SME Advisor Issue 120

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strategic SME partner

ISSUE 120

Go from good to great

ACCA’s Fazeela Gopalani on the role of Corporate Governance

Famine or feast?

Trends and constraints in 2016

R Serviced Offices’ Mark Hackett on the power of flexible solutions

Rushika Bhatia on Digital Marketing

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NBAD’s partnership made our growth possible in the Middle East.

John Fanelli CFO, Hill International

Hill International has managed the construction of some of the most complex projects in the world including the Etihad Towers in Abu Dhabi, the reconstruction of the World Trade Center site in New York City and the United Nations Headquarters in Geneva.

When Hill made expansion plans in the region, NBAD partnered with them to provide bonding facilities to meet their contractual obligations, and expand their limits, in line with the plan.

At NBAD we believe that the true success of a business is partnership. With our regional expertise and global reach across the dynamic West-East trade corridor, you can count on us to partner you to the next level of success.

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

EDITORIAL COMMITTEE

His Excellency Abdullah Saeed Al Darmaki CEO, Khalifa Fund for Enterprise Development

SME Advisor is delighted to announce that during 2015 we will be working with some of the leading names in the SME space - key figures who have kindly agreed to take part in our prestigious 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:

Policy makers

Professor Val Lindsay MSc (Otago), MBA (Victoria), PhD (Warwick) As a Professor of Entrepreneurship and Management at the American University of Sharjah (AUS), she has a keen interest in teaching and research in the areas of international strategy, exporting, services internationalization, entrepreneurship, small and medium-sized enterprises, networks and clusters, and economic development.

Thought leaders At the helm of the BPG Group since 1991, he is responsible for consolidating the Group’s interests across advertising, public advocacy, public relations, design, activation, media asset management and digital verticals, in the Middle East and North Africa region.

Entrepreneurs Avi Bhojani CEO, BPG GROUP

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sme advisor ISSUE 120

He is also the Director of the Dubai Chamber initiative, Tejar Dubai. He is a proven UAE leader and business entrepreneur, with the ability to rapidly mobilize teams to achieve organisational change and integration.

With his unique background as an educator, a business strategist, and a researcher, Dr. Abonamah has conducted many strategy and organisational transformation workshops for various SMEs in the Gulf region and has been invited to speak at many national and international conferences, and panel discussions. He has over fifty publications in international journals and conferences and a US patent in reliable computer systems.

Essa Al Zaabi Senior Vice President Support Services, Dubai Chamber of Commerce & Industry

Abdullah Abonamah PROFESSOR OF MANAGEMENT SCIENCES AND CEO, UAE ACADEMY

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

Roberto Mancone MD, GLOBAL HEAD BUSINESS PRODUCTS, LENDING, DEPOSIT AND PAYMENTS, DEUTSCHE BANK

Paul Kenny PARTNER, EMERGE VENTURES

Laura has been named one of the Best Keynote Speakers by Meetings and Conventions Magazine and is a member of the National Speakers Association. She serves on the boards of the American Heart Association, Clean the World Foundation, Common Threads and Event Solutions Magazine.

Laura Schwartz PROFESSIONAL SPEAKER, AUTHOR AND FORMERLY WHITE HOUSE DIRECTOR OF EVENTS

Paul is one of the most important figures in the Internet space in the MENA region and is an active investor, mentor and advisor to numerous companies around the world. He has made numerous investments into Internet and Technology companies worldwide and sits as an advisor and board member to several companies.

Yogesh Mehta Managing Director, Petrochem Middle East Mohan Valrani Senior Vice Chairman & Managing Director, Al Shirawi Group of Companies Apart, from his business-related ventures, he is also deeply involved in social activities. He is the founder - Chairman of the India Club and on the Board of Trustees of The Indian High School and has been as instrumental in contributing to the success of these institutions.

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

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

Sultan Sobhi Batterjee owner and CEO, IHCC He is a member of several social and economic associations including the Young Arab Leaders Society in Dubai, the young entrepreneurs committee Jeddah Chamber of Commerce and he is also a Board Member of the (EO) Entrepreneurs’ Organisation in the USA.

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FROM THE EDITOR MANAGEMENT Dominic De Sousa Chairman Nadeem Hood Group CEO Georgina O’Hara COO - Business and Consumer EDITORIAL Group Director of Editorial Paul Godfrey paul.godfrey@cpimediagroup.com +971 4 440 9105 Editor Rushika Bhatia rushika.bhatia@cpimediagroup.com +971 4 440 9115 ADVERTISING Business Development Executive Adam Barrie Lees adam.lees@cpimediagroup.com +971 4 440 9119 Business Development Executive Mohamed Kerrouchi mohamed.kerrouchi@cpimediagroup.com +971 4 440 9162 Account Executive Freshia Mistry freshia.mistry@cpimediagroup.com +971 4 440 9161 DESIGN Head of Design Glenn Roxas

In 2016, will you be a dolphin or struggle to find your lifejacket?

One of the reasons why entrepreneurial spirit is highly prized is because the entrepreneur simply gets on with doing what he or she is intuitively good at, believing that the details can be sorted by specialists better-placed to deliver the follow-up. The entrepreneur doesn’t have to be good at the back office tasks, or indeed, at anything other than driving forward the core proposition of the business and its ability to survive and prosper. Yet all too often, when SMEs look at how best to develop and evolve, they get hung up on the view that they’d better become good at all kinds of things they’ve never done before. The US business author Ash Ambirge puts this really well when she says - “We’re all looking to the newest medium as the lifejacket that’s going to keep us afloat, when really, we need to be focusing on the medium we naturally float in.” In other words, isn’t it better to be a dolphin - smart, nimble, adept, intuitive - than to try to tread water in an environment where we can’t even swim?

The reality is that when we’re looking for results - especially in a challenging climate, where they need to come fast and with as little risk as possible - playing to our strengths is the best recipe for rapid rewards. So if, for example, you pride yourself on the ability to understand the public sector and have proven ability to secure contracts, this is what you need to be doing. Rather than worry about extended payment cycles and looking into the unknown territory of the private sector (because everyone says this is the thing to do), take advantage of factoring arrangements and a cheque discounting facility - giving you liquidity and cashflow while sticking to the sector you know best. Similarly, if you have great experience as an exporter, but are worried about civil strife shrinking regional markets, rather than switch to home markets, look at other export territories - for example, use your accrued expertise to break into the vibrant SE Asian territories, or look to the fantastic SME markets in Egypt rather than Syria or Iraq. Your accrued mastery of export bureaucracy and strategies cannot and should not be allowed to go to waste. It’s a USP that is an intrinsic competitive advantage of your business, which might otherwise be lost in the mire of overt home market competition.

Are you brave enough to take ownership of the skills that have made your business great; or will you flounder in the high tides of mis-placed experimentation?

Thank you for investing your time with SME Advisor in 2015.

Senior Graphic Designer Froilan Cosgafa IV

Paul Godfrey Senior Editor

Production Manager James Tharian Data Manager Rajeesh Melath

Rushika Bhatia Editor

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PRESENTING PARTNER

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

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

STRATEGIC SME PARTNER

OFFICIAL GOVERNMENT PARTNER

Contents

“2016 will be the year where SMBs will take further initiatives to strengthen their organisations with more IT systems and ICT solutions.”

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p34

“Innovation is a powerful way to maximise sales through nurturing a healthy market appetite for the new and the fresh.” p64

ON THE FRONT COVER

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

09 Editor’s Note In 2016, will you be a dolphin or struggle to find your lifejacket?

12 Data and decision making Editor Rushika Bhatia’s infographic section provides a snapshot of key trends shaping the SME marketplace Ground Level 14 10 things you have to know in 2016.

Is your business ready for the age of upheaval, Generation Z and the dominance of messaging apps?

18 Optimising the use of your company’s database We outline the practical steps…

22 Diversify or Die? SME Advisor looks at the diversification model and offers some key options.

sme advisor ISSUE 120

Business Growth 44 Governance for all?

Fazeela Gopalani, Head of Education – Middle East, ACCA, sheds light on the region’s governance agenda.

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Technology 48 Trends shaping Digital Marketing in 2016 Editor Rushika Bhatia presents a snapshot of the prominent influencing factors…

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Country Focus 54 Business in Oman: opportunities, challenges and the evolving landscape The fundamental areas surrounding the economic development of this burgeoning market.

Legal 60 The top 5 strategies for dealing with workplace injury in the UAE Experts from Clyde and Co. highlight the key aspects.

Fast Four 26 Mobile payments Four excerpts that summarise everything you need to know.

Business Banking 28 The year of the cautious entrepreneur?

We look at the conclusion of key market makers and their recommendations for weathering a lean year.

Regional Trends 34 SPOTLIGHT ON MANUFACTURING Trends shaping the sector.

Movers & Shakers 38 “A comprehensive SME solution” An exclusive interview with Mark Hackett, Finance & Administration Director, R Serviced Offices…

Innovation 64 Innovate to accumulate?

Paul Godfrey explores whether the quest to innovate is really a practical and productive pursuit…

Customer service 68 The era of customer experience We asked Rowen Nadia to provide a detailed analysis…

Sector Focus 72 Gearing up for Gulfood 2016 An exclusive preview into the region’s leading food and hospitality trade show……

Tech Trends 76 Best of 2015 – apps that stood out this year!

Data and Decision making

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GROUND LEVEL

10 things you have to know in 2016 The New Year is rich with opportunities for SMEs, but they’re coming in the form of economic change, disruption to traditional working life and hard-to-cope with structural shifts in demographics. Senior Editor Paul Godfrey asks if you’re ready for the age of upheaval, Generation Z and the new dominance of messaging apps… ?

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SME Advisor spoke with AT Kearney, Standard & Poor’s and the Financial Times - as well as more than 20 market-making SMEs in the region.

Here’s what they had to say about 2016. Some of these trends are already becoming more apparent, others might take you by surprise, but the fact is they’re going to change not only the style and quality of business you do, but your ability to get (and keep) staff who deliver value and performance.

The arrival of Generation Z Generation Z and has very specific expectations about the workplace and the way you do business. This generation - born in 1995 - is totally focused on mobile devices, social media, connectivity and online presence. If your business is about PCs, dedicated desk space, offices and face-to-face deals, you have almost zero chance of attracting or keeping the new top talent.

Oil price repercussions The low oil price isn’t going to change - it’s the new normal. This is going to squeeze businesses in the fossil fuel supply chain; we’ve already seen the big contractors go to 180-day payment cycles. If you’re in that world, diversify and don’t get into risk concentration around the large corporates. But good news if you’re into alternative energy like solar power; and if you’re not, make the transition now - because this sector is going to expand exponentially. This is especially true given that His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Ruler of Dubai, recently launched the Dubai Clean Energy Strategy 2050, which aims to make the emirate a global centre of green energy and economy.

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App priorities Don’t get into app R&D, whatever you may have heard. It can be a costly and labour-intensive process, and (at least here in the region) isn’t at all the cottage industry of tomorrow for SMEs. Even the most brilliant and creative app solutions can cost a fortune to market and at the end of the day you might be faced with a very limited user base.

In contrast, messaging apps are BIG news and we’re currently seeing their proliferation. They represent a great way for your business to communicate, network and build market position and we’re seeing their evolution from personal to B2C and B2B markets. Why communicate the hard expensive way when the advantage of app messaging is plain to see?

Flexi-working hours for staff A survey conducted by Bloomberg in October showed that 30 per cent of staff aged between 25-35 would be happier to be working flexible hours, claiming it would add to productivity and employee loyalty.

Note that similar surveys amongst Millennials reveal that they rank flexible working hours above pure salary scale as a desirable feature of working life. SMEs can take a very positive spin on this ‘new style’ of working, because it also relates to the fact that many surveys show staff prefer not to be working at a fixed desk, but in more flexible styles of office accommodation. Staff indicate that they would opt for leisure-style areas with a shared sofa and a coffee machine nearby, opting to go into a meeting room for more personal correspondence, etc. This means SMEs need less office space, with a reduced emphasis on ‘personal’ furniture and desk areas. A great opportunity to combine less cost with better staff morale and retention!

