Issue 6

Feb. 2012 - Mar. 2012

Price: AED 10

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Gives your business an unfair advantage

SME outlook 2012

Dubai SMEs are all set for higher revenues and profits this year P28

European markets beckon

Why UAE companies are heading West P20

Behavioural ngerprint
How personality affects work performance
P54

A milestone for Dubai

The top 100 SMEs announced
P18

The No.1 Platform of Business Leaders

Strategic alliance partner Corporate partners

CONTENTS
FEBRUARY - MARCH 2012

20 Entry into European markets

Why local companies are now taking the jump into European markets, especially Germany.

24 Breakthrough technology in diagnostics

Revelar, a medical device that measures cell damage will soon be launched in April.

26 Viability depends on government support

SMEs in the F&B industry require the Dubai governments support in creating a nurturing environment.

28 SME business outlook 2012 9 Rare & Fabulous

32 SME Pulse: The way ahead

What can Dubais SMEs expect for the future? Success is a destination. Have you arrived?

SMEs have positive expectations from 2012. New initiatives are being taken by various authorities in the UAE to build a foundation for their growth and development.

14 A heady whiff of success

36 A closer look into the SME sector

Olimpia. T. Mascolo gives an account of her successful journey with her perfume brand Anfasic Dokhoon.

Zed Ayesh sheds light on the issues that affect the SME industry.

38 Micromanagement is a huge wastage

18 SME 100: A milestone for Dubai

The emirates top 100 SMEs announced.

Taner Kilicarslan urges SMEs to grab opportunities, use online tools and organise their business.

40 Dubai SMEs upbeat in Q4

Alliance partner

SMEs are expecting an increase in sales revenues and profits in 2012 compared to the previous year, according to Dubai SME.

44 To the long life of your business

Nita Maru writes on the need for a proper business succession plan to avoid uncertainties in the future.

46 Quality compliance with ISO 9001:2008 49 Women Entrepreneurs

Supported by

Quality at a competitive cost can be achieved only through an effective process-based system, writes Dr. Sameer Kumar. Kelly Lundbergs Divine inspiration, and Kristina Nyzells advice to entrepreneurs.

54 How personality affects performance 56 Happiness leads to success

Corrina Cross shows how to increase success at the workplace. Prof. Christopher Abraham explores the science of happiness and how it relates to professional and personal success.

58 Your employees need caring 61 How to inspire your peers 62 Lets get social

Michael Tolan explains the need for adopting wellness policies in companies to increase productivity. Anesh Jagtiani writes on the key to becoming a positive and decisive person. Farrukh Naeem answers your queries on using Facebook, Twitter, SEO and any other online services.

Be a Connector

Chief Executive Officer & Publisher Shantanu A.P

EDITORS NOTE

Account Director Vijay G. VP Business Development Shraddha Barot Amariei Editor Sandhya Divakaran Consulting Editor Utpal Bhattacharya Expert Contributors Kristina Nyzell Alexandar Williams Anesh Jagtiani Farrukh Naeem Zed Ayesh Dr.Sameer Kumar Nita Maru Corrina Cross Prof. Christopher Abraham Michael Tolan Taner Kilicarslan Art Director Aneesh Varghese Web Designer Hoze M Editorial Enquiries & Contributions Tel: 04-2659704, 04-2650312 Fax: 04-2690566 E-mail: editor@spiholding.net Advertising Enquiries Tel: 04-2659704, 04-2650312 E-mail: info@spiholding.net Subscription Enquiries Tel: 04-2659704, 04-2650312 E-mail: subscribe@spiholding.net Response Executive Melanie Castro SPI Publishing Post Box: 89735, Dubai, UAE Tel: 04-2659704, 04-2650312 Fax: 04-2690566, 04-2651708 E-mail: info@spiholding.net Website: www.spi-holding.com

vents such as SME 100 and SME Invest are giving SME companies solid platforms for further development and, above all, an exposure, which is indispensible for their growth.

Recently the top 100 SME companies were announced in the emirate of Dubai, which gave a wholesome emphasis on what exactly goes into being an SME by Dubai standards. Looking at financial and non-financial aspects, the SME 100 list gives many benefits to all companies that have attained this recognition. On a similar note, an SME roundtable, which was recently held in Dubai, further zoomed in on the sector, to see what is required by SMEs in order to grow. Industry experts were unanimous in their answer that finance and governance dictates an SMEs growth. Some of the upcoming events this year, including SME Invest, National Exhibition for SMEs and Middle East SME Forum are aimed at giving the much required support, recognition, knowledge and networking platforms to this sector. These are defining times for the regions SME sector, as various forces in the market are coming together to help them boost their performance. SME companies are looking forward to a great year ahead. There is a feeling within the sector that things have, finally, started to look up, in spite of mixed sentiments of industry experts. Company owners and decision makers are now motivated and inspired to strive for further growth, as the mechanisms of a positive change are slowly falling in place. The next step would, of course, be for suppliers, such as banks, equity lenders and financial institutions to take a closer look at SMEs, and see what can exactly be offered towards this sector. And as we, at The Intelligent SME, always emphasise, change is happening. Its time to get in where the action is, and be the change that you want to see!

Sandhya Divakaran

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.

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S U C C E S S I S A D E S T I N AT I O N

H AV E YO U A R R I V E D ?

WATCHES YACHTS DESIGNER JEWELLERY BOUTIQUE REAL ESTATE GADGETS EXOTIC DESTINATIONS FINE DINING

Rare & Fabulous

High tea onboard Bateaux Dubai

High Tea has now launched on the renowned Creek vessel Bateaux Dubai, a must do experience for any resident or visiting tourist! Take in the traditional Dubai sights in a cruise past the legendary Souqs, the bustling docks, the crowded Abra stations as well as the more modern landmarks. Launched in January, the 45-minute cruise combines delicious creations with essential sightseeing, as the vessel sails the famous waterway. The chef and his team onboard have created a delectable high tea menu, adding to the experience. Packages start from AED75 per person, including a selection of canaps and refreshments such as tea, coffee and soft drinks. Alternatively sample the new, mouth-watering high tea menu for only AED150. The premium package of AED195 per person also includes a glass of French bubbly. Bateaux Dubai is already an established evening venue and tops Trip Advisors list for Dubais best restaurants, but experiencing this superb glass vessel during daylight is as glorious as by night, albeit in a very different way. For reservations please contact the Bateaux Dubai team on 04 399 4994 or mail@bateauxdubai.com.

Rare & Fabulous

The new Porsche 911 Carrera: Tradition meets modernity

The completely redesigned generation of the iconic Porsche 911 Carrera is stepping into the limelight with its flat, stretched silhouette, exciting contours and precisely designed details. The 100 millimetre longer wheelbase and reduced height combined with the up to 20-inch wheels underpin the athletic appearance. At the same time, the compact sports car exterior dimensions were retained. The remodelled exterior mirrors are accommodated on the upper edge of the door and not as before on the mirror triangle. Like in the exterior design, classic Porsche elements can also be found in the interior: the instrument cluster with five round instruments of which one of them is a high resolution multifunction screen, the central rev counter and the ignition lock to the left of the steering wheel. Setting the standard in its class, as it has for generations, the new 911 Carrera and Carrera S raise the performance and efficiency bar yet another notch. All versions get by with significantly less than ten litres of fuel per 100 kilometres. Fuel consumption and emissions are up to 16 per cent lower compared to preceding models. The 911 Carrera and 911 Carrera S can be ordered as of now starting from US$91,041 for the 911 Carrera and US$107,796 for the 911 Carrera S (GCC).

Rare & Fabulous

Hstens Beds now in Dubai

The 160-year-old Swedish Hstens Beds brings to GCC its highly acclaimed hand made beds using only natural materials, with the launch of its state-of-the-art store at Sunset Mall, Jumeirah. The 3600 sq ft store is designed as an experience zone where visitors can test Hstens full range of beds along with all natural pillows and duvets and other bed accessories, in a luxurious environment. By using naturally processed horse hair, the finest wood, and a spring system that provides excellent ergonomic support to the whole body, Hstens has created beds that understand the human body and its need for deep, restful sleep. This understanding has spurred the creation of three collections that suit different sleep needs and individuals preference: Frame Beds, Continental Beds, and Adjustable Beds. Price on request.

Rare & Fabulous

Desvall, crafted to perfection

The Shisha is a symbol of unity. A round table which creates space for the merging of minds. With its flawless design and unparalleled beauty, the Desvall Shisha is the ideal choice, an object worthy of true art. The Desvall Shisha truly embodies Swedens world famous and critically acclaimed artistic heritage: hand shaped ceramics, pioneering use of metal and leather working techiques, as well as the exquisite and rare reindeer antler carvings of the indigenous Sami people. All Desvall Shishas are individually crafted to perfection; each piece is milled out of a solid block of metal. Every metal piece is sanded and polished by hand, and individually coated. Each Desvall Shisha is a unique work of art. Desvalls exquisite collection includes limited edition black, gold and chrome. It can also be customised to taste and specification. Price on request.

Made in UAE

A heady whiff of success

The UAE is one of the easiest places to begin a business. How one manages the business to makes profits depends on the owners skill. Sandhya Divakaran spoke to one such successful entrepreneur, Olimpia T. Mascolo (OM), owner of Anfasic Dokhoon LLC.
SD: Why did you choose this line of operations? What is your academic background? OM: When I was a child, I used to pick roses and ask my mum to boil them so I could keep their scent longer! Perfumes are my passion. While studying foreign languages in the south of France I was working in a historical perfume factory in Grasse, the capital of perfumes. It was converted into a museum and my job was to show people around and give them a sense of how perfume was manufactured. It was then I realised that this is what I wanted to do. I had an experience of Oud when I was in France and it was heavenly. Coincidentally, I came to Dubai on holidays and everything clicked in place. I wanted to work in perfumes and I wanted to be my own boss. The Gulfs incredible cultural addiction to perfumes and the business-friendly environment of the UAE were the perfect setting for me, so I decided to stay. SD: How did Anfasic Dokhoon come to being? OM: I was very lucky to meet my business partner, Mohamed Hilal, from my very first years in Dubai. We set about making a perfume brand, and he suggested the name Anfasic Dokhoon, which means

Made in UAE

breathing incense. We developed the brand from A to Z, from the concept creation all the way to the retail operations: scent development, packaging development, and production of the actual perfumes. The conception took about one year, finally the first kiosk opened in Mercato in April 2007. SD: What were the challenges that you faced in your journey? How was the competition, especially in this part of the world where incense, perfume, Oud are well established? OM: Anfasic Dokhoon now counts 28 retail stores. Support and hard work are what made us grow so fast. Mohameds experience in Arabian fragrances taught me everything I know about Oud and incense, and until today it is fascinating to manipulate such rich and beautiful ingredients. The perfume business is one where you have to ensure consistency and quality in every product. The ingredients are natural, and so one needs to be extremely conscious of the quality of the resources. Business is a challenge in itself. The list of specific challenges we faced would be very long. However, I believe the most important thing is to remain positive and believe in oneself. Of course, the most difficult part in this game is maintaining the right exposure in the retail market. Negotiating the right locations in shopping malls remains very challenging. Once you have the locations, the second challenge is to make sure you hire the correct brand ambassadors maintaining a high standard customer service. SD: How would you differentiate your product from the entire range of foreign and local products available? OM: Today, all the international houses of perfumery are turning towards Agarwood and oriental fragrances. Five years ago, when we started the brand, there

were either French perfumes or Arabic perfumes, which were very traditional. We blended the two worlds together. Our target is the young Arab generation that travels worldwide, is very fashionable and seeks quality, and yet is attached to their traditions. Anfasic Dokhoon reflects their needs: we offer a modern, elegant and trendy image with our powerful and rich oriental scents. Somebody once complimented me that we were the Rolls Royce of perfumes; but I would rather be the BMW of perfumes, because then we offer luxury, but at an affordable price. SD: What techniques have you used to market your product successfully? OM: Anfasic Dokhoons success came from three things. Firstly, I attribute it to the uniqueness of the concept and the quality of our fragrances; distribution is the second factor with our own retail shops giving us more flexibility; and thirdly, our strong focus on turning our sales team into fragrance specialists through extensive perfumery training. SD: What is your vision? How far do you want to take your brand? OM: We currently have shops across the UAE, Oman, Qatar and Saudi Arabia. The strategy for 2012 is to develop a range of products for the Western market, particularly Europe. We have succeeded in diversifying our range to spray perfumes, candles, lotions and so on besides incense. Were planning on adding many more products in this range in the near future. SD: What would you consider your achievements and what advice would you give to budding entrepreneurs? OM: Anfasic Dokhoon started with one little kiosk in Mercato in 2007. In three months we will be celebrating our fifth year with 30 shops across the region, over 60 employees for

the brand only (the group including the back office and the factory counts 200!), introduction of the brand in Galeries Lafayette in September 2010, and we closed 2011 as their number one selling brand. My advice? Dont start a business for the money, do it because you love the idea and everything will seem much easier! Real passion is what brings success. SD: Where do you see the perfume industry in the next five years? OM: Yesterday I was reading an article about edible perfumes, who knows where technology will take us? But definitely people are bored of the same scents. Perfume is a signature. It defines ones identity, gives one self confidence and makes one feel good. Most consumers are educated and demanding, and this allows more space for niche brands to develop. SD: How do you balance work and family? OM: I was very focused in the first three years on the brand; entrepreneurship in the beginning means longer hours, multitasking and very little time for yourself, your work becomes your family which I think is great. Dubai can be very lonely and its good for the staff and their boss to be comfortable and close to each other. I got married last September and nowadays life is much more balanced, so I have two families: one at home and one in the office!

The Intelligent SME

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Announcement

Updates you might have missed

New economic opportunities in Dubai
Dubai has steadily built confidence among businesses and residents on the strength and sustainability of its growth. Dubais economy returned to positive growth during the last two years, Sheikh Ahmad Bin Saeed Al Maktoum, chairman of the Economic Sector Committee, president of Dubai Civil Aviation, and chairman and chief executive of Emirates Airline and Group, said in his keynote address at the forum, hosted by the Department of Economic Development (DED) in Dubai. Held under the theme The Power of Vision Economic Development in an Uncertain World, Dubai Economic Outlook 2012 focused on three topics: Macroeconomic Outlook, Restructurings for Development and Engines of Growth. Sami Dhaen Al Qamzi, director general, Dubai Department of Economic Development, said: With sharper focus on diversification and growing international awareness on the emirates advantages as a gateway to high growth markets, the business sector in Dubai is looking forward to accelerated growth and expansion. Engineer Hamad Buamim, director general, Dubai Chamber of Commerce and Industry; Marwan Bin Galitha, director general, Real Estate Regulatory Agency; Khaled Ahmed, senior vice president, Economic Zones World; Dr. Nasser Saidi, chief economist, Dubai International Financial Centre Authority; and Dr. Mohammad Lahouel, chief economist, DED, shared the public sector perspective on the future of Dubais economy at the forum. The sector leaders and analysts who addressed the forum included Jamal Majid Bin Thaniah, group CEO, Dubai World; Dr Marios Maratheftis, head of research, Western Hemisphere, Standard Chartered; Dr Farouk Soussa, chief economist, Citibank; Trevor Rowe, executive chairman, Rothschild Australia; among others

Sami Al Qamzi, director general DED

overnment officials and private sector leaders speaking at the second Dubai Economic Outlookforum shed light on the economic growth prospects for Dubai in 2012, emphasising the various drivers, opportunities and strategies to harness potentials for further development and growth. Through strategic responses and close co-ordination between the government and the private sector,

S. Korea eyes 66% rise in tourists from Middle East

20th PR World Congress

ade in Korea, an exhibition in the MENA region showcasing products, services and technologies from South Korea, has announced that it is preparing a showcase of tourism destinations and value-added services in the country and in the Middle East. While there are around 60,000 tourists from the region who visit South Korea each year, the Korea Tourism Organisation (KTO) is aiming to increase the figure by over 66 per cent to reach 100,000 visitors by end of 2012, in line with the KTOs ongoing Visit Korea campaign. GCC countries are particularly important growth markets for South Koreas tourism industry, led by Saudi Arabia, which witnessed a 52 per cent increase in tourists to Korea during the first six months of 2011 in comparison to the same period in 2010. UAEs tourists to Korea also increased by 16.9 per cent during the same timeframe, while the number of Kuwaiti tourists in South Korea was up by 15.7 per cent. Tourism in South Korea has been a major revenue source for the national economy with 8.7 million foreign tourists visiting the country.

alaysias former Deputy Prime Minister, Anwar Ibrahim, the British public relations guru Lord Bell and the former head of Al Jazeera Wadah Khanfar, will headline an impressive line-up of 35 speakers from the worlds of politics, public relations and the media when the 20th Public Relations World Congress (PRWC) comes to Dubai next month. Held under the patronage of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, and in partnership with the National Media Council of the UAE, PRWC will take place at the Grand Hyatt Dubai over three days during March 13 15, 2012. Anwar Ibrahim, now a Malaysian opposition leader and leader of Keadilan, the Peoples Justice Party; Lord Bell, who played a key role in former British Prime Minister Margaret Thatchers three successful election campaigns and now the chairman of Chime Communications; and Wadah Khanfar, who now leads the Sharq Forum, an independent think tank, will lead a roster of thoughtleaders who will address the theme: From the Arab Street to Wall Street, Communications in the Age of Dialogue.

