Issue 10
www.theintelligentsme.com
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Oct - Nov 2012
Gives your business an unfair advantage
Meet UAE’s business icons once a month Visit : www.dubai-gbs.com
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Nothing more important than employees: Hassan Al Hazeem,
CEO, Intercoil International
20
Hero, leader or mastermind? Yogesh Mehta, M.D., Petrochem Middle East, discusses qualities of a successful entrepreneur
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Contents October - November 2012
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Entrepreneurs: Hero, leader or mastermind? Is there a formula to successful entrepreneurship? Yogesh Mehta has a recipe.
11 Rare & Fabulous
High end luxury products for CEOs and decision makers.
Hassan Abbas Ali Al-Hazeem throws light on his father’s vision, their family business and his roadmap to success.
18 Of heart, passion and vision 24 Announcements
What has been happening in the business marketplace? Here are some updates that you might have missed.
28 Finding the spark through mentorship
1 2
Why is mentorship a buzzword in the market? ISME paints a picture on the importance of mentoring in the life of an entrepreneur.
3 4 5
30 No more running in circles
6
Local Search changes the face of online search for SMEs. Jan D’Sa finds out how.
7 8 9
32 Building mature and complex businesses
The second corporate governance conference by Dubai SME emphasised on execution and implementation. An ISME report.
34 A heritage of lasting financial relationships
ISME speaks to Pritam Mirchandani, head of business finance, RAKBANK on the Business banking sector and the initiatives of the bank.
36 Demystifying banking: International payments
Having trouble with banking jargon? Harshit. H. Jain throws light on the entire banking process in this column.
40 Preparing for an IPO
Craig Hewett provides a clear understanding of the formalities involved in taking a company to the IPO level.
42 Being a sensible investor
Rupert Connor discusses the right attitudes and targets needed to become a private investor.
Alliance partners
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46 Insights to grow your business Simon Hodges outlines five tenets of business that will help to achieve sustainable growth.
48 Small can be powerful Zed Ayesh urges SMEs to take into account the
limitations of their businesses in order to transform these into strengths.
50 Losing out on missed opportunities?
To grow your business, good customer service just isn’t enough, explains Phil Bedford.
66 In pursuit of happiness and fulfillment
Hanan Nagi, life coach and trainer, speaks to ISME on her transition from a corporate employee to a successful entrepreneur.
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Editor’s Note S
o much has been written on entrepreneurship and on the qualities of an entrepreneur. From his risk-taking abilities to his perseverance, the chief attributes contributing to his success are all well doccumented. But one wonders, if these qualities were a recipe for success, then why aren’t those business owners that have these attributes successful? One billionaire speaking to us recently emphasised that entrepreneurs are not created but born. They need to have an intuitive ability to ensure if a deal were to be profitable or not, he said. An individual cannot be taught to cultivate that mindset. Although they might have all required technical skills, some things just cannot be taught.
And yet, we have come across entrepreneurs who claim not to possess “that gut feeling”, which tells one that a sale is on cards. This breed of entrepreneurs go by the big picture, using analytical skills, taking significant support from mentors/consultants and so on. They feel responsible for their business and believe in approaching a problem from all angles. They work hard and craft their success from a can-do belief.
However, in our chats with various entrepreneurs, the one attribute we found common in all is ambition: a very evident quality that drives entrepreneurs. We, at Intelligent SME, are proud of them. In an attempt to inspire new entrepreneurs, while celebrating the success of the few privileged ones, we have now organised our latest event - the Emirates NBD Global Business Series - by bringing home-grown business icons in the UAE that have spearheaded success. The first event on October 17 is a testament to the levels of success that can be achieved by individuals. We hope all those who attend will aspire to become like these jewels. As always, write to us, send us any feedback or issue that you would like to raise.
Sandhya Divakaran
editor@theintelligentsme.com. Disclaimer: SPI Publishing has endeavoured to bring out a publication that is reliable and informative. This is true to the best of our knowledge. The opinions presented are those of individual writers and not necessarily endorsed by SPI Publishing. The content in this magazine is protected by copyright law and is copyright to SPI Publishing unless credited otherwise, and may not be copied, reproduced or republished for any commercial purpose or financial gain.
Chief Executive Officer & Publisher Shantanu A.P Account Director Vijay G. Editor Sandhya Divakaran Consulting Editor Utpal Bhattacharya Expert Contributors Anesh Jagtiani Craig Hewett Farrukh Naeem Harshit H. Jain Hassan Abbas Ali Al-Hazeem Jan D’Sa Michael J. Tolan Nita Maru Phil Bedford Rupert Connor Sandi Saksena Shraddha Barot Amariei Simon Hodges Vinayak Doddihal V. Ramkumar Zed Ayesh Art Director Aneesh Varghese Photographer Arzai Zafar Editorial Enquiries & Contributions Tel: 04-2659704, 04-2650312 Fax: 04-2690566 E-mail: editor@theintelligentsme.com Advertising Enquiries Tel: 04-2659704, 04-2650312 E-mail: response@spiholding.net Subscription Enquiries Tel: 04-2659704, 04-2650312 E-mail: response@spiholding.net Response Executive Evelyn V. Bernasol SPI Publishing P.O. Box: 89735, Dubai, UAE Tel: 04-2659704, 04-2650312 Fax: 04-2690566, 04-2651708 E-mail: response@spiholding.net
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October - November 2012
Intelligent SME
Rare & Fabulous
Pave Diamonds
Utterly sublime S
aint Honore brings to the spotlight, a new offering - the Royal Coloseo, with an innovative éclair finish. Arranged in three tiers on the bezel, the chapter ring with Roman numerals and eight diamonds encloses a delicately decorated mother-of-pearl dial centre, the redesigned case is completed with a crown topped by a black onyx, the signature of the Coloseo line. With its graceful, refined, elegant style, Royal Coloseo proves that a watch can turn heads without requiring a diameter of more than 37 mm. Royal Coloseo stands out as a dazzling achievement in a glittering, infinitely precious, infinitely jewelled version. The bezel creates a unique “pavé diamonds” effect that captures the light with the slightest movement of the wrist.
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October - November 2012
Intelligent SME
Rare & Fabulous
Bold and extravagant, Roger Dubuis R
oger Dubuis recently opened its new boutique at The Avenue in Etihad Towers, marking it the first in the Middle East. The new boutique will feature a selection of the Geneva-based maison’s premium timepieces. The boutique will provide a distinguished setting
for discerning customers to browse through the collections at their leisure. “The Middle East customers are renowned for their passion for high end luxury products, which makes it an extremely important market for us,” said Jean-Marc Pontroué, CEO of Roger Dubuis.
Boldness and extravagance are the brand’s signatures. Rich in conceptual creativity and mechanical detail, its collections are inspired by four different worlds: the Incredible Player, the Incredible Warrior, the Incredible Venturer and the Incredible Diva. With an élan and flair all their own, wearers of a Roger Dubuis masterpiece can be sure of making an emphatic statement, whatever the occasion.
The Middle East customers are renowned for their passion for high end luxury products, which makes it an extremely important market for us. Jean-Marc Pontroue, CEO of Roger Dubuis
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October - November 2012
Intelligent SME
Rare & Fabulous
Timeless aesthetics with exceptional craftsmanship
G
lobe-Trotter is a modern heritage brand established in 1897. Founded by Englishman David Nelken, in Saxony Germany, the company soon returned to the UK in 1901 where it has remained ever since. Today, Globe-Trotter products are style icons adopted by purveyors of traditional craftsmanship and a timeless aesthetic. Globe-Trotter cases have been used over the last 100 years by an enviable client list. Captain Robert Falcon Scott travelled with Globe-Trotter on the infamous Antarctic expedition in 1912. Sir Winston Churchill used a Globe-Trotter dispatch case whilst he was Chancellor of the Exchequer in 1924. HM Queen Elizabeth II chose Globe-Trotter for her honeymoon luggage in 1947 (and continues to use her cases to this day). Sir Edmund Hilary ascended to first base camp with Globe-Trotter during his conquest of Everest in 1953. The luxury luggage brand is available at Harvey Nichols and Bloomingdales.
Used over the last 100 years by an enviable client list.
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October - November 2012
Intelligent SME
Rare & Fabulous
Manolo Blahnik sashays into Abu Dhabi
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orld renowned luxury footwear brand Manolo Blahnik has opened a new store in Abu Dhabi at the recently launched Etihad Towers. Resembling their Dubai showrooms in Harvey Nichols, Mall of the Emirates and in Dubai Mall, this store will cater to the strong demand the brand has witnessed from their customers based in Abu Dhabi. With a career spanning 30 years, Manolo Blahnik has become one of the world’s most influential footwear designers with loyal customers around the globe.
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October - November 2012
Intelligent SME
Rare & Fabulous
An iconic design reinvented T
he all-new Range Rover is the most capable and most luxurious Land Rover yet. Lighter, stronger and with new levels of refinement, the Range Rover reinforces its position as the world’s finest luxury SUV. The fourth generation of the unique Range Rover line, the new model has been developed from the ground up, capturing the innovative spirit and iconic design of the original model, which changed the world of motoring when it was launched over 40 years
ago. The world’s first SUV with a revolutionary lightweight aluminium monocoque body structure is 39 per cent lighter than the steel body in the outgoing model enabling total vehicle weight savings of up to 420kg. The lightweight aluminium platform has delivered significant enhancements in performance and agility, along with a transformation in fuel economy and CO2 emissions. In addition to the strong and rigid lightweight body, an all-new
aluminium front and rear chassis architecture has been developed with completely re-engineered four-corner air suspension. The new suspension architecture delivers flatter, more confident cornering, with natural and intuitive steering feel. Amongst the industry-leading innovations is a ground-breaking next generation version of Land Rover’s Terrain Response system, which analyses the current driving conditions and automatically selects the most suitable vehicle settings for the terrain.
To deliver the model’s characteristic effortless performance, customers have the choice of refined V8 petrol engines and for North Africa, TDV6 and TDV8 diesel engines combining responsive performance with outstanding CO2 emissions. The all-new Range Rover has been engineered with the latest developments in vehicle technologies, from interior luxury features such as exclusive Meridian surround sound music systems and power upper and lower tailgates, to advanced chassis and driver assistance technologies.
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October - November 2012
Intelligent SME
Open Forum
Journey of heart, passion and vision
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Hassan Abbas Ali Al-Hazeem, CEO, Intercoil International, throws light on his father’s vision, their family business and his roadmap to success. lot of businesses around the world - be it restaurants to jewellery to manufacturing, are run by families. These businesses are structured for long term existence, because exit strategies rarely cross the minds of founders. Since my childhood, I have been a firm believer in family businesses. My father, the late Abbas Ali Al-Hazeem has been my biggest inspiration. A Kuwaiti national born in Saudi Arabia, he founded Intercoil, and had very ambitious plans of cross-border expansion. He was an entrepreneur in the true sense, with the heart, passion and vision to start businesses not only in the Gulf region, but also to go beyond! He is the one who inspired me to take Intercoil across the confines of Dubai, to 8 distribution centers in 7 countries, 22 retail outlets, and exporting to 22 countries in MENA and the Levant. He started working towards his goals, by trading at the age of 16, and established the Abbas Ali Al-Hazeem Trading Company in Kuwait in 1958. A retail outlet in Beirut followed in the early sixties, and then he founded a carpet factory in Syria in 1962 and yet another one in Egypt in the late 1970’s. Needless to say, he was the epitome of an entrepreneur with a great vision, and set a great example of how hard work and great leadership can pay off for me and my siblings. His visionary project - Intercoil International - was established in Dubai in 1974, when the emirate was still a desert of opportunity for entrepreneurs. 18
October - November 2012
Intelligent SME
Open Forum The company was previously known as International Foam and Furnishing. When my father asked me to take over the management of the company in 1999, I was only 26 years old and had to learn a lot and quickly. My background in banking stood me in good stead to understand the financial nuances of a business. The word ‘Entrepreneur’ is a combination of two French words, “Entre” (between) and “preneur” (take); hence, it means following unusual paths in reaching your goals. Creativity drives the entrepreneurship process. Creativity involves imagination, ingenuity, and resourcefulness. Entrepreneurs do things far beyond the resources they have. Year after year, it’s becoming more evident that entrepreneurs are the true catalysts behind economic growth. Making the transition from a professional to an entrepreneur can be quite challenging and overwhelming. However, I would have to mention that setting up a business from scratch is much easier than turning around an existing one. More than putting in place structural changes, introducing processes, a change in mindset is also required. I knew there was a long journey ahead of me, but I plunged in and took up the challenge. Being part of a business family and taking after my father, a visionary entrepreneur, I got the confidence to take this ‘leap of faith.’ What drives entrepreneurs to keep going is their passion, their commitment and unrelenting desire to excel and grow. This passion is what has motivated me to develop the company and grow it in
our stride to realise my father’s vision. Intercoil has undergone a re-think in terms of HR policies, export orientation, building the brand, entering into the social media space and so on. We invested in an ERP from Microsoft and introduced international management standards to enhance our efficiency. We changed the company from its foundation. While doing so, we have kept in focus the interest of our loyal customers. In a company, top management has to be a role model of the values and ideology of the company, not only by living these values, but also by promoting them internally and externally. One of these values, which I strongly believe in and advocate is transparency. I believe that human resources are the most valuable asset of the company. Thus, believing in people empowerment, we implement the concept of the 3Ds -Discipline, Decentralise, and Delegate. Intercoil motivates and trains its people to be self-disciplined and result-oriented. I strongly believe that decentralisation is an important philosophy in driving organisational growth. Delegation has played a vital role in energising the managers of Intercoil to aggressively pursue change and development, creating a sense of ownership while doing so. I believe this is the golden age of enterprises in this sector. Prior to the recession, most companies were running businesses where they were not able to ensure if they had the right infrastructure in place and there was no difference between sales or
What drives entrepreneurs to keep going is their passion, their commitment and unrelenting desire to excel and grow. profit. There was no analysis of their performance to cope with any change in market demand, and many companies suffered. After the recession I see that there is more awareness of the SME sector as an important contributor to the economy, and a job creator. The main advantage of SMEs is that we are able to adapt to market trends, we have flexible managements that require very little turnaround time to restructure. However, I feel there is so much more that can be done to help SMEs. The banks are still stringent while lending to a company within this sector. A change of process in the extent of securities required and lending policy has to be made, especially with respect to manufacturing companies. There are still some restricting factors for home-grown companies setting up in other emirates, as well as in other locales in the MENA regions. I’m confident with a little more government support we could break the barriers of growth and emerge successful. Ultimately, our aim is beyond profits, as every entrepreneur would agree. Entrepreneurs strive for success, global recognition, and we’re more receptive to our consumers. Our vision is to provide value for money, and we try to provide solutions that are innovative and unique. We always try to improve and upgrade ourselves. That’s our main USP. We listen to our consumers; undertake market studies for wholesale and retail sectors. We are creative and efficient. Of course, there are sacrifices that we make along the way, but we are always true to our vision. 19
October - November 2012
Intelligent SME
Meet the CEO
Entrepreneurs: Hero, leader or mastermind? Is there a formula to successful entrepreneurship? Yogesh Mehta has a recipe, and he shares it here with Sandhya Divakaran. 20
October - November 2012
A
