An Agency of the Department of Economic Development – Government of Dubai STRATEGIES FOR SURVIVAL: WHAT KINDS OF SMES DO BEST IN THE MARKET? - THE FIRST

An Agency of the Department of Economic Development – Government of Dubai

STRATEGIES FOR SURVIVAL: WHAT KINDS OF SMES DO BEST IN THE MARKET?

- THE FIRST 1,000 DAYS OF THE ENTREPRENEURS’ AND

THEIR BUSINESS LIVES –

OBSERVATIONS FROM DUBAI SME

1

An Agency of the Department of Economic Development – Government of Dubai2

DUBAI SME – An agency of the Department of Economic Development – Government of Dubai

Mission: Enhance the Economic Welfare and Prosperity of the People of Dubai

Vision: Achieve Dubai’s economic development goals by 2015 for competitiveness and sustainable growth

An Agency of the Department of Economic Development – Government of Dubai 3

Output(economicgrowth)

Inputs(Labor and capital)

Reaching minimum scale

Dubai’s current situation in key sectors, e.g.

• Real estate

Reaching optimal scale

• Decreasing returns for each additional unit of labor and capital

• Increasing macroeconomic challenges (demographics, environment,

infrastructure) → Rising cost of growth

“More” path → More labor

and capital

Need to move tonew growth path

“Better” path → Productivity

“New” path → Innovation

Moving Forward: a different economic development pathFrom “Bigger” to “Better”

The Context and Future - The New Economic Imperative

An Agency of the Department of Economic Development – Government of Dubai 4

Our Vision, Mission, Roles & Core Initiatives

SME Sector and SME Firm Development

(Groom Dubai’s Top SMEs)

Entrepreneurship & Entrepreneur Development

Foster the development of a flourishing entrepreneurial

culture and a competitive SMEs sector to support Dubai’s economic development

Foster the development of a flourishing entrepreneurial

culture and a competitive SMEs sector to support Dubai’s economic development

MissionMission

Dubai as a Global Center for

Entrepreneurship and SME

Development

Dubai as a Global Center for

Entrepreneurship and SME

Development

VisionVision

Roles

Dubai SME 100, Gov. Proc. Prog., YBL

Dubai SME 100, Gov. Proc. Prog., YBL

Corporate Governance, Access to SME Financing, Ease of Doing Business ,IP

Corporate Governance, Access to SME Financing, Ease of Doing Business ,IP

Incubation, Idea Lab, Entrepreneur Capability Development, YEC

Incubation, Idea Lab, Entrepreneur Capability Development, YEC


Our Roles: Dubai SME develops/enables the:

Entrepreneur as a person (domain knowledge, selling skills, business financial literacy, decision making, intelligent risk taking, business planning, forecasts, how to use different business tools, diagnostics, etc)

Their business (commercial, corporate, organisation) – guidance & advisories in execution from legal set-up, formalisation & structuring, building a company, building a business, industry-based discussions, costs of execution, pricing, market demand, customer feedback)

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Our Roles (cont’d)

CEOs and Key Management Team Development – Investment & Financial Savviness, Human Capital Development, Innovation & Technology Adoption, International Orientation, Corporate Governance, Key Men Risks, Family business succession(via Dubai SME 100 Ranking Initiative)

SME Sector and Industry (ecosystem approach, access to finance, information on industry-based business opportunities , corporate governance for SMEs,)

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The Dubai SME Definition

Micro

Small

Medium

Trading

< = 9

Employees Turnover

< = AED 9 mn&

< = 35 < = AED 50 mn&

< = 75 < = AED 250 mn&

Manufacturing

< = 20

Employees Turnover

< = AED 10 mn&

< = 100 < = AED 100 mn&

< = 250 < = AED 250 mn&

Services

< = 20

Employees Turnover

< = AED 3 mn&

< = 100 < = AED 25 mn&

< = 250 < = AED 150 mn&

According to DSC Database:

SMEs count for 95% of the total enterprise population in Dubai SMEs employ around 42% of Dubai’s workforce SMEs contribute 40% of Dubai’s value add


Strategies for Survival (In Any Market) Must be hungry enough to achieve at all cost. Those that put in their

savings (hurt money) are arguably more hungrier to achieve.