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The Intelligent SME

Announcement

Updates you might have missed

DIB introduces Al Islami Business Online for companies
to access over 75 services at the click of a button. Developed to help businesses in the UAE easily manage their finances, Al Islami Business Online enables companies to administer their funds 24/7, pay utility bills and access Dubai eGovernment services, create multiple users with different levels of access, transfer salaries through the Wages Protection System (WPS), account services and cards related services. The launch of Al Islami Business Online is the latest component of DIBs strategy to transform the existing model of business banking, said Dr. Adnan Chilwan, deputy CEO chief of consumer, wholesale banking. Through continued innovation, DIB is helping enterprises in the UAE to both manage their finances and grow their businesses. Al Islami Business Online further enhances DIBs position as the bank of choice for the UAEs business community. Al Islami Business Online is available to all DIB business and corporate banking customers, with free account set-up until March 31, 2012.

Dr. Adnan Chilwan, deputy CEO chief of consumer, wholesale banking.

D R

ubai Islamic Bank announced the launch of Al Islami Business Online, a portal enabling companies

More fund raising assistance in the Middle East

oyal Investment Bank Limited has signed a collaborative agreement with Bridgehead Administration Limited to provide fund raising assistance and investment marketing services to international fund managers who are looking to access the investor market across the Middle East. Both firms are based at Dubai International Financial Centre (DIFC), and their joint venture aims to actively market alternative investment funds in the region and to provide a full bouquet of capital raising capabilities to fund managers thereby saving them the time and effort associated with finding Middle Eastern investors for individual funds. Explaining the new venture in context, Lars Pampel, CEO, Bridgehead Administration Ltd and director of investor relations at Royal Investment Bank Ltd, said that improving market visibility and raising capital in the Middle East has always been difficult, even for a large number of best of breed funds. Historically, most allocations have gone to funds that have been able to leverage their size as part of their overall investment marketing mix. However, our primary and secondary market research indicate that there is a strong investor desire for smaller funds with market-leading performance, he added. Mohamed Ahmadi, founder and CEO of Royal Investment Bank Limited said: Working in conjunction with Bridgehead Administration, we are focusing on industries that are of particular interest to investors in the Middle East - real estate, oil and gas, power and utility, travel and hospitality, healthcare, and foreign exchange.

Moodys credit opinion on the UAE

oody's foreign and local currency issuer ratings for the federal government of the UAE are Aa2. These high, investment grade ratings are based on Moody's assumption that the government of Abu Dhabi, the richest of the seven emirates that compose the UAE, stands fully behind the federal government. Given this assumption, Moody's links its ratings of the federal government to those of the

government of Abu Dhabi (also rated Aa2 with a stable outlook). Abu Dhabi's sovereign ratings are supported by the emirate's very strong government balance sheet and abundant hydrocarbon resources. A release said that the consolidated fiscal account of the UAE is dominated by the budget of Abu Dhabi. The release said that the federal government's ratings face several constraints. The

federation's economic performance and fiscal balances are volatile given its dependence on hydrocarbons, although the external current account has remained in surplus despite global oil price downturns since the late-1990s, if not longer. Another concern, it noted, is that the UAE's political, administrative, and legal institutions tend to be less developed than rating peers, especially as scored by the World Bank's governance indicators.

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SME 100: A milestone for Dubai

Dubai SME announced the names of the emirates top 100 SMEs earlier this month at a ranking ceremony. A TIS report.

he names of Dubais top 100 SMEs were announced earlier this month at a ceremony hosted by Dubai SME, an agency of Dubai Department of Economic Development. The ranking initiative was launched by Dubai SME in 2011, and a total of 1092 SMEs registered for the rankings, out of which 100 SMEs were selected. The selection of these 100 SMEs was based on a number of criteria and upon complete submissions of financial statements, management interviews and site visits to ascertain merits. The top 100 ranked SMEs fall under Dubais official SME definition, with 15 per cent of these companies classified under micro SMEs, 52 per

cent as small companies, and 33 per cent as medium sized establishments. Companies registered were from the manufacturing, services and trading sectors. Together, with a combined turnover of AED2.3 billion and employing 4,319 personnel, these100 companies have set the base for SME development in the emirate. The ranking will be a platform and catalyst to identify promising SMEs, groom them to become sustainable enterprises, and eventually become globally-oriented companies. The ranked companies will be role models, sharing best practices to the rest of the SME community. They will also receive opportunities to raise capital and a potential secondary listing

of SMEs to attract equity capital, according senior officials of Dubai SME. Speaking at the ceremony, Sami Al Qamzi, director general of DED, said: I congratulate the first batch of Dubai SME 100 companies that have demonstrated the willingness and capabilities to be evaluated under the Dubai SME 100 model. They have shown commendable performance and vision for growth and development. I also commend Dubai SME for launching such an initiative to create a dynamic platform for all SMEs to come forward on their own will, participate, exchange information and share best practices. I am sure SMEs will be curious to know how

Sami Al Qamzi, director general of DED, Sheikh Ahmed Bin Saeed Al Maktoum, chairman of the economic sector committee, president of Dubai Civil Aviation and chairman and chief executive of Emirates airline group, and Abdul Baset Al Janahi, CEO of Dubai SME at the SME 100 ranking ceremony.

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The Intelligent SME

their fellow-enterprises have grown and developed. These SMEs have now responded to the call to participate willingly and share their business information in the first-ever Dubai SME 100 ranking. A vast majority of them have been nominated by our banks and free zone companies, and therefore, it can be rightly said these SMEs represent some of the best SMEs that Dubai has, Al Qamzi added. Abdul Baset Al Janahi, CEO of Dubai SME, said: Dubai has been the epicentre of global business opportunities and development for decades. Many great companies and global brands have been built in Dubai over the last three decades. Indeed, their story is the story of Dubais economic development. Moving forward, to sustain Dubais dynamism and the can-do spirit, we need a new wave of thinking, action and energy. We need new ideas, more innovations; we need new ways of doing things; we need to take more risks, stretch ourselves,

and overcome challenges. In short, we need to overcome all barriers to create new value for the economy. Dubai SME 100 is a major means to achieve this. Al Janahi noted that Dubai is home to a rich diversity of companies, especially SMEs across varied sectors such as trading, services and manufacturing. Yet we do not often hear or know who among them are the fastest growing and most talented, or what their ambitions are. These SMEs have used Dubai as a base to start their business journey, and are now flourishing, he said, adding that Dubai SME 100 will bring the spotlight on these SMEs, enabling them to accelerate growth. Said Dr. Faruq M Badiyuddin, CEO of Eastern Biotech and Life Sciences: SMEs dominate business in Dubai. This ranking has motivated us further, by giving us the inspiration to strive for even more growth next year. We hope to better our ranking next time, and we are sure that companies that were

not ranked this year would join the bandwagon then. Eastern Biotech was ranked 19 in the listing. Arch. Khalifa A. Al Jaziri, group managing director of e-Home Automation, which was ranked seventh, said: This is a milestone in the growth of SMEs. We are proud to have made the ranking, and this opens the door of opportunity for us. This year is looking very positive for us.

SMEs dominate business in Dubai. This ranking has motivated us further, by giving us the inspiration to strive for even more growth next year.
Dr. Faruq M Badiyuddin
CEO of Eastern Biotech and Life Sciences:

Sami Al Qamzi, Sheikh Ahmed Bin Saeed Al Maktoum and Abdul Baset Al Janahi with the winners at the SME 100 ranking ceremony.

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Growth story

Entry into European markets

Jan DSa investigates why local companies are now taking the jump to European markets, especially Germany.

here has always been a constant interest in developing economic ties between Europe and the MENA (Middle East and North Africa) countries. A recent very good example is the agreement between Swiss-based pharmaceutical company Acino and Cephalon Inc. for the former to take over Cephalons Middle East and Africa business, investing EURO800 million. Stagnant economies offer golden opportunities for quality products to secure new thresholds. Products in the lifestyle, luxury fashion and gourmet food industries are currently experiencing market gains in highly competitive European markets, offering tremendous opportunities for companies in the Middle East to invest in these segments Besides, the constant political instability and churning in the Middle East in the recent times, is leading to regional companies looking out for more stable markets. These companies are increasingly choosing to set up bases, specially in those

European countries that offer a stable political and economical system, not giving in to all the talks of so called Euro crisis. German attraction A large number of companies in the Middle East consider the Federal Republic of Germany as the most attractive point for potential market entry in the European market, being the worlds fourth largest economy with a GDP of US$2.94 trillion (2010 estimate). Germany is strategically located in Central Europe, and which puts it right in the middle of the commodity and services movement. Germany Trade and Invest, the economic development agency of the Federal Republic of Germany, cites why Germany is the most attractive European market. Through Germany, UAE companies can have access to the growing domestic markets of the European Union. Other factors such as world class infrastructure, competitive tax conditions, and secure investment framework make Germany the ruling European market.

Two graphs are used here to illustrate the points as follows. In Graph 1(Page no.21) it is shown that besides being the largest exporting nation of the European Union (EU) and despite high customs, Germany remains the pillar of growth in Europe. This strength of Germany makes it attractive for international investors that are strictly looking for security, a very competitive environment, ultra modern infrastructure and the advantage of being in the geographical centre of Europe. Historically, Germany has strongly defended its track record as one of the major export nations of the EU, and this has elevated its economy into a solid position relative to competitors in the region. Graph 2: (Page no.22) Illustrates Germanys strong potential, even disregarding the countrys massive constraints that emanates from the household budget due to EU responsibilities. Dr. Marcel Mulley, managing director of MABA Holding, an international management consultancy firm specialising in new

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The Intelligent SME

Growth story

and value-added tax (VAT) on goods and services. The disadvantage of making goods expensive can be compensated by the rate of exchange in favour of the currency markets. The signing of a new tax treaty in 2010 between the UAE and the Federal Republic of Germany (also called the Double Tax Treaty) appears to have no considerable advantage over a situation without a double taxation agreement for German nationals, but offers advantages to UAE companies entering Europe.

Double tax treaty:

In principle, a double tax treaty enables offsetting tax paid in one of two countries against the tax payable in another, in this way preventing double taxation. The old agreement compromised that jobholders who had their place of residence or permanent dwelling in Germany were exempt from paying taxes in Germany on wages learnt in the UAE. According to Low Tax global tax & business portal (one of the webs largest and most authoritative tax and business portal information sources), the new DTA signed with Germany and the UAE in July 2010, introduces a new formula by which in such case any paid taxes in the UAE are to be set off against the otherwise payable taxes in Germany. The new agreement (DTA) has obviously grown to meet the constraints of the presence. Besides the prevention of fiscal evasion, with respect to taxes and income this agreement, as Sheikh Abdullah bin Zayed Al Nahyan stated, It was set to open new avenues for commercial and investment cooperation between the two countries. Also, the old agreement (DTA) did not treat the income earned by self-employed persons, namely people in positions as physicians, artists and attorneys.

(Graph 1) market entry and turnkey operations, says: Setting up a business in Germany is straightforward. The main consensus is choice of company. The German company law allows company formations that include limited liability companies, joint stock companies and various forms of partnerships. If UAE-based companies are for joint partnerships, the importance lies in doing the groundwork and charting a precise business plan to convince official bodies and to enter the market successfully. Thankfully, a lawyer or consultant can provide the necessary know-how to guide through the dense jungle of bureaucracy. Also, partnerships or joint ventures are less extensive, since the partner does all the regulatory work. The upcoming German-Emirati partnership conference in Abu Dhabi (April 2012) is further proof that there is a serious discussion taking place, revolving around economic cooperation, establishing and maintaining of contacts between German and Emirati companies. This event should boost fundamental relationships and coin the future agreements with German and Emirati companies working in the sectors of construction, engineering,

Through Germany, UAE companies can have access to the growing domestic markets of the European Union.

manufacturing and also supporting environmental issues in the GCC countries. What are the factors influencing economic decisions to enter new European markets? Costing structures and taxation While positive and negative factors (such as saturated markets, abrupt change in policies, tax issues) will continue to influence economic decisions when entering new markets, it is interesting to see how companies can still benefit from different taxation systems. Costing structures play an important role in consideration of market entry. Whilst the UAE is mainly income tax free, Germany has a complex tax system with income reaching up to 52 per cent

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Growth story

(Graph 2)

Looking abroad For ChoCoa, a UAE-based manufacturer and retailer of exclusive chocolate, confectionery and pastries, the current UAE markets are saturated with many chocolate manufactures. It, therefore, made sense for them to expand into new markets in Europe, despite the fact that Germany and Switzerland are the main chocolate producing European countries. According to Assem Hamzeh, managing director, ChoCoa, Our market study indicates that the European markets are mostly saturated with mass chocolate products; however, the high-end market is shared by few. Moreover, there are no products like ours in the German market. Despite tax implications in Europe, Hamzeh believes that a population of 82 million Germans means a bigger target clientele, which would be of great interest to ChoCoa. Sure, there are competitors, but the different approach to our products as well as developing new line of tastes, which is not familiar to the European markets, means that we stand a greater chance of having new cooperation partners and major

Setting up a business in Germany is straightforward. The main consensus is choice of company. The German company law offers company formations that include limited liability companies, joint stock companies and various forms of partnerships.

dealers companies,Hamzeh adds. Unique Arab artwork It is also important to have unique products to showcase in new markets. Recent political situations in the Middle East have given art a big boost. MENA artists are presenting artworks that showcase issues which are poignant and moving. In recent years, we have seen a number of art fairs and biennales, such as the Art Dubai, Art Abu Dhabi and the Sharjah Biennale that attract international art lovers and investors to the UAE. But

this is not a one-way trend. Arts festivals and Biennales in other parts of the world are flooded with visitors from the Middle East countries, including artists, collectors and investors. The art that is produced in the Islamic world is definitely gaining prominence in the West, thanks to Charles Saatchis initial initiatives through his Unveiled exhibition featuring Middle East artists. More recently, the Louvre museum, France, has added on the department of Islamic Art, which will hold some of the oldest Islamic collections. Most of the funds towards this department, running in millions of Euros, were championed by GCC countries, including Saudi Arabia, Oman and Kuwait. There is enough proof that there is interest for Middle Eastern art and high craft products in European markets. It is on this train of thought that Emirati Farah Al Fardh, owner and designer of Farooha, approached the idea of introducing her Emirati themed 3D models made of paper quilling with Emirati themes into the European markets. While the art of paper quilling is quite extensively practised in the UK, it remains relatively unique in other parts of Europe including Germany, France, Spain and Italy. She says: The European market is a mature one, where there is more appreciation for all kinds of art forms originating from the Middle East. It is definitely easier to make the right kind of contacts in the art world as well as working with a Germanbased partner so that I can augment the awareness of this particular art form. There are a number of areas where MENA companies can look at Europe to diversify their markets, including manufacturing, IT, health care and engineering services. But industries like art, which show significant promise, should be explored further. In some ways, for companies from the region, the pastures in Europe are really lush green: the scope is immense for those that have the right products and services, strategy and in some cases partners.