re entrepreneurs natural leaders? Do they have a natural aptitude, a personality that keeps them attuned towards achieving a goal? Yogesh Mehta, MD, Petrochem Middle East, believes so. Having crafted his own path to success, he feels entrepreneurs are a different breed. Mehta was a failed entrepreneur in India. He had lost everything in his chemical trading business there many years back. Owing to the kindness of a friend, he took a flight to Dubai, seeking to build his fortunes in another country. As he was a passionate, independent individual, Mehta refused working as an employee for any company. “I wanted to do business, be my own boss - my whole demeanor was not to be an employee. I wanted the freedom of thought, freedom of movement, and freedom of performing,” he says. But this time Mehta did not want to make the same mistake twice. He set about researching as much as he could on the chemical trading industry in the UAE. “I remember sitting and researching in a library from 9 am to 4 pm for many, many days. I was determined to make a business plan that was invest-worthy. I finally made a dossier,” he recalls. The wheel of fortune turned in Mehta’s favour in 1995, when Petrochem launched a large distribution terminal facility in Jebel Ali. This was the turning point that changed the face of the chemical trading industry, and Petrochem soon became the biggest distributor in the Middle East. Determination and the will to succeed are among the primary characteristics of an entrepreneur, but one quality that sets a successful entrepreneur apart from the rest is learning from mistakes, which is exactly why Mehta’s Petrochem Middle East clocked a frenetic growth rate of 300 per cent in the first few years of its establishment. Ultimately, all fantastic ideas boil down to one - Can this idea make money? This is how entrepreneurs think, notes Mehta. Entrepreneurs are not concerned with technicalities;
Intelligent SME
Meet the CEO
You have to be in the right place at the right time. Multiple factors are responsible in making an entrepreneur successful. they look at the bigger picture and the consequences of a decision, according to him. “Business is for commercial gain. It has to be a win-win situation for people to invest. An entrepreneur does not think like a salaried individual. It calls for a different attitude and aptitude. A good entrepreneur believes in great ideas that can be converted into a business model, fetching dollars,” he adds. Challenges of recession Which is why Mehta is now a billionaire! But this meteoric rise had its share of pitfalls too in the course of the journey. Petrochem, like many
others, suffered huge losses, in the millions in 2008, when the economic boom went bust. The entire market underwent a change when recession hit the market, and once again there was a need to understand these changes, which is the first step to any damage control. Says Mehta: “Losses are part of life. We did not panic, instead we started consolidating. We went back to the drawing board, and created a business plan. We made a lot of mistakes; we identified those mistakes, with a view not to repeat them. We also understood the dynamics of the market and took certain calculated risks in order to grow. With good luck we succeeded.” Hard times often result in innovative strategies, described by various terms, including “entire restructuring” or “mitigating actions.” Either way, being an entrepreneur has its advantages - of being able to bounce back because of flexible processes and having a smaller workforce. Or, as Mehta quips, “It is better to cry and complain that you are making less profits than saying you were wiped out.” Success factors With or without a harsh economic climate, every entrepreneur has his share of setbacks. An entrepreneur is determined by his success rate. Mehta himself was a failed entrepreneur until
Evolution of Petrochem Middle East 1995
Inception of Petrochem
1999
Established distribution terminal in Jebel Ali
2001
Launch of tank farms at Jebel Ali Terminal Launched Singapore operations
2004 2004
Established additional tanks in Jebel Ali
2004
Launched India operations
2005
Completed 10 successful years
2007 2010 2012
Launched China operations Joint venture in Egypt for tank farms Set up a state-of-the-art office in Dubai
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October - November 2012
Intelligent SME
Meet the CEO
he had a brave idea, a good plan and a lot of luck. He, however, believes in making his own luck. “You have to be in the right place at the right time. Multiple factors are responsible in making an entrepreneur successful,” he adds. Mehta lists out the many “ingredients” as the recipe for success. However, among all these, one quality that seems to have much more value than the rest is having patience. By being patient, an entrepreneur bides his time, according to him. He or she accepts that success is not going to come overnight. It takes its own time and path. And next on this list of ingredients is knowledge. “Many second generation businesses, these days, fail because there is neither patience nor knowledge. The next generation often abstains from learning the trade and gathering
22
I think, that entrepreneurs are born, and if you aren’t, then you can never become one. the knowledge that will aid them in the business. You have to know and learn the things that your previous generation did,” advises Mehta. And of course, honesty, hard work and strong ethics all contribute to success. Coming back to where it all began,
the idea, the starting point of the vision of an entrepreneur, must have a justification to returns. Mehta prefers to give an idea three years before he expects his investment to double. It takes a great idea to become a success. But most importantly, it is the gut feeling that enables an entrepreneur to believe in that idea, to visualise and strategise with this idea. It all comes back to the age-old question: Are entrepreneurs born or do they evolve and become what they are? To the disappointment of many selfmade entrepreneurs, here’s what Mehta has to say: “I think, that entrepreneurs are born, and if you aren’t, then you can never become one.” Entrepreneurs like Mehta have broken all growth barriers. An eccentric and work-packed routine has been his life. Going forward, his aspirations include raising the growth of Petrochem from a billion to a two-billion-dollar company before he retires. An IPO also may be on the cards. Relationships From a failed entrepreneur to a most successful one, Mehta has done it all and seen it all. Has his success at relationships also been a contributing factor to success? “You need to be a good leader to manage relationships,” explains Mehta. Above all, one needs to be a fair leader. There is a lot of give and take. The key is to understand and create expectations. With transparency, one will have a good relationship whether stakeholders or employees. He has another word of advice for young entrepreneurs: to have “numerical” dreams. He enumerates, “Growth is a number. Everything in life is a number, and one must pay attention to numbers.” There were times when Mehta has worked 20 hours a day, slept at office, and globe-trotted around the world in order to establish his business. He aims - or a better expression would be dreams- to retire in five years time from now, and live a ‘normal life’. “There are so many things I want to do. Life is beautiful and I want to enjoy it,” he says.
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October - November 2012
Intelligent SME
Announcements
‘SME in a Box’ launched
Bhairav Trivedi, CEO, Network International
D
N
etwork International, announced the launch of a packaged card acceptance solution, “SME in a Box,” which enables small and medium enterprises to accept cards as a means of payment. The start-up kit for the solution will be offered literally in a ‘box,’ containing a merchant application form, a bank account opening form, a configured point of sale (POS) terminal for plug-and-play operations (once approved), branded POS rolls, training manual and e-commerce payment integration to SME website, in addition to addendums for value added services. “Typically, SMEs have been hesitant to move from cash-only payments because they do not fully recognise that card payment systems are an effective way of cutting down on operating costs and increasing profitability,” said Bhairav Trivedi, chief executive officer, Network International.
Intelaq entrepreneur registration opens ubai SME, the agency of the Department of Economic Development in Dubai (DED) mandated to develop the SME sector, has opened registration for its Intelaq entrepreneur training programme due in October 2012. The innovative programme is aimed to assist UAE nationals in Dubai take their first step into the world of business through
simple projects, which can also be managed from the comfort of their homes. The programme will include a minimum of 10 Arabic lectures totalling 40 hours of theory and practicals. The participants will learn how to start and manage a successful project from home. Intelaq licences are issued to UAE
J
nationals interested in setting up and operating their own businesses singlehandedly from home. The application fees for these licences, which are issued on an annual basis, have been fixed at AED1, 000. Licences are only issued to those businesses, which will not cause any pollution, traffic jams, or harm to neighbours.
World record achieved
James Reynolds, CEO, Incredible Incorporated
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ames Reynolds, CEO, Incredible Incorporated, has appeared alongside entrepreneurs and marketing experts as part of a new Guinness World Record-breaking event. The event, which was billed as a ‘business and marketing extravaganza’, went down in history as the longest ever live uninterrupted webcast and smashed the current 24-hour record with a 36-hour webcast marathon. James Reynolds delivered a one-hour presentation entitled Outrank Your Competitors and Get Found Online, alongside the dozens of other marketing experts including Michael Gerber, Larry Winget, Chris Brogan, Bob Burg, Scott Stratten and Michael Port, whose series of presentations made up the record. The event was organised by Susan Baroncini-Moe, and featured remote presentations from over 30 other leading entrepreneurs.
October - November 2012
Intelligent SME
Announcements
HDFC Bank opens in Abu Dhabi
Harsh Gupta, VP - GCC Business, Abhay Aima, group head - International Business, S. Sampathkumar, senior VP - International Business, and Rajeev Warriar, chief representative - Abu Dhabi at the launch of HDFC bank representative office in Abu Dhabi.
H
DFC Bank opened its first representative office on Salaam Street in Abu Dhabi to provide services to the Non Resident Indians (NRIs). The new Representative Office will provide services like facilitation of opening NRE accounts in India, remittance services, fixed deposits in India and other related banking services for India accounts to the NRIs in Abu Dhabi. To cater to its non-resident clients, HDFC Bank also has partners in exchange houses across the GCC countries for NRI remittances.
UAE biggest importer of paper, tissue in MENA region
T Satish Khanna, managing director of Al Fajer.
D
he UAE is the biggest importer of paper and tissue in the MENA, according to the organisers of Paper Arabia 2012, which opened on October 1 at the Dubai International Exhibition and Convention Centre. The UAE imports papers and tissues mainly from Asia, and specifically from Indonesia, making it a key re-export centre in the Middle East region. Satish Khanna, managing director
of Al Fajer, organisers of Paper Arabia 2012, said that the paper industry saw spectacular growth in recent years, with production centres, paper mills and paper converting businesses growing both in numbers and output. According to the figures from Asia Pulp and Paper, the annual consumption of paper in the Middle East will cross 29 million tons by 2020; while in 2010 it was just 18 million tons. Paper Arabia 2012 featured 125 companies from 20 countries.
Next gen business solutions by du uring Gitex Technology Week 2012 du will showcase next generation business solutions. Business customers visiting du’s stand (stand Z-F20) can experience cutting-edge breakthroughs in cloud computing, smart communications and green computing. The key themes demonstrated are: Cloud Computing showcases the technology solutions that will make data available anywhere. du’s Virtual Cloud Services are a robust, flexible and scalable way for Small and Medium Enterprises (SMEs) to manage data availability. Smart Communications represent the way that tomorrow’s technology will impact upon businesses in the UAE. Featuring next generation solutions, this section will demonstrate the benefits of du’s Virtual Corporate Clinic. Green Computing will house features that will help to create a sustainable future, in line with du’s efforts to promote more environmentally-friendly practices.
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October - November 2012
Intelligent SME
Mentorship
Finding the spark through mentorship Why is mentorship a buzzword in the marketplace? ISME paints a picture on the importance of mentoring in the life of an entrepreneur.
W
hen an entrepreneur assumes he or she knows it all, he is doomed to failure. Entrepreneurs, therefore, are always on a learning curve. They need to update, innovate and continuously re-invent. It pays to stay attuned to new trends and seek new ways of approaching a problem. Previously the idea of mentorship was never a formal one; if a new entrepreneur needed help in a technical area, there was nothing to stop him or her from going up to an experienced one and seeking his help. Today, people do not bother to ask questions. “There’s more to an enabling environment than just finance,”
according to Kathleen Bury, business manager (GCC and North Africa), Mowgli Foundation, a leading mentoring organisation headquarterd in the UK, that caters to placing mentorship at the heart of supporting entrepreneurship and leadership development through the recruitment, training and matching of mentors with entrepreneurs. Having been around for the past four years, the organisation has been involved in the development of over 400 entrepreneurs and mentors. Many experts, including Bury, believe that the recent emphasis on mentorship is due to the onus on entrepreneurs and SMEs that are the focus of individual governments all over the world. Closer to home, the
I think people are now realising that you can’t be on your own, and that you need guidance. All successful people will always find a mentor because mentoring is having someone tell you what you need to know... Kathleen Bury, business manager
(GCC and North Africa), Mowgli Foundation
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UAE government has recognised the efforts of the SME sector here. Governmental aid extended to the local entrepreneurs has been increased to AED2 billion in 2011. Although finance and talent seem to be the only tangible means of fuelling rapid growth in SME’s, there is more than meets the eye. Experts have, for some time been emphasising on the need for ongoing support with the help of training and being in the company of mentors every step of the entrepreneurial journey. Mentoring is very different from consulting or coaching. It involves listening to an entrepreneur. It’s about starting the thought process in an entrepreneur by asking questions and seeing how he or she takes it forward. Need for mentorship In the current political, social and economic conditions in the region, entrepreneurs feel pressured and need to be supported at all times. A great
October - November 2012
Intelligent SME
Mentorship way to address economic issues is by supporting start-ups and SMEs that create jobs. However, many new entrepreneurs are not accustomed to the financial nuances, the nitty-gritty of administration, regulations and checks as well as the experienced decision making abilities of seasoned business owners. “For a person there are many ways not to succeed. Sometimes it’s due to lack of management or for want of the right co-founder, or perhaps your great business plan is not ready for a certain market. You either adapt or don’t begin at all. People who have succeeded in spite of these challenges can help start-ups on how to overcome this,” according to Ludmilla Figueiredo, operations manager of Seed Startup. Figueiredo’s first experience with mentorship was with Endeavour, an organisation that works with highimpact SMEs in Brazil. Later she moved to the Middle East and signed up with Seed Startup, an intense accelerator program that provides seed investment and mentorship to founders of web and mobile start-ups. “I think people are now realising that you can’t be on your own, and that you need guidance. All successful people will always find a mentor because mentoring is having someone tell you what you need to know, and not always what you want to hear. It’s about having that honest voice that keeps you on track without faltering. People are now beginning to see the power mentoring can have from a personal and business perspective,” Bury notes. Leadership Entrepreneurship and leadership are two qualities that go together. A true entrepreneur is a great leader owing to his idea that has generated profit and success. Mentorship inculcates this very quality in entrepreneurs. “Mentoring is an art;
Mentoring is an art; it is about endearing yourself to the mentee and understanding their problems. You have to be a good leader to be a mentor. Yogesh Mehta, M.D, Petrochem Middle East
it is about endearing yourself to the mentee and understanding their problems. You have to be a good leader to be a mentor,” says Yogesh Mehta, managing director, Petrochem Middle East. Mehta, being a Harvard Business School alumnus, has taken up mentorship of three students. “The mentor is responsible for the mentee’s success; he is an anchor, a father figure who is all forgiving and all understanding. It requires great character to be a good mentor. It is hard work to understand people as you may have different points of views. If you have shown the right way to your mentee, then you are a successful mentor. It’s not only saying the good things - it can be harsh and strong advice. It’s about being objective and showing the pros and cons of a situation,” Mehta adds. Fresh perspective Mentorship provides support throughout the journey of the entrepreneur, unlike paid advice that is given by a consultant or a trainer. Contrary to popular belief, mentorship is not always taken up by the more experienced individuals. Companies like GE have long advocated reverse mentorship, where senior and junior executives work together to absorb the best of both individuals. Skills and competency Mowgli’s mentorship program begins with a preliminary three-day experience program that introduces potential mentors to entrepreneurs.