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GROUND LEVEL

In 2016, being online isn’t about shortcuts: it’s about doing things properly and asserting your presence to a discerning and sophisticated audience.

Online advertising Oddly, while the GCC has the highest mobile device penetration levels in the world, the level of online advertising is one of the very lowest.

This is a sector whose day is yet to come - and 2016 is set to be the first dawn, with through-the-line ad agencies claiming a 20 per cent drop in hard copy advertising in Qs 3 and 4 2015. Nor does this mean elaborate banner ads on existing sites - it embraces the whole world view of SMS and app messaging and direct communications through a mobile device. Establishing mobile device rapport is a powerful ‘in’ to relationship marketing, allowing you quick and cheap access to your database and a very tailored conduit for following up on HTMLs and broader marketing initiatives.

Social media is the new PR Pushing your news through social media is a great way to build brand awareness and presence, covering many of the bases that expensive PR used to pride itself on. The secret is to have strong content that is really newsworthy and grabs attention. Feature key client names, straplines from your top events, unusual angles that strike a chord - and links to top-quality video snippets that speak volumes on your behalf. Create a tailored messaging campaign that lasts three to four weeks and revolves content weekly, picking out new ways to engage your target audience. Like PR, this is a great way to build ambient awareness, making it far easier to get committals and sign-up to products, promotions and events.

The SME profile in the region is changing - but are you?

For more than a decade, the absolute core of the SME sector in the GCC was seen as the traditional trading business.

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There were more than 120,000 in the UAE alone. But times change. In the last several years, we have seen dramatic growth in the consultancy and professional services sectors, as well as the stronger maturity of the manufacturing sector. Increasingly, marketeers will tell you that these verticals are spawning a vibrant,

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responsive core of about 40,000 SMEs looking for growth opportunities. The trade sector is changing as a result of the reduced number of viable trading partners in the region (civil unrest takes its toll) new online ways of working leading to less staffing requirement - and the fact that the top-performing businesses have graduated beyond SME status.

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Structural transformation

Online presence means world-class branding

The growth of regional economies has led to a burgeoning middle class and a growing shift in employment aspirations and prospects. The most affected sectors are construction and development, where major businesses are starting to struggle to find the sheer numbers of blue collar personnel who once were an unquestioned element of cost-effective production.

This in turn means a growing emphasis on high technology on-site, following a US and European model, and opens considerable opportunities for businesses in the relevant specialist equipment supply chain. It also means that if you’re geared up to service mass recruitment issues, the time has come to look for other sectors for rapid diversification.

India’s rise

Forget the days when your website was simply a brochure under glass - today, your online branding has to be world-class, reflecting the global outreach and international competition that being online necessarily involves.

World-class design and content means video, social media feeds and third party referrals; it means case studies and highly successful product positioning; it means having clear data about online readership and customer acquisition. Remember too that being online also means that you will be subject to taxation in any overseas jurisdiction where you are selling goods - are you equipped to deal with this and knowledgeable about the territories you are selling into? In 2016, being online isn’t about short-cuts: it’s about doing things properly and asserting your presence to a discerning and sophisticated audience.

The Indian economy is expected to grow at a rate of at least seven per cent in 2016 - one of the highest in the world. Accompanied by legislation (slightly) simplifying the relocation of overseas business, this is great news for SMEs wanting to connect with the Sub-Continent, or raise their game in export/import.

There is a special emphasis here on opportunities connected with low technology and fossil fuel power production – still the backbone of India’s power generation. Meanwhile, the transformation of the Chinese economy from industrial to servicedriven has massively impacted SMEs engaged in the commodities supply chain (especially given that demand for copper has fallen 40 per cent).

This impact is felt more keenly in economies such as South Africa, Indonesia and Australia, and is leading to a redirection of efforts to commodities supply chain operations in the Central and West African nations.

For an online version, please visit: http://www.smeadvisor.com/groundlevel/top-trends-2016

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GROUND LEVEL

Optimising the use of your company’s database A well-kept and efficiently managed database can help a business improve customer relationships, generate sales leads and send out key brand messaging. SME Advisor outlines the practical steps in getting your business data in order…

Imagine the following scenario: You’re on a business trip and are visiting a foreign country you’ve never travelled to before. As you check into your hotel, the hostess informs you that she has pre-arranged a chauffeur service for your next meeting. When you arrive back to your room after your day’s meetings, you find a list of meal options ready based on your previous preferences in different hotels. Finally, as you get ready to check out, the hostess hands you filled out immigration forms for your next destination along with your passport!

This scenario is a simple, yet effective, illustration of the power of database management. Database management is the ability to use customer data to make an impact on the overall customer experience – leading to a better bottom line for your company. The term comes under the umbrella of ‘customer relationship

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management (CRM)’ and very often largely involves ‘e-mail marketing’ – sending out mass e-mails to your database. It also branches out to include direct mail and cold-calling.

While on the surface level database management is an easy way to reach out to your customer and drive sales, it is also a great tool to understand your customers’ needs.

We present the following key point guide that will help streamline the use of your database and ensure that you’re reaping maximum rewards –

1. Clean your database – The first step is to spring clean your database; get rid of all the redundant data – repetitions, old addresses, outdated job titles. Keep your target audience in mind and have an outline as to who would benefit or be interested in your company’s communication material. Ask yourself the following

questions – ‘Is this contact a current or prospective client?’, ‘How would your e-mail impact this contact?’, ‘Is this contact relevant to my industry sector’, and so on. Appoint a dedicated database management professional to constantly monitor the database. Such a professional would also be able to address key areas such as – how often to send out campaigns, the number of data records to maintain in order to make a meaningful impact, ways to follow-up post-campaign and identify key trends in customer behaviour.

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Appoint a dedicated database management professional to constantly monitor the database.

can send varied offers based on age, gender, location, etc.

2. Customer segmentation strategies – Now this is vital solution no matter what your business may be. For instance, if you run a PR agency, you would need to separate journalists from clients, or divide clients across B2B and consumer platforms. As simple as that. Or, if you are a luxury fashion brand, you can divide your customers according to their purchasing activities. That’s not all, if you are a B2B company, you can do the same with your suppliers, dividing them according to products, supply

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dates, size of business, credit terms, etc. This kind of segmentation strategy not only enables effective selling of the existing product lines, but can lead to R&D processes geared specifically to established customer needs and preferences – the essence of proactive marketing.

3. Personalisation – This is really an extension of the previous point. Once you have successfully segmented data, you can send personalised messages to the different groups. For instance, you

4. Split testing – An excellent way to see what works with your database marketing campaigns and what doesn’t is to experiment! For instance, when e-mail marketing, don’t hesitate to send out two different batches of e-mails and then review what gets a better response.

This could apply to a variety of things – titles, colour schemes, layout, etc.

That’s not all. You could also send out similar e-mails to different people at varied times during the day. Using this ‘control group’ technique can help you understand the best strategy for your business. There are several software solutions available that can help you with creating and sending out customised versions of your e-mails such as iContact, AWeber and so on.

5. Accessibility – A large amount of the people today (46 per cent) access e-mails through their phones and this is something to keep in mind when designing e-mails as part of your database marketing campaign.

Keep it simple and in a format that’s easy to view on a mobile device.

In addition, if you have an expert working with your business, you can

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GROUND LEVEL

In reality, database management has evolved over time to become a powerful tool for any SME – both from a service and sales stand point.

Ways to increase effectiveness of your e-mail marketing campaigns

40% Subject line

32% Personalisation

55% Subject matter

38% Database accuracy

39% Database relevance Sources: B2B Marketing’s Email Benchmarking Report (b2bmarketing.net)

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discuss the possibility of having a customised version for smartphones and tablets.

6. Measure the outcomes – This is when you can assess the kind of impact your campaign has managed to create. What do the customer acquisition figures look like? Did you get any feedback? How many clicks did you have? Did any one particular story attract more attention than others? You can take this up a notch and use this data for detailed statistical analysis and data modelling – extremely useful when making management decisions.

7. Tell, don’t sell! – Another big mistake to avoid is to send out constant product information in an attempt to blatantly sell to your customers. This will appear desperate and customers might instantly dismiss it as spam or trash. Instead, sending out e-mails with interesting facts or expert advice within the realm of your industry will help you create a strong brand image. For instance, if you are a restaurant, instead of sending out your daily offers you could send out healthy eating tips and engage customers. Of course, you could still mention your daily offers in the e-mail but it’s not the main subject matter. Finally, using mixed media to interact with your customers can prove beneficial too – send out an SMS saying reminding them about the e-mail.

8. Legal implications – A classic example would be of a situation wherein a coffee shop sends out messages of ‘free coffee’ during a certain time period but isn’t fully prepared to cater to a huge crowd. As a result, the campaign has not only backfired and upset your customers but also has a dire chance of someone filing a lawsuit against your company!

Keep your messaging simple and clear – stick to the basics.

9. Operational manual – Like any other strategic activity within your

business, ensure that you have a comprehensive operational manual in place that serves as the ‘holy grail’ for your database management initiatives.

Highlight key areas to target, the kind of campaigns you are looking and the budgets for each of them, which departments will be involved in the process and the timelines.

10. Link all your messaging – If you are running other campaigns via social media, print, radio, etc., ensure that all your messaging is aligned with each other and ties in to the ultimate brand image of the company. More importantly, try following up all your communication through social media.

For instance, reiterate the offer you’ve sent to your customers by sending them a personalised tweet.

Database management for your SME Remember, database management has a plethora of advantages; it can help your SME in lead generation, customer acquisition, customer referrals, customer loyalty, etc. It equips you with the business intelligence you need in order to implement effective target marketing strategies.

One downside of database management, however, is the cost of being able to set up the sophisticated software mechanisms required to run it. However, if looked at from a long-term perspective, it is definitely something that a business would readily want to invest it. In reality, database management has evolved over time to become a powerful tool for any SME – both from a service and sales stand point. So, put these ten strategies into place, and reap the rewards today!

For an online version, please visit: http://www.smeadvisor.com/ground-level/ optimising-database

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Diversify or die?

There are many myths about the role and power of diversification.

Businesses might be tempted to change direction when their present offer is failing, but changing track when your stock is low can be a recipe for disaster, leaving you ill-prepared for challenges and fresh investment costs. Senior Editor Paul Godfrey looks at the diversification model and some of the key options

“People say ‘don’t put all your eggs in one basket’, but I say - just watch that basket!”

– Henry Ford

There is no doubt that many seasoned entrepreneurs - and a good many leading consultancies - take the view that diversification is in itself a good thing. Fundamentally, it spreads risk, which can be very helpful when you are still a relatively young and small business, with

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limited cashflow. Moreover, another attraction is the fact that in the digital era, there is no doubt that customer tastes are changing more rapidly and product life cycles are reducing. Being in more than one market protects against the impact of changing customer sensibilities and the risk that they’ll make your product offer redundant.

Having said that, there is actually no statistical proof that diversification is the key to success. If we look at Fortune 500 businesses, they are almost exactly split between singlebusiness models and diversified portfolios. Note as well that the only three companies who have ever

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GROUND LEVEL

that a few extra features can add massive perceived value - a Cadillac, for example, only costs US$15,000 more to make than a Chevrolet, but the perception commands multiples on the retail price.

The art is to add features that will make your product or service appealing to a fresh group of consumers. They may already know your reputation with a different demographic and be delighted to hear that you are now addressing their needs too.

• FIND RELATED PRODUCTS. Are there products that go along with your core offer but which your customers currently purchase from a different supplier? Perhaps there are training materials that you can offer to support a particular product?

Or you can accompany seminars and events with online followup and course tuition? The most aggressive version of this strategy is to buy a company that makes products related to yours. If you can identify such a business and have the required cash reserves, this can be a very astute strategy. It means that you diversify your lineup and remove a potential competitor from the playing field. This is a classic approach used by companies like Facebook and Amazon. occupied the No. spot - General Motors, Wal-Mart and Exxon Mobil are all single activity models.