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Health care

Medical diagnostics gains breakthrough technology

Ground-breaking medical device measuring cell damage to be launched in April. A TIS report.

lood tests will soon be thing of the past. Enter the Revelar system, a medical device that uses non-invasive techniques to detect aldehydes and free radical damage. Launched by US-based Pulse Health and distributed in the region by Pharmaplus, the Revelar system gives real-time diagnosis of a persons wellness or illness by tracking aldehydes, organic compounds released when cell damage occurs in a body. Aldehydes are indicators of free radical damage, a possible symptom that factors in cancer, heart disease, ageing and rheumatoid arthritis. The Revelar system measures volatile and often toxic aldehydes that exit a body through exhaled breath. The non-invasive technology uses a Revelar Breath Tube to capture these aldehydes in a unique manner, and calculate with a Revelar Score, which

reflects breath aldehydes in the parts-per-billion range. The device is simple to use, and takes less than seven minutes to get a personal score, which helps to detect oxidative stress in the human body. The Revelar score helps people make educated lifestyle decisions that may improve their health. Additionally, it can be used to determine the type and amount of nutritional supplementation an individual takes to narrow down the risk of disease. Alaa Altaher, CEO of Pharmaplus, says: Aldehydes are evidence of cellular injury, and many are also highly toxic themselves. The Revelar score is a measurement tool to give patients a very specific method to measure aldehydes, help reduce free radical damage and ultimately improve health. If a doctor has this data in his hand, then he will be able to prescribe appropriate antioxidants and enzymes, or give

The Revelar score is a measurement tool to give patients a very specific method to measure aldehydes, help reduce free radical damage and ultimately improve health.
stress reduction advice and suggest appropriate exercises to alter the score and help in improving the wellness of a patient. The Revelar device is currently in the registration process with the UAE ministry of health. Altaher says that the device is being registered in the Grade 1 category. He also adds that the device will be rolled out in phases in the UAE and the region. We will roll out Revelar to the hospitals first, and then target corporates and insurance companies, he says. Chris Marsh, CEO of Pulse Health, who was in the UAE recently to speak to the countrys medical fraternity, notes that the device would also be appropriate in wellness centres, for nutritionists, clinics, chiropractors and fitness centres. Pulse Health, the owners of the Revelar device, is in the process of launching other medical devices that use breath-analyzers. The company is planning a global launch of two devices shortly, one that will measure cholesterol and another that would measure blood pressure, both using breath technology.

Alaa Altaher, CEO of Pharmaplus, and Chris Marsh, CEO of Pulse Health, launch the Revelar system in Dubai.

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F&B industry

Viability depends on government support

SMEs in the F&B industry see opportunities ahead; however, the government needs to play a proactive role to create the right environment, according to some local players. A TIS report.

he food and beverage (F&B) sector represents a significant share of the total investments in Dubai. The F&B industry in Dubai is characterised by national industries that account for local investment and multinational companies (MNCs) and free zones, representing foreign investment. However, Dubais F&B industry remains largely dependent on imports, a trend common to the GCC as a region. To promote the industry, the government needs to play a proactive role in providing incentives and creating the right environment to encourage local F&B manufacturing in a highly competitive environment in and around Dubai. The development of the F&B industry is key to the strategic development plan of Dubai. From an economic and strategic perspective, F&B

manufacturing contributes to the food security and diversifying manufacturing objectives of the country. Opportunities The main opportunity for SMEs in the F&B industry in Dubai relates to niche products based on the market trends of convenience, health and luxury that cater to high income segments. With a multicultural society consisting of wealthy locals and a dynamic pool of expatriates, Dubai can serve as a testing ground for innovative food products, which are export-worthy, according to experts. The latest Dubai SME research on Dubais F&B industry revealed that the local industry in Dubai has been stagnant due to increased competition coming from large and low cost producers in Saudi Arabia and India, limited supply of local

agricultural and livestock produce and a continuous rise in raw material prices, affecting margins. The study also revealed that in order to develop and increase competitiveness of F&B manufacturing in Dubai, government intervention in the form of low cost land and utilities and increased incentives for research and development would be appreciated. Firms could also benefit from increased export assistance and marketing support for locally made products. The demand for products is highly dependent on population and its lifestyle characteristics. A highly demanding population provides incentive to innovate and improvise products, the Dubai SME report suggested. The F&B landscape in Dubai is relatively crowded with a multitude

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F&B industry

of imported products and brands. Foodstuff sold in retail outlets is estimated to consist of 75-80 per cent imported consumer-ready products and 20-25 per cent locally processed foods. Consequently, there is potential to increase the share of locally manufactured F&B products as well as to enhance value-addition on re-exports before it reaches the customer. There are also avenues for Emiratis to explore entrepreneurship opportunities in select product categories. Challenges Nasser Al Hashemi, a young UAE businessman, who is in the process of setting up a restaurant, said: It is not easy to set up a new business as we do not get enough help in doing so. For instance, I do not know whether I can get any help in financing my venture and, if yes, there is no information on how one can get it. Luckily, I am financially sound, and can do it on my own. But apart from funding we need other help too. For example, we had to conduct market research, a feasibility study to find out whether it is viable to open a new restaurant in Dubai, which is full of different kinds of outlets from fast food to specialised ethnic food restaurants, he said. There are two ways of setting up an eatery establish a new concept or get a franchise. I opted for the first one and decided to open an outlet, which will serve traditional European food, with a different concept of serving, he explained. So, to get market research done I was asked to pay a huge sum of money that would be very difficult to recover even if the restaurant is successful from day one. My question here is how am I or any other young entrepreneur supposed to pay so much to some consultancy firm, which is doing this kind of report that I did on my own with minimal expenditure? he queried. Fardan Al Fardan, his cousin brother and business partner in the

The F&B landscape in Dubai is relatively crowded with a multitude of imported products and brands. Foodstuff sold in retail outlets is estimated to consist of 75-80 per cent imported consumer-ready products and 2025 per cent locally processed foods.

new venture, while agreeing with him, said that challenges were not limited to these issues only. Another problem is the location. The right location for an outlet like this is very important. Ideally it could be big shopping malls, but those are out of question, as they demand huge rentals. It is hard to convince big malls to give us a releasing offer. In fact, they (malls managements) ask us, the beginners and local players, to pay as much as major international brands. Is this fair? he demands. We need governments help. We know there is a dedicated organisation Dubai SME, but so far we have not approached them, the partners said.

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SME business outlook for 2012

What can SMEs expect for the future? TIS finds out, following the recently held Dubai Economic Outlook, the pulse of the segment.

Special focus

ith Dubais GDP expected to grow by over four per cent in the first quarter of this year, the emirates business outlook for 2012 seems to be positive, according to experts. Government officials and private sector leaders speaking at the second Dubai Economic Outlook (DEO 2012) forum recently shed light on the economic growth prospects for Dubai emphasising various drivers, opportunities and strategies to harness potentials for further development and growth. Sheikh Ahmed Bin Saeed Al Maktoum, chairman of the Dubai Economic Sector Committee, president of Dubai Civil Aviation and chairman and CEO of Emirates Group, said Dubais economy has returned to positive growth in the last two years, albeit at a moderate pace, compared to the pre-2009 phase. According to available estimates, the emirates GDP grew by about 2.5 per cent in 2010 and by more than three per cent in 2011. Dubai has had its fair share of difficulties. However, the strategy of creating new opportunities through diversification has succeeded in bringing about economic prosperity and stability. Growing sectors Economic activity and prosperity in Dubai has traditionally been centred on the trade, logistics and tourism sectors, he said, adding: We see these sectors firmly in the driving seat once again, supported by an unrivalled infrastructure, global enterprises and growing reputation as an international destination. Together, trade, logistics, transportation and tourism accounted for almost 60 per cent of Dubais GDP in 2011, he noted. According to Hani Al Hamli, secretary-general of Dubai Economic Council, Dubai accounts for about one-third of the UAE economy. As you well know, these sectors have recently experienced vigorous growth, as demonstrated by the buoyancy in tourism and hospitality

and the substantial increase in passenger traffic through Dubai International Airport in 2010 and 2011, Sheikh Ahmed said. He said the financial sector in Dubai has also remained resilient and robust, in spite of the real estate lending challenges. As a part of our overall prudential approach in managing public finance we have rationalised the use of public funds and have set tighter budget controls for 2012, Sheikh Ahmed disclosed. Trevor Rowe, executive chairman, Rothschild Australia, echoing Sheikh Ahmeds views, said that construction and real estate sectors were expected to achieve robust growth following a return to positive growth in parallel with global economy recovery, and the tourism sector will continue to play an important role in Dubais economy. Following an increase of 17 per cent for restaurants and hotels in

Q1 2011, growth rate for 2012 is expected to exceed the numbers achieved before the economic crisis, he added. As the global economic slowdown is expected to impact Dubais trade partners (especially Europe, China, India and other GCC countries), access to international diverse markets will be a key element for the emirates trade activities, he explained. Export Dr. Mohammad Lahouel, chief economist of the Dubai Department of Economic Development, said: Exports of goods and services will be the main driver of growth in 2012. He said that it would contribute to this growth rate significantly, adding that Dubai has an extremely open economy with an excessively dynamic service oriented market, driven by a rather exemplary tourism sector, which in turn feeds the retail and hospitality sectors. Sami Dhaen Al Qamzi, director general, Dubai Department of Economic Development, said: With sharper focus on diversification and growing international awareness on the emirates advantages as a gateway to high growth markets, the business sector in Dubai is looking forward to accelerated growth and expansion. Hamad Buamim, director-general of Dubai Chamber of Commerce

We see these sectors firmly in the driving seat once again, supported by an unrivalled infrastructure, global enterprises and growing reputation as an international destination.
Sheikh Ahmed Bin Saeed Al Maktoum, chairman of the Dubai

Economic Sector Committee, president of Dubai Civil Aviation and chairman and CEO of Emirates Air Line Group,

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and Industry, said: From whatever feedback we get from the Dubai business community, perspectives for this year look promising. Uncertainties resulting from the global downturn and euro-zone crisis as well as regional developments following from the Arab Spring have underscored the importance of Dubais economic vision. The subsequent eastward shift in economic activity and financial flows present vast opportunities for Dubais economy and the private sector, experts say. The economic forecast for the UAE by Oxford Economics last month put the merchandise export growth at 35 per cent driven by higher oil output and prices, as well as by the revival of non-oil trade in Dubai. Whats in store for SMEs? The (business) outlook for Dubai SMEs for this year is good, with all the indicators showing positive outlook growth, said Abdul Baset Al Janahi, CEO, Dubai SME. He added

The subsequent eastward shift in economic activity and financial flows present vast opportunities for Dubais economy and the private sector, experts say.

that SMEs in Dubai can divert their operations to the vast African market and benefit from the significant trade relationships that exist with the continent. Dr. Abdulqader Al Khayat, owner of a medium-sized laboratory supply and maintenance company in Dubai, said: Business outlook for mediumsized companies in Dubai is good this year, especially in our field given there are investments in this sector. If the government has budget

for investment in labs and there is demand, then it is going to be a good year for us despite the global slowdown. But I believe it will be tough for others, especially smaller companies to survive in these uncertain times when competition is fierce, he said. In fact, we managed to expand into other GCC countries, including Saudi Arabia and Qatar, as well as Egypt, during the last couple of years since the inception of the company, he added. The business is growing, there are all the positive signs for that, with our company entering new markets, including Saudi Arabia, Qatar and Kuwait, not to mention the Northern Emirates, said Atheeqe Ansari, director of a medium-sized electrical cables supply company. While the real estate and construction sectors have plunged over the last three to four years since the economic crisis has struck, the industrial sector is still functional. It is growing and it is well funded, he explained.

Trade, logistics, transportation and tourism accounted for almost 60 per cent of Dubais GDP in 2011.

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SME Pulse 2012: The way ahead

Factors like lack of finance and talents have been the bane of the SME industry for ages. However, certain initiatives are now being launched in the UAE in an attempt to solve these issues. A TIS report.

he SME industry has always been at a disadvantage, when it comes to basic elements that contribute to growth and success of enterprises. Time and again, there have been various discussions regarding the plight of these small businesses that contribute so significantly to the gross domestic product of the UAE economy and yet continue to remain on the fringes. Experts keep harping on two primary areas that need immediate addressing for SMEs to become competitive: talent and funding. Challenges of funding There are numerous instances of SMEs being forced to close owing to lack of capital. Take for example the case of Mohamed Nassar, the founder and managing partner of WMS Metal Industries. Nasser founded WMS in 2007. He took the company from a start-up to a

company listed in Dubai SME 100 and winner of The Big Projects 2011 Green Building Project of the Year. But Nassars journey had not been easy. It was a bumpy ride to success. His first business closed in about six months. Nassar says that he did receive trade credit from a local bank, but this support was not a consistent one. When youre dealing with local banks in tough times, as they were in 2008, the consistency of support can be very poor. We had facilities that were valid for 90 days. Then, on the 59th day, I get a call from my banker saying that they had changed their terms. The facility was now valid for only 60 days. I had recourse to nothing at that time, and yet I had to close my position with the bank within 24 hours. It had been quite a struggle those days, he recalls. Nassars second business WMS Metal Industries has seen better days. After three years of

operation he is expanding, but he owes this success purely to innovative solutions. Nigel Sillitoe, CEO of Insight Discovery, explains why small businesses go through messy situations, especially at times like today when there is hardly any confidence in the market. He says: More fundamentally, entrepreneurs in the UAE are usually expatriates, with strong links to other countries. In the event that their businesses falter, they often leave for good. In fact, given the absence of a modern bankruptcy law, they may face imprisonment if they stay. Potential financiers know this, and often see commercial ideas of merit as being far too risky. A recent panel discussion on SMEs, organised by Insight Discovery in Dubai, drew attention to some major problems faced by this industry segment. According to Edward Rodericks, co-chairman, Envestors MENA, an angel investment and corporate finance company, among numerous challenges that SMEs face, those that are in the business of offering services find borrowing extremely difficult, as they hardly own any hard assets that can be offered as security. Their second challenge is the cost of funding. Sometimes the rates are punitive, he adds. I find it extraordinary that businesses which are trying to grow and develop are able to borrow at that level, let alone to be able to pay it back at some stage in the future, he remarks. Add to that the cost of getting a licence, operating fees, an office space, rents, and many other