Must be determined to get things done. Don’t leave things to chance. Every action has a reaction.

Passionate about selling, influencing others

Not afraid and not shy to seek advice

Price your products/services/menus carefully with as much information as possible on the costs in any market space, geography (rent is a killer in Dubai)

Design a value- for- money business model

Develop & enhance domain knowledge of the business idea in that industry/trade (e.g., retailing, F & B, Printing & packaging, importing machinery; wholesaling of spices & fruits; etc.) (Chefs turned entrepreneurs)

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Strategies for Survival Leadership and Human Capital Development

Start to build teams; start to develop teams as the businesses grows.

Spot talent early, test them, develop them to the next level. Give them some stake in the company’s growth (ESOPS).

Set the leadership tone. Define, develop and live the values; live by example

Develop leaders that can run the business without you

Hire someone smarter than you in core business areas – market development, social media, financial management, operations and process management, ICT development)

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Strategies for Survival

Cultivating Customers and Suppliers

Adapt and change according to close customer feedback, and a believe in Kaizen (continuous improvement)

Cultivate new customers, retain existing customers who will be your repeat customers

Diversify customer base progressively

Diversify supplier base progressively

Focus on differentiation, always ask “why would customers want to buy from us” and “why do customers want to come back to us”

Make your customers your ambassadors

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Cultivating Customers and Suppliers (cont’d)

Build and enhance long term partnerships

Continuously improve products, services and menu progressively

Test the waters, pilot the new offering, get feedback, improve and move on.

Develop the customer database with intelligence details (specific details on likes, dislikes, tastes & preferences). It is going to be your key differentiating asset!

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Business Learning and Knowledge Building

Don’t stop learning, you do not have monopoly of knowledge

Beware of the competition, be thankful for it to spur you out of complacency and to innovate to differentiate.

Constantly think of improving productivity – doing more with less

Develop the ability to spot trends and emerging market needs, not just tracking changing customers’ tastes

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Business Relationships and Networks

Join a support network group – share experiences, share referrals, share networks, share solutions, share joys and tribulations. It helps to develop your business personality & character.

Learn from other entrepreneurs in different businesses and industries (e.g. F & B firm learning from a logistics firm)

Learn from the business failures more than the business successes

Benchmark where it makes sense for measurable business dimensions for example; - customer turnaround time, employee satisfaction, pricing and merchandising.

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Strategies for Survival Financial Management

If you are raising funds through equity capital, always remember that investors enter your business to exit at some point (they seek profits)

Develop the habit of sound financial management from Day 1. Document every single invoice, transaction, expenditure line by line. If you can afford in the early days, hire a part-time accountant to tidy the books, and do the matching/balancing. But master to some degree the importance of business finance. Remember, your financial story is your business story.

You should work towards making your business very bankable and investable at all times.

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Don’t forget to budget for losses; have a plan B, plan C to de-risk the venture as much as possible

Do all you can to ensure timely payments from customers, as lack of a cash flow can kill (have a dedicated process to remind clients’ of payments, build into contracts upfront partial payments, do some background checks of the financial health of clients, etc;)

Separate personal from business accounts. Factor in your time/skills/effort as compensation / salary in the accounts at a reasonable stage of the business growth (2nd /3rd year)

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Business Protection and Risk Management

Start thinking about how to protect your business, and the wealth being created, and how to use it wisely for expansion and asset enhancements. Spend on your rewards, after you have set aside the savings for future productive investments

Plan for your eventual or sudden exit – have a succession plan, have a business continuity plan (BCP). Evolve the plan as the company grows.

Insure the business and the key management team (loss of a member can be damaging)

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Conclusions

No one formula for success - every case, every business model, every entrepreneur, every business, industry and economic context is different

Find your niche, determine your differentiation in the market

Once started, don’t stop. Focus, focus, focus! Adapt, adapt, adapt

Build the business, the company, and eventually the brand

Don’t stop learning

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If your business survives the first 1,000 days, chances of stability and future growth prospects are much better.

Profit – positive within 5- 8 years

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If they can do it, why can’t you?

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- End - Thanks

Discussion

Documents

An Agency of the Department of Economic Development – Government of Dubai STRATEGIES FOR SURVIVAL: WHAT KINDS OF SMES DO BEST IN THE MARKET? - THE FIRST