Generally, when people speak about diversification; in the context of the SME sector, they are actually talking about exploring fresh markets and broadening the market offer, rather than, eg, your cleaning business also opening a bakery or your recruitment firm extending into an accountancy practice. The fact is, it’s vital to spread risk in some shape or form, and there can be some fairly cost-effective ways of doing this without completely re-inventing the wheel and having to bring dramatically new skillsets into your business. The following templates

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are some of the best and most practical options to consider if you’re an SME and feel that current business performance is generally lackustre or just ‘missing a trick’.

Diversify your product portfolio • FIRST THINGS FIRST. Try simply adapting what you already do. Put a spin on your product or service so it appeals to a new group of consumers or users. If you have a ‘high end’ product or service, consider a lessexpensive version. Or if you have a lower-end product, add value and extra features to it. Remember the General Motors model here, in

• OFFER AN INTEGRATED SOLUTION. The key here is to offer something that uses skills your business already has, but which is perceived as highly valuable.

So if you are an app developer, offer your customers training in using app messaging as a core communications platform; or if you are providing telecoms hardware, for example, offer cloud and broadband feasibility training.

• FIND OUT WHAT’S NEXT AND DISRUPT THE MARKET. Are technological changes or better quality standards beginning to erode

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GROUND LEVEL

If your clients are drifting away to competitors because they offer something you don’t reinvent your capabilities now and start offering something even better than they do!

your core business? Don’t be the last in your industry to identify where things are going. The best strategy here is to take things one step at a time, and divert just a part of your resources to investigating the new market opportunity. Dedicate part of your business to meeting the needs of the ‘early adopters’ - then you’ll be ready if a major shift occurs.

• SELL ONLINE. If you don’t offer your products over the Internet, add an e-commerce element to your website. If you already sell online, sell online more. Look at the various ‘marketplace’ programmes featured by major e-tailers like Amazon. Consider opening an eBaystyle store, especially if you have miscellaneous overstock items on your inventory. Rather than marking them down to next to nothing and undercutting new products, sell them on popular prime-offer websites.

• OPEN ANOTHER LOCATION. If you’re exclusively online, consider a physical location. If you have one physical location, consider opening a second. This is an important opportunity to build and finalise your brand identity: verify the essential elements (design, packaging, service, etc.) about your brand and crystallise these into the highly-recognisable traits that will be your ‘Golden Arches’ in the years to come. Expansion can be the most powerful form of diversification, enabling you to ‘tweak’ your offer until you find a perfect fit for regional variations.

• EXPAND OVERSEAS OR TO A NEW NATIONAL MARKET. The best way to go about this is to network in your community, and see if any businesses are exploring overseas ventures.

You might find a project where your company fits in, and you might also like to buy into these initiatives and make an investment in future growth.

Two good regional options for SMEs

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are Oman and Egypt, for example.

Oman offers strong possibilities for professional service businesses, due to exceptional Government development programmes, opening up a whole new market of ‘first adopters’. While Egypt offers highly developed markets and good opportunities for volume business if yours is a strong and developed SME. • FOLLOW THE GROWTH, NOT THE DECLINE. This is true both in physical terms and in product offer itself. If you’re operating in an area of town where your target customers are becoming hard to reach, change neighbourhoods at once - don’t wait for things to get even worse. If you have risk concentration around one or two huge clients, and one of these is looking precarious, find a cluster of medium-sized clients to broaden your risk potential. If your clients are drifting away to competitors because they offer something you don’t - reinvent your capabilities now and start offering something even better than they do!

Always remember that a strong successful business isn’t built in a day. It may be that these small steps to diversification aren’t necessary now, but will help you navigate testing times in the years to come. Conversely, they may also be the stepping stones to discovering real market strengths and capabilities that your present offer doesn’t properly manifest.

For an online version, please visit: http://www.smeadvisor.com/ground-level/ diversify-or-die

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fast four

“2016 will be an enormous year for mobile payments. It’s predicted that in the USA alone, the volume of mobile payments will grow by over 300 per cent. If your business is retail, mobile payments are set to change everything in the next 12 months and way beyond. It’s not just retail, mobile payments are affecting every area of our business lives. It’s estimated that in 2016 nearly 25 per cent of all smartphone users will regularly use mobile payments.”

Source: www.waracle.net

Mobile payments in 2016

We present to you a compelling new section that explores four different, practical views on one topical SME issue. This month SME Advisor scoured through multiple sources of information and found four excerpts that summarise everything you need to know about mobile payments…

• 94 per cent of consumers believe that convenience remains the most positive aspect of mobile payments. Mobile payment is appealing to consumers because it’s simple and instantaneous.

So, ensure to keep your interface user friendly – with not more than two taps to checkout.

• 58 per cent of consumers are comfortable with stores using their purchase history to customise future shopping experience.

One of the most appealing factors of a mobile payment programme is its ability to understand consumer behaviour and capture useful information on buying trends. You can track what products or services are being purchased and better manage inventory levels.

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One topic

Understanding what consumers want

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fast four

What’s new in the field of mobile payments?

four expert opinions What’s the biggest roadblock?

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An emerging trend is tokenisation, which is a unique way of securing confidential information such as credit card data.

Using this method, credit card numbers are substituted by tokens and the original numbers are stored safely on a protected server. Since only the tokens are used while making the transactions, no harm can be done. Tokenisation is a great way to reduce security concerns and is quickly gaining traction.

Hot topic this month: Mobile payments

In 2015, there was a lot of anticipation around mobile payments, but the commercial uptake wasn’t as great as expected. The primary reason behind this was security. Consumer apprehension still exists when it comes to mobile payments, and this has discouraged them to a certain extent. For mobile payments to reach its full potential, mobile payment platforms will have to be more secure – fully protecting transaction information and consumer data.

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BUSINESS BANKING

The year of the

cautious entrepreneur?

Many industry pundits believe that 2016 could offer challenging market conditions - led by an increase in US interest rates likely to destabilise Asian economies and impose increased debt. Yet typically, SMEs are relatively well-placed to manoeuvre in difficult times, and history shows that a lacklustre market can sow the seeds of tomorrow’s large corporates.

SME Advisor looked at the conclusions of key market makers and their recommendations for weathering a lean year‌

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Loss of cashflow, typically impacting the balance sheet after three-four months.

Perhaps the most worrying factor of all for an SME.

As confidence falters, lower investment means indifferent markets, reducing returns and eroding value - bringing less chance of investing in your business.

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BUSINESS BANKING

Creditor companies can be faced with extended payment cycles from clients - most dangerously, much larger businesses higher in the food chain who may move from 90 days to 120 days (and beyond).

Borrowing can become harder as banks and finance houses increase their lending criteria in order to minimise lending risk.

Major economies can increase interest rates to stimulate growth, making borrowing more expensive.

Yet the higher returns this offers can drive investment away from developing nations.

Suppliers offer less flexible rates, meaning less cash available even if you spend modestly.

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Consumers have less disposable income - especially damaging in white goods manufacture and the hospitality and retail sectors.

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BUSINESS BANKING

A downturn in customer spending is going to require the people at the helm to have a lot of motivation and endure a good many late nights planning the next move.

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Just to continue on a negative note.

Bear in mind that while in the likes of Europe and the USA, these conditions might lead to a rise in takeover and merger activity, thereby mitigating the number of firms that collapse completely, in the Middle East, local ownership requirements deter M&A activity and the concomitant descent into oblivion can accelerate through lack of buyer-seller options.

Strategies for survival Notwithstanding, there are key strategies that SMEs can follow which can mitigate all but the most severe market conditions. As Richard Highcroft, VP SMB and Enterprise Portfolios, JP Morgan, comments: “Small or relatively new enterprises are much better positioned to be nimble, taking advantage of obstacles and seeing opportunities. Historically, tough times have spawned the next generation of great corporates-to-be.

The fact is that a small business can always stop doing the things that aren’t working and do something else. Or it can keep doing what it does, but in a different way. It won’t be tied to an expensive production line tooled up to do one unchangeable activity, or have an extensive network of third-party contractors managing business across international markets.”

If a commitment to being adaptable is paramount, so too is the attitude of the CEO or Managing Director leading the business. A downturn in customer spending is going to require the people at the helm to have a lot of motivation and endure a good many late nights planning the next move. So one point that is critical during those challenging months is to make sure you’re in a business to which you’re 100 per cent committed. As Richard Sloan, founder of StartUpNation, observes: “Pursue your passion. Business is tougher than ever during a go-slow. You have to fight for orders and overcome challenges. If you’re passionate, you’re contagious.

People want to work with you, buy from you, work for you and invest in you.”

How will the CEO apply that

passion and commitment? While there are many recommendations for weathering the storm, perhaps the best and most relevant to SMEs are the set of strategies developed by the University of Pennsylvania’s Wharton Entrepreneurship Programme. These focus on strategies strictly relating to the business owner’s income statement and balance sheet. They are compellingly strong and deserve to be seen as the absolutely key tenets of survival in a colder climate.

The Wharton Strategies

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Slash costs viciously

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Share resources

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Take advantage of the deflationary environment

Examine your financials every week.

Determine which things have a fixed cost and those that are variable. If it’s variable spending, these are things you should only be doing it they are making money. A classic example is that instead of increasing staffing, consider outsourcing and shortcontract personnel.

It may be the case that you know a cluster of businesses in the same sector as you. They could have production facilities or specialist skills which are be under-used through lack of business. Arrange to club together and share resources, splitting income and profits. This can dramatically reduce costs. Isn’t it worth putting your competitiveness aside in order to survive and prosper together?

When demand slackens, suppliers are hurting too. This means you can strike a better deal to cut your costs - eg, by paying your suppliers less or hiring better people at a lower cost.

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BUSINESS BANKING

If an investment in product development isn’t working, pull out of the project at once - don’t waste more time and money by thinking about it.

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Cut your costs quickly!

Cutting costs quickly is vastly preferable to doing so slowly. If an investment in product development isn’t working, pull out of the project at once - don’t waste more time and money by thinking about it. Wharton asked Fortune 500 CEOs what they would do if they had already lost US$20 million in a failed product launch, but still had another US$8 million to spend. Would they invest this as well or drop the whole project? 94 per cent said ‘drop the whole project’.

This same argument applies to family businesses who often employ family members purely because they ‘don’t like not to’. If they are not performing well, they have to go, and it will pay to tell them sooner, not later.

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BUSINESS BANKING

building alliances with companies which may otherwise be your competitors - through creative means such as barter - spreads risk, reduces the pool of competition and leverages your skillsets.

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Don’t pay, barter

SMEs are turning increasingly to barter transactions to curb their spending. For example, a magazine publisher can offer column inches of coverage and advertising in return for goods and services. There are also other, more subtle, benefits. As we all know, success is difficult to achieve in isolation. So building alliances with companies which may otherwise be your competitors - through creative means such as barter - spreads risk, reduces the pool of competition and leverages your skillsets.

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Re-finance assets

Sitting on assets purely for pride of ownership is simply empty vanity if they are not earning you money.

Property or plant and equipment are classic examples where refinancing can bring valuable income and supercharge cashflow. You can generally retain ownership as well, but normally, only plant and equipment with serial numbers and manufacturer’s service record (and in good working condition) will be eligible for re-financing.

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Be cautious in new initiatives and investment

Regardless of what you may have heard, a tricky economic climate is not the time to take risks. Textbooks may give examples of entrepreneurs who made fortunes in recessions - like Henry Ford and Aristotle Onassis - but you are not them! This is not the time to speculate on new market entry, which may prove costly, or to invest in expensive IT solutions, no matter how they might promise to leverage hidden value. You can do all those things next year - no harm in that.

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8

Increase marketing budgets by five per cent

One area where you shouldn’t trim expenses is marketing, despite the fact that during a tough climate it’s an obvious extra cost. In fact, now is the time to increase visibility, not diminish it, and a good strategy is to increase your advertising and marketing spend by five per cent. This can reap terrific rewards once the markets improve.

Also, take note of this ‘Wharton trick’: change the roles of some of your staff slightly, so that they focus more on outward-facing marketing activities.

Every little helps.