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expenses, and SMEs are left with no budget to strategise and develop their business. Innovating to survive The need for hiring the right talent in a company is equally important as capital. Many SME owners are of the opinion that talent is key to a companys success, along with cash flow. Every potential candidate is a winner during interviews. Ten days later, they reveal their true capabilities, and the employer is at a loss, notes one entrepreneur. Finding and sustaining right talent is as time-consuming as any other project, and due diligence is required for this task as well, he adds. However, despite the difficulties of the present times many SMEs are applying innovative and cost-effective solutions to access capital to cover their burgeoning expenses. Many have diversified their portfolios of services and thereby, increased revenue lines. Hussain Al Tahri, managing partner and director of Al Wegdaniyah Transport, says: Our company used to cater to retail walk-in clients prior to 2008; but since then we only deal with corporate clients, long-term rentals

and leasing. We are focusing only on corporate clients since most companies, these days, dont have enough liquidity to buy vehicles by themselves and the banks are very tight on lending, so the only choice is to lease out these vehicles, giving them peace of mind to outsource this function to us. This is an effective solution that works in our favour. Companies like Atics are going with market trends and developing innovative products. Atics, which primarily provides preventive and predictive electrical maintenance solutions for various sectors by using thermal imaging or thermography, is about to diversify its products on a need-based philosophy. The world is in need of an energy shift, and renewable energy is the focus of the times. With this in mind, Atics will be entering into commercial trading of solar hybrid generators and energy efficient lighting, discloses Rashid Al Mutawaa, MD of Atics. SMEs owners and decision makers are networking regularly, seizing opportunities wherever possible to expand their client database. Indeed, proactive and result-oriented in nature, they are constantly trying to remain ahead of competition, reducing unnecessary

costs.A number of SMEs have also begun to outsource simple tasks to freelancers and consultants to reduce expenses further. This way they have professionals to deal with their projects, while incurring nominal expenses as opposed to recruiting new staff. In most SMEs, multitasking is a habit, where few manage a lot of responsibilities. The owner himself wears many hats and takes care of many specific tasks, be it administrative, financial and so on by himself. Another way of getting talent and finance is to get a shareholder who is also an industry expert. This is a long-term solution where both parties the business owner and shareholder receive mutual benefit. Financial institutions such as Gulf Finance, and HSBC and National Bank of Abu Dhabi (NBAD) are now closely following the SME industry, supported by their own research arms. Nick Levitt, head of commercial banking, HSBC Bank Middle East, predicts that in the next five to ten years, provision of funding to SMEs will be one of the areas that will experience the largest growth for financial services in the country. Government support Many industry experts agree that

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Special focus

government support is the key to the success of the SMEs in the country. The governments of economies like Hong Kong and Singapore ensure that half of bank debts are invested into the SME sector. Although there is nothing comparable in the UAE, there are certain positive indications in this regard. The Dubai Chamber of Commerce and Industry recently signed a memorandum of understanding with NBAD to facilitate entrepreneurship by providing up to US$100 million to SMEs. This is a major development for the UAE, as bank lending to SMEs in the country has been restricted to a mere 3.85 per cent, which is the lowest in the world. All indications are that the governments in the UAE are beginning to offer the much needed support to entrepreneurs. Rankings

such as the recently held Dubai SME 100, organised by Dubai SME, an agency under the Dubai Department of Economic Development, are aimed at motivating SME companies, inspiring them to maintain robust financials, strive for further growth and also offering them beneficial support through financial institutions and advisory. Mohamed Ahmed Bin Ghalaita, managing director of Suntron, an electronics and home appliance company that was adjudged 31 in the Dubai SME 100 rankings is now looking forward to the next big event. The Dubai SME 100 ranking has motivated us immensely; we are now looking forward to SME Invest where we will be exhibiting, he says. Events such as these, along with trade exhibitions and conferences,

will provide value to the SME sector, encouraging knowledge transfer and networking. It is hoped that this steady stream of support will continue till SMEs are self sufficient.

Among numerous challenges that SMEs face, those that are in the business of offering services find borrowing extremely difficult, as they hardly own any hard assets that can be offered as security.

Innovation is the name of the game

Hussain Al Tahri (HT), managing partner and director and Mohamed Lashin (ML), CEO, gave The Intelligent SME an account of their experiences at Al Wegdaniyah Transport and the SME industry in general. Al Wegdaniyah Transport is ranked 70 in the Dubai SME 100 list. TIS: Please explain the operations of your company and how long you have been functioning. HT: Our company was established in the year 1997, and we became members of Dubai SME in 2008. Al Wegdaniyah handles the shuttle bus service for all the major malls in Dubai and is one of the top three companies for ground transportation for Emirates airline. ML: Our company catered to retail walk-in clients prior to 2008, but since then we only deal with corporate clients, long-term rentals and leasing. TIS: How have you grown over the years of your existence? What are the best insights you can give to budding entrepreneurs? HT: Since 2008, we doubled our growth achievements every year. Our advice? Focus on long term prospects and give excellent service and pricing. You will definitely beat the competition. ML: Also, I might add, it pays to be specialised. Companies have to study their market very well, and use tactics and pricing that cant be offered by large companies. TIS: What were the challenges faced in the course of doing business in this country? HT: In order to operate without any difficulties we pay high fees to establish and run our business. These are challenges to any start-up. We have to pay licensing and operating fees to various bodies. Now, after more than three years, we have an established revenue stream, but in the beginning these fees severely affected our cash flow. TIS: What is your opinion of your industry at present? Are there any problems that you would like to highlight, and how you are solving it? ML: We are focusing on corporate clients only; now most companies dont have enough liquidity to buy vehicles by themselves and the banks are very tight on lending, so the only choice is to lease out these vehicles, giving them peace of mind to outsource this function to us. This is an effective solution that works to our benefit. TIS: What are your plans for the future? Would you be further diversifying your portfolio, or build on the existing products? HT: We already diversified our portfolio of products. We are now providing innovative solutions to our existing client base. For example, we are now offering baggage delivery express service for Emirates and goods delivery for various companies. Innovation is the name of the game.

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Special focus

A closer look into the SME sector

Zed Ayesh sheds light on the issues that affect the growth of the SME industry and provides solutions that will uplift this sector.

ubai, without a doubt, is one of the best places in the world to set up a business, especially for SMEs. As an expert working very closely with the SME sector for the past five years, I have had an opportunity to deeply understand the working of SMEs in the region. This has provided a clearer perspective of SMEs internally and externally. In this part of the world, SMEs are challenged by internal factors much more than external ones. There are two important issues that contribute to the internal challenges, the first being that most SMEs in the UAE are

micro businesses employing nine people or less, with a turnover of less than AED3 million for service-oriented businesses and AED20 million for manufacturing businesses, according to the Dubai SME definition. The second factor is that the majority of SMEs in the UAE are service businesses. At the outset, it is important to note that UAE SMEs, in spite of all the challenges they face both internally and externally, are in a much better position compared to similar SMEs in the region. However, it would be pertinent to shed some light on the issues that will affect

SMEs, a sector that plays a vital role in the economy, employing more than 50 per cent of the labour force. Delegation of responsibility It is fair to say that SME owners are a different breed of people. They are a key factor in any SME success story, as they drive their businesses with dedication and passion. The more passionate they are about what they do; the better is their rate of success. Unfortunately, this is also the reason for most of the internal challenges owners or managers cannot let go off the reins; in most cases they are unable to empower

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Many of these businesses do not even understand market needs, demands and consumer behaviour. In most cases, owners open shops based on their beliefs and intuition, until they are struck by reality.
other staff, and which means there are lesser delegations of duty to get the job done. Ultimately, it all boils down to an owner or a manager and his individual capacities to multitask, instead of creating internal systems that delegate responsibilities. This is one of the reasons at the core why SMEs in this region are handicapped from becoming large corporations. Add to that the complexities that, in many cases, arise from the background, culture and education level of an owner or a manager, stymieing progress of the company. Many SMEs stagnate at one level due to avoidable mistakes, as most internal challenges exist due to flawed top management practices and conduct within the business. Owners or managers need to be rehabilitated, which is the first and most important step in building strong, growth-focused SMEs. Quality of service Furthermore, another cause of internal challenges is that most SMEs in the UAE are service-oriented. This means that, in order to succeed, service-based SMEs should provide good (if not good, then reasonable) level of service to their customers. This in turn, requires trained individuals. In most cases, an owner or a manager is unable to provide such training, as costs significantly increase when hiring trained employees. A majority of owners try doing business without investing more than the minimum

requirement, and which reflects badly on delivered services. A bigger challenge stems from service businesses: selling services that are intangible, thus dictating longer sales cycles, which are more accentuated when there is a lack of track record and credibility, especially in the case of a newly established business. Longer sales cycles affect a business owner financially and emotionally, and have a negative impact on the passion factor, expectations and performance. This is an important issue that is not addressed in the big picture. Competition As a global business hub, Dubai constantly attracts many entrepreneurs from around the world; this in turn results in fierce competition in the market. Only the best will survive, depending upon business understandings of an owner, practices established in place and levels of service delivery of any company that meets the same requirement. However, most consumers will refer to price as the main comparison among goods and services, a factor that could challenge a new SME business. I have seen a number of entrepreneurs in Dubai that have set up their businesses without (if any) enough market research, business planning, feasibility studies, evaluation of core competencies or differentiating factors to take on competition. Many of these businesses do not even understand market needs, demands and consumer behaviour. In most cases, owners open shops based on their beliefs and intuition, until they are struck by reality. Solutions Business owners must undertake certain procedures in order to succeed. I would suggest a few to begin with, and these include establishing a reliable source to receive accurate data on the various aspects of the market. This data can be used to make business plans and chart out feasibility studies,

marketing and sales plans. Secondly, a credit-reporting system should be created where suppliers and customers can be checked out and evaluated based on track record and performance. Thirdly, any business has to involve its consumer. Allow experiences to be shared with consumers through an open forum with feedback that can be displayed prominently. Fourthly, standardisation, certification and insurance will help bring accountability to a business, by being responsible for the goods and services sold. This step would also increase the need to be consistent with quality. Giving SMEs a boost to steady, upward growth requires due importance for the consumer, in terms of value delivered, as well as improving the quality of service of the SME. We must uplift all stakeholders in order to make the SME sector the most important engine of growth our economy.

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.

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Micromanagement is a huge wastage

Taner Kilicarslan urges business owners to grab opportunities, be smart, use online tools and organise their businesses to make good profits.
and authorities are promising less bureaucracy to help start-ups. These are positive times for the UAE economy. Challenges However, there are some major hurdles to overcome for the regional SME businesses. We get calls every day from business owners, and the most common question we face is: How can I get my business to generate more profits? Quite a few of our clients have hit a plateau, and some very early in their life cycle. After studying their marketing and sales strategies, the one flaw we find is that their tactics have not changed, although the market has. For example, one of the biggest problems I find is that while consumers are going on the internet or using mobile technology to source products and services, many SMEs arent properly harnessing the power of these tools to generate more business or communicate with their existing customers. Internet savvy competitors are snapping these clients up, while those not willing to accept the use of new media are losing revenue by not being able to communicate their message and ask for the sale. Another major challenge that I run into is, meeting a business owner who wants to grow his business, but has no business plan. Its near impossible to run and grow a business without clear benchmarks in place with realistic goals. One of my clients for instance, was facing a similar type of situation. It was an established and recognised brand, but had no internal structure for HR, finance, or marketing. It also had no web presence, no product development for many years, no

rowing your business in a flat-growth environment requires a bold combination of savvy and innovative thinking, careful planning and well-thought-out tactics with realistic benchmarks. While I see a surprising degree of confidence amongst businesses in the UAE, SMEs must also possess a keen awareness of a shifting focus on where and how growth is pursued. In the past 15 years, I have always worked for the largest firm of one industry or another from media to manufacturing, helping them grow their business. And today, I focus more on helping SMEs achieve exceptional growth. It is more exciting to work with SMEs because they are poised ready to

shape a whole new paradigm for the way 21st century businesses will operate. The collapse of many aspects of corporate culture and change in financing gives way to growth being driven by emerging, highly flexible, entrepreneurial organisations. SMEs also make up over 85 per cent of the UAEs business community with recent government statistics showing nearly 180,000 SMEs in operation. And, according to the Ease of Doing Business rankings 2011 set by the World Bank and IFC, currently, the UAE is ranked 33rd in the world, while it is ranked 42nd for starting a business. Banks are starting to lend more to this specific group, laws surrounding small business are being reformed,

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sales training and was losing money. The owner had been micromanaging the business so much that it created a bottleneck, and development was not possible. When I was called in to the company to help restructure things, the first thing I noticed was the lack of a business plan or a clear trajectory to grow and generate more revenue, and none of the employees knew which direction the company was going either. It took some time to revamp that business with adequate planning, web development and market domination strategies. Today, with our guidance, this same company offers exciting new web tools, has completely new branding, employs successful online marketing using social media to bring in more prospects, a sales team that sells with one voice, and a back office that supports the whole process efficiently. Micromanaging I would say that one of the most important lessons for SMEs is to set up automated systems for marketing, lead generation, accounting, sales training, outsourcing web development, and creating a new mindset around the business by clearly defining everyones roles. A common mistake business owners make is to feel they need to control and run every process themselves. This type of micromanagement is a huge waste of time and resources, especially for a busy CEO who should be out networking, creating business ventures and driving big deals back to the company. We understand that for SMEs, cutting costs and converting prospects into buying customers is essential. But it takes the leaders of these organisations to believe that change is necessary before any meaningful change can occur. Small businesses must also remember that they are not limited to local or domestic markets, and through effective use of the internet, doing business globally can have exceptional benefits. However, a recent informal study we conducted

Another major challenge that I run into is, meeting a business owner who wants to grow his business, but has no business plan. Its near impossible to run and grow a business without clear benchmarks in place with realistic goals.
with our partner David Bullock in the US, co-author of Barack 2.0 - Barack Obamas Social Media Lessons for Business, showed that the regions adoption of web-based tools is nearly five years behind that of the US. The UAE, and regionally the GCC, has a truly dynamic business community that wants real change and is hungry for development. But when countries develop, they expect entrepreneurs to initiate and champion change. Therefore, there is usually not enough research conducted on what the SME truly needs and governments tend not to have clear strategies on how to help this sector grow. At the third Annual Middle East SME Forum in Abu Dhabi in late 2011, government initiatives were set up to workshop ways to help SMEs through the announcement of improved laws while state run banks would offer more services. But in the end, its up to the SME to take action and invest in their development. But a warning to the wise; be careful when trying to find resources as the world is rife with people trying to sell solutions in a box which promise new media expertise. I have written about this in my book, The Web-Entrepreneur Success Guide, but if they are not a registered business in your area or a registered company that offers real training you may be in for an expensive ride and wasted months. If an SME needs help deciding what resources to choose, we can help them by connecting them to the right people. My outlook for the SME

sector in the region for this year is extremely positive. Essential factors for the success of a good business are creativity, diversity and entrepreneurial drive which UAE-based businesses have. Regardless of what the news tells us, we are in a new economy and it is here to stay. No matter what the conditions are, innovation remains the essential ingredient for market leadership. Yet, many businesses fail to set strategic priorities for it. Those who apply the right approach to how their business operates, from identifying efficiencies and sources of financing to thinking more globally about opportunities for expansion, will continue to reap the rewards of growth in an otherwise flat business environment.

After 15 years experience working in three continents, Taner Kilicarslan launched SME Rebuilders, a group of experts focusing on change management, strategic company planning, sales training, business development, website design and development with SEO services, business accounting, business law, and Virtual PA services. Having expanded his network around the world with influential figures in key sectors and creating successful joint ventures, Taner gained a more rounded understanding of most markets bringing that expertise to SME Rebuilders. Taner loves public speaking and filming his own Web-TV shows and more. His ultimate goal is to build an online business empire and open a micro-winery in Southern France.

