of business cards stacked up on your desk, this app is definitely for you. CamCard is a professional business card reader, which lets you scan business cards using your phoneâ&#x20AC;&#x2122;s camera and save all the information to your phone contacts. What is particularly attractive about this app is that it syncs all the business cards across multiple devices such as smartphones, tablets, PC and so on. So, you never have to worry about losing a contact or carrying your business card folder around! The app also offers several useful features like grouping and sorting the cards to simplify the search process and facilitating connections with contacts on social media.

Available on: iPhone, iPad, Android, Android tablet, Windows 8, Windows Phone, Blackberry, and others. Cost: Basic version is free.

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TECH TRENDS

Evermeeting Evermeeting is a simple app that allows for collaboration and resource-sharing during meetings, events, conferences and other business gatherings. It allows you to store data including images and voice recording, which you can refer back to and organise at a later time. The audio recording is especially useful as the app does all the note-taking for you, while you concentrate on the meeting itself. Its cloud-based storage feature ensures that you have access to all your data anywhere. Evermeeting also allows you to export PDFs of the information stored – a valuable resource for business owners looking to create quick reports.

Available on: iPhone, iPad and others. Cost: Free

Dubai Metro For business owners, who like to beat the traffic and travel by the Dubai Metro, this app is quite handy. Its ‘sort by time’ option enables you to find the fastest route to your destination. Moreover, additional features allow you to locate nearby metro stations, plan your trip ahead of time, find local hotspots, and much more. The app’s interactive metro map is perhaps its most exciting feature with its user-friendly design and flawless functionality.

Available on: Android and iOS. Cost: Free

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TECH TRENDS

Haiku Deck This innovative app is a fantastic for creating impactful business presentations. In addition to images from the Web, Dropbox, Instagram, etc., the app also allows the integration of pie charts, bar diagrams and other graphics into the presentation. So next time you want to convert your sales figures into a simple bar chart, you can do it easily at your fingertips. Haiku Deck is extremely valuable for entrepreneurs, who constantly find themselves in pitching meetings. All in all, this appâ&#x20AC;&#x2122;s simplicity and clean features enable you to easily produce a professional presentation, leaving your clients, business partners and other stakeholders impressed!

Available for: iOS and several other platforms. Cost: Free

Smart Document Scanner Smart Document Scanner is a multi-purpose office productivity mobile app that enables you to digitise and manage any sort of document. This useful app lets you scan, enhance, and convert to PDF and OCR (or Optical Character Recognition, allowing scanned PDFs and images to be converted into editable text formats), sync, and file notes, receipts, invoices, meeting minutes, contracts, bank statements, whiteboards and much more! For an online version, please visit: www.smeadvisor.com/2014/07/fast-five/

Available for: Android Cost: Free

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TECH TRENDS