Speak out sooner, rather than later One more thing. When you first start to see cashflow slowing, or signs of payment cycles being extended, tell your bank, finance house or investors. Don’t wait until there is a very difficult and challenging story to tell! If you let the finance experts know in good time, they may be able to advise you with relevant and helpful strategies - perhaps they’ve been through this very scenario themselves many times!

They may also be able to re-structure your debts in return for asset revaluation or financing, buying you valuable time to turn things round.

Another approach is to prepare a detailed presentation document with a view to broadening your investor base, bringing in a bigger pot of money while arguing that fresh investment reduces everybody’s risk.

This is the hallmark of a true entrepreneur.

Can you rise to that particular challenge?

For an online version, please visit: http://www.smeadvisor.com/businessbanking/the-cautious-entrepreneur

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REGIONAL TRENDS

SPOTLIGHT ON Manufacturing trends shaping the sector

Manufacturing is one of the fastest-growing sectors in the region – contributing significantly to the overall development of the economy. The emergence of the West-East corridor, fiercely-competitive market environments and other economic factors have changed the landscape within this sector, over the years. Is your SME fully aligned with the new trends? Editor Rushika Bhatia comments…

A corporation is a living organism; it has to continue to shed its skin. Methods have to change. Focus has to change. Values have to change. The sum total of those changes is transformation.

– Andrew Grove

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As a manufacturing SME, you need to ask yourself the following question – “Is my business up to speed with industry changes and the economic trends that are transforming key markets and opportunities?”

Consider the following – • Can your business enjoy the same market edge as competitors in the USA, China and SE Asia?

• Do you have time to innovate and command margins based on added-value, not simply on price competition alone?

• Are you implementing lean manufacturing principles, end-to-

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REGIONAL TRENDS

end procurement technologies and delivery systems that keep you ahead of the curve?

Understanding – and being fully up to speed – with the following trends will give you the answers you need…

The shift from West to East With countries such as China and India going from strength to strength, manufacturing capacities have seen a shift from nations in the west to the east. A lot of manufacturing companies based in the west are now outsourcing their activities to companies in the east.

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A major factor driving this change is price – Asian nations are able to compete on price, owing to low labour costs and mass manufacturing.

This, however, has their western counterparts rethinking their strategy – increasing focus on innovation and customer-driven initiatives. In fact, research by KPMG shows that 72 per cent of manufacturers believe “the next wave of transformational innovation” in manufacturing is either under way or will begin in 12 to 24 months. Western manufacturers have come to realise that innovation will help them create sustainable business models and gain a competitive edge in the market.

Although the competition between the West and East has become quite fierce in the last few years, manufacturers operating within both sides of the world have their fair share of opportunities and challenges.

Research from Deloitte’s 2013 Global Manufacturing Competitiveness Index sets the scene: “The emerging superpowers in manufacturing will focus on building the advanced manufacturing capabilities and economic and political infrastructures that drive rapid growth and high value jobs for their citizens, forcing 20th century manufacturing powerhouses to fend off the growing strength of more focused global competitors,” remarked Craig Giffi, Vice Chairman, Deloitte United States (Deloitte LLP) and consumer and industrial products industry leader, who co-authored this report and led the research-team.

Lean manufacturing – getting on the bandwagon Originating from the Toyota Production System (TPS), lean manufacturing enables companies to increase efficiency by improvements in productivity, quality and lead-time.

Increasingly, manufacturing SMEs are adopting lean manufacturing practices, allowing them to be more efficient and reduce costs. Lean manufacturing is simply defined as the “elimination of waste from manufacturing processes”.

Taichi Ohno, former Toyota Chief

Why is the manufacturing sector important?

Manufacturing SMEs are the lifeblood of any country’s economy. They are the key drivers behind: - National development - Skilled employment - Creation of infrastructural facilities - Building machinery, equipment and tools Most importantly, however, they facilitate trade and export – a vital source of income, pumping the much-need finance and resources into the nation. So, it’s crucial for any country to foster the growth and development of this sector.

Engineer, shares seven primary types of wastages that companies need to look out for: • Overproduction • Transportation • Unnecessary inventory • Inappropriate processing • Waiting • Excess motion • Defects Such wastage can be effectively eliminated using the following lean manufacturing principles, as suggested in an online article on www.lean.org: 1. Specify value from the standpoint of the end customer by product family.

Identify Value

Map the Value Stream

Seek Perfection

Establish Pull

Create Flow

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REGIONAL TRENDS

Established manufacturing nations

Emerging manufacturing nations

Talent-driven innovation

85% believe the availability of skilled talent in US, Germany and Japan makes these nations highly competitive.

Only 58% believe the same is true for China and 40% for India.

Labour costs

Fewer than four in 10 believe US, Germany and Japan are competitive when it comes to labour costs.

Nine in 10 believe China and India are extremely competitive in this aspect.

Supplier networks

Eight in 10 say US, Germany and Japan are competitive.

Five in 10 say the same about India and Brazil.

Healthcare systems

Seven in 10 think that US, Germany and Japan are extremely competitive.

Only three in 10 think India, China and Brazil are competitive.

2. Identify all the steps in the value stream for each product family, eliminating whenever possible those steps that do not create value.

3. Make the value-creating steps occur in tight sequence so the product will flow smoothly toward the customer.

4. As flow is introduced, let customers pull value from the next upstream activity.

5. As value is specified, value streams are identified, wasted steps are removed, and flow and pull are introduced, begin the process again and continue it until a state of perfection is reached in which perfect value is created with no waste.

Increasingly, manufacturing SMEs are adopting lean manufacturing practices, allowing them to be more efficient and reduce costs.

As a manufacturing SME, integrating these principles within your business quite early on can help create a culture of efficiency, value and costeffectiveness.

a) Cloud computing: A lot has been said about the cloud and its benefits, but over the last couple of years, it has evolved to play a major role in the growth and expansion of businesses.

For instance, manufacturing companies that are looking to set up new plants in emerging countries, due to their vast potential, can now fully streamline processes using a cloud-based system. This allows the companies to access data remotely, as and when required. It also means that the new plant is fully connected with the home base almost instantly

Technology transformation This is perhaps the most important emerging trend of all – new, sophisticated technologies are changing the way manufacturers do business. They no longer need to rely on manual organisational and inventory handling systems to manage and monitor activities.

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Following are four major technological developments that have taken place in the last decade and here’s how your manufacturing business can make the most of them:

– without having to go through software implementation from scratch. b) Mobility: With the rising popularity of mobile devices, literally anything and everything is just a few clicks away. In the context of a manufacturing company, this makes managing workflows incredibly simple and efficient. For example, managers can monitor at what stage exactly a product has reached in its production cycle, identify delay times, get notifications on expiry dates of products, and so on, by a simple software on their handheld devices. This allows managers and other C-suite executives to be truly on-the-go, without the need to be constantly confined to their desks. c) Big Data: Managing and storing large chunks of data is a challenge for a business operating within any sector. Big Data will help companies in converting data in meaningful information that can be further used to make strategic decisions. d) Social media: If you think that as a manufacturing company, social media really has nothing to offer you, you are absolutely wrong. Apart from being a powerful marketing tool, social media is also great for gathering market intelligence.

With a number of B2B social media platforms such as LinkedIn, you can now connect with partners, suppliers and competitors, and stay updated with the latest trends in the sector.

Finally, consider this remarkable statistic: 429 of the original Fortune 500 companies are no longer in business today, which sets your imperative straight, shape up to these trends or ship out!

For an online version, please visit: http://www.smeadvisor.com/groundlevel/the-future-of-manufacturing

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MOVERS & shakers

“A comprehensive SME solution” R SERVICED OFFICES IS A LOCALLY-BASED BUSINESS RAPIDLY BUILDING A TOP-QUALITY REPUTATION FOR MEETING CLIENT NEEDS AND WORKING PROACTIVELY TO CREATE EXCEPTIONAL OFFICE ENVIRONMENTS FOR A SPECTRUM OF BUSINESSES. WE SPEAK TO MARK HACKETT, FINANCE & ADMINISTRATION DIRECTOR, AND SAMEH FARAG, OPERATIONS DIRECTOR, ABOUT THE OPPORTUNITIES ON OFFER FOR SMEs…

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MOVERS & shakers

Mark Hackett www.smeadvisor.com

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MOVERS & shakers

When cashflow is tight in the early years of your business, leasing your own office in one of the best towers is prohibitively expensive.

We often hear it said that serviced offices are a ‘flexible’ solution - but can you give examples of what this means in practice?

Each business that comes to RSO for an office solution has a unique set of needs and circumstances. We recognise that, and our approach is always to help provide a solution that closely meets their needs.

This starts with an easy to follow one year tenancy contract that allows you to change your office solution with a short notice period. You would not get that flexibility with, say, a standard office lease contract which tends to be longer term.

Also RSO have start-up packages with products and services that clients really want. Clients can select what they need and take additional items when they want them.

For some of our major clients for example, we have offered highly bespoke solutions. One example is a full library set-up for a world class university. We’ve re-designed offices to give a more corporate brand to a well known Italian company. Then, we delivered a bespoke IT and video conferencing system for a major oil and gas company.

Some of these experiences aren’t only on offer to bigger entities: we’ve created strongly customised offers for our SME clients too, really giving a sense of each business’ unique culture and identity.

How will a serviced office solution actually save my business money?

There have been a number of studies including one by the Chartered Institute of Purchasing. They all show

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that a significant saving can be made in the early years of your business if you choose the serviced office option. You avoid the capital required for setup, whether that is an office refurbishment, purchasing furniture or items like printers, copiers and other start-up equipment. On the service side, you benefit from a RSO receptionist and office assistant that ordinarily you may have to hire. There are a number of inclusive items in our package like cooling, building service charges and maintenance which really helps keep your budget and cashflow on track.

Will a serviced office give me access to a premium location?

This is one of the big advantages of a serviced office. When cashflow is tight in the early years of your business, leasing directly your own office in one of the best towers is prohibitively expensive. This is important, though, because you need to impress your clients. With an RSO serviced office you get a premium location and your guests will be greeted by our professional staff, and looked after in the reception area until you are ready to meet them. This is all included in the RSO package.

Tell us about the office support services that you can provide?

Do I get multilingual support?

We are Emirati owned and have a truly international support team of 50 professionals who speak over 25 languages. We have a range of business setup and licensing services, transport, health, relocation, translation and other office support activities.

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MOVERS & shakers

Mark Hackett and Sameh Farag

A number of security features come completely as a given, but we can also meet the full spectrum of individual security requirements.

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Do I have the advantage of an integrated IT network and services?

Can I reserve further accommodation in advance as my business grows?

We have fully-specified IT services whether you take our package offers or need a bespoke set up. The infrastructure is CAT 6 standard with fibre optics for the best in speed and service. A number of security features come completely as a given, but we can also meet the full spectrum of individual security requirements, with elements such as under-floor wiring and completely separate, dedicated servers, and so on.

We are supplied by both of the UAE’s approved telecom suppliers, Etisalat and du, which is extremely unusual and of course really adds value and relevance to the products available.

We have over 150 offices suitable for SME companies. We have helped to serve over 350 clients ranging from multinationals to single entrepreneur setup companies.

Many of these have evolved during their time with us, and as they developed their need for office space, we have been able to grow along with them.

Can I book additional rooms for meetings, etc., at short notice?

Another great advantage of serviced offices is that you can use RSO meeting rooms on a “pay as you go basis� rather than including extra 41

MOVERS & shakers

to improve our client experience we are implementing a new ERP system to make booking services on-line easier for those clients who prefer this route.

space on an annual direct lease that you don’t need all the time. In Reef Tower for example, we have 12 meeting rooms ranging from a traditional Board Room, for your AGM, for example, to medium sized meeting rooms with teleconference facilities, through to rooms for the most confidential meetings.

We are an ambitious company and have a range of expansion plans for our office solutions and services. For Q3 2016 we have an exciting new office community planned in Dubai which will be of great appeal to start-up and SME companies, which we hope to announce in early 2016 for prebooking. This will further enhance our comprehensive SME solution.