The Intelligent SME

39

Special focus

Dubai SMEs upbeat in Q4

The SME community has positive expectations from the last quarter of 2011 in terms of sales revenues and profits. They are also quite bullish on the outlook of 2012, writes Alexandar Williams.

ubai SME, an agency under the Department of Economic Development, conducted the SME pulse survey for 475 SME businesses in Dubai for the fourth quarter (Q4) of 2011. The sample selected for the survey included companies in the trading, manufacturing and services sectors. According to the survey, the composite business confidence index for SMEs rose in Q4 by approximately 10 per cent compared to Q3, reaching 125 points, indicating a positive and rising business outlook of SMEs for the first quarter of the year 2012. The majority of SMEs are optimistic about Q1 (January March, 2012), reporting expectations of rising sales and profits as compared to Q4, 2011. In terms of economic activities, expectations are higher among trading SMEs relative to services and manufacturing SMEs. Overall, the SME community is moderately less optimistic in their expectations of sales revenues and profits in Q1 2012, compared to large companies in Dubai. In the order of intensity, some of the key challenges, cited by businesses in the survey, include insufficient demand for products and services, competition from local and international players, increasing government fees, rising costs of utilities, frequent changes in business regulations and delays in payments and collections. Despite these challenges, the positive outlook of businesses in Dubai is reflected in the confirmation of investment plans over a 12-month time horizon. Around 38 per cent of SMEs plan to upgrade technology

(vs. 41 per cent of SMEs as per the Q3 survey) and another 54 per cent plan to expand their capacity (vs. 49 per cent of SMEs as per the Q3 survey). Business Confidence Index Q4 The SME Business Confidence Index (BCI) for Dubai in Q4 rose to 125 points, indicating an overall positive business outlook amongst SMEs for the first quarter of the year 2012 (a score of 100 indicates stable/ neutral sentiments). Moreover, a quarter-on-quarter comparison reflects that the SME

confidence index has increased by approximately 25 per cent compared to the index in Q2, 2011 and approximately 10 per cent compared to the index in Q3, 2011. However, large businesses are more upbeat compared to the SMEs. This is reflected in their Q4 BCIs which are respectively equal to 125 for SMEs and 138.6 for large businesses. The higher confidence among large companies is primarily due to a more optimistic outlook on future profits. In contrast, previous quarters (Q3) findings showed higher optimism amongst SMEs.

SME Business Con dence Index

140.0 120.0 100.0 80.0 60.0 40.0 20.0 Q2, 2011 Q3, 2011 Q4, 2011 115.7 100.0 125

(Base Quarter, Q2, 2011)

Business Con dence Index- Q4, 2011

180 140

133.2

138.6 125

100

60

20 Composite BCI Large BCI SME BCI

Business outlook Q1, 2012 The survey shows rising expectations of the SME community with respect to key business performance indicators. It shows that 67 per cent of the SMEs are expecting a rise in their sales revenues in Q1 2012, an increase of nine percentage points over

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SME business outlook Q1, 2012

Forecast Business Performance (SMEs) - Q1, 2012

Sales Revenue Selling Prices Volumes Sold No. of Employees Pro ts New Purchase Orders Capacity Utilization 0% 10% 20% 28% 19% 7% 66% 6% 57% 49% 53% 30% 40% 50% 9% 8% 60% 70% 67% 75% 11% 66% 14% 38% 39% 80% 90% 100% 28% 24% 11% 22%

Increase
the last quarter, while another 22 per cent expect sales revenues to remain stable. A comparison between large companies and SMEs shows that the former are moderately more optimistic about sales revenues than the latter, with a net balance positive and equal respectively to 60 per cent and 56 per cent. In contrast, SMEs were more optimistic than the large companies with respect to sales revenues outlook for Q4, 2011. In line with the overall business scenario, trading SMEs are more optimistic about future sales revenues as compared to their counterparts in the manufacturing and services sectors (net balance of positive 59 per cent for trading SMEs against a positive net balance of 53 per cent for both manufacturing and services SMEs). Similar to Q3, the optimistic sales revenue forecasts in Q4 are driven by higher volumes, with prices remaining stable (as elicited from 75 per cent of SMEs in Q4 and 73 per cent in Q3 stating expectations of stable prices). This signals an expected rise in the level of real economic activity in Q1, 2012 compared to Q4, 2011. One of the significant drivers for the expected increase in volumes is the Dubai Shopping Festival (DSF). DSF attracts around 3.5 million

Decrease

No Change

Not Applicable
next quarter whereby a majority of the respondents report that their sales revenues are likely to increase marginally, at best, or remain stable. Prospects for this activity are driven by expectations of new projects in the domestic market as well as contracts in other GCC countries. Capacity utilisation In view of the expectation of higher sales, a majority of SMEs expect an increase in their capacity utilisation as well 53 per cent of the SMEs expect an increase in capacity utilisation in the next quarter, while another 39 per cent report no change compared to Q4, 2011. Manufacturing firms are also seen to be most optimistic on increasing their capacity utilisation, relative to their counterparts in services and trading. Moreover, SMEs are moderately more optimistic for the next quarter than large companies, with 53 per cent of the SMEs expecting an increase in capacity utilisation as compared to 48 per cent of large companies. There is also an optimistic view on new purchase orders, with 49 per cent of SMEs forecasting an increase in purchase orders in Q1, 2012 (versus 42 per cent of SMEs, who were expecting an increase

visitors every year. Expectations of a similar footfall of tourists on account of the 2012 DSF has led to optimism amongst tourism, hospitality and retail businesses. Consequently, a majority of tour operators, restaurants, car rental companies, jewellery, electronics, apparel and textile trading businesses expect their sales to increase in the first quarter of 2012. This reflects the typical nature of such businesses, where sales cycles receive the maximum attraction during the high tourist season in Dubai (i.e. October to March). In addition to tourism, some of the transportation and logistics companies have expressed optimism about their sales, partly because they expect higher cargo movements in order to respond to the needs of the shopping festival. In line with overall business trends, majority of the food and beverage enterprises (manufacturers and traders of F&B) are expecting an increase or stability in the volume of their sales in Q1, 2012. Some of these companies have mentioned that they are likely to benefit from an increased demand stemming from the hospitality sector. In contrast, the construction sector is expecting stability in the

The Intelligent SME

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Special focus

in purchase orders in Q4, 2011). Manufacturing SMEs are seen to have the most ambitious plans to increase their purchases in Q1, 2012. Rising expectations about sales revenues are also consistent with reported hiring plans, wherein the percentage of SMEs planning to increase their workforce has increased from 18 per cent for Q4, 2011 outlook to 28 per cent for Q1, 2012 outlook, with manufacturing and service SMEs expressing the strongest intentions to increase their workforce in Q1, 2012. However, new recruitments are expected from about 28 per cent of SMEs, while two-thirds expect to maintain the same level of employment as in Q4, 2011. Upgrade in profits The Q4 survey also assesses a rise in the number of SMEs that foresee an improvement in profits in Q1, 2012 (57 per cent of SMEs expect an increase in profits in Q1, 2012 versus 45 per cent of SMEs that were expecting an increase in profits in Q4, 2011). However, large companies are more optimistic with regards to their profits in Q1 compared to SMEs (57 per cent SMEs are expecting a rise in profits in Q1 as compared to 64 per cent of large companies). Furthermore, in terms of sectors, manufacturing SMEs are more upbeat about future profits than those operating in trading and other services. In comparison, service-based SMEs were the most optimistic in terms of the expected profits in Q4, 2011. In summary, expectations on key business performance indicators look positive and reflect a high

level of optimism amongst the SME community in Dubai. This is reflected in the fact that 54 per cent of business respondents expect an improvement in the overall business scenario, while an additional 37 per cent expect the business situation to continue to be at the same levels as in Q4, with a minimal proportion (i.e. nine per cent) expecting the situation to worsen. SME performance Q4, 2011 Overall, the survey shows an improvement in the real economic activity in Dubai in Q4, 2011, with a higher number of SMEs reporting an increase rather than a decrease in sales volumes (Net balance on sales volumes of positive one per cent in Q4). There are other key highlights of business performance in this quarter that needs mentioning. The end of Ramadan in September, and the beginning of winters and the holiday season in this quarter were the key drivers for improvement in sales volumes for tourism and hospitality businesses and businesses engaged in manufacturing and trading of jewellery and food and beverages. Increased promotional activities of corporates and higher printing requirements for festive greetings benefited the businesses involved in the advertising and printing industry (including advertising firms, printing and publishing firms, manufacturers and traders of paper and other advertising materials). On the other hand, a majority of businesses related to the construction industry experienced a decline in their sales volumes in Q4, owing to lack of domestic

demand and strong competition in the market. The decline was seen in the case of contracting companies, manufacturers and traders of building materials, construction equipment rental companies, architectural and engineering consulting firms, among others. In addition to improvement in sales, new hiring has been reported, as shown in a positive net balance of seven per cent, although a majority of firms (67 per cent) reported no change in their employee count for this quarter. However, a higher proportion of large companies reported an increase in their employee count as compared to SMEs, 28 per cent for the former against 20 per cent for the latter. As expected, the cost of finance shouldnt change significantly from one quarter to another. A significantly higher proportion of the SMEs (approximately 30 percentage points higher as compared to Q3) reported no change in cost of finance in the current quarter. Likewise, the cost of labour remained relatively stable in Q4, with 71 per cent of SMEs reporting no change in unit labour costs and 25 per cent reporting an increase that is imputed to annual increments provided to employees in order to reward their performance and match any increases in the cost of living. The cost of raw materials in Q4 was still a cause of concern for a large number of SMEs as 39 per cent of them reported an increase. As expected, this rise impacted the manufacturing more than trading and service SMEs. Overall, the survey shows an improvement in sales, even though it was not reflected in reported profit performance. Key business challenges in Dubai The survey also addressed key challenges faced by SMEs, as perceived at the end of Q4. Reduced demand for products and services (cited by 41 per cent of the respondents). The survey illustrated that a decline in demand was experienced by SMEs that were highly dependent on construction

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Key business challenges in Dubai The survey also addressed key challenges faced by SMEs, as perceived at the end of Q4.

demand for products and services, and competition, Investment outlook Capital investment plans over a 12-month horizon are steady, as 38 per cent of SMEs plan to upgrade technology (vs. 41 per cent of SMEs as per the Q3 survey) and 54 per cent of SMEs plan to expand their capacity (vs. 49 per cent of SMEs as per the Q3 survey). From a sectoral perspective, trading SMEs are the most optimistic about investing in capacity expansion, with approximately 60 per cent expressing intent to invest. In comparison, manufacturing SMEs are more inclined to increase investments in technology upgrades. In the context of a comparison between exporters and non-exporters, the survey explains that the exporting SME community is more inclined towards investments in capacity and technology upgrades, as compared to the non-exporting businesses. Further, the survey mentions that there is no significant difference in capacity expansion and technology upgrade plans of SMEs registered in the Dubai mainland and free zones.

Key Business Challenges (SMEs) - Q4, 2011

45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 10.0% 9.3% 7.7% 7.5% 6.6% 6.4% 5.4% 41.3% 40.7%

5.0%

3.5%

2.5%

1.9%

Demand for products / services

Payment/Receivables delay

Availability of Bank Finance

Cost of Rental & Leasing

Availability & Cost of Skilled Labour

Currency Fluctuations

Government Fees

Business Regulations

Competition

Cost of Finance

Cost of Utilities

activity and government projects. In addition, the current economic climate in the US and Europe, coupled with political instability in the region has created ripple effects impacting businesses engaged in transportation and logistics, and trading and manufacturing companies focusing on exports. Competition The survey shows that competition (cited by 40 per cent of respondents) from international and local players has impacted revenues and profit margins, especially in sectors such as food trading, jewellery, textiles, construction materials and electronics. Rising government fees (cited by 10 per cent of the respondents), with respect to fees (such as employee visa, licence renewal and municipality) and duties (such as custom, import and port charges) has been cited as the third most prominent challenge amongst the businesses in Dubai. High cost of utilities (cited by nine per cent of the respondents) was voiced as a concern, associated with cost of electricity, water, telecom and internet charges. Frequent changes in business regulations (relating to imports,

municipality and traffic rules) coupled with a lack of communication of such changes, are reported as a challenge by eight per cent of the respondents. The formalities and paperwork (particularly in customs), leading to transshipment delays was also voiced as a key challenge by respondents. Delays in payment receivables are expressed as a growing challenge cited by seven per cent of the respondents. The survey showed that businesses faced challenges in Q4, in collecting money from clients, making timely payments to suppliers and negotiating better credit terms. Volatility in the cost of raw materials, cost of skilled labour, rental costs and lack of accessibility to bank finance coupled with rising cost of finance are the other challenges that have been highlighted by respondents. A few of the respondents also reported inability to manage internal overhead costs, lack of market information and currency fluctuations as causes of concern. Overall, the challenges for SMEs were similar to those faced by large companies. However, for the latter the availability and cost of skilled labour figures were among the most serious challenges, just after the

Cost of raw materials

Others

Alexandar Williams is the director of strategy and policy at Dubai SME. He has over 20 years experience in strategy and policy planning for SME sectors of various countries. He has an MSc in Public Administration from the London School of Economics and Political Science.

The Intelligent SME

43

Business law

To the long life of your business

If you do not have a proper business succession plan or estate planning in place, you are inviting uncertainties in the future, writes Nita Maru.

n my line of business, I am often found quoting the words of American author and academician John M. Richardson Jr. Marked by innate simplicity, it is as simple to practice as it is to preach: When it comes to the future, there are three kinds of people: those who let it happen, those who make it happen, and those who wonder what happened. If you own or co-own a business or professional practice in the UAE, it is important that you plan for its future and that of your family members, before someone has to sit back and sigh over what went wrong. As a business owner, a significant portion of your wealth - and possibly your familys

main source of future income - will be tied up in your business. The success of your estate planning is dependent upon this business being transferred smoothly, or sold to a third party for a fair price. Either way,

If you do not have a proper business succession plan or estate planning in place, you simply cannot be sure what will happen after your death.

it takes considerable planning and preparation, and should be ranked high on a priority task list for all business owners. Average global statistics estimate that less than 30 per cent of family owned businesses survive to the second generation, and less than 12 per cent to the third. The survival rate for the fourth generation is a meagre three per cent. For expatriates living in the UAE, these figures may be ever more alarmingly lower. The official website of the Government of Dubai emphasises: The UAE Courts will adhere to Shariah law in any situation where there is no will in place. This means if you die without having planned your future - or that of your family - the local courts will examine your estate and distribute it

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according to Shariah law. Personal assets, including vehicles and bank accounts will be seized, until liabilities have been discharged. A wife who has children will qualify for only 1/8th of the estate. Shared assets will be frozen until the issue of inheritance is determined by the local courts, and surviving family members are often left without access to money during this period. On the business front, if you do not have a proper business succession plan or estate planning in place, you simply cannot be sure what will happen after your death: whether your family will be provided for, who will look after your business, and when and how your beneficiaries will stand to benefit from the investments you made in your business. There are also many uncertainties regarding real estate inheritance issues under Shariah law, especially in the case of office, showroom, manufacturing or warehouse facilities that are owned or co-owned by an individual but used by the business. Unlike other jurisdictions, the UAE does not practice right of survivorship (where property passes on automatically to a surviving joint owner upon death of the other), and the local courts will have a final say in the matter. All successful businesses - whether sole proprietor firms, partnerships, joint ventures, limited liability companies or free zone corporations - should plan for the transfer, succession, and/or sale of the business in unexpected circumstances shrouding the owner or a partner. Planning your business succession is a process - not an event - and it is intuitive, interactive, and reflective of circumstances. The process will also vary based on the number and diversity of issues involved. Consequently, there is no single fit solution that will work for everyone; each case has to be studied and evaluated independently. Key questions It is best to begin by addressing

and answering pertinent questions yourself: Who will run the business after you? Will revenues decrease dramatically? Will all your loyal clients take their business elsewhere? Will your business survive your absence? Planning the future of your business and ensuring seamless continuity and success may be a complex process, but professional lawyers not only offer advice, but also, provide physical assistance in setting up bespoke solutions like trusts, and off-shore structures. A good business succession plan will address the death, disability or retirement of a business owner, as well as the sale of a business owners interest. Further, a great plan will ensure that all the business owners objectives are accomplished - that the most effective business transfer is realised, and that funds will be available to provide maximum financial flexibility. Professional lawyers will also weave in clauses that minimise the possibility of conflict among co-owners, partners, and heirs, thereby lowering the odds of litigation and the costs and time involved in probate. Without adequate planning, your business may be negatively impacted or forced to close in a relatively short period of time. And it will not be because you did something wrong. It will simply be because you did nothing at all.