A good mentor is hands-on, and has to be ready to listen. It’s an exciting environment, but it’s important to maintain a balance between giving advice and going through a process with them. Ludmilla Figueiredo, operations manager, Seed Startup.
Later a matching session modelled after speed-dating ensures that entrepreneurs have a chance to meet all the mentors. Here Mowgli’s trained facilitators watch the interactions for the ‘sparks’ and determine the pairings “The bond between an entrepreneur and his or her mentor is hugely powerful,” notes Kathleen. In this relationship, an entrepreneur gains many skills that enhance their leadership development, and increase the likelihood of the success and sustainability of their business. As powerful as mentorship seems, there are challenges associated with this medium of support. The primary challenge is the need for a mentor to stay committed, devoting a long-term interest in the activities of his or her mentee, and which can sometimes be very stressful. “A good mentor is hands-on, and has to be ready to listen. It’s an exciting environment, but it’s important to maintain a balance between giving advice and going through a process with them. Being hands-on doesn’t mean doing the work for them, but it’s about guiding them,” explains Figueiredo. Political conditions in many parts of the GCC region have posed a challenge to the entrepreneurs in these locales. Many have been forced to quit their business and leave the area. Affected areas are also hit on the technological side and, therefore, mentors in other countries are often cut off from their mentees for purely technical reasons. Sometimes, there are cultural reasons, and as mentorship presents a powerful network to an entrepreneur on behalf of a mentor, there may be differences of opinion in sharing these contacts. All said and done, the bond between mentor and mentee is a powerful one. It is a mutual relationship that benefits both parties. And it will elevate the growth of entrepreneurs. 29
October - November 2012
Intelligent SME
SME Development
No more running in circles
T
Local Search has changed the face of online search for SMEs, writes Jan D’Sa. he time has come when you will never have to ask or answer one of the most dreaded questions in the UAE; “Where is your office location?” This question has complicated the lives of people, thanks to miscommunication or even incorrectly drawn maps sitting on company websites. Thanks to Local Search, you can now eliminate time wastage and life
30
is made easier. Operating under the umbrella of Local Media, Local Search is here to help SMEs with their online presence and business opportunities. Local Search has entered in to an exclusive collaboration with InforMap Production LLC to use a unique business locator based on the most accurate and detailed digital UAE map ever available online. The virtual addressing system in the UAE
called Geo Reference Locator (GRL) is a unique six-digit number that has been assigned to every company registered in the UAE and its freezones. The complete details of the SME in question, such as the location area, streets and the building all show up when you search on www.grl.ae. Benef its for SMEs Andrew Thomas, managing
October - November 2012
Intelligent SME
SME Development
Being found online is half the story; how your company is represented online is the next crucial step. The search tools that people use as well as information processing has changed over time. Andrew Thomas Managing Director of Local Search
online presence beyond a static website because they lack credible social media presence that is essential to their online wellbeing. Some of them do not even have basic contact information on their websites or the websites are not mobile enabled. According to the latest data from vSplash’s SMB Digitalscape, less than 20 per cent of small business websites link to their social presence. “The benefits go further as partnership with Local Media can help these companies build their online presence and their business in the process, through added value services including social media properties and online tools including video. Without this, SMEs risk lagging behind their customers and consumers,” says Thomas.
director of Local Search, says, “Being found online is half the story; how your company is represented online is the next crucial step. The search tools that people use as well as information processing has changed over time. Looking for a company is as easy as grabbing your smartphone and clicking
‘search!’ Local Media studies the way people look for information and then provides the tools that help an SME to be found and to communicate an effective message in an ever confusing digital landscape.” In general, SMEs are faced with the challenge of building an effective
Response As time is the biggest constraint for most SMEs, it is imperative for them to choose wisely where to invest for business growth. The other problem is the lack of know-how on the commercial side of online media. As Time Ansell, sales director, Al Thika Packaging LLC, a client of Local Media says, “Although I knew we had to establish a more comprehensive online presence, I only had a vague idea of how to go about it. Creating a facebook or Youtube account is one thing but managing them as part of a media campaign was not our area of expertise. A large part of why local media won our business was because they took the time to explain the levels of interaction between various sites and search engines, making it easier for me to decide where to allocate more time and investment.” 31
October - November 2012
Intelligent SME
Out and About
Building a competent SME community
H
The second corporate governance conference by Dubai SME emphasised on execution and implementation. An ISME report. eld under the theme ‘Execution and Best Practices in Corporate Governance’, the second conference held by Dubai SME - an agency of the Dubai Department of Economic Development (DED) mandated to develop the SME sector emphasised on the implementation and execution of corporate governance. Speaking on the occasion, Sami Al Qamzi, director general, DED, said: “At the heart of corporate governance are ethics and integrity. These values are extremely important as we deal
with each other in our personal and business relationships. Ethics and integrity, coupled with accountability and transparency, builds confidence and trust in all partnerships. The UAE leadership has since long recognised the strategic importance of SMEs. Encouraging entrepreneurship and SME development are among the strategic economic objectives of our federal government.” The aim of the conference was to show SMEs how to take a practical step towards corporate governance, even for companies that were about to begin
this journey, with the help of the Guide to Execution publication and 10 case studies on how SMEs in Dubai have implemented corporate governance. The event also featured two panel discussions on executing the basics of corporate governance and preparing corporate governance for the capital markets and the investor community. The first panel discussion was preceded by presentations from Dimitris Tsitsiragos, IFC vice president for Europe, Middle East and North Africa, Dr. Sassan Dieter Khatib-Shahidi, CEO and ED
Abdul Baset Al Janahi, chief executive officer of Dubai SME , Sami Al Qamzi, director general, DED at the second conference on corporate governance held recently.
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October - November 2012
Intelligent SME
Out and About board of directors, German Imaging Technologies (GIT) Dubai LLC, and Fadi Malas, CEO, Just Falafel. Tsitsiragos said that executing corporate governance within SMEs lead to a competent private sector. “At present the share of bank leding to SMEs is only two per cent of total bank lending in the GCC countries.“ He added that one of the benefits of a corporate governance structure would be to attract finance. Impact Dr. Khatib-Shahidi, outlined the process of implementing corporate governance policies within his company. Having begun with the pillar of setting up a board of directors in accordance with the nine pillars of the Code of Corporate Governance, he said that the impact was better financial planning, decision making on annual budget, five-year-growth plans being set in place, business expansion strategies and management control. “We are breaking even this month. This would not have happened without setting up a board of directors for decision making. As business owners, we must be transparent and open-minded,” he added. Malas said that putting in corporate governance strategies in the Just Falafel franchise was imperative due to the nature of his business. “Practically corporate governance is a simple thing to understand. Everything we do in the business is regulated. With investors and other stakeholders in place, one needs to protect their interests, and only corporate governance structures can fulfill this need,” he explained. Enabling platforms In another panel discussion Ahmad Jalal, vice president, Aureos Capital (owned by Abraaj group of companies), spoke about the importance of corporate governance from an investor’s perspective. “Most companies ignore their foundation, or their enabling platforms to pursue new product development, new market development and sales and marketing, such as corporate governance, an IT infrastructure, human capital,
The second conference emphasised on the implementation and execution of corporate governance.
and financial reporting. Ultimately corporate governance involves sustainability and scalability.” He also enumerated on ‘mindset values’ that are integral to having corporate governance practices: firstly, a company has to follow international standards such as IFRS. The company should also have in place ‘rigor of process’ by hiring a competent CFO and audit firm. “Investors are only interested in plans presented by business owners who have the support of a qualified and competent team, such as a board of directors, one independent expert, with share option pool for key employees,” he said. Jalal also advocated transparency in a company. “By sharing information to various levels of stakeholders and aligning the stakeholders to the goals of the business, transparency is generated,” he explained. Experience “An entrepreneur is always alone. They take risks and have a higher risk appetite than business owners who have inherited their business. They are innovative, with many ideas. Sometimes they have serious problems with strategy. As for their capital needs, private equity lenders are the best choice because they are different from banks, with a larger risk appetite,” said Abouzar Rahmani, founder and CEO, Mani Europe SA - Belgium and Mani Foods Industry - UAE. He added that once an entrepreneur receives money, he needs to be more careful, as businesses that
do not perform and have results to show can lose everything. He also advised attendees to select the right people for their board of directors. “The directors of the board should be experienced entrepreneurs, have business knowledge, and are extremely successful and credible. They have no need for remuneration, but instead, are happy to help strategise and help companies grow. They help you take sound decisions that give results,” Rahmani said. Abdul Baset Al Janahi, chief executive officer of Dubai SME, said: “Corporate governance is integral for enterprise growth and development. It opens new doors for SMEs that embrace it willingly. “Good governance lays the foundation for a quality SME that focuses on sustainability. It will ensure that an SME is bankable and investable to all key stakeholders, such as the banking and finance community, private equity firms, and corporate financiers.” The guide to execution lists key steps to be taken in implementing corporate governance based on the nine pillars, which are: adopt a formal corporate governance framework; conduct a succession planning process; establish a timely and open flow of information; set up a formal board of directors; develop a clear mandate for board of directors; maintain a credible book of accounts; set up an internal control framework; recognise the needs of stakeholders; and formulate a family governance framework. 33
October - November 2012
Intelligent SME
Out and About
A heritage of lasting financial relationships ISME speaks to Pritam Mirchandani, head of business finance, RAKBANK on the business banking sector and the initiatives of the bank. ISME: How is the business banking sector doing?
PM: The SME sector is a vibrant and growing part of the local economy. Two key reasons for the increased activity in this sector are the opportunities available in the market (especially with the economic slowdown now behind us) and the entrepreneurial spirit in the community. Besides, Dubai’s strategic location as a trading hub for a wide geographic region provides excellent business opportunities. ISME: What criteria do SMEs have to fulfill in order to access these loans?
PM: We review the customer’s cash flows and bank statements and, most importantly, we try to understand the business model and his working capital cycle. Based on this, we extend a suitable product which in most cases is the RAKFinance Loan. Keeping in mind the customer’s track record, we proceed to the next stage where we increase the business loan amount based on the SME’s business requirements. In the third stage, RAKBANK develops tailor-made working capital and trade finance products that fit the business cycle and provide solutions based on the customer’s future requirements.
ISME: How do you lend to companies
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Intelligent SME
Out and About with just one year of track record?
PM: You can have a customer who is just one year into their current business, but who may have 20 years’ of work experience (as an employee) in the same industry and profile. If the client’s product is one which is very relevant in today’s marketplace, they would have a higher chance of succeeding. We review these along with several other conditions when we extend credit lines.
US Dollars (and the exporter again converts the USD to RMB). As they will soon be able to pay from Dubai in the local Chinese currency (RMB), they will avoid exchange costs and therefore become even more competitive.
ISME: Local banks are now becoming more aggressive in the SME space. Is this a government driven move, or do
you see a real opportunity?
PM: We definitely see a good opportunity in this sector. Keeping in mind the growth in this sector and the support that SMEs receive from the government in terms of ease of doing business with minimal bureaucracy, we are fully committed to support the growth of the SME sector.
ISME: Have you made any changes in compliance procedures?
PM: The market is evolving very quickly and we need to understand and adjust with the trends. This ensures that regulatory measures are complied with and that the bank’s customer base is of a superior profile. ISME: What industries do you prefer
lending to?
PM: The SME business is very important to RAKBANK and our products cater to the business needs of a wide sector ranging from food to health care. By having a diverse range of customers, the bank spreads its risk and encourages a well-spread portfolio of business customers from many different industries. ISME: What are the future plans of RAKBANK? Do you have any new products in the pipeline?
PM: Because we aim to continuously support our customers through their growth, we have products suited for each phase. RAKBANK will be launching a new service, Dox2Go, through which the bank will arrange for a regular pick-up service of banking documents to spare the busy client a visit to its premises. The working relationship with RAKBANK then becomes very convenient, allowing customers to focus on their business. We also expect to launch the RMB payment option to our clients very soon. Currently, when our customer imports from China, they pay in
Mukesh Patel
J.G Dias
Mukesh Patel and J.G Dias, directors of S.H Ali Trading LLC relate their experience with RAKBANK.
We have a hotel and restaurant supply business which was launched in 1997. We began as a two-man outfit with backgrounds in the foodstuff and hotel supply business and therefore combined our strengths to start this venture. Initially, we made a small profit, but within a year were able to recruit a third person. The business started small and there was a time when we supplied from the back of our car. We have steadily grown since then and today are on the verge of having much larger premises in the biggest investment park in the country and have an annual turnover in excess of AED30 million. Our relationship with RAKBANK has been very supportive to our business. In 2006, we had appointed a part-time accountant, who suggested that we might need funds to grow faster. He advised us to meet RAKBANK’s relationship manager who processed a RAKFinance loan of AED500,000 within a week. At the time we did not believe that this would be possible but the credit in our new RAKBANK account proved otherwise. We have since been doing very well with RAKBANK’s support and have recorded a growth rate of over 20 per cent on an annual basis. From time to time the relationship managers advise us and give us proactive support which helps us in our journey. Keeping in context the existing market trends, we forecast our growth and hand it over to the bank and our relationship managers who then advise us, and come up with tailor-made banking solutions to help achieve this forecast. Being in the food industry, we have not been significantly affected by the recession, with a growth rate of 12 to 15 per cent even in the worst period. Dubai is blessed this way. We are also very innovative with our products and remove the ones in our portfolio that lose appeal.