How comprehensive is your network and its geographical locations?

We serve Dubai and Abu Dhabi.

Our expertise in business setup and support extends to free zones as well as mainland support. Our head office is in Reef Tower in DMCC Free Zone – a really key business hub, honoured with the award of “Global Free Zone of the Year” 2015 by The Financial Times fDi Magazine, and rated as “FastestGrowing Free Zone” in the Stars of Business Awards 2015.

Can I access booking services and IT facilities from my mobile device?

Each client has access to a relationship manager and an assistant. We find this personal touch in arranging needs an advantage. However, to improve our client experience we are implementing a new ERP system to make booking services on-line easier for those clients who prefer this route. We will roll out the mobile services shortly.

What are the future growth plans for the business and its SME offer?

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For an online version, please visit: http://www.smeadvisor.com/movers-shakers/ comprehensive-sme-solution

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BUSINESS GROWTH

Governance for all?

The implementation challenge for SMEs For large corporates, it’s taken as a given that good Governance is a key factor in establishing credibility, resilience and ethical treatment of stakeholders.

Yet for SMEs, the apparent complexity of the Governance agenda can be a barrier to implementation, leading to many companies short-changing their capabilities and failing to build capacity.

Fazeela Gopalani, Head of Education, Middle East, ACCA, looks at what Corporate Governance can do for you‌

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BUSINESS GROWTH

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BUSINESS GROWTH

The corporate governance framework applied to any business has to be ‘fit for purpose’, which includes being appropriate for the size and maturity of the business.

Corporate governance is now seen as an essential building block of stable economies. It helps to protect the rights and interests of shareholders and, increasingly, those of other stakeholders, providing a framework for effective monitoring of management actions and performance and for encouraging better business results.

The challenge for SMEs is that established corporate governance frameworks have been developed primarily with large, listed companies.

Such frameworks and codes may not reflect the characteristics of the SME, where owners may often be its managers as well, or where company ownership may be shared across family members.

Corporate governance structures can be seen as frameworks to help organisations achieve long-term success for their stakeholders.

The Organisation for Economic Cooperation and Development (OECD) describes corporate governance as follows: ‘Corporate governance involves a set of relationships between a company’s management, its board, its shareholders and other stakeholders. Corporate governance also provides the structure through which the objectives of the company are set, and the means of attaining those objectives and monitoring performance are determined. Good corporate governance should provide proper incentives for the board and management to pursue objectives that are in the interests of the company and its shareholders and should facilitate effective monitoring’ (OECD 2004).

Given that all companies want to attain their objectives, corporate governance is relevant to organisations of all sizes.

Nonetheless, the aims and nature of the corporate governance framework applied are likely to vary from one company to another.

How Governance actually works Corporate governance in large businesses is associated with the

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agent-principal issue: managers are agents for the shareholders (the principals and owners). Corporate governance involves trying to establish a framework, systems and controls that encourage management to act in the best interests of the shareholders. It is also increasingly seen as needing to take account of the interests of other stakeholders, such as employees and suppliers, and wider societal issues such as appropriate stewardship of environmental assets.

In family-owned businesses and SMEs in general, the agent-principal issue is less likely to arise, or less likely to be so significant. Where the owners are also the managers, management and ownership interests are aligned, but these interests are not necessarily those of other stakeholders. For instance, where there are family shareholders who are not actively involved in running the business, some mechanisms may be required to protect their interests.

In general, however, for SMEs, corporate governance is mainly about improving business efficiency and performance, and less about monitoring the actions of management.

The elements of effective Corporate Governance The corporate governance framework applied to any business has to be ‘fit for purpose’, which includes being appropriate for the size and maturity of the business. In general, a robust and effective corporate governance framework includes a number of features and characteristics. These will typically include: • Clear reporting lines and clarity about how decisions are made and risks controlled, and about other matters that need to be brought to the board’s attention (or the attention of committees) for review or approval.

• A framework that promotes understanding of roles and responsibilities and limits of

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BUSINESS GROWTH

Corporate governance also provides the structure through which the objectives of the company are set, and the means of attaining those objectives and monitoring performance are determined.

authority and sets the balance the board wants to see between, for example, acceptable risk and reward.

• A remit that incentives for staff need to be supportive of board strategies.

• A requirement for clear communication (of strategic goals, expected behaviour, etc.) by the board to management and staff.

• Establishment of appropriate internal controls, related to key risks.

Boards need to have good visibility of management actions and decision making, which includes the provision of high-quality information on business performance and risk management. Board structures may differ among family-owned SMEs. There may not, for example, be a unitary board. Some firms may have a (formal or informal) dual board arrangement, with an operations board and a separate advisory board addressing more strategic issues or representing wider family interests.

How SMEs stand to benefit SMEs can gain a range of benefits from establishing appropriate corporate governance in their businesses. For example: • Less risk of conflict between family members or other owners who are actively managing the business and those who are not • Enhanced access to credit • Faster business growth • Greater resilience to fraud, theft or other financial costs due to poor internal controls.

Notwithstanding, there are many challenges to understanding the role that corporate governance can play in helping SMEs to grow. More research needs to be undertaken to understand the impact of corporate governance on SMEs and the various barriers that stand in the way of greater implementation of effective corporate governance.

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Challenges also arise in encouraging the owners of SMEs to take the time to understand what corporate governance means and how improving it could benefit the business. The basic terminology also needs to be taken into account: SMEs that are unincorporated or family-owned may see the word ‘corporate’ and assume that a corporate governance framework has no relevance for them.

The fact that corporate governance frameworks and approaches were typically developed for large businesses can also be a barrier to their adoption by SMEs. Frameworks need to be applied flexibly, taking account of the heterogeneous nature of SMEs. It is also worth emphasising that corporate governance frameworks and their effectiveness are influenced by the environment in which they exist. In an economy characterised by widespread corruption or weak enforcement of laws and regulations, company action to implement corporate governance standards may be frustrated and have limited impact. Such constraints need to be understood by businesses and institutions in better-regulated economies. International organisations, including the IFC and ACCA, can have an impact through supporting research and understanding of the challenges and benefits of achieving improved standards and greater corporate governance adoption in SMEs. They can also play a role in raising awareness and understanding building capacity and expertise among local businesses and their professional advisers. http://www.accaglobal.com/ content/dam/acca/global/PDFtechnical/small-business/eagovernance-for-all.pdf

For an online version, please visit: http://www.smeadvisor.com/businessgrowth/governance-for-all

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TECHNOLOGY

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TECHNOLOGY

Trends shaping digital marketing in 2016 As technological advances in 2016 promise to get faster than ever before, businesses will need to increasingly capitalise on digital solutions to improve customer experience and share engaging, consistent and personalised content. SME Advisor presents a snapshot of the prominent trends influencing digital marketing in the New Year‌

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TECHNOLOGY

“As the web becomes a more social and porous medium, remember that interaction and community are going to happen with or without your involvement.

You can watch the conversation take place, or you can own or guide it.”

– Adam Weinroth, Making Sense of Social Media

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Digital marketing initiatives are fundamental to making sure a business keeps moving forwards, builds market share and stays ahead of the curve. Here are 10 top trends that are fresh, relevant and critical to implement. Start putting them in place today!

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Mobile will continue to dominate

The shift to mobile has already happened and isn’t anything new, but 2016 will see mobile traffic largely overtake desktop traffic. Experts predict that global searches will be primarily mobile. This also means that it is absolutely imperative that businesses ensure that their website is mobile responsive. That’s not all. The uptake of mobile also extends to e-mail marketing as an increasing number

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TECHNOLOGY

Experts also predict that platforms such as Instagram and Snapchat will be at the forefront of video content – slowly integrating (and building on) video ad offerings.

exponentially in 2016, particularly across mobile devices. It is predicted that the new ‘Generation Z’ will be a huge driver of video content – preferring it over traditional mediums of communication. Businesses can capitalise on this opportunity by creating videos that are personalised, interactive and build an emotional connect with their consumers.

Experts also predict that platforms such as Instagram and Snapchat will be at the forefront of video content – slowly integrating (and building on) video ad offerings.

3 of e-mails are accessed on-the-go through mobile devices. An excerpt

by Chad White on marketingland.com explains further: “During 2015, the percentage of e-mail opens on mobile devices averaged 49 per cent, with mobile opens surging in November and December, according to Litmus’ Email Analytics data. Webmail, especially desktop opens, will continue to decline. In 2016, opens on the Outlook desktop app will fall to around five per cent as businesses continue to shift away from expensive desktop suites like Microsoft Office toward more scalable services like Google Apps and Outlook 365. Cloudbased software will continue to disrupt installed and on-premise software.”

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Video content is key

We’ve said this several times during the year, and we will say it again – video content is integral to marketing success! Video consumption will grow

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Webinars and Podcasts gain momentum

Even though they’ve been around for a while, the uptake of webinars hasn’t been very high. However, as the demand for video content continues to skyrocket, webinars will be increasingly adopted. “Webinars are the have quickly become the standard for the new marketing culture of ‘permission marketing’. Permission marketing is based on the knowing participation of potential consumers in the marketing process. Consumers do this because they think the marketing materials will help them make better decisions,” explains Steve Toth in his article on adluge.com. Similarly, podcasts have been rising in popularity and experts suggest that an average listener listens to five or six podcasts a week.

Although creating a podcast series requires a lot of effort and time, the reality is that this can be one of the most effective medium for SMEs to build customer loyalty by sharing their story in a unique way.

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Spotlight on App Indexing

App Indexing helps put apps in front of users on Google search. In other words, Google will index the content within the app, and when a user searches for that content, they have the option

to view it in the app versus the usual mobile webpage. Overall, this helps increase your presence in search results.

Alexander Rauser, CEO of Prototype, comments: “App indexing came into the spotlight in 2015, despite being around for a while, and it is bound to become an even more prominent feature of online marketing in 2016.

There are many predictions that suggest that the mobile web will soon be exceeded by mobile apps, and with this will come a more complex ranking system for apps. Although this may not happen by 2016, a steady adoption of apps by many more business owners will be a trend throughout the year.”

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Digital will merge with Marketing

In addition to the adoption of new technologies, there will also be a slight restructuring within businesses as the remit of digital and marketing departments overlap. Dave Chaffey explains in his article on smartinsights. com: “Ultimately the aim in the mature organisations should be to reduce specialist digital skills and agencies as digital becomes integrated as part of marketing activities. Digital silos should shrink and specialist Digital marketing managers should reduce in number although I believe there will always be a need for a ‘Digital Centre of Excellence’ to evaluate the latest digital marketing trends, set standards, manage technology projects and complete advanced optimisation.”

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Snapchat gets bigger

The massive potential that Snapchat presents to businesses hasn’t fully been recognised. 2016 will see an increase in ad spending on Snapchat, especially for those businesses trying to reach a younger demographic and looking to use location-based ads. Since Snapchat is fairly new territory, take your time to understand it and plan your strategy

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TECHNOLOGY

social listening is essentially analysing everything that goes on across your social media accounts to ascertain what’s working and what’s not.

accordingly. A lot of businesses are jumping on the bandwagon just for the sake of doing so – this can be more harmful than anything else. Remember that like any other social media channel, content is king on Snapchat so investing time in creating a thoughtful story is the best way to garner positive responses.

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MarketeErs explore mobile automation

“The growth of mobile automation will lead the pack among next year’s hottest trends. Mobile is a dominant force with its global growth and pervasiveness.

Marketeers can no longer blanket their customers with information or communication. Mobile will become even more a part of marketeer’s dayto-day as the focal point for which the complete customer picture exists.

Brands must understand how to strategically connect with customers on a personal basis and encourage engagement, based on customer behaviour, to transform them into long-lasting users. Mobile marketing automation will allow companies to collect and use data in a more actionable way and deliver personalised and timely messages to their customers,” explains Mark Ghermezian from Appboy on mashable.com. 2016 is marked as the year when marketers will invest in marketing automation with a view to make their work easier and goals more attainable. It will also help in achieving more with a smaller – but specialised – team of experts, rather than having to hire more people for additional tasks.