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, including five in the UAE, 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 Shariah 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 Rulers Court. Their office location is Office Suite 1305, Saba 1 Tower , Jumeirah Lakes Towers. Dubai. Tel: +971 4 448 4284, Email: info@willsuae. com.

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International accreditation

Quality compliance with ISO 9001:2008

Quality at a competitive cost can be achieved only through an effective process-based quality management system, writes Dr. Sameer Kumar.

hen something goes wrong, managers or society in general, choose someone to blame, rather than analysing and correcting the flaws in the systems that are in place. Famous American statistician Dr. Edward Deming, in the course of his research, developed the System of Profound Knowledge, which is used by companies worldwide. He advocated that employees should work within a system, while the leadership in an organisation should continuously work on the system, making changes when required. This approach would help one understand a system of procedures better, giving a magnified view of what processes result in failure or success. The primary purpose of any organisations system is to result in outcomes namely, the satisfaction of the customer. To do this, the organisation must first understand the needs of the customer base it seeks to serve. These needs are reflected in the system requirements of an organisation. By fulfilling these requirements, an organisations processes are able to churn out results that reflect its primary goal. However, customer needs change with time, and so, continual improvements have to be made to any management system. Successful organisations extend the processes in their systems to include prompt receipt of cash, so it can be reinvested. It is also important to drive a process-based quality management system (QMS) with requirements from customers, inputs

from leaders of an organisation, law makers and regulators. Process-based QMS A process-based QMS is that part of an organisations overall management system that focuses on the achievement of results in relation to quality objectives to satisfy the needs and expectations of the customer. The needs and expectations can be stated or implied. All processes are mapped, documented and followed with a philosophy of consistency, of being right the first time and every time. In short, this approach enables an organisation to lead and operate its departments successfully in a systematic and visible manner. QMS and ISO 9001:2008 A process-based quality management system is the foremost

requirement of ISO 9001:2008 implementation in any organisation. It enables an organisation to cater to the needs of internal and external stakeholders. This well-planned system facilitates planning and allocation of scarce resources, and strengthens the overall effectiveness of an organisation. It also enables international recognition through certification. A well-thought out QMS gives a better sense of ownership, and in turn, empowers the workforce. Process mapping main tasks While understanding the benefits of a QMS, it would be pertinent to know how to begin planning a system. Business process mapping encompasses a set of tasks that aid in developing a system of procedures. The first step involves identifying key processes that go into delivering

Customer-driven Organisation
People

Leadership

Processes

Products

Customer Satisfaction

Planning

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results. Once identified, the next step entails analysing and defining each process after which these processes have to be designed and

Process-based QMS & ISO 9001:2008

Process-based QMS is the

validated. It is a good gesture on the part of a leadership to involve the process team while commencing on this step. Next, these processes are thoroughly evaluated to identify improvements to ensure efficient systems. Need for process-based QMS An organisations competitiveness and future depends upon the performance of its system and how efficiently that system converts customers needs into opportunities with a focus on customer satisfaction. An organisation must never stop designing and planning its system, as this translates evolving customer needs into product and process. A well-charted system also enables employees to quickly understand requirements of their processes, giving them the know-how of how better to serve their internal and external customers. Of course, it is understood that selecting a candidate with required attributes comes first, and the system also provides information on this aspect. Process-based systems further enable employees to see how their processes satisfy customers. It is paramount to reinforce the importance of focusing on the customer instead of process over departmental loyalty. Employees should see how their system can deliver value faster and prevent losses, which is the key to job security and career progression. Once employees understand their system, they can use it to improve its performance by

foremost requirement of ISO 9001:2008 implementation in any organisation and benefits in following way:
Assists organisation in enhancing

removing elements that cause things to go wrong and thereby eliminate wastage of resources. A great system gives an employee the opportunity of foreseeing what might go wrong and fix the problem before it happens. Processes can sometimes go terribly wrong or long with too many unnecessary procedures involved. A well-documented system eliminates these unnecessary steps so that an organisation can deliver value faster. There are many important questions a business owner needs to ask oneself. Right now, do colleagues know what their system has done for them lately? Do they appreciate their system? Or do they separate themselves from their system by referring to it as company procedures? Do they see their system beyond the few procedures essential for their job? Make it clear who is in charge of your system and who is in charge of its development project. It could be the same person.

satisfaction of the stakeholders (internal and external customers)

Facilitates organisation in planning

and allocation of scarce resources

Provide basis for evaluation

of overall effectiveness of an organisation

Enables an organisation to identify

its strengths and weaknesses

Provision for evaluation of its

performance
Provides a platform for continual

improvement
Enables external recognition

through certification
Stronger sense of ownership More empowered workforce Improved quality of work life

and enjoyment of work (more engaged)

Less wastage of resources More recognition Better use of expertise.

Dr. Sameer Kumar, CEO, Universal Consulting FZE, is a quality professional with an experience of working in more than seven countries. He has provided consultation and training to more than 400 clients in the UAE, UK, Thailand, Singapore, Hong Kong and India. He has completed his MBA, PhD and is a Six Sigma champion by qualification and lead auditor of ISO 9001, ISO 14001 and OHSAS 18001. E-mail: ceo@ucfglobal. com.

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THOSE WHO MADE A MARK.

WOMEN
ENTREPRENEURS

Women entrepreneurs

Divine inspiration
Kelly Lundberg (KL), styling consultant and owner of Divine, speaks to The Intelligent SME (TIS) on her journey to success.
TIS: Please give us a picture of Dubai when you first began operations? What was the need, and what inspired you to set up Divine? KL: If anyone had told me, when I arrived on a flight from Heathrow Airport to embark on my new life as an air stewardess, that by the age of 30 I will have accomplished owning a successful business in Dubai, won a Lloyds TSB Small Business Award, been finalist for Female Entrepreneur of the Year twice, been voted higher than Gordon Ramsay restaurant for things to do in Dubai, publish a book available worldwide on Amazon and have my own APP on iTunes, I would have said: I think you are talking about someone else. The idea came to me whilst I chatted away to my passengers in first and business class. I would share style tips on where to shop in the city. It occurred to me then that it would be quite nice to do it for a living. I then thought, why not? Everyone in Dubai around this time was setting up a business of some sort, whether it was real estate, PR or events, and I figured if they were doing it, so could I! In those days Mall of the Emirates had been open a matter of days and the sheer size of the mall intimidated many clients and visitors to Dubai. Utilising the services of a personal stylist was a major benefit. Now six years later, Mall of the Emirates is just one of the numerous destinations where I take my clients. TIS: What was the initial response to Divine? How have things changed? KL: The media were amazing and immediately picked up on the press release that was sent out. Within

Kelly Lundberg

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and asked me to buy him a puppy! A personal favourite is taking a client to purchase their first pair of designer shoes, such a thrill not only for them but me too! More recently, a VIP client flew me to New York and we shopped solidly for four days just before Christmas; it was like a living dream! TIS: What are your future plans? Do you plan to expand Divine further? Alternatively, will you be starting any related businesses? KL: There are many projects in the pipeline that include a revised edition of Success in the City. Divine, for the first time, will be offering a unique styling course for those who want to get an insight into personal styling and shopping called Make me a Stylist. Catering to our international database we are in the process of launching an online boutique as well as styling by Skype. TIS: What lessons would you give to your fellow women entrepreneurs? KL: I always say the only person stopping you from achieving what you want is you, as you just have to go out there and get it. Working for oneself is hugely rewarding and there are so many opportunities in the Middle East. TIS: Do you put every free minute into your work, or do you set aside time for yourself? What are your hobbies and special preferences? KL: Yes, I would say a large part of my time I do spend in working, but it really doesnt feel like working because I love what I do! When I can, I work from our beach club, just for a change of scenery and inspiration. During the weekends, I do like to have one mall-free day, and if possible, combine this with a phoneless Friday and use this time to relax on the beach and have lunch with friends. As I spend a great deal of time travelling, I add a couple of extra days on; it makes me feel like I have had several mini-holidays!

a month, Divine had been featured in OK! Magazine, Emirates Women and 7Days, although it took a while for the service to take off. It took six weeks for a client to call in. I was slightly nave at the beginning (although some people do say this helps) - I was under the impression that everyone would know what a personal shopper or stylist was, as it was growing rapidly in the UK, Europe and the US, but here it took a little longer to catch on. This meant I needed to think of new ideas and opportunities to supplement my income. Nearly a year after leaving full time employment and several phone calls from a wedding planner, asking where to buy wedding gifts, it transpired that there was no online registrar for guests to buy gifts for bridal couples. I thought this would be the perfect complement to a shopping service. I spent the last of my loan and got Divines site developed. Using the same principles as before, with press releases, and now equipped with Google Ads I launched the service to coincide with the Bride Show 2006. I had six couples in the first few months and since then I assisted over 40 couples with their wedding lists. TIS: What were the challenges you faced in the course of your operations? KL: My two major challenges that I faced in the beginning were, becoming legal, and funding. As I didnt come from a business background (I was still a cabin crew at the time) I spoke to everyone and told them about my idea. I kept hoping the more people I told the

closer I would get to find an answer to becoming legal. Dubai Media City was full at the time and I did not know any local sponsors. It was when I was on a flight back from Bangkok and was animatedly telling the captain about my budding plans and my current obstacle that he told me about his friend who had set up a business in Ras Al Khaimah; the emirate was more affordable and relatively straightforward and it got me excited! I called the relevant department and, by the afternoon, had paid a deposit on credit card so I could proceed to the next level. I was slightly unconventional with funding my business. In those days business loans werent really offered to expats; so, I decided that I would tell the bank I wanted a personal loan to buy a car. At the meeting, the bank manager asked me what kind of car I was going to buy with such a large loan, and I was slightly thrown by that question. I had never owned an expensive car, and I told him the only one I knew a Porsche. Those were the heady days in Dubai! He smiled, told me I had good taste and the funds were in my account in less than two days! TIS: Are there any poignant memories in the course of your business that you can share? KL: I have had random to the ridiculous of shopping requests; one client, who had booked a Rolls Royce for the day for shopping experience, requested we visit Karama to haggle for watches and bags just for fun! You can only imagine the looks we got as the chauffer opened the door, I am sure they were expecting royalty! Another client called me up

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Women entrepreneurs

Good things come in small packages

Next time someone tells you that you charge too much and ask you for a large discount on your fees, remember that as a consultant you need to survive too, writes Kristina Nyzell.

ost companies forget that an independent consultant is a consultancy too, says Mark, a freelancer working for a financial institution in Dubai International Financial Centre. We need to charge fees which are in line with market rates, but my client compares my fees to the salaries of that of his employees. He says that I am too expensive in comparison. What he is forgetting is that my fees should not only provide me with a basic income that covers my costs, personal expenses and medical insurance, but it should also allow me to save towards retirement. He is also forgetting that on top of his employees salaries he also has to pay benefits, which is an additional 50 per cent on top of their salaries, he adds. What to charge for your services depends on whether you are doing something in order to make a living or simply as a favour. I dont mind working for less if I know I am working for a

non-profit organisation or a charity, and if the individual I am working with is earning less than AED20,000 per year. I dont mind working for free, if I feel I am learning a new skill, gaining valuable new experiences or contributing to world peace. I also dont mind helping a friend. On the other hand, if the person I am working with is a senior executive or director in a large multinational firm and he or she earns more than AED300,000 per year, my own daily charge out rate needs to be high too. A systematic approach to establishing the value of your small business starts with yourself and determining the value of your own personal brand. Know your value! This is a particularly important lesson learned, and particularly true for all you fellow female entrepreneurs out there who tend to over deliver and be underpaid. It is a well known fact that female consultancy fees come in 20 to 30 per cent lower than that of their male counterparts and for the same service. Determining the value of your brand starts with the painstaking

process of calculating your income and expenses and doing some research into what competitors are charging for similar services. It is sometimes difficult for clients to understand that you need to pass on your business costs to them. Sometimes, it makes sense to pass on business development costs to clients. For instance, if after six business meetings in Abu Dhabi with a potential customer you find out that he or she is offering you less than AED5000 as fees for a project, you need to think carefully whether to engage with this client or not, even if the promise of larger contracts after this initial almost free engagement is on the cards. Not all business meetings result in paid work. It should be noted that the dollar amount of a project is not directly related to the amount of time needed to complete a proposal. Small project bids may require just as much effort and time to complete as a large bid would. As an SME or independent consultant you will probably find yourself submitting collaborative bids with others to win an important

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bid. When it comes to working on collaborative bids it is important to make it clear from the start how the returns and the workload will be divided among various parties. Remember, you need to protect your fees as well as your IP. For those of you who are interested, it is worthwhile looking for tools like creative commons and creative barcode, as well as password protecting your documents. Utopia 100pc billable time As a small business owner you need to take into consideration that you may be taking care of marketing and administration yourself which often make up 50 per cent of your time spent running your business. It is important that these costs are calculated into your pricing. In a year it is unlikely that you will be charged out at the full 44 weeks per year (1784 hours), after taking holiday, sick leave and national holidays into consideration. With 50 per cent of your time spent in marketing and administration, you would have 892 hours left. With a modest hourly rate of AED200, your yearly income would be AED178,400. Five per cent of your clients will, most likely, not pay your invoices, reducing the number of hours to 847 and, therefore, the income to AED169,400. And we must remember, income is not the same as profit. Once the money starts rolling in as a small business, then do the invoices. Apart from the obvious direct costs like office rent, licence and registration costs, there are also the health insurance and pension costs to consider. One of the biggest killers of small businesses is the periodisation of costs and invoices. Having all costs lumped together in one quarter together with your own personal bills for the year, will most likely kill your business. Expenses Included in the yearly expenses and costs would be things like office rent, insurance, phone, travel, meetings,

legal fees etc. In many countries around the world the company registration fee is a one-time fee, while in the UAE it is a yearly occurrence. Without an office you are not allowed to operate a business in many free zones. If you had your eyes set on running a virtual business and keeping all your fees and not paying tax, dream on. If we take AED80,000 as the average office rent for a free zone based firm and deduct that from the yearly income of AED169,400 that leaves us with roughly AED89,400 to spare after the basic business expenses have been paid. As a consultant you also need to set aside five per cent of your yearly income after the basic expenses have been paid towards continuous learning and education. If we take five per cent of AED89,400, we are left with AED84,930. Personal expenses As a small business owner it would, of course, have been nice to have been able to keep that sum of money and put it towards your savings. However, as we all know, one needs to eat and live somewhere too. In addition to eating and sleeping somewhere, you also need to insure yourself against potential loss of income due to ill health. A private health insurance will take a healthy chunk of your income, but it is an insurance against a future life in misery and poverty. A modest pension, corresponding to the gratuity that UAE companies have to pay by law, means you will need to add 1/12 of your charge out rate to cover this cost. For many clients, working with a small consultancy has its advantages. A small consultancy takes on the financial risk, delivery risk and also the risk of failure. For this reason, many clients will engage with consultants for risky projects to defuse risk and failure from themselves. From fees to value generation The first conversation that the client

has with you should not be about fees, but about your experiences and what you have to offer. How much do you charge per day or per hour? Can you give me a special price? Well, we have all heard that havent we? Take that comment as a sign of a kamikaze client and simply walk away, or, if you have the energy, try to educate them. If they, after a discussion like that, will still revert back to a fee discussion, simply walk away. A client, who starts off his or her conversation by asking about costs and fees instead of trying to build a relationship with the SME and freelancer to see where they could add value to their business, will only see the consultant and the freelancer as a cost and an outside service provider and not a value generator and trusted partner. Another thing I would recommend is to build long-term relationships with clients and negotiate a retainer. This will allow you to have a secure income of several months at a reduced rate, build a relationship with the client, and lock competition out. You have unique skills that are highly sought after. Dont sell yourself too cheaply and know your worth.