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October - November 2012
Intelligent SME
SME Financing
Demystifying banking: International payments
Having trouble with banking jargon? Harshit. H. Jain throws light on the entire banking process in this column.
Y
ou would now be more familiar with SWIFT Society for Worldwide Interbank Financial Telecommunication - and the key role it plays as the global provider of secure financial messaging services. You would have heard from your banker that international payments are facilitated through SWIFT. 36
Now we shall see and understand how SWIFT facilitates international payments and transfers from one party (remitter or ordering customer) to a beneficiary anywhere around the world. But before we get into that, let me share with you some historical perspective of how banks facilitated international payments. Before SWIFT came into existence
in 1973, all international payments were transacted between banks by telegram and telex machines (hence also the name “wire transfers” or “telegraphic transfers” or simply “TTs” which is used even today!), secured by a system of sequential “test keys” manually calculated by the bank’s telex department sitting in a secure office with restricted access even to the other bank staff. While standards had been developed by the central banks in each country for domestic / local payments, international payments were the last to be automated due to complexity arising from differences in language, formulation, standards and practices. To overcome this problem, Citibank in the early 1970s (then the First National City Bank of New York) started to develop the Marti (Machine Readable Telex Input) system, based on standard telex messages to effect such payments. In parallel, a group of European banks launched MSP (Message Switching Project) to develop a standardised automated electronic communication system for international payments. This project rapidly gained momentum and the major 69 banks across Europe and North America (including Citibank which had by then abandoned its plans for Marti) came together to form what we know today as SWIFT in 1973. Of course, before SWIFT cut over to live operations in May 1977, it had to wrestle it out with the European postal authorities who till then held a monopoly on telecommunications How are international payments effected using SWIFT?
October - November 2012
Intelligent SME
SME Financing Harshit H. Jain is a seasoned banker with over 25 years of global banking experience and commercial success across Asia and Middle East. He is the founding CEO of InnoVention Solutions, a young and versatile consultancy and training firm which focuses on providing consultancy, training and advisory services to banks, financial institutions and corporate customers (Institutional clients as well as SME clients) in the Middle East, North Africa and South Asia (MENASA) region.
Essentially there are two ways in which SWIFT is used for making international (or cross-border) payments when the banks of the ordering (remitter) and beneficiary customer do not have a direct account relationship: the Serial and the Cover methods.
‘clear’ that currency locally eg: a local bank in UAE having an account [called a NOSTRO account] with a US bank in US, so that USD funds transfers can be settled by the US bank, using the US Dollar clearing system in US), to move payments along using either SWIFT or local bank messaging formats.
Serial method This is the traditional way of effecting international payments. It uses the correspondent mutual account network (bank in one country having an account with a bank in another country that would be a member of that country’s clearing house so that it can
International transfers using the serial method
COMPANY ABC (SINGAPORE)
COMPANY XYZ (HONG KONG)
INVOICE MT 210 Advice to Receive
PAYMENT INSTRUCTION
Debit Co. ABC account
CREDIT ADVICE
Debit Bank nostro account
Credit nostro accountant Bank DEF BANK ABC (SINGAPORE)
BANK XYZ (HONGKONG)
MT 103 Payment Order
Debit Bank ABC Nostro account
Credit Co. XYZ account
ADVICE OF RECEIPT
Credit Bank UVW correspondent account
Debit Bank DEF correspondent account
BANK DEF (USA)
Credit Bank XYZ Nostro account BANK UVW (USA)
MT 210 Advice to Receive Source: International Cash Management, The Association of Corporate Treasurers
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October - November 2012
Intelligent SME
SME Financing International transfers using the cover method
COMPANY ABC (SINGAPORE)
COMPANY XYZ (UK)
INVOICE
CREDIT ADVICE
PAYMENT INSTRUCTION
MT 103 Payment Order BANK ABC (SINGAPORE)
BANK XYZ (UK)
MT 202 COV Cover payment
BANK ABC’S CHIPS CORRESPONDENT BANK (USA)
ADVICE
CHIPS Settlement
BANK XYZ’S CHIPS CORRESPONDENT BANK (USA)
FEDERAL RESERVE BANK OF NEW YORK ROTS Settlement
Source: International Cash Management, The Association of Corporate Treasurers
This method uses an MT-103 (recall this is the standard SWIFT Message Type for customer funds transfer) which is sent by the remitting bank to the beneficiary’s bank and it performs two functions: it acts as the payment instruction to credit the beneficiary’s account, and it acts as the instruction to debit the NOSTRO account of the remitting bank with its correspondent bank of that transfer currency. 38
The correspondent bank then forwards the MT-103 (or a local clearing equivalent) to the “next serial” bank in the chain, until a bank is found that has a correspondent bank account with the beneficiary’s bank. As you can imagine, these chains can be quite long and further increase the cost, time and complexity of the international payment. Also, if a problem arises - as they frequently do - then these are quite difficult to
resolve as every bank in the chain needs to know “its payment reference number” whereas the remitting bank or the earlier bank in that chain would normally provide that bank “its own payment reference number.” Cover method With the cover method, the remitting bank would send an MT-103 directly to the beneficiary’s bank (informing them of the transfer and from which bank they will be receiving the funds to cover the payment to the beneficiary) along with a separate MT-202 (standard SWIFT Message Type for Bank-to-Bank Funds Transfer) being sent out simultaneously so as to the clear and settle the payment at the inter-bank level. When the remitting bank has no relationship with the beneficiary’s bank and there is a clearing system to facilitate the international transfer, this method is usually more efficient. In some countries based on internal policies (customer service vis-à-vis risk prioritisation), some banks will post a credit to their customer’s account (beneficiary’s account) upon receiving the MT-103 SWIFT message (under reserve) although this entry will be reversed later in the day or the next working day if the funds fail to arrive through the MT-202 SWIFT message to the beneficiary’s bank account with its correspondent bank of that currency. Amendment Due to the more stringent regulations that central banks and banks globally have taken in their fight against money laundering as well as terrorist funding getting facilitated through international payments. In 2009 SWIFT has amended the MT-202 message with the MT202 COV message which allows for the end-to-end inclusion of full information on customers (both remitters and beneficiaries) and their banks and enables correspondent banks to screen payments in line with the regulations, sanctions screening and other mitigating factors to safeguard reputation risk.
October - November 2012
Intelligent SME
SME Financing
Preparing for an IPO
I
f your company is among the growing number of SMEs that is thinking about going public on NASDAQ Dubai, you will benefit from a clear understanding of the steps involved. The basic process, including timelines, is set out below. A key criterion, which you should be aware of right from the start, is that you should have a market capitalisation of at least US$10 million when you carry out your initial public offering (IPO). If you meet that test already, fine. If not, you can still start preparing to IPO if you are confident that your company will become that large. This rule about the company’s size is set by the Dubai Financial Services Authority (DFSA), which is the regulator of the exchange. You will be in close contact with the DFSA
40
Craig Hewett provides a clear understanding of the formalities involved in taking a company to the IPO level. on your journey to going public, as it oversees the rules that you will follow and its approval must be obtained for you to list your shares. The DFSA, like NASDAQ Dubai itself, is based in the Dubai International Financial Centre (DIFC) free zone and its rules are based on international standards, to help ensure that your listing will be a success. Groundwork Before you engage in detail with the DFSA there is plenty of useful groundwork that you can be doing, preferably as early as possible. This could well be over a year before your eventual IPO. Make sure the company accounts are in order: The DFSA usually asks for audited financial statements going
back three years. It’s worth talking to external advisors, such as an accountancy firm to ensure that this is done correctly. Create a strong corporate governance structure: This includes a board of directors with decisionmaking powers. Major shareholders can, of course, sit on the Board and it must also include directors who do not have close ties to them, known as independents. This structure aims to ensure that the company is run in the interests of all its shareholders. It also promotes efficiency and best practices, which support the success of the business. Start thinking like a public company: This includes becoming accustomed to the idea that once you are listed you will be regularly
October - November 2012
Intelligent SME
SME Financing
Craig Hewett is senior vice president- head of business development at NASDAQ Dubai with responsibility for the commercial activities of the exchange. These include product and market development, membership, training and market data. Prior to joining NASDAQ Dubai in July 2011, he held the position of chief business officer at the Bahrain Financial Exchange (BFX) from 2008. He brings a wealth of international expertise in trading a variety of asset classes.
disclosing certain information to investors, under the DFSA’s rules. It pays to decide well in advance who in the company will be in charge of doing that. Perhaps your company ticks these boxes already. Some SMEs, however, need a long time to put them in place, before the next stage of preparation for their IPO begins. At any time, please come and talk to us at NASDAQ Dubai. It’s never too early. We can address your questions and give you a steer about many aspects of the IPO process. Run-up to IPO You will need to appoint an experienced adviser to manage the sale of your company’s shares to the public. A law firm will also be required to ensure you comply with laws and regulations. Also key is a public relations firm to help you tell the media about your company’s success story. These advisers are typically appointed several months before the IPO. With the advisers in place, you can focus on many aspects. Structure of the IPO: Under the DFSA’s rules, at least 25 per cent of the company’s shares must be sold to the public. This allows owners to keep control of it. A larger percentage can be sold if the owners wish. The owners can also decide whether they wish to sell new shares to fund the business, or sell some of their existing stake for their own purposes. Or they can do both.
Prospectus: This is the core document around which your IPO will revolve. It will contain a description of the company’s business, information about its directors, and the reasons for the
IPO, as well as financial statements and details of the share offering. It must be in English and be approved by the DFSA in order for it to approve the listing. Your advisors will help you to get it right. The prospectus is made public and is your main tool to persuade investors to buy shares.
The DFSA usually asks for audited financial statements going back three years. It’s worth talking to external advisors, such as an accountancy firm to ensure that this is done correctly.
Application to trade: In parallel with your application to the DFSA, you will apply to the exchange for your shares to trade. NASDAQ Dubai has created rules to encourage a healthy The IPO timeline
Issuer appoints advisors
Submission of draft prospectus to DFSA/NASDAQ Dubai
Application to DFSA for prospectus approval
Number of days before Listing
28
Initial meeting with DFSA/NASDAQ Dubai
Initial Trading Application to NASDAQ Dubai
amount of trading after the listing. These include that a company must typically have at least 250 shareholders, or else appoint a broker to offer both buy and sell prices in the shares simultaneously.
Public relations: Your public relations firm can help you decide what messages to emphasise to the media, including through press conferences and press releases.
Roadshow and selling shares: Your investment bank will help you identify potential investors and will introduce
Final Listing Application to DFSA
7
Final Trading Application to NASDAQ Dubai
Conditional listing approval by DFSA
5
Admission to Official List
Listing Day
Approval for Admission to Admission to Trading Trading by NASDAQ Dubai
your company to them. These meetings are together known as a ‘roadshow’. Executives of your company will make presentations to the potential investors. When bids for shares come in, the bank will help you decide what price to sell the shares at, and to whom. A final application to the DFSA for prospectus approval is typically made about a month before the planned IPO date. Above are some typical timeline details. The IPO process is complete on the day that the shares list on NASDAQ Dubai. Trading begins at the same time. From start to finish, the process of joining NASDAQ Dubai’s market has been designed to be readily achievable by companies large and small. 41
October - November 2012
Intelligent SME
Wealth Management
Being a sensible investor Rupert Connor discusses the right attitudes and targets needed to become a private investor.
O
nce you understand the key disciplines and concepts that underpin acquiring wealth (or if not “wealth� as such, then at least enough capital to support your lifestyle in retirement) and have begun to implement them, your focus may then change and you may find yourself more interested in managing and increasing your wealth. If you take the attitude that the stock 42
market is for cash that you can spare, and that you may not reap any rewards for some time, then you probably have the right temperament for investing. It is sincerely to be hoped that you are not intending to throw in your job or business and join the 80 to 95 per cent of day traders who lose money in their frantic daily pursuit of share prices. You should be a cool and sensible investor, not a gambler, looking for the
eventual returns that you can get with shares, which can be better than other forms of investment in the long run. Acceptable risk You must establish how much risk you are prepared to take by investing in shares at all; never mind the smaller, newer companies with their potential for failure as well as for growth in share price and dividends.
October - November 2012
Intelligent SME
Wealth Management
Rupert Connor is an independent financial advisor with Acuma Wealth Management. As a qualified advisor in the region, he helps expats get their finances in order, and maximise the financial opportunities available offshore and plan for future events.
Set your time lines Is your investment going to be short, medium or long term? If you are planning on a long-term investment, then a certain amount of volatility in the current share price of your investment can be disregarded, while short-term investments should be in stable businesses. If medium, then you should take a view halfway between. Income or capital growth For income, seek companies with higher yield figures, or dividends - BP shares were until recently a staple. For growth, look for companies with lower dividends, but higher corporate growth potential - Microsoft shares did not pay dividends between 1986 and 2003, but their value went up more than a hundredfold. Respect your investment Can you live with armaments, alcohol, tobacco or pharmaceutical concerns? You’ll be spending time with these companies, so make it an enjoyable experience. Managing your portfolio Some people love looking after their own investments and financial futures. For them, the combination of analysing the markets, acting on their own hunches, and keeping their personal portfolio up to date is irresistible. But do you have the time or inclination? Most people with money to invest are fully occupied with running their own lives and businesses, and don’t have the time to weigh up all their financial options. Add the constantly changing proliferation of laws affecting tax, investments and pensions (especially pensions) and it is almost impossible for someone not fully immersed in the financial world to keep 44
up with developments. That’s where investment managers come in. They can, for a management fee, take your needs, preferences, life plans and current financial circumstances into account and provide you with a tailor-made set of investment recommendations that should form the basis of your portfolio. It is then up to you to decide whether the information advice and management skills they offer are worth their fees. If you are seeking professional help you can maximise its benefits by following these guidelines: Swat up on the markets Your advisors or managers will have endless information and financial products at their fingertips, but you’ll get better advice if you have some basic current knowledge of the markets and your investment options and you are able to discuss investments and the markets with them intelligently. Stay up to date If you read the city pages of the newspapers and keep up to date with economic news and trends, you won’t be far behind when it comes to the evaluation of your situation and keeping your portfolio up to date. Turn private detective No matter how well respected your adviser or manager may be, don’t be lulled into a false sense of security by their reputation. It pays to check that the performance of their investment recommendations has been as good as, or better than the market average. Take the long view Even if your advisers’ recommendations have been rock solid, would just investing your money in a
For income, seek companies with higher yield figures, or dividends - BP shares were until recently a staple. For growth, look for companies with lower dividends, but higher corporate growth potential...
tracker fund have given you a better return when the management fees you’re paying are taken into account?