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We enter an era of ‘experience’

Many experts have termed 2016 as “The Experience Economy” – a time when consumer experience will be at the helm of everything we do. In line with this, marketeers will be seen focusing primarily on enhancing experience by creating personalised messaging and content. So,

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it is no longer the case of ‘one-size-fitsall’ – all the information that reaches the consumer will be customised to their needs and interests.

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Predictive analytics will drive marketing content

Marketeers have started using data collected from day-to-day engagement in innovative ways. So, the data collected is analysed for trends, patterns, typical behaviours and responses, and this helps them engage with the audience in a personalised way i.e. displaying ads that match a customer’s individual needs. Moreover, these targeted campaigns help them predict probable outcomes, thus decreasing risk and increasing reward.

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The emergence of ‘social listening’

Along the lines of predictive analytics, social listening is essentially analysing everything that goes on across your social media accounts to ascertain what’s working and what’s not. This is a powerful measurement tool that is supporting marketers in understanding customer behaviour, delivering meaningful content and strengthening engagement. Bearing in mind the challenging market conditions forecast for 2016, all digital marketing will be driven by ‘ROI’, and this is where social listening and other measurement mechanics become imperative to create effective campaigns and efficiently manage costs.

Goodluck!

For an online version, please visit: http://www.smeadvisor.com/tech/digitalmarketing-trends

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NOW AVAILABLE ON

COUNTRY FOCUS

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COUNTRY FOCUS

Business in Oman opportunities, challenges and the evolving landscape

Oman has become a preferred destination for businesses looking to expand their horizons and build their branch network. The country’s improving infrastructure, ease of doing business and environment of untapped opportunities have attracted a range of investors, business owners and entrepreneurs. In the following feature, we shed light on the fundamental areas surrounding the economic development of this burgeoning market.

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COUNTRY FOCUS

Several governmental reforms have helped improve the overall business climate in Oman and attract regional and global investors to setup businesses within the country.

Oman’s increasing focus on creating a diversified economy with lesser reliance on oil and its ongoing efforts to improve the overall ease of doing business have significantly strengthened its presence within the global landscape. Add the country’s favourable location and welldeveloped logistics infrastructure into the mix and you have one of the most attractive markets in the region.

However, the recent plunge in oil price has added pressure on the country’s policy makers to introduce reforms and fasttrack diversification. With oil and associated products accounting for roughly 50 per cent of the country’s GDP and 77 per cent of the government revenues, the pressure for immediate action is mounting.

This is probably when the country’s leadership is likely to revisit its powerful strategic document Vision 2020, which outlines policies aligned with such economic development.

The document highlights three primary objectives: • Fuel growth in key sectors such as manufacturing, tourism and logistics. The country’s upcoming US$13 billion railway is a classic example of a project that will help the economy steer in this direction.

• Foster the development of the SME sector by introducing key initiatives focusing on their productivity and profitability.

• Hone the skills of young talent by providing training and education to create a strong workforce.

A large part of the onus to meet these objectives lies on the most prolific segment of the Omani economy – the SMEs! Like most of its counterparts in the Middle East, Oman has a thriving SME sector, which is the lifeblood of the economy, employing about 40 per cent of the workforce.

Given the significant role that SMEs play in economic growth, the government has been leading several initiatives to create opportunities

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and boost productivity of this sector.

But, to fully maximise the benefits of these opportunities, it is important to fully understand the dynamics of this burgeoning market.

Doing business in Oman So, as a relatively new player in Oman or as a well-established SME looking to widen your horizons by entering into Oman, what are the key factors to bear in mind? We explore some of the fundamental market forces and trends…

• Growth across manufacturing, tourism & logistics By focusing on the development of these three sectors, Oman is clearly playing to its strengths.

For instance, Oman’s geographical advantages give it a significant competitive edge when it comes to shipping routes. The Sultanate has turned this into a strategic advantage with the introduction of ports such as the Port of Duqm and Port of Salalah and Port of Sohar.

These fast-growing ports have become hot-spots for commercial and industrial activity – attracting businesses from all around the world. With serious investment across different networks such as rail, road and sea, growth within this sector looks more than promising.

Another key area that Oman is also looking to expand into is the lucrative meetings, incentives, conferences and exhibitions (MICE) industry. In fact, the construction of the Oman Convention & Exhibition Centre is currently underway and the Centre is due to open near Seeb International Airport in 2016.

• Harnessing the power of Public Private Partnerships (PPPs) Public Private Partnerships are becoming the driving force behind the success of SMEs because they are synonymous to knowledge exchange. They allow

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COUNTRY FOCUS

Oman GDP is projected to trend around US$ 111.09 bn in 2020

Comparing Oman’s GDP growth with the wider Middle East region

Source: National sources, IHS, Euler Hermes

SMEs to benefit from tendering opportunities and work alongside larger firms to gain added exposure and expertise. In addition, to gain these contracts, SMEs need to meet certain prerequisites, which encourage them to raise operating standards and apply international best practices. Of course, PPPs also open doors to large public investments allowing SMEs to supercharge growth and undergo rapid expansion. This also works in favour of the overall economy as it encourages private sector investments into governmentled projects, i.e. incentivising the private sector.

• Government-led initiatives Several governmental reforms have helped improve the overall

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business climate in Oman and attract regional and global investors to setup businesses within the country. For instance, the Omani government had introduced an online business registration portal for businesses to speed up the process. This proved to be extremely beneficial – creating a streamlined procedure to register and understand all legal requirements.

One of the most prominent programmes for SME development is led by the Ministry of Manpower and is called Sanad.

• The power of a skilled workforce An excerpt from EY’s report

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COUNTRY FOCUS

inward investment, although not to a marked degree.”

How Oman ranks on the ease of doing business scale – in comparison to its neighbouring countries: • UAE - 31 • Bahrain – 65 • Oman – 70 • Saudi Arabia – 82 • Jordan – 113 Source: Doing Business database

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Doing Business in Oman explains: “Business operations in Oman, have in recent years, been staffed with skilled workers from abroad.

The need to obtain workers with certain specialised skills from other countries continues.

However, the government has taken considerable measures to equip Omani nationals with skills to gradually replace expatriate workers, employment of foreign nationals in certain positions and professions is prohibited. The government has established a register for the national workforce.

No organisation may employ an applicant unless the applicant is registered with the National Workforce Register. All employers are required to report new employees for registration within the stipulated period.”

On the other hand, a report by Euler Hermes pointed out: “A policy of Omanisation is followed; this aims to boost job prospects for the local workforce at the expense of expatriate labour.

However, such a strategy can lead to an increase in business costs, weakening in labour productivity and act as a deterrent to some

Understanding the challenges 1. Working in a climate of lower oil prices Being associated with the vulnerability of global energy markets is a key risk. A recent report

by Moody’s – the renowned ratings agency – suggests that the low oil prices will have far more significant impact on the Omani economy over GCC peers such as Kuwait, Qatar, UAE and Saudi Arabia. This will require further strengthening of government initiatives to fuel growth in the SME sector and encourage diversification. This will also see strong measures being taken to drive privatisation – increasing the vital role played by the private sector in the country’s economy. This will lead to the privatisation of key projects in areas such as infrastructure, power and telecommunications.

2. Access to credit This is of course an ongoing challenge for the SME sector. World Bank Group’s Doing Business 2015 Report places Oman on 126 for ease of getting credit in a ranking of 189 economies. To facilitate funding for the sector, the government has launched incubators – one of the prominent ones being Al Rafd Fund, which is tasked with the remit to allocate 10 per cent of public projects tenders to SMEs. That’s not all, 10 per cent of procurement by large contractors of governmental projects will also be sourced from SMEs.

For an online version, please visit: http://www.smeadvisor.com/countryfocus/business-in-oman

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LEGAL

The Top 5 Strategies for Dealing with Workplace Injury in the UAE

STRATEGY

Employers in the UAE need to be aware of their obligations to provide a safe system of work and the potential civil and/ or criminal liability arising from accidents in the workplace. This article examines the top five employer strategies for dealing with workplace injury onshore in the UAE.

1

Reporting workplace accidents to the police and the applicable labour authority

The UAE Federal Law No. 8 of 1980, as amended (Labour Law) imposes a number of obligations on employers regarding employee health and safety and managing employee injury, including reporting obligations.

Specifically, where an employee sustains an employment accident or contracts an occupational disease, under the Labour Law, the employer must immediately report the matter to the police and the Ministry of Labour (or the applicable Free Zone authority). Article 142 goes on to prescribe particular matters that must be contained in such a report including the employee’s name, age,

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occupation, address and nationality, along with a summary of what occurred and the medical aid and/or treatment provided to the employee.

Ministerial Decision No. 851 of 2001 provides for additional penalties for certain breaches of the Labour Law (in addition to the fines and penalties set out in Articles 181 to 186 of the Labour Law). One such additional penalty applies where an employer fails to comply with its reporting obligations outlined above or where the employer fails to take measures against a danger threatening the health and safety of employees. In the event of such a breach, the employer’s trade licence may be suspended and, in the case of an employer failing to take measure(s) against a danger

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LEGAL

Rebecca Ford, Partner at Clyde & Co

STRATEGY

function, for the purposes of meeting new business contacts, even where that function is not run by the employer.

In addition, the definition also extends to accidents sustained by employees to and from work, which is wide enough to extend to travel for business purposes, where there is no diversion from the normal route.

STRATEGY

threatening the health and safety of employees, procedures may be taken to windup the employer.

In addition, the applicable Labour Department may conduct safety inspections on employers at any given time. In the event of the relevant department finding evidence of non-compliance with the Labour Law in this regard, the penalties outlined above may be enforced against the employer.

2

Understanding of the scope of the definition of ‘Employment Injury’

Employers are liable to compensate employees as a result of ‘Employment Injury’. Employers may not appreciate the breadth of the definition of

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‘Employment Injury’ under the Labour Law which is defined as follows: ‘[(i)] Any of the occupational diseases listed in the Schedule under this Law or [(ii)] any other accident sustained by the worker during the performance or as a result of his work. [(iii)] Any accident sustained by the worker on his way to or back from his work shall be deemed an Employment Injury provided that the trip to or from the place of work is made directly, without delay, default or diversion from the normal route.’

The use of the words any accident sustained ‘during the performance or as a result of [the employee’s] work’ is very wide and could potentially include where an employee attends a networking

3

Providing appropriate treatment and related transport costs

The Labour Law provides that where an employee sustains an employment accident or contracts an occupational disease, the employer shall pay for the cost of the employee’s treatment (and related transport costs) until the employee recovers or his disability is confirmed. What if the particular treatment is not available locally and the employee asserts that they need to travel to another country to obtain treatment? Is the employer responsible for such treatment costs and the related travel costs?

Strictly speaking, under the Labour Law, an employer is only responsible for local treatment as Article 144 expressly states: ‘[w]here a worker sustains an employment accident … the employer shall pay for the cost of his treatment in a local government or private medical centre until he recovers or until he is disabled’ (emphasis added). Therefore, if an employee insists that they require international treatment; an employer may refuse to pay for such treatment and associated travel costs as employer liability for payment of treatment does not extend to international treatment.

Employers are only obliged to pay for an employee’s medical treatment in a local medical facility.

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LEGAL

4

Collating documentary evidence in support of applicable exceptions to the liability to pay compensation

STRATEGY

Under the Labour Law, employers are liable to pay injured employee’s compensation on a strict liability / no fault basis. In the case of death of an employee, the compensation is equivalent to 24 months’ basic salary at the time of death (provided that the amount of compensation shall not be less than AED 18,000 or more than AED 35,000) and in the case of permanent injury, the compensation is a proportion of the amount payable on death, as set out in the schedules to the Labour Law, as amended from time to time.

Exceptions to the above apply where an employee’s injury or disability (not resulting in death) are a result of the employee’s deliberate actions, for example, where an employee attempts suicide, was under the influence of alcohol or drugs, intentionally violated safety instructions posted up on conspicuous positions in the workplace or the injury or disability was the result of gross and deliberate misconduct on the employee’s part.