Kristina Nyzell is the owner and M.D. of Disruptive Play FZ LLC, a Dubai-based Human Resource Consultancy. She is an experienced strategy consultant specialising in open source, lead user/ collaborative innovation and community development.

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How personality affects performance

Corrina Cross, a personality profiling consultant, shows you how understanding your own personality style and that of your colleagues, clients and suppliers can increase your success in the workplace.
Dominance People with high D traits are generally fast paced and driven by results. Influence People with high I traits are generally fast paced and people-oriented. Steadiness People with high S traits are generally more reserved and thoughtful. Conscientious People with high C traits are generally reserved and methodical. Communicating better High D personality type High D types are big-picture people who like a challenge. When given a task, they come up with a solution to get from A to B following the shortest route. They dont like wasting time so you better not waste theirs! When speaking or writing e-mails, they get to the point and would prefer that you do the same (You wont catch them talking about your grandmas health or the change of weather). Some find this abrupt but they simply have a task to do and are on a mission to achieve it. Even out of work, these people are motivated and driven and they relate well to other high achievers. They will often be super fit, well dressed and driving a top-of-therange car. High I personality types High I types are fun-loving and enjoy having lots of people around them. They are good communicators and great at motivating others. They are often found in creative or marketing roles. When communicating, they

hy do you act the way you do? Have you noticed that there are some tasks on your to do list that you sail through easily, while other tasks keep moving down the list and never seem to get started? Theres a reason for that and, strange as it may seem, it is linked with your personality type. American psychologist Dr. William Marston believed that individuals fall into four main personality types. Based on this philosophy, he developed the DISC Behavioural Model back in 1928. Whilst your personality is a unique

combination of these four types (pretty much like your fingerprint), by studying the four main types and what motivates them, you can get a better understanding of the people around you. Doing so will help you to see how life would look standing in somebody elses shoes. This is a great way to improve relationships as you start to appreciate people more, and communicate with them in a way that suits their style by speaking their language. Identifying personality style The DISC behavioural model recognises these four main personality styles:-

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often use informal, friendly language (maybe a few smiley faces too). They also tend to have lots of tasks on the go at once so be sure to remind them before setting off for a meeting as they may have double-booked! Away from the workplace, they are great to have in your social scene and will be sure to get the party started! High S Personality Types High S types are easy to get along with and considerate of others. They are good at team-building and getting a consensus. They are interested in people and will take time to ask how you are doing. Even if you are not interested, it would be nice and beneficial if you took a little interest in them and not jump straight into business-talk. Those who fall into this personality type do not like conflict. Therefore, when they have something tough to communicate, they may dance around the subject to avoid hurting anybodys feelings. Tell them you would appreciate a direct answer to avoid wasting time. Away from work, these people are very kind and helpful. (Everybody needs a high S as a friend.) If you are a high S, though, you need to take care not to continually put others before yourself. High C personality types High C types like to do quality work and to do it right the first time. They
D
EFFICIENT

and keep communication direct and to the point.

This is a great way to improve relationships as you start to appreciate people more, and communicate with them in a way that suits their style by speaking their language.

High I types Keep it interesting. If you are late, dont worry too much, as they may also be late (However, it is still polite to call ahead). Remember not to bore them with word-heavy lengthy presentations. High S types Dont be too aggressive. They like to get to know a person before doing business with them; so, soften your edges and slow down your pace if you are the fast-paced driven type. High C types Often referred to as perfectionists, they are interested in effectiveness and efficiency. Be on time and be well prepared with back-up information and case studies. Remember NO personality type is better than the others. You are a unique mix of all four styles and everyone has their strengths. Understanding others can significantly improve your relationships. Knowing your own style and working on your strengths will help steer you on your personal path of success.

actually enjoy paying attention to detail! They work well with systems, procedures and structure. You will find many accountants and auditors fall into this category. When communicating, they back up their findings with facts and figures. If you want to do business with them, you would be wise to do the same. Never guess when answering a question asked by a High C. Be prepared and know your stuff or you will lose credibility. In their free time, you may find them sitting at their computers, analysing data or researching the most practical, value-for-money car/ TV/stereo before heading out to buy it. They prefer to be alone or in small groups, rather than socialising in large crowds. Using this knowledge The key to success in the workplace or outside is to know how to deal with this knowledge. When dealing with:
R S C O

SUPPORT

PA

CE

ST

FA

U N IC

LT

TO

ES

THOUGHTFUL R E S E R V E D

High D types Step up to their level. If you want to do business with this group, you better prepare well for your meeting, look successful,
IC

Corrina Cross runs powerful interactive workshops for both corporates and individuals that deliver results with improved motivation and increased productivity. Check out the website www.the-peoplepeople.com or email her on Corrina@the-people-people. com to find out more.

H
Y IT IL

D
IB

L
P O N S

R E S

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Leadership

Happiness leads to success

Prof. Christopher Abraham explores the science of happiness, and how it relates to professional and personal success.

sychological studies have primarily concentrated on human failing and pathology. In fact, the idea of psychotherapy, a concept realised by Sigmund Freud, is based on the fact that human beings are distressed and need to be calm. The practitioners that followed Freud developed a model that seemed to portray humans as mechanical and passive, being shaped by situations surrounding them. However, this view was soon altered when eminent psychologist Martin Seligman, in 1998, urged psychology professionals to set about the healing process with understanding and building strong qualities. Seligman is credited with sowing the seeds of happiness studies and positive psychology. He went on to be the worlds leading scholar on optimism.

Seligmans idea quickly caught on, with the Gallup organisation founding the Gallup Positive Psychology Institute to fund research on the subject. This provided the foundation of the Gallup Positive Psychology Summit, which was globally recognised within two years of it being held. So what really makes us happy? How can we become happier? And is happiness sustainable? Current cutting edge research on studying happiness indicates that our individual level of happiness springs from three primary sources: Our genetic set point Fifty per cent of our happiness derives from a genetically determined set point, contend leading researchers such as Professor Sonja Lyubomirsky from the University of California.

The set point for happiness is similar to the set point for weight. Some people are blessed with skinny dispositions: even when theyre not trying, they easily maintain their weight. By contrast, others have to work hard to keep their weight at optimum levels, and the moment they relax their dietary and exercise regime, they gain back all the weight. So those of us with low happiness set points will have to work harder to achieve and maintain happiness, while those of us with high set points will find it easier to be happy under similar conditions. Our life circumstances Life circumstances determine a scant 10 per cent of our happiness, Prof. Lyubomirsky continues: Only about 10 per cent of the variance in our happiness levels is explained by differences in life circumstances or

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situations--that is, whether we are rich or poor, healthy or unhealthy, beautiful or plain, married or divorced, etc. If, with a magic wand, we could put a group of people into the same set of circumstances (same house, same spouse, same place of birth, same face, and same aches and pains), the differences in their happiness levels would be reduced by a measly 10 per cent. Prof. Lyubomirsky notes in her book The How of Happiness that this finding runs contrary to many of our efforts to obtain happiness: One of the great ironies of our quest to become happier is that so many of us focus on changing the circumstances of our lives in the misguided hope that those changes will deliver happiness... An impressive body of research now shows that trying to be happy by changing our life situations ultimately will not work. Although we may achieve temporary boosts in well-being by moving to new parts of the country or the world, securing raises, or changing our appearances, such boosts are unlikely to be long-lasting. Most experts agree that human beings immediately adapt to positive circumstantial changes in the hope of bringing about happiness in their lives. Although the circumstances change, it may not be a source of long-term happiness, as they will eventually be taken for granted.

A set of evidence-based happiness-increasing strategies whose practice is supported by scientific research include: 1. Expressing gratitude 2. Cultivating optimism 3. Avoiding over-thinking and social comparison 4. Practising acts of kindness 5. Nurturing social relationships 6. Developing strategies for coping 7. Learning to forgive 8. Increasing flow experiences 9. Savouring lifes joys 10. Committing to your goals 11. Practising religion and spirituality 12. Taking care of your body 13. Meditation 14. Physical activity 15. Acting like a happy person.
Happiness strategies The remaining 40 per cent of our happiness is determined by our behaviourintentional activities referred to as happiness strategies. This is the core of the research of leading professionals in this field which advocates increasing and sustaining happiness through intentional activities. Genuinely happy people make things happen, and dont just sit around being content. They learn more, achieve more and control their thoughts and feelings. If an unhappy person wants to experience interest, enthusiasm, contentment, peace and joy, he or she can make it happen by learning the habits of a happy person. Scientific research supports the use of strategies such as expressing gratitude, acts of kindness, nurturing relationships, committing to goals, among others. Researchers describe precisely what these somewhat generic terms mean in this context and provide a rationale for why they work and explore what they might look like in practice. They do not say that these are the only meaningful happiness strategies, but separately they meet standards for being evidenced-based, and together they constitute a list sufficiently broad so that every individual could find a set right for him or her. The science of happiness is here to stay with the single focus of making the world a better place.

Genuinely happy people make things happen, and dont just sit around being content. They learn more, achieve more and control their thoughts and feelings.

Prof. Christopher Abraham holds three post graduate qualifications in business administration (marketing), human resources management and labour and administrative law, and has 24 years of professional experience in management consulting and management education in India, Canada, Singapore, and the UAE. Currently he is the senior vice president and head of the Dubai campus at SP Jain School of Global Management. His areas of competence are corporate strategy, innovation, trends, positive organisational behaviour and the science of happiness.

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Wellness

Your employees need caring

Michael Tolan explains why there is a need for adopting wellness policies in companies to increase productivity.

ecently I was daydreaming in the back of a taxi, as I was being whisked from one speaking engagement to the next, and had the opportunity to observe in the heavy traffic, hundreds of drivers during my journey of 30 minutes. I watched, as they all seemed to be mindful of their mission of the day, the deals that were cooking, the tasks that had to be done, the e-mails they needed to write. Most of them were in typical fashion, on the phone, and few of them, it seemed, displayed any sign that they were happy. I wondered after witnessing so many people, from various walks of life and rank, if any of them were

working in a healthy environment that would support them as human beings with an assortment of needs. This reminded me of a recent epidemic within companies, especially in Europe and the US, that has been referred to as Burn Out syndrome. In short, Burn Out syndrome has affected tens of thousands of executives and workers, leaving them virtually empty of purpose or passion. This is often a direct road to depression and furthermore disease caused by the effects of disempowerment. There seems to be no single industry, today, that is immune to this career quicksand, and many leaders are waking up to this fact.

Some have started to understand the importance of looking after the welfare of their troops. If you think about it, this is smart medicine for any company; after all, if most people spend more time at work than they do with their families or private life, it does make sense to ask the bigger question: If my team members feel empowered, healthier and more vital as people, is there a chance they might add more value to the company? In some leading organisations, the answer is a resounding yes. Wellness or well being practices is more than a buzz word these days. It has become a multi-billion dollar industry worldwide. It has also improved the lifestyles of many

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who had previously ignored their own health, both physically and emotionally, due to a misguided idea that there was not enough time in the day to take care of oneself. This is why leaders that embrace the concept of peak performance encourage and develop wellness benefits within their own organisations. All wellness programmes do not require expensive investments in order to communicate and make available supportive culture that sends a message to its employees that the company cares. Often good communication to the staff, for example advising them to hydrate during the day, or things like the HR department bringing in a dietician for free consultations with staff members and offering daily meditation training will go far to communicate that a company encourages its team members to look and feel healthier, more relaxed and good about themselves. One company worth mentioning in this connection is Google. Google actually engages a director of fun, installs playrooms in their offices with facilities, such as ping pong and gyms to support wellness of mind to reap more creativity for its staff, and as a result, more loyalty. According to mind-body medicine pioneer Dr. Deepak Chopra, whose centre I have visited on two occasions, wellness starts with a presence of mind, and that the mind and body are intrinsically connected. When the mind is at peace and relaxed, we experience ease, but when there is no peaceful mindfulness, and we are scattered and stressed, this will lead often to disease if not balanced and harmony is restored. Today, the ancient wisdom of the Chinese and the Vedic principles of India are being re-visited and adopted by wellness centres around the world. Why has this emerged now? Our new shiny, fast talking, fast paced, fast food, fast everything lifestyle is

staff. Wellness policies have been adopted by some top companies overseas, but have yet to trickle down to small and medium size companies in the MENA region. My advice is to stop following and start leading. Create a company membership for your team in the gym. Bring in a dietician for free to have one to one consultation with your team. Offer a free morning of meditation or yoga even if it is only once a week. And, now, imagine seeing one of your people looking haggard and unhappy at work, and walking up to them and saying: Sorry, you have to leave the office now. You are going off to the spa for the next three hours for pampering session. It might be possible that your people might just love you and your company more because they never met anyone who cared as much. Wellness delivery is all about caring. The result - less absentees, more creativity, more productivity, and more rumours in the market that your company is a great place to work.

When the mind is at peace and relaxed, we experience ease, but when there is no peaceful mindfulness, and we are scattered and stressed, this will lead often to disease if not balanced and harmony is restored.
not giving our mind and body what our very own cell phones require almost daily - a recharge. Is there a feeling of tranquility one can envision and experience by seeing and inhaling the healing scents and floating candles in a pool of water, or does sipping a freshly made herbal tea call to the spirit a sigh of relaxation almost instantly while listening to waterfalls? Smart leaders might arm their HR departments and managers with new tools that could empower their

Get Well-Ness Soon.

Michael J Tolan is senior consultant for Potential.com, an organization that develops excellence practices, provides coaching and training to SMEs in the Middle East and North Africa region. He is also the head of the Leadership Academy for Excellence within the Potential Group.

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How to inspire your peers

Anesh Jagtiani writes on the key to becoming a positive and decisive person.
this. The first is that most of the motivation comes from convincing that something is possible. So if you're living by your convictions and getting results in your life, that alone will motivate others to do the same. The second reason for this is that people cannot argue with actions and solid results as they can with words. If your attempts to inspire and influence involve only words, people will usually question your words, even if they make perfect sense. But when someone sees your beliefs represented in your actions and realises that those beliefs are producing solid results, they'll have no choice but to be convinced. Now, let's look at the most important step towards laying the personal foundation of inspiration. Defining purpose The most powerful and pronounced character trait of a great leader is decisiveness, and this comes as the result of knowing exactly where you're going in life. Napoleon Hill said that the world has a way of making room for people who demonstrate by their words and actions that they know where they are going. But people do a bit more than make room for a person who knows where they're going. The world will be much more ready to be inspired by and to follow someone who knows where they are going. People are also quicker to forgive someone when they fail if that person is certain about the direction of their life. On top of this, almost everyone is slower to get in the way of someone who can demonstrate that they know where they're going. Finally, being decisive gives you a specific place to focus your energy and makes it easier for you to take action and to produce results that will inspire others. So, what's the key to becoming a decisive person and an inspiration to your peers? It starts with sitting down and brainstorming for each of the key areas of your life and deciding once and for all what you're determined to have: your career, your financial life, your health, your relationships. Don't worry about how you're going to accomplish what you want, until you know for sure what you're going to accomplish. Then, write down a plan of action and get to work immediately on it, whether you're ready or not.

magine what people would be saying about you, both today and after you were gone. What is the secret to becoming a force of positive inspiration to the people around you? Let's look at the most important factors to inspiring others, and then we'll look at a plan of action for making them work in your life. The foundation Before you make an attempt to lead or inspire anyone else, you must properly manage your own life. This means you become the very person who you want to inspire other people to become. For example, if you want to inspire others to get into good health, the best thing to do is give them an example which will inspire them to do so. This will convince them more than all of the slick talking and persuasion you can practice. In fact, inspiring others by setting an example with your own life will eliminate the need to try and convince them with your words. A perfect example of this is the Mahatma Gandhi of India who said: "We must become the change that we seek to make in the world." His legacy as a leader and the principles he lived by prove that the above statement is the foundation for inspiring others. There are two reasons for

Anesh Jagtiani is the CEO of Empowering Leaders Group (M. E). He is a professional speaker and trainer. His leadership program 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

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Social media

Lets 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 email@farrukhnaeem.com
Q. I have been seeing a lot of Google +1 buttons on my competitors websites? Do I need one? How do I get it for my own website? A. As the New Year rolled in, Google
announced the integration of the privacy policies of all its services into one, a possible indication of how its different services will work together to enhance your browsing experience. Google+ profiles and the +1 button will play an important role in this phase of the evolution of social search. So, yes, you should have a +1 button on your website and content its free and its valuable. Also, a Google user gets an option to share your content while giving you a +1 on their Google+ profile the big benefit being the increased share-ability of your content on this new platform with 90 million users on last count. last year and it is being rolled out as a mandatory upgrade across the world currently.