Be decisive If you’ve done your research and are well acquainted with the facts and figures, you can make decisions with your advisers to adjust your portfolio - or you can even make the decision to strike out on your own. This is powerful information that, if utilised correctly, can change your future. Regardless of our attitude towards money, there is no avoiding or denying, that it plays a pivotal role in all our lives. Money determines our moods, influences our relationships and even dictates our choices. Building one’s wealth, in any way possible, simply gives us more options in life further down the track and this can only ever be a good thing. Life is for living, but that doesn’t mean you can live it with abandon. You have to plan for and work on your desired future and that starts with your personal finances and wealth creation. You have a tremendous opportunity living in the UAE, so ensure you take advantage of it.
Intellegent SME Exe plan-260x190-E.indd 1
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October - November 2012
Intelligent SME
Sales & Marketing
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Insights to grow your business
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Simon Hodges outlines five tenets of business that will help to achieve sustainable growth. ll SME business owners work very hard but very few get the rewards they deserve, and that’s a shame, in some cases it’s absolutely tragic. Today, the reality is that many owners of SMEs are increasingly 46
concerned about their ability to develop their business with many struggling to survive. They want to grow and prosper in their business but are unsure how to do it or lack the necessary skills. Some are frozen, while others feel stuck at an unsatisfactory level of development
and are unable to achieve results that represent success to them. Once you get through the populist theories for business failing to grow (too much regulation, lack of capital, poor corporate governance etc), experience has shown that many
October - November 2012
Intelligent SME
Sales & Marketing
Simon Hodges, CEO, Alchemy Network Middle East has recently launched the franchise network in the Middle East. Alchemy Network is a UK-based worldwide network of consultant partners, who work alongside owners and operators of SMEs to help bring them financial success, and eventually introduce them to systems that will relieve them from the mundane day-to-day running of the business,and allow them time to concentrate more on what they do best.
businesses here in the Middle East are really suffering from lack of enough orders or sales; difficulty and high cost of acquiring new customers; and profit margins being squeezed as a result of too many competitors. If one or more of these represent your biggest challenge each one points to the same fundamental difficulty: Your business is losing the marketing battle for the hearts and minds of its customers and prospective customers! Marketing and innovation Regardless of the products, markets or services you are in, all businesses are sales and marketing businesses as they must sell and market their products or services to succeed. The renowned business guru Peter Drucker once said; “…Because its purpose is to create a customer, the business has two - and only two - functions: marketing and innovation. Marketing and innovation produce results, all the rest are costs.” You really can’t put it any clearer than that and shows that all businesses must understand their business to succeed. Understanding the business Unfortunately, many businesses do not attract a sufficient number of leads, they then fail to convert those leads into profitable customers and then they let these customers slip away to do business with their competitors principally because the business does not have a clear understanding of the market for its products and services. Your market consists of customers and potential customers. For this latter group, there are three reasons why someone does not buy from you. First, they do not have the money to spend on your product; second, they do not want or need your product; while the third is that they do not trust the organisation.
…Because its purpose is to create a customer, the business has two - and only two - functions: marketing and innovation. Marketing and innovation produce results, all the rest are costs. Peter Drucker
Clutter factor Did you know that the average consumer receives over 3,000 commercial messages every day (In 1984 it was only 1600). Here’s the crunch, your marketing is part of everyone else’s clutter. Therefore, the third point is to realise that you are not only marketing against your competitors but marketing against every other business for the attention of your potential customer! Because of this, you have to stand out, which is easier if you focus on a specific group of people or businesses that want and need your product or service, and can afford to pay for it!
Overcoming trust The second point is, therefore, to understand that you cannot do much to overcome the first two reasons, but to succeed over the long term you must win the trust of your customers. Beware! This trust is not a right, and once won, it has to be earned continuously because if it is lost, it is almost impossible to regain. Therefore, you need to concentrate on how you will tell them of the benefits of buying from you and not your competitors (your marketing plan). Customers are your most valuable asset. By knowing the ‘lifetime value’ of a customer, you’ll know - through a simple scientific process - what you can afford to spend to acquire a new customer as well as keep your existing customers. The lifetime value of a customer is the average cost of your goods or services; multiplied by the average number of transactions for each customer per year, multiplied by the number of years a customer stays with you.
Niche targets The fourth point is therefore that “you can’t be all things to all men” and that you should stop marketing to the wrong people by defining your market place and targeting it by concentrating on a well chosen segment or niche. Once you have identified your target market, the fifth and final point is that you will need to develop a unique selling proposition. A unique selling proposition is the one real benefit that differentiates you from your competition in the mind of your potential customer. Before ending, I would remind you, there is a limit to how much you can cut prices and costs before quality and service is affected. Therefore, it makes sense to use ‘no limit strategies’ to build a business that can achieve a sustainable growth path. 47
October - November 2012
Intelligent SME
Sales & Marketing
Small can be powerful
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Zed Ayesh urges SMEs to take into account the limitations of their businesses in order to transform these into strengths. ntrepreneurs, SMEs and start-ups come from all walks of life. Owing to their varied business experiences, they take a certain amount of time and multiple attempts to settle into business, while getting accustomed to realities of the size of their businesses and their limitations. Getting used to multiple tasks in a new start-up, wearing many hats and juggling multiple activities are the norm within SMEs. Above all, knowing what you are, your capabilities and what you simply cannot do will help you reach success faster. In an article in the Harvard Business Review, John A. Welsh and Jerry F. White reminded us that a small business is not a little big business. An entrepreneur is not a multinational conglomerate but a profit-seeking individual. Surviving requires a different set of rules and methodologies than the ones used to manage large 48
businesses. The new venture needs to ensure that revenue keeps coming. Money is what keeps all going. Therefore, understanding limitations of an SME will aid in streamlining projects that come its way. A company’s small size and limited resources in the market could give it the advantage of flexibility, speed and creativity, and an overall competitive edge over larger corporations. According to business speaker and writer Jay Goltz, among the top reasons for failure of a small business include an owner’s inability to do things differently apart from his lack of funding capability to carry on business activities. Goltz advises entrepreneurs to use their limited funds intelligently and their ability to be flexible, as much as possible. So, why do SMEs fail? Many of them are not able to get clients to buy
Jay Goltz
their products or services. On the other hand, entrepreneurs do not help targeted customers buy from them; they do not have a budget set out for marketing and, sometimes, don’t even have a marketing strategy for acquiring customers. Marketing as a business activity is undervalued and underserved. I always ask my business clients about their plans to acquire new customers. “How will they come to you? Why
October - November 2012
Intelligent SME
Sales & Marketing Zed Ayesh has over 20 years’ experience in management and business development. He is currently the managing director of Flagship Consultancy based in Dubai, and works with clients on many aspects of the business from strategic planning, business development, marketing strategies, pre-sales and sales management, across different sectors such as government agencies, real estate, media companies, manufacturing, contracting, engineering firms, retail and shipping companies.
should they buy from you and not your competitor who is older, bigger, more credible and less risky to do business with?” The answer I usually get is a long pause. Marketing is crucial for any business. It is the driver of the business; it is the fuel that runs the business. It tells the world that you exist, that you can deliver the promised value; it tells clients that they have other options. Marketing also gives your business credibility. If your target customers don’t know about you, how will they buy from you? I always tell my clients to make it easy to do business with them and to make the business easy to be found. Much literature is found on the concept of low budget and even no budget marketing, where companies rely on creativity to sell their products and services. Having worked with companies in various industries, I have found some proven ideas that cost next to nothing, employed by SMEs. They have great results, assuming that the core proposition is solid. Business cards A business card is a very powerful tool that is much under-utilised in this part of the world. It is a portable billboard and should have (in addition to complete contact information and title) what needs your offering will fulfill. Clear and concise, this information should be on the back of the card. It will also be an added value if the card’s design and colours are unique. Friends and family Begin the marketing process with your friends and family. Give them your newly designed card and find out if they know anyone who needs your particular services. This will be your
Marketing is crucial for any business. It is the driver of the business; it is the fuel that runs the business. It tells the world that you exist, that you can deliver the promised value...
trial base, and it would be useful to get honest feedback from them to improve. Immediate circle Find out if there is an advertisement board in your building, your community hypermarket or gym, and get permission to place an ad on these boards. Introduce yourself and your business to your neighbours. All you need is a greeting and to show interest in others. Signs Signs in your office building can say a lot about you - make it count. In addition to the sign in your office building, you can use signs inside your office that describe your product or service. Internal office signs work as motivational tools for both staff
and customers. These signs should be large and clear, with the same theme or elements of your logo. All communication material should speak the same theme. Ask for a referral It is normal to ask your clients for a referral by recommending your business to their friends and colleagues. Testimonials are a powerful marketing tool and should be used often. Direct mail Packages sent through professional courier services have one of the best results in marketing activities with excellent cost per lead ratio. This tool requires knowledge about customers, and should be simple, clear and the message should state the purpose and the action it calls for. Follow-up for such activity is important within reasonable time. Your event Starting a small event is easy and can be done with little or no cost. Events such as discussion groups, meetings, and so on. Target groups can be different at every event. The last thing that you should do at these events is selling, as it is doomed to fail. Such events are a platform to exchange ideas, knowledge and above all, to network. If organised intelligently, a number of participants could become your business ambassadors. Getting involved in your community is a great way for people to know you and your business. Donating some of your time for a noble cause will reflect your business in positive light and lead to greater opportunities. Entrepreneurs must always remember that the distinguishing lines between you and your business are not very clear. You are your business. 49
October - November 2012
Intelligent SME
Sales Strategy
Losing out on missed opportunities?
To grow your business, good customer service just isn’t enough, writes Phil Bedford.
er Custom e ic v Ser
“I am your client not your marketing department” - If you go back to clients and keep asking for referrals, how long is it before they start to get annoyed? 50
October - November 2012
Intelligent SME
Sales Strategy
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veryone says it: “We give good customer service.” Whether it is the case or not, it is the expectation that we will receive it when we first engage a supplier. No one ever advertises, “We give mediocre or average customer service,” all a company can do is prove they live up to the expectation, surpass it, or not. Giving good customer service will normally ensure you keep the client as opposed to losing them. This will maintain your business by increasing the chances of future purchases from the customer. It does not necessarily increase your new business by bringing you new clients, although the perception is that it does. The perception that good customer service will be enough to get new business referrals is a delusion that is costing businesses a fortune in missed opportunities. Many companies mistakenly believe that if they give good customer service then their clients will refer them business. While this may be the case sometimes, studies show that it tends to be the exception rather then the rule. Harvard business studies show that when asked (if asked) then up to 64 per cent of clients in the financial industry say they are happy to refer their supplier. In reality though, only 11 per cent ever will. It is often the case that most people do not even ask for referrals, and if they do, they have unrealistic expectations of the expected results. They fool themselves into thinking they are doing enough. They believe new business is coming and only find out it isn’t a few months down the line when they don’t hit their targets. Business people who are serious about growing their business by referral
An experienced business trainer, Phil Bedford brings over a decade of experience to his role as master franchisee for the Referral Institute. His expertise and experience of working with both companies and networking associations, coupled with a passion for training have helped him immensely. He regularly appears as a speaker in the UAE and abroad, educating people on how to build their business by word of mouth and “Creating Referrals for Life.”
need to look at other sources of referral than just clients, if they wish to grow their business in a more predictable and efficient way. Client’s referrals are nice when they come but very few people even know about the other seven sources let alone do anything about developing a high quality stream of referrals (for more information follow my posts in future or read The World’s Best Known Marketing Secret) Challenges For example, in the UAE around 60 per cent of new independent financial advisors tend to fail because they are relying on old and inefficient techniques e.g. referrals from clients (who are not really clients but prospects) or from cold calling or trying to find centres of influence, many of who are ineffectual. Imagine what these individuals could do with another six sources of referral? It is a tough profession with a lot of competition and it is so easy to get the edge if you know how. The challenges with trying to get more referrals from clients are many. Clients will tend to refer you reactively. They will wait until someone says, “That’s nice; where did you get it?” or “I have a problem - do you know anyone who…” While nice to receive, these are chance referrals and your business cannot be built on chance. If untrained, your clients may just pass you referrals that are not qualified i.e. they may not be the right client, or not really in a position to buy, which results in lost time for you. Many of my clients come to me not because they need more referrals, it’s because
they get too many referrals and they are wasting their precious time. They want to work smart not hard. “I am your client not your marketing department” - If you go back to clients and keep asking for referrals, how long is it before they start to get annoyed? Some professions will offer clients money in exchange for referrals. While this is often a reasonably productive way to generate referrals and reward the source, it is not always legal. Let’s face it; wouldn’t you rather keep the money for yourself? Developing referral sources that have synergistic business interests to yours, who do not compete, and you share the same clients, can result in business relationships based on reciprocity rather than cash. Asking too early Some people do ask for referrals and it is commendable. When you ask, is important though. I recently sat with a financial advisor who did a fact find on me and then asked for referrals. While I appreciate the proactive nature of this (most people don’t even ask) was it really the appropriate time? Referrals should be requested when you have proved you can do a good job, not after a consultation. It is, of course, a challenge. It may take years to prove you can do a good job and this is the exact reason why a balanced and efficient referral strategy should be applied across a number of referral sources (by sources I do not mean clients). In conclusion, if you want to grow your business by referral, treat your clients like the important resource they are, just do not rely on them to grow your business for you. That is your responsibility. 51
October - November 2012
Intelligent SME
Process Documentation
Streamlining your business
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Vinayak Doddihal details the first in a series of steps involved in process documentation.
ook around you. Take an example of any business and you will find that a business runs because of processes - these processes might have been documented systematically, or, people running a business know these processes. If those running a business know about these processes, then why is it required to document these? The answer lies in the question itself. What if those people who know about these processes leave the organisation, or just retire? Could the business be run in the same way as it was running before? Process documentation is mainly about improving customer experience and streamlining processes running a business. Another advantage of documenting processes is to find out gaps, if any, and to analyse whether some of these processes or activities could be automated to improve productivity.