As part of the employer’s investigation into the incident, it should consider whether any of the prescribed exemptions apply, and, if so, clear contemporaneous documentary evidence should be collected in support. For example, if it is asserted that the employee was injured as a result of intentionally violating safety instructions, photographs should be taken of the safety instructions posted around the workplace.

5

Considering potential liability outside the Labour Law

In addition to an employee’s potential rights under the Labour Law, employees can bring a claim against their employer under the Federal Law

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No. 5 of 1987, as amended (Civil Code). These claims are assessed separately to claims under the Labour Law. Given the capped compensation under the Labour Law as outlined above, we are seeing employees commencing claims under the Civil Code rather than the Labour Law. In addition, under the Civil Code, the limitation period is ‘three years from the day on which the victim became aware of the occurrence of the harm and of the identity of the person responsible for it’ (Article 298) as opposed to ‘one year from the date on which the entitlement became due’ under the Labour Law (Article 6).

However, the provisions under the Civil Code differ from the strict liability provisions in the Labour Law. Article 283 of the Civil Code provides that harm may be direct or consequential and if the harm is direct ‘it must be unconditionally made good and if it is consequential there must be a wrongful or deliberate element and the act must have led to the damage’.

In addition, Article 287 provides that if the employer proves that the loss arose out of an extraneous cause that the employer paid no part ‘such as a natural disaster, unavoidable accident, force majeure, act of a third party, or act of the person suffering loss’ the employer will not be bound to make the loss good (in the absence of a legal provision or agreement to the contrary). The Civil Code expressly permits the judge to reduce the level of damages/compensation if the employee participated in bringing about or aggravating the damage caused.

In addition, employers may have criminal liability under the Federal Law 3 of 1987, as amended (Penal Code). Although the Penal Code does not specifically relate to employee health and safety, it does impose criminal liability in certain circumstances as a result of acts and omissions causing personal injury

or death. The Penal Code sets out the levels of compensation available which will extend to workers injured where employers are responsible for the act causing harm.

Conclusion Employers should be aware of the applicable obligations that apply to them under local law and consider the potential liability arising from workplace injury. Employers should ensure that training is provided to employees regarding the procedure to be followed when a workplace accident occurs; including emphasising the importance of documenting what occurred.

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

For an online version, please visit: http://www.smeadvisor.com/featured/ dealing-with-workplace-injury

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INNOVATION

Innovate to accumulate?

Innovation is often seen as a fundamental element of business success, but for many SMEs it’s an expensive, exotic process outside of day-to-day commerce - a topic loved by management gurus and magazines, but far removed from the realities of running a ‘typical’ business. Here, Senior Editor Paul Godfrey explores whether the quest to innovate is really a practical and productive pursuit - or does it just sound good?

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INNOVATION

“Innovation is the specific function of entrepreneurship, whether in an existing business, a public service institution, or a new venture started by a lone individual in the family kitchen. It is the means by which the entrepreneur either creates new wealth-producing resources or endows existing resources with enhanced potential for creating wealth.”

– Peter Drucker

In this quote from Peter Drucker, innovation is not only intrinsically part of what an entrepreneur does, but - more than this - it only happens because of the entrepreneurial drive to do things new and differently. Yet many entrepreneurs at the helm of SMEs simply don’t see it as having this inseparable link with what they do. A recent survey by Bain, focusing on SME owners and directors in the UK, France and Germany, shows that while about 85 per cent of entrepreneurs believe in the importance of innovation, less than 10 per cent actually believe it happens in their own companies.

This is a very classic rift in the understanding of what innovation is actually about: while many see innovation as critical and meaningful, it also appears to have little to do with the day-to-day practicalities, even when it comes to creating worthwhile competitive edge. The problem is that we’re very hooked-up on two very specific notions of what innovation ‘is’;

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INNOVATION

Both of these experiences are likely to feel very alien to the majority of SMEs. Ironic, because the examples above miss the main point about innovation: innovation begins with meeting the needs of people – either current or future customers. So it can take place in relation to any aspect of customer service or product creation, or any way at all in which your company interacts with its customers.

The fact is, when companies focus on providing better customer service and value, they get curious about the needs of customers and whether they’re being met or not. This focus drives the organisation to solve its customers’ problems, and to come up with solutions that ‘go the extra mile’ and create value: this is the very essence of innovation.

It’s the SMEs that follow this customercentric model of innovation which stand to benefit greatly.

How you can put the innovation process to work Now that we’ve overcome any notions that innovation only takes place in particular types of company or sectors, the question is, how you can make innovation happen in your business?

Innovation is led by three simple steps: • Customer focus • Problem solving • Learning This three-step model was created by Fairchild Semiconductor – one of the great pioneer Silicon Valley companies – in the late 1960s and remains the basis by which businesses large and small can disrupt their conventional behaviours and reap the fruits of innovation.

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1

STEP

we see it as being either – • A ‘light-bulb’ moment that results in the blue-sky invention of something new and incredible - Facebook or the touch-screen smart phone, for example.

• A series of technical enhancements resulting in incremental change – leading to better overall profitability, normally in the context of an engineering, automotive or aviation business.

Innovation through understanding the customer

Fundamentally, for any business the customer is the only thing that matters.

Understanding what the customer wants and providing it in a better way is the route to stronger profitability and turnover. But have you asked challenging questions like – • What are the dominant trends affecting your top five customers and how can your product offer secure the customers’ journey, and therefore, your own business’ future?

• Is your packaging and delivery saving the customer time, or confusing their warehousing and dispatch team?

• What are the features that your key customers are really looking for - and if you can offer these, will it make them better customers?

• If you invest in making the changes that your customers want, will this secure market leadership for you for the foreseeable future?

Armed with this knowledge, you will be well-placed to decide whether to invest in innovation or not.

STEP

Understanding what the customer wants and providing it in a better way is the route to stronger profitability and turnover.

2

Problem-solving

There is a famous story about Thomas Edison that once he invented the idea of the light bulb, it took 950 prototypes to get it right and make the idea a reality.

Even if you are led by the customer responses above, there will be many questions, such as • What will be the time curve to profitability if I do things differently?

• Is my business capable of making the changes?

• Will making the changes take up too much time and resources?

• Is it worth investing in being a market leader - or are we OK as we are?

• Is the innovation we have created as good as it can be, or are there still problems?

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INNOVATION

Innovation won’t just ‘fall into your lap’. The core idea will have to be chipped away at and refined over and over. Whether or not it’s worth investing in that process depends on the reward value of having a product or service unique in the market. Yet the fact remains that this is in essence a very humble process, well within the capabilities of the majority of SMEs. STEP

innovation is a powerful way to maximise sales through nurturing a healthy market appetite for the new and the fresh.

3

LEARNING

Sometimes there are more steps to perfecting the right innovation than you might have imagined. In the case of Thomas Edison, above, it took nearly a decade for him to realise that the universal standard of consumer electricity supply should be Alternating Current (AC) not Direct Current (DC). Once you launch the innovation into the market, the learning process actually begins.

It might also be the case that prior to launching your innovation, you need to experiment - learning is appreciating the constant connection between cause and effect. The key factor here, though, is always to use market and customer feedback, ensuring that learning and experimentation is actually a real process. Working in this way, you can trigger the innovation ‘path’ whenever you require - it’s not a random, oncein-a-blue-moon event.

Innovation and your sector The key benefit of working with the three ‘behaviours’ - customer focus, problem solving and learning - is that it creates a methodology appropriate to any style of business or sector. For example, your SME might be a small legal partnership, and you decide to branch out to offer a unique service offering support specifically to those companies with claims against the public sector; or you might be a distributor of kitchen ‘white goods’ and decide to

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market a series of complete, themed kitchen sets, saving retailers time and money spent matching up their orders. You can see at once how each of these companies would follow the three steps to arrive at a viable and forward-thinking solution.

One last point. If you have any doubt about the value of innovation, consider this: the global consultancy AT Kearney conducted a survey of Fortune 500 businesses with a view to understanding the importance of regularly churning and reviewing product lines - did a commitment to regularly launching new products help anchor world leadership or not? AT Kearney found that no fewer than 71 per cent of Fortune 500 businesses had replaced at least 35 per cent of their product lines in the last three years. In the last analysis, innovation is a powerful way to maximise sales through nurturing a healthy market appetite for the new and the fresh.

For an online version, please visit: http://www.smeadvisor.com/ground-level/ innovate-to-accumulate

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CUSTOMER SERVICE

The era of customer experience Enhancing your company’s customer experience essentially means understanding the needs and wants of your customers to create a memorable end-to-end journey. This would typically start by analysing the various touchpoints your business has with your customers i.e. moments when your client is interacting with your organisation. The next question is – how does your organisation maximise satisfaction at those touchpoints to provide an unforgettable experience? SME Advisor spoke to an industry expert to gain insights…

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CUSTOMER SERVICE

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CUSTOMER SERVICE

Creating unique customer experiences is an exciting challenge, and transcends across taking an integrated approach to brand, marketing, human resources, operations and sales.

To us marketeers, there is something more important than content, relevance and digital strategy and it is customer experience.

With an abundance of supply, both in terms of choice and content, customers are literally barraged with every sort of post, ad, newsletter, you can think of, making it increasingly difficult for brands to cut through the noise and connect with their target audience.

This is where the value of creating an “experience� or the X factor comes in.

What is Customer Experience?

Customer Experience (CX), goes beyond marketing and focuses on the entire process or what we call the user journey, which starts from the acquisition phase right up to after sales service. Often associated with User Experience (UX), which forms one part or a sub set of the customer experience universe, CX is more concerned with creating an inclusive environment that engages the customer from their very first interaction with the brand, evolving throughout the relationship.

Apple for example has done a terrific job of this. From its unique product interface (with clever UX design), to its retail ambience and customer service approach (CX planning) its brand look, vision and values are embedded at every stage of the customer lifecycle.

This has helped create a holistic appeal to consumers, not only in terms of initial interest, but spurred conversion, advocacy and brand loyalty.

A regional success story here in the Middle East is Emirates Airlines, which focuses as much, if not more, on its inflight experience as it does its marketing. Even with its more recent A380 advert featuring Jennifer Aniston and the Jet Pack commercial, both of which created a viral stir; Emirates got its message across with a

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trend leading and humorous flair to give customers what they want – entertaining and interesting content.

What can we learn from this?

Not surprisingly, just as people spend time with people they like, customers spend time with brands they like. Much of which has to do with the feeling or enjoyment of a brand including its actual product or service. This not only suggests that the experience is almost as important as the product or service itself, but carries greater emphasis in service oriented businesses such as aviation and hospitality, where experience is the product and a distinct economic offering in its own right. Whether they sell to consumers or businesses, companies will find that the key differentiator lies in staging experiences as services.

How can we apply it?

Creating unique customer experiences is an exciting challenge, and transcends across taking an integrated approach to brand, marketing, human resources, operations and sales. The brands that nail it are often those that marry their product, marketing and operational strategy as closely as possible, seamlessly managing to communicate their key messages and value proposition to their target audience. This unison and consistency helps customers identify a pattern and build an affinity towards a brand, making it more credible and reliable in their eyes.

While a 360 overhaul is not always achievable, due to size, structural and financial constraints of a business, agility is important in order to stay relevant and appeal to consumer needs.

There are also varying degrees to which customer experience can be improved and better orchestrated using a phased approach. A starting point may be to revamp your brand

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CUSTOMER SERVICE

positioning or upgrade existing customer service standards and procedures.

In doing so, here are a few things to consider: 1. First impressions count Your customers form their perception of your company website in as little as 50 milliseconds as found in a study by Google. Using eye-tracking observations they determined that 6.48 sec were spent checking out your logo; so consider what your logo, brand and product design says about your business.

Don’t forget UX contributes greatly towards CX expectations.

2. Identify and optimise touch points Your value-add as a company is to make your customer’s life as easy as possible. Whether that means introducing new communication mediums, simplifying your site navigation, upgrading your product offering or customer service standards, gather customer feedback and use it as an opportunity to learn, problem solve and connect. A study

by Aberdeen Group Inc. states that companies with extremely strong omni-channel customer engagement retain, on average, 89 per cent of their customers, compared to 33 per cent for companies with weak omnichannel customer engagement.