To get the +1 buttons on your website, you need to install a few lines of code to your webpages by following the instructions on this page: http://bit.ly/xtbiuk Useful Links: http://bit.ly/xLyXVG http://bit.ly/w9qZnn http://bit.ly/yXaDvP

The +1 button works on multiple levels in favour of your website and online content. When someone plusones your web page, their friends are shown this fact when they are searching for results. Strong and instant social proof!

Q. I have seen a very different design of some Facebook profiles recently. What is going on? Does this have any significance for my business? A. Facebook introduced
one of its most debated and discussed layout changes for personal profiles in September 2011 its called the Timeline. Mark Zuckerberg announced it officially at Facebooks F8 conference

Once you have the new timeline, which blends your profile and your wall, your entire life and its events will be mapped on one long scrolldown page. Of course, you can choose to hide, reveal or showcase various milestones in your life depending on what you wish to share. From the point of view of an entrepreneur, one of the biggest opportunities offered by the timeline is the extra-large cover photo you can set up on the top of your profile page. Businesses are using this real estate in many creative ways as Facebook cautions against using this area for banner ads or commercial content. Facebook marketing celebrity Mari Smith uses her cover photo to highlight her books or events.

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Entrepreneurs like Muhammad Siddique are using the cover as a business card, which saves the trouble of a potential prospect to dig through the Info tab for your contact information.

Useful Links: http://on.fb.me/x9oxGA http://on.fb.me/yiHr03 http://bit.ly/y4WnHL

Michael Stelzner, CEO and Founder of Social Media Examiner, has used his cover establishing his expert status, without being too commercial.

Q. Can you tell me a good

website for seeking small business advice? I am looking for simple and straightforward information on venture capital, start-up challenges,

content is written in research style, with citations and references being valued most, in Quora.com the information is in the question and answer format with a focus on the users own expertise and experience. If you have a question on venture capital for example, you have the opportunity to ask a venture capitalist on Quora.com. If you are struggling with co-founders, there is a wealth of experience shared by some of the top players in business. The best part is, Quora is free to use and has already built up a very large resource of questions and answers where the answers are voted up by users, thus helping the site keep the best content on top and bury what does not add value. You would need an invite to join Quora.com to get one, visit this page and submit your details: http://bit.ly/getquora Useful Links: http://www.quora.com http://www.quora.com/StartupAdvice-and-Strategy http://www.quora.com/ Entrepreneurship http://www.quora.com/SmallBusiness-Advice

The most ideal situation for a business would be when its users choose to feature the brand on their Facebook cover like the position Apple and Starbucks enjoy in the cover image of Brian Gardner the founder of Copyblogger.com. But this should come as a result of a great brand experience, nothing less.

stories of other SMEs, etc.

A. One of the most interesting and

interactive sources of information for startups is Quora.com. It is like a combination of Wikipedia, LinkedIn, Yahoo Answers and Facebook all rolled in one. Unlike Wikipedia where the

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.

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2/12/12 5:31 PM

SEMINAR ON DECEMBER 21, 2011

Shantanu Phansalkar, CEO, SPI Publishing, speaks with attendees of the Quality is Paramount seminar held at Media Rotana, Tecom.

Kannan Nayar, Procurement Manager, New Concept, and Hassan Mosafer, Commercial Directr, Dubai World Trade Centre, at the seminar on ISO accreditation held at Media Rotana, Tecom.

Dr. Sameer Kumar, CEO, Universal Consulting FZC, being introduced at the Quality is Paramount ISO accreditation seminar, held recently at Media Rotana.

Dr. Sameer Kumar, CEO, Universal Consulting FZC, speaks the Quality is Paramount ISO accreditation seminar, held recently at Media Rotana.

If you would like to give your business the unfair advantage by participating in the Knowledge Series, just SMS your name to 055 9023185 / e-mail: events@spiholding.net

SEMINAR ON JANUARY 25, 2012

Networking session prior to the Emotional Intelligence - Hiring and Firing at Will Seminar held at Business Village.

John Lincoln, Vice President, Marketing (Enterprise segment) Du, speaks at the seminar.

Participants gathered at the seminar on Emotional Intelligence - Hiring and Firing at Will at Business Village, Deira.

Khalifa A. Al Jaziri, co-founder of e-Home Automation International, Huny S. Garg, head of product and segment solutions, Standard Chartered bank atted the seminar on Emotional Intelligence. Right: John Lincoln, Vikram Chadha, senior director - marketing (SME segment), Du and Shantanu Phansalkar look on.

Events calendar

Networking opportunities
Important business events across the globe
OFFSHORE ARABIA CONFERENCE & EXHIBITION Date: February 27-29, 2012 Venue: Dubai International Convention and Exhibition Centre, Halls 5 & 6. An international marine and environment conference and exhibition held with the theme, Offshore Oil Spill Prevention and Response through New Technology and International Cooperation. The exhibition which is to be held simultaneously will provide the opportunity to showcase the state of the art know-how and technology and will also reflect every organisations commitment to marine and environment. Website: www.offshorearabia.ae HOW TO BE A SOCIALLY GOOD SME Date: February 27, 2012 Venue: Media Rotana, Tecom, Al Barsha. Connect, learn, share and be inspired! Join an amazing group of like-minded female entrepreneurs for networking and 'How to be a Socially Good SME' with Tricia Evans of Gulf for Good and a panel of UAE based charities and NPOs, along with Susan Castle of Out with The Dots. Pre-payment fee: Members AED120, non-members AED150, On the Door Fee: AED170, non-members AED200. Website: www.heelsanddeals.org CABSAT 2012 Date: February 28 March 1, 2012 Venue: Dubai International Convention and Exhibition Centre. CABSAT is the established and respected trade platform for the digital media and satellite sectors across the Middle East, Africa, and Southern Asian regions. Conferences include GVF Satellite MENA Summit and several other workshops, including the Twofour54 tadreeb workshops delivered in conjunction with the BBC Academy. Website: www.cabsat.com IBWG SMALL BUSINESS INCUBATOR SEMINAR Date: March 3, 2012 Venue: Emirates Golf Club. Sue-Sharyn Ward & Claire Malcolm will facilitate a discussion on 'Free Trade Zones Panel (RAK - JLT DAFZA)' which will deal on setting up in a free zone and the advantages. Registration at 7 pm, Cost: AED70 per person, bookings via e-mail to ibwg_dxb@eim.ae, last bookings at noon on February 28. Website: www.ibwgdubai.com HEDGE FUNDS WORLD MIDDLE EAST Date: March 5-8, 2012 Venue: Jumeirah Beach Hotel, Dubai. With over US$3 trillion worth of capital represented, Hedge Funds World Middle East is the local meeting place for the Middle Easts biggest institutional investors. Find out where star hedge fund managers will be investing in 2012 and learn which styles and strategies are predicted to outperform the market. Website: www.terrapinn.com MIDDLE EAST INVESTMENT SUMMIT Date: March 5-7, 2012 Venue: Jumeirah Beach Hotel, Dubai The Middle East Investment Summit brings together regional and global institutional investors and asset managers to explore the latest portfolio management strategies. The conference showcases top asset classes, untapped regional opportunities and global funds, enabling investors and asset managers to produce maximum returns in 2012. Website: www.terrapinn.com ABU DHABI AIR EXPO Date: March 6-8, 2012 Venue: Al Bateen Executive Airport, Abu Dhabi. Mainly intended for owners, pilots, enthusiasts and professionals in the general aviation field, who come from all over the Middle East, this event showcases a complete range of aviation. Website: www.adairexpo.com COMMERCIAL VEHICLES MIDDLE EAST Date: March 6-8, 2012 Venue: Dubai International Convention and Exhibition Centre. Commercial Vehicles Middle East is the region's only event dedicated to commercial vehicles, parts and services. The event provides a platform for knowledge exchange, commercial partnerships, market and trend analysis, product comparison and technology updates for transport, fleet and logistics managers from regional commercial enterprises and procurement officials from the region's transportation departments. Website: www.commvehicles.com EMERGING HEDGE FUNDS MIDDLE EAST Date: March 8, 2012 Venue: Jumeirah Beach Hotel, Dubai. Emerging Hedge Funds World Middle East is an invitation-only event for investors who are actively looking to allocate into small funds. If you are a small fund manager, this is an exclusive opportunity to demonstrate your fund to 30 sovereign wealth funds, family offices and institutional investors. Website: www.terrapinn.com MIDDLE EAST COATINGS SHOW 2012 Date: March 12-14, 2012 Venue: Dubai International Convention and Exhibition Centre. The Middle East Coatings Show is the largest coatings event in the Middle East and Gulf Region for raw materials suppliers and equipment manufacturers for the coatings industry. See the very latest innovations,

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Events calendar

Networking opportunities
Important business events across the globe
solutions, products and services from the world leaders in the coatings industry at the Middle East Coatings Show 2012. Website: www.coatings-group.com ASIA PACIFIC RAIL 2012 Date: March 13-15, 2012 Venue: Shangri-La Hotel, Kowloon, Hong Kong. From metros and mainlines to high speed rail follow the rapid developments in Asias rail scene and take part in its success at the 14th annual Asia Pacific Rail. Website: www.terrapinn.com WETEX 2012 Date: March 13-15, 2012 Venue: Dubai International Convention and Exhibition Centre. WETEX 2012 is an important regional resourcing platform for national and international companies to access wide range of latest technology and management solutions. This event also provides avenue for industry leaders to keep abreast of the latest developments in the Gulf region in the field of Water, Energy and Environment. Website: www.wetex.ae INTERNATIONAL SECURITY NATIONAL AND RESILIENCE 2012 Date: March 19-21, 2012 Venue: ADNEC, Abu Dhabi. ISNR Abu Dhabi is the only event bringing together the entire spectrum of homeland security issues under one roof. It is a unique event addressing the growing need for sophisticated equipment to counter international terrorism, to protect national borders and to respond resiliently to disasters, whether natural or the result of terrorist action. Website: www.isnrabudhabi.com AVIATION OUTLOOK MENA Date: March 19-21, 2012 Venue: Shangri-La Hotel, Dubai. This Middle East aviation conference, the only CEO aviation conference in the region will address the challenges unearthed in this operating environment and strive to find innovative solutions that will drive growth and expansion with optimised route scheduling and the latest distribution and revenue management strategies. Website: www.terrapinn.com GULF INCENTIVE, BUSINESS TRAVEL AND MEETINGS EXHIBITION Date: March 26-28, 2012 Venue: ADNEC, Abu Dhabi. As the leading event for the rapidly developing Middle East Meetings, Events, Incentives and Business Travel industry, GIBTM brings together a combination of regional and international industry buyers and suppliers, for three days of business opportunities, networking and professional education. Website: www.gibtm.com WORLD PORTS AND TRADE SUMMIT Date: April 2-4, 2012 Venue: ADNEC, Abu Dhabi. The World Ports & Trade Summit is being launched to deliver an unprecedented exchange of information on the future of ports and shipping and will present some of the most ambitious projects ever attempted. As governments in the region earmark US$46.5 billion for the build and development of ports facilities, the summit will bring thousands of industry professionals together to study what this investment means for the industry. Website: www.worldportsandtrade.com SAUDI TRAVEL AND TOURISM INVESTMENT MARKET Date: April 2-5, 2012. Venue: Riyadh International Convention and Exhibition Centre, Riyadh, Saudi Arabia The event covers all travel and tourism investments aspects in Saudi Arabia through a combined conference and exhibition aiming to present and promote the investment opportunities and tourism services and products. The conference highlights the investment opportunities and the available potential in the Saudi travel and tourism investments market, and covers the tourism development strategies related to the business sector. Website: www.sttm.com.sa THE MOBILE SHOW Date: April 17-18, 2012 Venue: Madinat Arena, Dubai. Meet the worlds leaders, disrupters and challengers of the mobile ecosystem and discover new business models and partnerships to develop your business. Website: www.terrapinn.com ARABIAN BUILD AND CONSTRUCTION EXPO Date: April 22-25, 2012 Venue: ADNEC, Abu Dhabi. An international construction event dedicated to sustainability and innovation. The Arabian Construction week incorporates three dedicated trade exhibitions: Green Building, Future Build and Civil Engineering and four international summits. Website: www.worldecoconstruct.com CITYSCAPE ABU DHABI 2012 Date: April 22-25, 2012 Venue: ADNEC, Abu Dhabi. Cityscape Abu Dhabi 2012 will serve as a platform to bring further positive development as well as transparency to this burgeoning market and introduce the local, regional and international projects to a global audience, made up of investors, and senior real estate professionals. Website: www.cityscapeabudhabi.com

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Column

Solving the cash flow riddle

Utpal Bhattacharya on why a good accountant is so dear for an SME that aspires to succeed.

Summing up

ecently, I was sitting with a friend, an entrepreneur and a smart businessman at that. I had done some business with him, and he owed me some consultancy money. But his problem was that he could not pay me on time, as he was not receiving his money on time: the blame goes to Dubais credit cycle, which can become annoying at times. This friend showed me his books, and I could see that most of his money was due in the next two months, while he had to pay significantly large amounts to creditors immediately. There was a clear mismatch, and banks had already refused to fund him on his cash flow, just because he was a small business. Both of us knew that he was in trouble, as his cheques would start bouncing; and not long after that creditors would be queuing up outside his door, while some initiate police and court action. What was the way out from here? On the retrospective assessment, he should have been more careful. He should have appointed an adroit accountant who

would have cautioned him to act before it was too late. A highly skilled accountant would have been able to advise him a way out of trouble, as his problem area was not more than three months: that kind of time is not too difficult to purchase from nervous creditors. However, my friend had saved money on his accountant, and that was the beginning of his problems. Among some of his basic flaws, which I could make out, were that he had not prioritised his payments, pre-paid certain accounts and did not give much thought to reducing his interest payout to individual lenders. My friend is no exception to bad practices in cash flow management. In fact, more than 60 per cent of new businesses do not survive over six years, and one of the primary reasons for failures is bad management of cash flow. According to Les Masonson, author of Cash, Cash, Cash: The Three Principles of Business Survival and Success, the best way to keep a business going is by improving collection, not delaying in depositing cheques and keeping a strict

accounts receivable policy. Getting the money from customers sooner, paying bills at the last possible moment, concentrating money to a single bank account, managing accounts payable, accounts receivable and inventory more effectively, and squeezing every penny out of your daily business," Masonson suggested. When I told my friend about Masonson, he said: All that is fine for the future. But, what should I do now? I advised him: Try cutting a deal with all creditors. It will not only buy you some time, but your creditors will also feel that you are not closing down and trying to escape. It is very important for small businesses to give a feeling of confidence to creditors, and if need be sit across the table and cut a deal, promising to pay in installments, while offering to do more business. I told my friend to start the practice with me. So, he paid me my dues, albeit 50 per cent. A quarter was to be paid the next month and the rest settled the following month. I came away happier and promised to keep servicing him. He has since been quite successful in negotiating with his creditors, paying everybody a part of their dues, while keeping them engaged. He has also, and very correctly to his credit, hired a skilled accountant: although that might mean that my dues will not be pre-paid, but on time, as promised.

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