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I have an interesting example to cite: one of my good friends is running a successful business for the last 20 years, primarily depending upon his trustworthy staff. Most of his employees have been working with him since the inception of the company, and they know everything about the operations of the business. Everything was running smooth until one of the key employees decided to migrate, giving a very short notice. My friend realised that he could not play the role of that key employee nor employ someone else, as none in the organisation was aware of how that key employee conducted his business operations. This friend of mine requested for help, and we were able to capture the business processes just in time. Imagine the plight of the business without the key employee! Such scenarios are common in businesses, and therefore, they mandate investing in business process
documentation. It helps an organisation to go for quality certification, simplifies internal quality audits, reduces the learning curve of new staff, and helps to improve productivity and customer satisfaction. It is not mandatory to go to a consultant to document business processes; although they do bring a lot more to the table than just documenting processes. They help you find the correct process standard, process documentation tool, document delivery method, and document maintenance methodologies, and most importantly, look at your processes from an objective point of view, giving you suggestions on their improvement. If you decide to document business processes yourself, you will find this article useful in understanding what is to be done to document these processes. In the previous article in this series (Issue 7), we discussed six major steps of process documentation namely,
October - November 2012
Intelligent SME
Process Documentation
Vinayak Doddihal is director at Infinito Management Consultancy and specialises in managing and authoring simple-to-complex process and technical documentation. He has been instrumental in implementing DITA and Single-source methodologies to produce process and technical documentation for print and online media. He can be contacted at vin@infinitome.com or on +971 56 690 4565.
collection of correct and factual data, creation of a process map, creation of sub-processes, documentation of activities and tasks, creation of visual representation of processes, and documentation of processrelated information such as forms, templates, policies, etc. In this article, we will discuss how to collect correct and factual data. Collection of data Data collection related to processes seems to be simple, as people running these processes are the ones holding that information. However, in reality it is the trickiest step of all. People perceive a process from their own point of operation and each individual looks at these processes only from his/her point of view. Therefore, to understand any business process, one must interview all individuals involved, to see their perception of that process and to interview the management to understand their expectations. So where does one start? The answer is simple; it’s always a top-to-bottom approach. Start with the management to find out what processes a company has. The management staff of a company is supposed to describe the operations to you, and it’s your job as process documenter to find out the high-level processes. Make a list of these high-level processes and find out who the process owners are. Don’t get overpowered with technical terms. In simple language, a process owner is the person who is responsible for its operation. Let’s take a simple example of a leave application process to see what data to collect and how to collect it. The leave application is raised by an employee wishing to go on leave,
let’s call him a process initiator. The leave application is then sent to his line manager for approval, he is a process player. Once approved, the leave application goes to HR department for various actions, such as deducting leave balance, checking leave balance and adjusting leave, and then forwarding the application to payroll for salary adjustments, if any. This simple leave application process involves quite a few people - the initiator, line manager, HR manager, HR officer responsible for leaves, personnel office for updating employee file, and payroll for salary adjustment. However, as a business function, it is the HR manager who is responsible for the overall leave process, and hence he is the process owner. A process owner is vital to the success of a process execution as he knows how the process works, and he has an authority to control it. It is very crucial to interview a process owner to understand high-level of process execution, policies associated with that process, the work flow, the documents used in that process, other process players and their roles, and so on. Once you collect the high-level process execution, make a point to interview each individual involved in the process. Using the above example as a guide, find out what happens if a leave application is rejected by the line manager, how leave balance is maintained and then deducted, how the personnel officer updates an employee’s file, and how salary adjustments are done. Verify what they say with the process owner, and if there is any conflict, resolve it by discussing jointly with the process owner and process player. Always keep in mind
So where does one start? The answer is simple; it’s always a top-to-bottom approach. the customer of this process. In our example, the customer is an employee requesting for leave. You also need to interview employees to find out what do they expect from the leave application process. It is important to align views of all parties involved in the process; however, the decision of management and of process owner is final. While interviewing the involved parties make a note of documents associated with the process such as, forms, policies, working documents. Find out where these documents are stored and their formats. You will need these documents later. Discuss the process flow; find out how each process player interacts with the other, what policies are associated with the process, and whether process activities are manual or automated. Collect all possible information related to the process you are documenting. Always make a note of how a process interacts with other processes. In any organisation a process is never stand-alone; all processes are interlinked. If you are able to collect correct and factual data from all involved parties, you have won half the battle of documenting the process. 53
October - November 2012
Intelligent SME
SME Insurance
Competent, informed owners = Responsible ownership Sandi Saksena outlines the need for planning an exit strategy for a business in the event of emergencies.
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very SME owner shares three common goals: business prosperity, family harmony and personal well being. As the owner of an SME you, no doubt, have your definition of success. However, I challenge you to add one more component to your definition of success: What will you leave behind as your lasting legacy? Ask yourself, “If I died or fell critically ill today, how would my family view me? What would I want people to say about me? Have I done my best, given my all? Has my life had meaning and purpose?” Many SMEs fail not because the owner was not hardworking or
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creative, but because he or she did not have a business plan; was poor at record keeping and financial controls, to review revenue and expenses report each month, because he was either too busy or was cutting costs. Other reasons include poor money management. By living for one to two years without income when getting started, often businesses are very slow to get off the ground. Or, there is no creation and/or use of a realistic business budget thus constantly draining the business income or personal spending. Sometimes, procrastination and poor time management can also bring about failure. Generally SME owners
will have just one product, one service or one big client. They cling tight to this one thing because it brings in good revenue. Further, do not forget poor cash flow. Let’s face it - having enough cash on hand to pay the bills is crucial, as is having enough cash on hand, or access to capital. Too many small business owners fail because they don’t have enough cash. Else, have you heard of ‘entrepreneurial burnout’? Owning one’s business requires a huge investment of time, money, energy and emotion. Work all hours, but for how long? Many are unable
October - November 2012
Intelligent SME
SME Insurance
Sandi Saksena is a financial planning counsellor with over 15 years’ experience in advising on life, disability and critical illness insurances. She focuses on exit planning for SME owners, working with accountants and lawyers to provide holistic solutions.
to balance business and personal life, (which includes stress management) and both will suffer. Whether by design or by default, many SME owners make themselves irreplaceable. The reality is, if they were to fall critically ill or die the business would most likely fail. This is singularly where most entrepreneurs go wrong and, it is without doubt, one of the main reasons why families of SME owners find themselves in dire straits. Preparing yourself for the contingencies that affect the business you own involves a complete exit strategy, which must consider potential changes, such as the death or critical illness or permanent disability of yourself as, the owner, your partner or buyer so that your objectives can still be achieved if circumstances change. Among major dilemmas confronting shareholders, partnerships and sole proprietors is what will happen to their equity in the event of their premature death or critical illness. There may be reluctance on the part of surviving shareholders to share in the future growth of the company, in particular, when a surviving spouse or children are not active in the business. Or the surviving spouse or children do not have the necessary expertise. In the event of critical illness or death of the business owner in a sole proprietorship, there could be serious implications, leading to liquidity crisis, loss of credibility and sharp decline of market share. There is a simple cost effective way to meet the challenges that can occur in the event of critical illness (heart attack or stroke) or death of the owner shareholder. It is life insurance and critical illness insurance. Life insurance is easy to administer, and the proceeds are
usually received income tax free, and are not subject to claims from creditors. Life insurance will also strengthen the business’ credit position while providing cash liquidity. Critical illness insurance This money always paid in a lump sum will help alleviate pressures like loss of income, loss of banking facilities and credit lines in the market, creditors knocking at your door. It
What is a Buy Sell Agreement? • A legal written agreement between two or more parties providing for the disposition of a business interest at death, disability or at retirement. • It provides for an orderly transfer of ownership. • The agreement must contain an obligation by a shareholder to sell and the other party (parties) to buy. • An agreed price must be established or an agreed formula to determine the purchase price. • At death, surviving shareholder(s) uses the life insurance proceeds to purchase shares as per the term of the buy-sell agreement.
Whether by design or by default, many SME owners make themselves irreplaceable. will help you keep your financial commitments, such as paying your mortgage, car or personal or credit card loan, household expenses, rent, utility bills among others. To put these insurances in place to safeguard business interests, many shareholders, partners and sole proprietors use life insurance and critical illness insurance (which is generally found to be the simplest, most economical way) to fund a buy-sell agreement. Life insurance and critical illness insurance provides ready cash to buy out a partner’s interests exactly when needed. As a funding medium for a buy-sell agreement, these two products are unsurpassed. For a modest expenditure each year, life insurance is the only method that fully guarantees that the full amount of cash required is available exactly when needed. Life insurance and critical illness insurance owned and payable to the company can be the difference between success and failure. The death of Walt Disney many years ago illustrates this point very clearly. At that time, the Disney Corporation was confronted with significant financial challenges. It was the one million-dollar key person policy that he had taken paid for by his company that kept the company afloat! 55
October - November 2012
Intelligent SME
Business Management
Getting the most from your IT investment
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V. Ramkumar analyses the various determining factors that govern a serious IT investment. t is always disturbing to note how very large IT investments by most organisations do not get the intended benefit, for the most simplest of reasons. Why do IT projects tend to face difficulties through its implementation life cycle? Is it because it is too technical? Is it because we don’t have the right people? Is it because the solution itself is not what a company should be looking at in the
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first place? Or even after getting the implementation done, what can be done to get the most of the investment? After all, IT investments don’t come cheap, and as an SME, one needs to ensure the right return on the investment is received. What we saw above are very common questions that one gets to hear from CEOs, especially of SMEs. One can make the entire investment a rolling success and deliver continuous
value both to the enterprise and the shareholder, if one gets three simple and common tenets that need to be followed while making any serious IT investments. And they get answered with three simple questions: why, what, and how. Let’s explore them. Addressing a business objective Simple as it may sound, this is perhaps the first and foremost factor that needs to be ingrained in the minds
October - November 2012
Intelligent SME
Business Management
V Ramkumar is senior director at Cedar Management Consulting International LLC, a US based management consulting firm whose heritage includes being part of the firm founded by creators of the Balanced Scorecard. Ram has over 17 years of management consulting and strategic transformation experience. He can be reached at v.ramkumar@cedar-consulting.com
of both the organisation and the vendor while any large technology initiative is undertaken. And don’t be surprised - 90 per cent of projects that fail have this as one of the common reasons for not being successful. When you fail to plan, you are indeed planning to fail. Any project - IT or otherwise, has to have the alignment to the business need defined upfront, in clear terms. Why am I investing in this project? What business pains am I addressing? What benefits do I expect to reap? This could be defined by way of improved processes, better turnaround time, reduction of manpower and effort, better quality of MIS, reduction of dependency on multiple smaller and disparate systems, higher operational controls, and so on. But the bottom line is to define: what is the foremost objective that will matter the most to you, from a return of investment standpoint. That defines the “why” part of the equation. And that is key to the first part of this equation. Right solution, vendor and team This is moving into the second part of the equation, which is to ask the question “what.” The typical questions that one needs to ask are not too daunting, but are quite pertinent: Which is the right solution that addresses my requirement - has it successfully been established in the region? Does it have the right functional and technical capability that I am looking to have? Several times, we do see organisations investing in the solution that is quite good functionally, but has an archaic architecture or that is not scalable. More importantly, who is the right vendor I need to partner with, to deliver the implementation successfully? What should be the team I need to have in place to deliver this project - do I have the team in place, and if not where do I
get the right resources from - can they be contracted, employed or mandated to a firm? One should note that not having any of the above can make or break the quality of the output expected from this initiative. Unless we get the solution, the vendor, the team and the mandates for them right, it would not make the right recipe for success. The other important factor is the ‘Total Cost of Ownership’ (TCO). While the cost or investments of a solution is directly measured by the licence, implementation and customisation costs, the indirect costs that get associated with this investment also count - the support costs, the hardware and third party solutions required to run the core solution, the database investment, etc. Additionally there is a list of “supplementary” costs that also need to be accounted for in the TCO, which are measured by way of internal team costs, other service providers for testing, training, project management, etc. There can be quite
Any project - IT or otherwise, has to have the alignment to the business need defined upfront, in clear terms. Why am I investing in this project? What business pains am I addressing? What benefits do I expect to reap?
a few hidden costs that one uncovers much later, unless due diligence is applied upfront in having these well reviewed and tightly contracted. Project plan and controls The most critical part of the project, and perhaps where maximum management attention is attracted, is the ‘how’ part of the equation. A specialised area in itself, the very idea of a well-managed project implies it has been well planned and well executed. Investing adequate time in planning the project - in terms of the activities and sub-activities, the resources executing these activities, the interdependencies, the key milestones in the project and what is known as the “critical path” of the project that conveys if the project is on track or not, are all critical. A good project management office (PMO) also helps in defining the mechanism of tracking these projects, determining the key risks and identifying mitigations that need to be put in place, the communication framework for both internal and external updates, escalation framework for any deviation that needs to be managed and also a formal project status update model, that gives a periodic update to key stakeholders are important for a timely delivery - that saves unnecessary wastage of time, effort, and of course, money! Having reviewed and managed multiple such projects globally and also in the Middle East, one thing I have always found most effective is to have the right measurement and alert systems in place. Ultimately, one can only manage what can be measured, and if you have your controls for measuring the project progress right, then management of it becomes that much easier! 57
October - November 2012
Intelligent SME
Business Law
Safeguarding family legacies Shari’ah law probably operates entirely differently from the laws of your home country. Nita Maru answers a few questions on inheritance issues.
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rotection of family legacies in the Middle East is a complicated, often underestimated area of the law, and as we have seen, Shari’ah law probably operates entirely differently from the laws of your home country. It is therefore important to have the assistance of a fully qualified lawyer to advise on wills and on business succession planning to best ensure that your assets are distributed according to your wishes.
Q. We own property in Dubai in joint
names. Will I automatically inherit that property upon my husband’s death?
A. The general rule is that inheritance issues for Muslims will be dealt with in accordance with Shari’ah, and for foreigners, the law of the deceased’s home country will apply. There is, however, some uncertainty with the law surrounding inheritance issues for UAE real estate owned by foreigners and for this reason property owners are recommended to make wills. This is reinforced by the fact that although
you have property in joint names, in the UAE, there is no ‘right of survivorship’ concept found in other jurisdictions (where property passes to the surviving joint owner upon the death of a joint owner). There are, however, alternative offshore structures we can advise on to protect property here.
Q. If my husband dies will our joint bank accounts get frozen?
A. In principle, the government will freeze accounts until all liabilities of your husband are cleared such as loans, credit cards and business debts; this can happen within one hour of a fatality! The procedure for reactivating the accounts is complex; however the process can be expedited if there is a will in place. Q. My husband sponsors me and our children. What effect will his death have on our visas?
A. The harsh reality is that your visa will be cancelled within 30 days and you will have to leave the country
as you no longer have a sponsor. However, there are contingency plans you can put in place for those wishing to stay in the UAE which I can advise on.
Q. John and Jackson are business
partners and equal shareholders in a LLC company in Dubai. Their business is growing rapidly and they are extremely successful. John is concerned that in the event of death of either one of them what the implications are.