3. Leverage the power of big data and technology With big data, new apps and technology available at our fingertips, find ways to leverage these capabilities within user journey context. By 2020, globally there will be 6.1 smartphone users led by huge growth in less mature markets according Ericsson’s latest Mobility Report. Use metrics, research and analysis to define market segments, assess buying/lifestyle habits and penetrate new markets. Use technology to streamline efficiency and add novelty to what may

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otherwise be a mundane process.

Find ways to digitise, innovate and excite.

In essence, putting customers first is an age-old narrative, however with increasing competition and the changing pace of markets, never has it been more crucial to focus on the customer experience.

The millennial generation is inquisitive, informed and trend sensitive, quick to voice approval or dissatisfaction through social channels. This means word of mouth travels sooner than it used to, putting more control in the consumers hands and more pressure on brands to deliver and impress.

We are currently witnessing the transformation of economic value, evolving from a commodity-based to experiential model, all of which carries implications and ultimately determines how much a customer is willing to pay for a particular product or service, based on the perceived value of your brand.

Simply put, in today’s economy, brands that perform consistently will survive. Brands that wow their customers with a unique experience will thrive.

Meet the author...

Rowen is Communications Director @Wire_Consult, with over 10 years of experience in consulting established businesses and SMEs on disruptive PR and marketing solutions to be seen and heard in today’s competitive landscape. Through a range of traditional and new media channels, she combines passion with out of the box thinking to craft bespoke workshops and strategies that have proven to increase awareness, sales and productivity.

For an online version, please visit: http://www.smeadvisor.com/ground-level/ customer-experience

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SECTOR FOCUS

Gearing up for Gulfood 2016 The annual food and hospitality trade show is quickly becoming a hotspot for innovation, entrepreneurialism and culinary expertise. This year, its back – and its bigger and better. SME Advisor provides an exclusive preview…

The world’s largest annual food and hospitality trade show returns to Dubai World Trade Centre (DWTC) next month to cement its title as the leading global food trading platform.

More than 5,000 international companies from 120 countries will gather for the event, hoping to strike up trade links with the 85,000-plus expected visitors. With a 20 year legacy, Gulfood continues to provide the best platform for F&B trade in the region, connecting suppliers and distributors from across the globe. And, the team behind the event are putting on an extra special spread for 2016.

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Sticking to this year’s slogan of ‘More Taste, More Trends and More Trade’, Gulfood 2016 welcomes four new countries into the fold: Russia, Costa Rica, New Zealand and Paraguay. The Russian arrival is of particular interest since the country is one of the world’s largest exporters of grain.

In a historic first, Gulfood 2016 will also host the ninth World Cezve/Ibrik Championship. It is the first time the competition for the centuries-old art of brewing coffee in a ‘Cezve’ or ‘Ibrik’ – the small, long-handled pot – will been held in the Arabian Gulf – the region it

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SECTOR FOCUS

How has Gulfood developed over the years?

In 1987, Gulfood had 65 exhibitors from 13 countries and 1,600 specialist trade visitors. The 21st edition of the show in 2016 will welcome more than 5,000 local, regional and international companies from 120 countries and over 85,000 visitors from 170 countries – a considerable jump from 28 years ago.

With our largest ever European and South American participation already secured, Gulfood 2016 will feature four new country pavilions – from Russia, Costa Rica, New Zealand and Paraguay.

Why is Gulfood so important?

What does it do for the industry here?

With one-event and year-round legacy trading running into billions of dollars, Gulfood connects nations and suppliers, opens distribution channels for industryrelated business, and highlights Dubai’s strategic role as a key global food industry trading hub.

Ultimately, Gulfood gathers the global industry for a five-day mega event that continues to set the international agenda and position Dubai as a key player in the global food trade industry.

ke 016 will ta Gulfood 2 ld r ubai Wo place at D C) T W tre (D Trade Cen ary u r b e F from on 1am-7pm 11am-5pm n 21-24 and ca s r 25. Visito February t a r pre-registe om. .c d o o lf u .g www

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originates from. The competition continues with the annual Emirates Culinary Guild International Salon Culinaire, a showcase of the region’s best culinary talent and expertise.

More than 1,300 professional chefs and bakers will compete to become the regional best in class.

In conversation with a global expert A Gulfood veteran himself, we check in with Exhibitions Director, Mark Napier, for a sneak peak of what to expect from February’s biggest F&B trade event…

What’s new for Gulfood 2016?

Aside from the inclusion of the first ever Russian, Costa Rican, New Zealand and Paraguayan pavilions, Gulfood 2016 will also host the ninth World Cezve/ Ibrik Championship, which is the ancient art of brewing coffee in a ‘Cezve’ or ‘Ibrik’ – the small, longhandled pot. The championship will be overseen by an independent judging panel that will rate baristas’ brewing skills on taste, presentation and technique.

Is there a theme surrounding this year’s event?

The theme for Gulfood 2016 is

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SECTOR FOCUS

One of the reasons Gulfood is so highlyregarded internationally is our world-class global visitor profile, aided by our geostrategic location.

Did you know?

• In its recent analysis of the GCC food sector, the consulting company Alpen Capital predicts that in the period 2012 to 2017, for Saudi Arabia and the UAE an average (quantitative) food demand growth of respectively 2.6 and 4.2 per cent.

• In the UAE, about 300 companies are producing foodstuff, including many international companies.

• The GCC Food Market (Gulf Cooperation Council), with its today 50 million consumers, continues to grow. About three quarters of the food demand must be sourced from abroad.

• Imports increased in 2013 to over US$ 46 billion, the share of Saudi Arabia and the UAE was 75%.

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‘More Taste, More Trade and More Trend’ – we feel this underlines the overall Gulfood proposition.

Trading is in the region’s DNA and Dubai’s developed logistics infrastructure and efficient customs service make it a cost-effective global gateway for foodstuff and food commodities trading.

What does this year’s Emirates Salon Culinaire have in store?

One of the region’s most eagerly awaited culinary competitions, the Emirates Culinary Guild Salon Culinaire is a series of practical and display-based culinary competitions that is open to professional chefs, pastry chefs, cooks and bakers.

The five-day event will host over 1,300 chefs evaluated by a panel of 25 renowned experts, authorised by the World Association of Chefs Societies (WACS) to judge culinary events across the globe, ensuring the highest competition standards.

offs. The Gulfood umbrella now covers highly specialised trade events including Halal World Food, Gulfood Manufacturing, Speciality Food Festival, SEAFEX and Yummex – a resounding portfolio of diverse yet specialised industry events.

What does the Gulf need to do in order to become the global authority on F&B trade? What challenges do we need to overcome?

With its world-class trading and logistics infrastructure, prime geographic location, excellent safety and security record and a host of other benefits, I would actually spin this question around and say ‘what does the rest of the world need to do catch-up with Dubai in terms of F&B trade’? The answer, naturally, would be to visit Gulfood and find out!

Tell us a little about the Export Advice Clinic.

The Export Advice Clinic is an independent set-up and knowledge sharing platform, where visitors can get impartial advice from market experts. Furthermore, key government, industry, trade authorities, consultants and market analysts are on hand to guide and inform on all aspects of the food industry including foodservice, import and export, meat and bakery.

How do you view the rise of other regional F&B trade shows? How can you remain the show of choice for exhibitors and visitors?

One of the reasons Gulfood is so highly-regarded internationally is our world-class global visitor profile, aided by our geo-strategic location. Over the last decade we have also accentuated the core Gulfood offering with the launch of various sector-specific spin-

For an online version, please visit: http://www.smeadvisor.com/featured/ gulfood-2016

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TECH TRENDS

Best of 2015 Apps that were rated very highly during the year, went from strength to strength and proved to be game changers in their respective sectors…

, Rushika Bhatia s view...

Periscope This video live streaming app is arguably one of the top apps in 2015. With a Periscope and Twitter account in place, users can share video streams with their followers. Of course, there is an option to choose between a public stream going out to all your followers and a private stream targeted to selected people. From a business perspective, this is a great way to share your story and exclusive ‘behind-thescenes’ excerpts with customers.

Available on: iOS and Android Cost: Free

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TECH TRENDS

Unlistr Unlistr is one of the most reliable and simplified apps when it comes to getting rid of unwanted e-mails. This app provides a sound solution to spring clean your inbox. It’s quite simple to use – provide your e-mail address and Unlistr scans all subscriptions you’ve enrolled in. It gives you a list of all the subscriptions and allows you to unsubscribe from unwanted third party e-mails. The beauty of this app is that it does exactly what it says on the label – no lengthy procedures required!

Available on: iOS and Android Cost: Basic version is free.

Paper Paper is a great productivity app that helps organise your notes, images or any other thoughts you’d like to easily access at a later time. What sets this app apart from its peers is its ability to seamlessly integrate text, photos and sketches together. You can see everything in one place rather than going over several different files. The app allows you to create a wall where they can put several sticky notes – making it visually simple (and appealing) to access everything you need!

Available on: iOS Cost: Free

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TECH TRENDS

MailChimp MailChimp is a slightly different type of e-mail app, which lets you create powerful e-mail marketing campaigns. It allows you to stay in touch with existing sales leads, customers and partners. The app has various templates to choose from, in addition to a useful function for a designer to design a coded e-mail message for your company. Following this, you can send the message to selected list of e-mail subscribers.

This app is particularly useful for small businesses that are looking for cost-effective, efficient and easy-to-use marketing solutions.

Available on: iOS and Android Cost: Find out the right package, based on your needs at http://mailchimp.com/pricing/

iMovie This popular video editing app, staple to iOS, offers a suite of advanced features, with an extremely sophisticated user interface. The app comes with a portfolio of pre-made templates and themes, which is ideal for basic editing. Moreover, it allows you to add titles, soundtracks, filters and voice overs to existing videos.

The app’s comprehensive range of features make it suitable for beginners as well as expert users.

Available on: iOS Cost: AED 17.99

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TECH TRENDS

Waze Waze is a traffic and navigation app that notifies users of road closures, congested areas and other community alerts. The app has been a popular choice for users because it provides a one-stop-shop solution when you are on the roads. From cheap fuel options and road navigation to automatic re-routing and live maps, this app has it all. For business owners, it’s a great way to stay in sync with employee locations and plan ahead of time for important meetings.

Available on: iOS and Android Cost: Free

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Evermeeting

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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: Basic version is free.

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COMPLEXITY

© 2015 SAP SE or an SAP affiliate company. All rights reserved.

TURNS LOYAL CUSTOMERS INTO FORMER CUSTOMERS.

SIMPLE

KEEPS THEM COMING.

It’s not about how much consumer data you have. It’s about how simple it is to put it to work for your customers. SAP helps bring together insights into every customer, and lets you engage them in the exact time, place and channel that’s right for them. So your customers feel cared for, respected and, most of all, delighted. That’s running simple.

Find out more at sap.com/runsimple

TECH TRENDS

Duolingo How many times have you travelled for business wishing you’d been familiar with the foreign language? Duolingo is a fantastic app that offers free tutorials for languages such as Spanish, French, German, Portuguese, Italian and English. The app’s interactive interface makes learning simple and fairly straightforward. More importantly, it saves you from the hassle of enrolling into different courses or buying various books for every language. What’s distinctive in the app is its option to track your progress, so that you know how well you are doing.

Available on: iOS and Android Cost: Free

LogMeIn LogMeIn, with its advanced features, is perhaps one of the most useful apps to have. Following a few basic instructions, the app allows you to remotely access your computer using your Android device. So, for instance, you may be in a client meeting, where you need to urgently get hold of additional information to close the deal with very limited time on-hand. Using LogMeIn, you can easily get all the files on your computer without having to travel back at all! Of course, you do have to ensure that your computer has the LogMeIn software installed.

Available on: iOS and Android Cost: Basic version is free.

For an online version, please visit: http://www.smeadvisor.com/tech/ best-of-2015

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TECH TRENDS

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