A. At the juncture of untimely death of a shareholder, local probate laws will govern the future of the business, but the results may be unpredictable as shares do not pass automatically by survivorship, nor can another family member take over in lieu. However, we can secure arrangements to avoid lengthy local probate and guarantee business continuity. The Wills Specialists understand the implications and importance of planning for the future as an expat in the UAE.
Nita Maru is a British qualified solicitor and founder of The Wills Specialists (www.willsuae.com). With over 14 years of experience in senior legal positions, Nita has authored several articles and essays on asset and wealth protection. Her focus is on safeguarding families, heirs and businesses, under succession and inheritance laws in Shari’ah jurisdictions. The Wills Specialists is a law firm based in Dubai, dedicated to the business of wills, asset protection, business succession planning, offshore structures and trusts. The firm is accredited by the Government of Dubai Legal Affairs Department, and by the Dubai Ruler’s Court. Their office location is Office Suite 1305, Saba 1 Tower , Jumeirah Lakes Towers. Dubai.
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October - November 2012
Intelligent SME
Leadership
Do you lead like Attila the Hun or Branson?
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Leadership is a quality that every business owner is required to possess, writes Michael. J. Tolan. tatistics indicate that people do not leave organisations; they leave their boss or manager. Ooops. Why are some managers and owners so darn delightful to work for, and why are so many others unbearable as if they really do believe they should run their business with brutal force and heartless bravado, hence modelling Attila the Hun? Talk to any HR manager tasked with aligning behavioral mindset and you will discover many are talking about leadership as a training topic. This thought is not logical to many people, as they believe that there is either good leadership that either emerges in certain people or it does not. In fact, many believe that great 60
leadership is a gift you are born with, like a special and magical gene that skips every 50, 100, or 1000 people. Looking at Richard Branson, one could think that it could be simply a matter of luck to be a great inspiring leader, but many who know him would outright disagree. It could be that, he had a good model of what a great leader should be like in his mind and practiced this all of his business life to get better and better. Organisations today can use psychometric testing to evaluate new candidates’ abilities, habits and aptitudes and attitudes to see if they could be a proper fit for team alignment, empowerment and task management. To this end, so many organisations, consider their mission accomplished
as they onboard their new shiny recruit into the rank, file and role they were mandated to fill. And this is sometimes where it ends. Enter learning systems and solutions that attempt to teach leadership skills to their team. This is a great start, because there are many people in a current role that, if given the chance, they could give more heart, passion and innovation to their work life. Creating a policy to enable people to grow and learn new skills is the hallmark of great leadership from the top. It’s like saying, “We want you to know that you are important to us, we value your contribution, and since you spend more time with us than you do with your family or personal life, we
October - November 2012
Intelligent SME
Leadership
Michael J. Tolan is a speaker, writer and corporate mentor and board advisor to several organisations. He is the creator of Mission I’m Possible series of motivational workshops through FirePowerLeadership.com and is the Chief Inspirational Officer of the World Class Academy of Excellence (Follow him on Twitter mtolan@ worldclassgroup).
want you to grow and we are not going to hold you back from improving your skills or becoming more qualified as a team member. Wow!” Science of leadership Around 35 years ago, two researchers Jim Kouzes and Barry Posner teamed up to study the subject of what is now considered to be the science of leadership. They had the right questions: what makes a leader great, what attributes do they demonstrate, what behaviours they exhibit and what we, as people, expect to see in them. Their research produced some interesting and even dramatic findings, and as a result, they published their work and created the best leadership guidebook to showcase authentic leadership traits and habits. Since that time, they have stayed on their course updating their research and their work to keep up with trends, and moreover, the extreme transparencies that we can now all read about in leadership around the world to help leaders understand how to go from good to actually, great. Their book is called the Leadership Challenge, and it has sold more than 2,000,000 copies. To date, many Fortune 500 companies have integrated these practices into their curriculum, as have thousands of small to mid size companies. Honeywell, for example, put over 150 of its managers through the shorter two-day workshops at an investment of a reported US$200,000. “The ROI is evident when young managers or even seasoned ones learn that how they see the world and their role may be a different picture from what others around them, top to bottom, view. The progress reports throughout the year help keep us all in focus on where we are striving to
get to,” recounted one such company owner, after their managers finished this workshop. This 360 evaluation, LPI, gives the leader in everyone the opportunity to set targets and objectives for themselves in their overall behaviour toward others on their journey, as they are initially surveyed they get feedback and then put this as their challenge to improve in 3-6 months time. It’s an accurate course corrector along the journey of becoming a great leader. This is why it has become so popular as the LPI, Leadership Practices Inventory; executed again after the initial review, shows landmarks of core competencies and areas where there could be more room for improvement. In a nutshell, the five practices are as follows: ‘Model the Way’, meaning, does the leader walk the walk that they talk, and if so, how frequently, because consistency is the measurable piece of the puzzle. Next on the hotlist is to ‘Inspire a Shared Vision’, do they inspire others to collaborate, to join in and add their input to their vision and get everyone on board, with, you guessed it, consistency. After this, do they ‘Challenge the Process’ or look for new ways to get things done, do they innovate and allow innovation to grow as part of their culture that they steer through their leadership. Then chances are, that the final practice could fall into place, when they have the courage to ‘Encourage the Heart’, a practice that demonstrates rewarding others and appreciating their efforts in the organisation. These five practices, which are supported by 10 separate commitments, are not an easy pill to swallow for some, as their role models may have taught them a different set of rules in which to lead their organisation.
Creating a policy to enable people to grow and learn new skills is the hallmark of great leadership from the top. What type of leader would you rather work for, if you were not, the boss? A Richard Branson or Attila the Hun? This will go a long way to help business owners and managers accelerate their awareness of the importance of instilling great practices within their leadership team and yes, even to challenge themselves. Whether a company chooses this methodology or chooses any other similar solution to implement, one thing is clear. If retaining people within your ranks is a benefit to your organisational strength, then keeping them engaged and satisfied is a better strategy than alienating yourself and your team. The fact that great leaders keep good people and save money on constant recruitment to fill in the frequent gaps is another ROI of good leadership practices broadcast throughout the organisation. Leadership is not an accident, it’s a discipline that will carry an entrepreneur through the most challenging of times, and hopefully done right, with a team that will unify and rally around them, proud to be part of the purpose that is bigger than themselves. The good news is it is highly possible that we can all fine-tune our own leadership skills and win more often with tools like these and others. Lead On! 61
October - November 2012
Intelligent SME
Leadership
How to make a powerful first impression Anesh Jagtiani weighs five key components that create confident and lasting relationships.
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o you feel your communication skills are holding you back from creating great relationships? Have you ever heard about how important first impressions are? “You never get a second chance to make a first impression.” “First impressions are lasting impressions.” “First impressions set the pace for the rest of the relationship.” Sure, you can’t tell everything about a person by the first impression... in fact, most of the time you can’t tell much about who they really are. Nevertheless, so many people give so much weight to a first impression, that you either make a powerful one or spend the rest of the relationship making up for it. So let’s look at the five key components of making a powerful first impression: Conf idence The evidence is in on both the male and the female perspective, in business and in personal relationships... and in romance: confidence is the sexiest, most impressive and most attractive character trait that a man or a woman can portray. What does it take to communicate genuine confidence? Well, first, there’s the outside traits: eye contact, good posture, firm handshake, assertiveness...but if that’s all you have to go on, you’re just faking it. At the root of self-confidence is a high sense of personal value which comes from your own belief about who you are and what your value is.
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October - November 2012
Intelligent SME
Leadership Anesh Jagtiani is the CEO of Empowering Leaders Group (M. E). He is a professional speaker and trainer. His leadership programme helps managers motivate and retain their top people, improve their effectiveness in communication and maximise the bottom line of companies. He is also a TV anchor of a show called TOP GUNS on ZEE TV where he has interviewed the 12 most successful Indian entrepreneurs of UAE. He can be reached at anesh@elgme.com or www.elgme.com
If this personal sense of value depends on a title or a status symbol, or on someone else approving of you, then you don’t have core confidence. Thankfully, it’s as easy as making a decision when it comes to deciding your own value. You simply make up your mind and you affirm to yourself on a daily basis (out loud in front of the mirror whenever possible), that your personal value is yours to choose and yours alone. Respect The above kind of confidence must be balanced with respect for others. Even though you never want to let someone else’s impression of you determine your personal value, you respecting others is key when it comes to having successful interactions. Respecting others means that you use their name during the conversation, while you really listen to them instead of waiting for your turn to talk (or listening to your own inner dialogue). But much like confidence, there’s something much more important at the core of respect.
The golden rule In case you haven’t heard the Golden Rule, it is: “Do unto others as you would have them do unto you.” Sounds simple enough right? Yes, but you also have to make sure that you have self-confidence and respect. After all, if you’re going to do to them as you would unto yourself, you have to be going right by yourself first. A little mystery Another golden rule of first impressions is: be a man/woman of few words. Give the person some things to wonder and to guess about. If you reveal everything about yourself up front, you leave no curiosity in the person’s mind, and curiosity is the first principle of generating interest. So don’t tell everything about yourself, leave a little mystery to create interest. High social value This is the most important rule of making a great first impression, and one which will be taken care of by radiating confidence, respect and mystery. But that’s not all.
You simply make up your mind and you affirm to yourself on a daily basis (out loud in front of the mirror whenever possible), that your personal value is yours to choose and yours alone. People of high social value are seldom alone and they value their time. This is why when making a first impression, it’s crucial that you end the interaction first (unless it’s just not possible). Either way, show them that you value your time and that you’re not making yourself completely available to someone you just met. Write down these five tips and review them every time that you’re about to meet someone new. With enough practice you’ll be making stellar first impressions in no time. 63
The Gulf Finance SME Cup at Emirates Golf Club
Entries for the inaugural Gulf Finance SME Golf Cup are now open. Dubai’s SMEs are invited to enter this exciting corporate team golf event taking place over the coming months at Emirates Golf Club, offering SME companies a unique platform to establish new business opportunities. Corporate teams of four, compromising of a minimum of two employees, select two of the four qualifying rounds to try and secure a place in the Grand Final, where the top 24 teams based on the aggregate total of the two qualifying rounds will compete. Each team member must have a valid handicap. Fixture Qualifying Round One Qualifying Round Two Qualifying Round Three Qualifying Round Four Grand Final
Location Faldo Course Faldo Course Faldo Course Faldo Course Majlis Course
Date Monday 19th November 2012 Monday 17th December 2012 Monday 14th January 2013 Monday 18th February 2013 Thursday 18th April 2013
Time 1pm shotgun 1pm shotgun 1pm shotgun 1pm shotgun 1pm shotgun
Tournament Fees AED 3,500* per team of four and AED 3,200* for companies registered with Dubai SME *entry fees include two qualifying rounds (eight green fees), four team shirts, dinner buffet on the Clubhouse terrace at both qualifying rounds as well as four places at the Gala Dinner regardless of qualification. For further information and to enter your team, please email JDanby@dubaigolf.com Official Magazine Title Sponsor
in collaboration with
THOSE WHO MADE A MARK.
WOMEN ENTREPRENEURS
October - November 2012
Intelligent SME
Women Entrepreneurs
In pursuit of happiness and fulfillment Hanan Nagi, life coach and trainer, speaks to ISME on her transition from a corporate employee to a successful entrepreneur.
one’s personality, values, and ambitions. Becoming an entrepreneur is a lot of hard work. I wanted to add value the way I see fit, not from the perspective of a corporate organisation.
ISME: What sort of investment was required to set up your company? HN: I started my business before I was married. This made
things easier for me, than say, a person with many financial responsibilities and a family, because this can be a scary proposition. Even then I started consulting services and coaching while I was still in my job. The more senior you are in your corporate role, the more difficult it is for you to let go of the security of a full-time job. It was tough at the time, because I had to devote 10 hours to my corporate job and another 5-6 hours in the evening to training and coaching. This lasted for a year and a half till I landed a big contract, and then I took the risk of leaving my job and setting up my business. Of course, this is one contract, with no guarantee of the next one, but at least I knew I was ready. I would advise anybody who wants to start a business: do your homework, a business is nothing like corporate life, which is easier. To be ready, you have to start early. Do it as a part time job first, and then, when you’re ready, begin the entrepreneurial journey. This then becomes a calculated risk because it is harder, but safer.
ISME: How long did it take for you to break even?
HN: It took only six months, and I’m very proud of this
ISME: After pursuing a great career for 15 years, what prompted you to start a new business?
HN: Everybody called me crazy at the time! I used to have a prestigious job with the Dubai government. I resigned willingly a year after the economic crisis had hit. Many people reach a point in their career where they question their motivation, happiness and the long-term relevance of continuing in the same job and profile. It boils down to
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achievement. I know this is not the same in every industry, but I would like to think that the success we achieved very quickly was because of the way we projected ourselves as a large business. One of the things we did for example, that nobody else thought about, was a 100-per-cent money back guarantee for our clients, something unusual in this business. It keeps us on our toes all the time in terms of quality, and it also guarantees a no-loss situation for a client that can always go to another company that’s been around for a very long time.
ISME: What was your core focus when you started?
HN: Our core focus was on quality and developing a unique product. Anybody who’s starting a business should think about differentiating themselves and their unique selling
October - November 2012
Intelligent SME
Women Entrepreneurs ISME: What is your opinion of the training industry?
HN: It’s a challenging industry, but there’s always place for
point. It’s not about the money; it’s about projecting your image- from website, business cards, to the way you speak to customers- the way you present your product with confidence. Most entrepreneurs make a classic mistake in the beginning they’re so scared of spending. So far, our entire revenue, after salary deduction, is re-invested into the business. Otherwise, if you always worry about the cost and go for substandard production materials, it will affect your image, and the business you get from clients.
ISME: Do you enjoy being an entrepreneur?
HN: Being an entrepreneur is a lot of hard
work. Everybody who thinks they want to work for themselves because it is easier, are deluding themselves. I haven’t taken a vacation in three years! As an entrepreneur you have to work all the time because there’s nobody you can trust, especially in the beginning, to run the business for you. I love being an entrepreneur in terms of the challenges, the excitement, and achievements. Every achievement is a proud moment. It’s something that I have created from nothing. Plus I would like to think that we’re making a difference in a lot of people’s lives directly or indirectly. There’s a personal sense of achievement. It’s very satisfying and fulfilling.
ISME: You function in a very competitive environment. How do you ensure you stay on top of competition?
HN: I would like to think that the market is big enough to
recognise talent. There are many companies that we partner with; it may look as if we are competitors, but we maintain very good relationships with the founders. Furthermore, these are companies that share the same values as us. We focus on differentiating ourselves by giving or providing experiential learning through passionate and competent trainers in a fun, interactive environment and making a difference on both professional and personal levels.
real talent, passionate entrepreneurs, unique products, and for those with a will to succeed. Sadly, a lot of companies (corporates, government, banks) with financial problems slash their training and marketing budgets first, when they should be investing more in training to retain resources and to be creative and innovative in their jobs. By cutting this budget, you end up with scared, partly developed employees who aren’t sure of keeping their jobs. Conversely, there are companies that never stop investing. Dubai is picking up gradually, which is a positive sign. Being an SME myself, I think SMEs see training as a cost, because they don’t have a budget. Training is an investment, not a cost. It could be something like finance, social media and so on that has a direct return on investment. Some SMEs do that intelligently.
ISME: What advice would you give to new entrepreneurs? HN: Primarily, be sure you want to
do this. Many people lose their job, subsequently open a consultancy business or become a freelancer. But after a while they find that it’s not working, and they get depressed. It has to be planned right. I believe in the 4 Ps for success: Passion, Product, People and Process. Obviously quality, ethics, and great relationships with clients are core focus areas. Hire the best people you can because hiring the cheapest is not always the best thing for a small business. Resources may be a little more expensive, but can give you a lot in return. ISME: What programs would you recommend for SMEs?
HN: I think entrepreneurship training, tailored sales and
marketing for SMEs, financial planning, managing business from an accounting perspective are all programs that are necessary for this sector. Entrepreneurship is exciting, but there are so many nuances to be understood. Currently, social media is absolutely necessary. How to hire the right people is another skill we all need, including managing a diversified team or dealing with multicultural clients.
ISME: Who do you rely on for advice?
HN: I have a coach who doesn’t give me advice, but helps
me through a problem by asking powerful questions. I do have a large group of subject matter experts who help me with specific subjects. But entrepreneurs must be careful not to take too much advice, because value systems differ from person to person. 67
October - November 2012
Intelligent SME
Digital Marketing
Let’s get social Have a question about social media and promoting your business online? UAE-based social media consultant and award-winning marketing strategist Farrukh Naeem answers your queries on using Facebook, Twitter, YouTube, AdWords, SEO and any other online services. Send your questions to farrukh@farrukhnaeem.com Q. All my Facebook connections are on my personal profile
and I have been told that I cannot have more than 5000 connections on my profile? I do not want to create a page for myself. Is there a workaround to have more people connected to my Facebook profile?
A. For people who have a very large networking circle of friends and followers on Facebook, it is quite possible to reach the maximum limit of 5000 friends on their personal profile. Once you reach 5000 friends, you cannot add any more friends to your profile unless you remove a few. Earlier people had the choice to then either create a page and then manage a profile and a page - or create another personal profile - which is against Facebook rules. But Facebook has introduced a feature that enables thousands of people follow your profile’s public updates. It’s the ability to ‘Subscribe’ to personal profiles.
Celebrities and top influencers on Facebook have thousands of users subscribed to their updates. Pete Cashmore, the CEO of Mashable.com has more than 536,000 people subscribed to his public updates.
Anyone you have not blocked can subscribe to your updates and you only give them access to your public updates. Any posts made private to a select audience will not be visible to subscribers. Facebook understands that you might not wish to be flooded by updates from people you subscribe to or alerts from people subscribed to you. You have the options to tweak these settings to suit your preferences.
You can enable thousands of people to connect to your Facebook profile without the 5000-friends limit by enabling the ‘Subscribe’ option in your Facebook profile’s account settings.
The Subscribe feature can be enabled by any Facebook user above 18 years of age on their Facebook profile. Once enabled, people will see a ‘Subscribe’ button on your profile and will be able to see your public updates. Most celebrities and influential people have this option enabled which lets you follow them without worrying about whether they will approve or reject a friend request. 68
When people subscribe to a person’s public Facebook updates, they can choose how many and what types of updates they would like to see from that person in their timeline using drop-down settings of the ‘Subscribe’ button.
October - November 2012
Intelligent SME
Digital Marketing
Farrukh Naeem is a digital strategist and social media consultant based in Abu Dhabi, UAE. His marketing blog (copywriterjournalist.com) has a readership across 140 countries and his tweets (@farrukhnaeem) are followed by more than 11000 people worldwide. Farrukh helps SMEs and individuals build and grow their influence online using social media and online marketing.
Useful Links: 1. Facebook’s official information on the Subscribe feature: http://on.fb.me/OMswmu 2. Popular people to subscribe to (log in for customised suggestions): http://on.fb.me/Uw5YbW 3.Create a Facebook Subscribe button for your website or blog: http://bit.ly/Q6x8kn
After Facebook’s IPO, the urgency to have robust revenue streams is paramount. With the world’s most engaging platform reaching 1 billion users, the option for most of these users to pay small amounts to promote their everyday posts could add up to significant income for Facebook if the trend picks up. The feature is being made available to people with less than 5000 friends and subscribers.
A. Facebook posts are not shown to all the people who are
Useful Links: 1. Facebook’s post on Promoted Posts in the US: http://bit.ly/ SVIwye 2. Payments terms for Facebook that apply to Promoted Posts: http://on.fb.me/TirAqF 3. Facebook’s advertising guidelines that any promoted content must adhere to:http://on.fb.me/R89y5R
Q. How can I get more people to read my Facebook updates? What if my friends and family are not looking at my timeline at my unusual posting times? connected to you. Your friends and family might miss some of your updates that you might have wished they would see. While Facebook Pages had the option to advertise their recent and important updates, individual users did not have a similar option.
You can now promote your Facebook profile updates - news, links, photos, important life events - so that they appear prominently in the News Feed of your friends and family connected to you with easy payment options.
Most recently, Facebook has rolled out the ability to ‘Promote’ recent posts from your personal Facebook profile by paying a fixed amount of money - what they call the ‘lifetime budget’ of a promotion. The move has received mixed reactions from people but it is clear that people now do have an option to have their personal posts show up more prominently in their connection’s news feed. The ‘Promote an Important Post’ feature is being rolled out in stages. Once your profile has it, you will see a ‘Promote’ link in your recent posts on your personal profile. Clicking on it will open up a list of payment options based on the country you are in.
How to add a header image to your twitter prof ile
Twitter has had a major overhaul of its interface. One of the most interesting features is the ability to add a large photo around your Twitter bio - they call it the ‘Header’ image. Here’s how you can customise your Twitter profile in four easy steps using a header image from your computer. 1: Log in to your Twitter account and go into ‘Settings’. 2: Once you are inside the ‘Settings’ area, choose the ‘Design’ option from the left menu. 3: Scroll down in the ‘Design’ settings page and click on the ‘Change header’ button to choose and upload a header image from your computer. 4: Use the slider to resize the uploaded image as needed. Click ‘Save’ when done.
Tips to remember: The image to be uploaded for the header must be under five MB. Twitter recommends 1200x600 as the image dimensions. It might take a few tries to get the perfect fit in combination with your Twitter profile and bio text that is centralised and placed over the header image.
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October - November 2012
Intelligent SME
Sustainable Financial Discipline (How to grow revenue & save costs)
Date: August 29, 2012
The basic aims of running a financially disciplined enterprise is that the revenues need to increase, costs have to reduce, and the spectrum of right customers must expand.
Venue: Business Village, Deira.
Harshit. H. Jain, founder and CEO, Innovention Solutions.
The sustainable mindset involves the realisation that cash and other assets are king, employment of relentlesss working capital management, streamlining of business processes and co-creation of value through strategic alliances aor collaborative selling, Jain said during his presentation.
Jain also said that businesses had to live in the present and conform their processes according to the needs of the next generation customer. He explained in detail the supply chain solution and how different it was for the buyer, seller, the distributor and the supplier.
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October - November 2012
Intelligent SME
Powerful strategies to grow your business Date: September 26, 2012
Simon Hodges, CEO, Alchemy Network Middle East.
Venue: Business Village, Deira.
Business owners and decision makers at the event were told to focus on the main reason why they were sought after by clients, and to make this their USP. A good USP attracts attention and distinguishes from the competition.
The need to understand the market a company operates in, is also a key factor of success, Hodges explained. He also outlined the concept of niche marketing.
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October - November 2012
Intelligent SME
Events Calendar
Networking opportunities Important business events across the globe MENA MINING SHOW Date: October 22-23, 2012 Venue: Dubai International Convention and Exhibition Centre
The MENA Mining Show is where mining companies come to raise capital, win exploration licences and buy world-class solutions. Regional governments come to promote exploration opportunities and reveal the latest incentives to attract mining companies. It is also the platform where local investors come to evaluate the region’s best mining investment opportunities. Leading equipment and service providers demonstrate the latest solutions for regional mining projects. www.terrapinn.com FUTURE RETAIL Date: November 5-7, 2012 Venue: Jumeirah Beach Hotel, Dubai
A brand new event that provides the latest technologies, models and strategies for increasing sales, driving profits and inspiring innovation across the retail globe. Attended by regional and international retailers, retail distributors, mall operators and professional service providers, as well as developers, franchise operators, architects and designers; it will share progressive approaches to successful retail in both challenging and evolving markets. www.futureretail.ae THE BIG 5 Date: November 5-8, 2012 Venue: World Trade Centre, Dubai
With its continuous growth, the construction market in the Middle East is offering huge potential to international exhibitors who are looking to develop their business and The Big 5 is the perfect place to cultivate new opportunities. In 2012, the event will continue to focus on product innovation and green technologies and provide valuable
content to bring more buyers to the event. www.thebig5.ae FM EXPO Date: November 5-8, 2012 Venue: World Trade Centre
The FM EXPO Exhibition is the most direct route to sourcing the following services and related products: integrated facilities management, maintenance, security, health & safety, cleaning, air control, landscaping, waste management and software. Following the success of the inaugural World FM Congress in 2011, FM EXPO returns with the second edition. The World FM Congress 2012 will once again be one of the region›s leading facilities management conferences, presenting global speakers and world-class facilities. www.fm-expo.com ADIPEC 2012 Date: November 11-14, 2012 Venue: ADNEC, Abu Dhabi
Whether you are a multinational company or a local supplier, if you are involved within the oil and gas industry and the Middle East is your target then you should be exhibiting at ADIPEC 2012. www.adipec.com SWEET & SNACKTEC MIDDLE EAST Date: November 19-21, 2012 Venue: Dubai World Trade Centre This unique business platform provides the rapidly growing market for confectionery and snack items in the MENA region with a broad scope for sourcing food and packaging opportunities at the same time. www.sweetsnacktecmiddleeast.com
e-CRIME ABU DHABI Date: November 21, 2012 Venue: Rocco Forte Hotel, Abu Dhabi
The conference provides unique perspectives on how organisations can take advantage of emerging opportunities to increase productivity or decrease cost while at the same time maintaining the security and integrity of IT systems and electronic assets. www.e-crimecongress.org MY CONTENT 2012 Date: November 27-28, 2012 Venue: Dubai International Conference and Exhibition Centre
My Content is the leading international entertainment content marketplace in the MENA region. It provides professionals involved in the TV, film, animation, kids programmes, internet content, mobile content, social media, creative art, interactive entertainment, comics, apps, and digital media content industry with the perfect platform to conduct business. www.mycontent.ae INTERNATIONAL AUTOMOBILE SHOW 2012 Date: November 28 - December 1, 2012 Venue: Expo Centre, Sharjah The show is an ideal platform to showcase latest models of automobiles, convertibles, prototypes, 4X4s, motorbikes, accessories, audio and video systems, navigation systems, and auto finance facilities. www.int-autoshow.com MIDDLE EAST TELCO WORLD SUMMIT 2012 Date: December 4-5, 2012 Venue: JW Marriot Marquis, Dubai
The Middle East Com Telco Summit is the perfect place for all telecoms, media players and ICT players to discuss the changing realities of the ever more complex market and to gain insight from the most innovative companies who are succeeding in this increasingly competitive arena. www.me.comworldseries.com 81
October - November 2012
Intelligent SME
Column
The art of delegation
Summing up
Utpal Bhattacharya explains why the ability to delegate work in an organisation can be the difference between a winner and a loser.
L
ast month I spent some time with a very successful entrepreneur in the health care industry. He was planning a new brand launch early next year, and he wanted to share some ideas with me. It was mostly a friendly discussion without any commitments from both sides, and which also meant that we spoke about a lot of other things than just bouncing ideas. At one point he sighed, and said: “It is time now that I graduate from being a self employed professional to an employer.” That one line did catch my immediate attention, and I asked him what he meant, as he was already an employer, employing many, many professionals. His response was again pithy. He said: “I have been hands-on until now, working as a professional along with the rest in treating patients and as well as managing the business. But now, we have grown big enough, and I would rather focus my energies on managing the business and growing it.” 82
It is very important for an entrepreneur to be able to judge, ahead of time, where he stands and what he has to do. He has to be not only ahead in the game, but at times even act without taking note of what the heart said, as was the case with this entrepreneur, who despite his attachment to being a professional physician decided to quit and become a fulltime CEO for the sake of his business. The ability to delegate work in an organisation is vital, and that includes an SME owner. In the above instance, the owner decided to delegate himself to be the manager and leave the rest to professionals to manage. That decision was important, as the owner felt he needed to spend more time sourcing and managing his business rather than closeted in a physician’s chamber if he had to grow the business. Delegating wrongly can be disastrous, though, as I have found out a number of times. In one of the instances, I was horrified to discover that the man who had the title of “Financial Controller” did not know what capital expenditure was. I only found out too late, as by that time a potential partner had walked out on us. Sometimes owners appoint close relatives or trusted people to certain jobs of importance without considering if these persons are capable to deliver or not. Such owners are very confident people, and are also, in many cases micromanagers, and feel that since they themselves would manage all
“It is time now that I graduate from being a self employed professional to an employer.”
functions, it did not matter if right persons were hired for right jobs at the top. All that these types of business owners care for are “yes men” and those that they could trust. But that does not always work, and businesses suffer because of this approach. Very recently, I came across another successful entrepreneur in the education and training business. He is a chartered accountant by profession, but landed the business accidentally. His business has now flourished, but he has not stopped his practice because he loves it. I asked him how he managed his education and training business and his accountancy work together. He said he did not enjoy education and training, and so he has delegated the management to capable hands, only giving directions and meticulously looking at numbers, which he likes so much, every day. By doing that, while he has been able keep a strong leash on the business itself, he has been able to keep out of the operations, which he does not like so much: a perfect example of good delegation.