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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.

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Presentation on theme: "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."— Presentation transcript:

1 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

2 An Agency of the Department of Economic Development – Government of Dubai 2 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

3 An Agency of the Department of Economic Development – Government of Dubai 3 Output (economic growth) 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 to new growth path “Better” path → Productivity “New” path → Innovation Moving Forward: a different economic development path From “Bigger” to “Better” The Context and Future - The New Economic Imperative

4 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 Advocate Seed Groom Foster the development of a flourishing entrepreneurial culture and a competitive SMEs sector to support Dubai’s economic development Mission Dubai as a Global Center for Entrepreneurship and SME Development Vision Roles 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

5 An Agency of the Department of Economic Development – Government of Dubai 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) 5

6 An Agency of the Department of Economic Development – Government of Dubai 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,) 6

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

8 An Agency of the Department of Economic Development – Government of Dubai 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) 8

9 An Agency of the Department of Economic Development – Government of Dubai 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) 9

10 An Agency of the Department of Economic Development – Government of Dubai 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 10

11 An Agency of the Department of Economic Development – Government of Dubai Strategies for Survival 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! 11

12 An Agency of the Department of Economic Development – Government of Dubai Strategies for Survival 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 12

13 An Agency of the Department of Economic Development – Government of Dubai Strategies for Survival 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. 13

14 An Agency of the Department of Economic Development – Government of Dubai 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. 14

15 An Agency of the Department of Economic Development – Government of Dubai Strategies for Survival  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 (2 nd /3 rd year) 15

16 An Agency of the Department of Economic Development – Government of Dubai Strategies for Survival 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) 16

17 An Agency of the Department of Economic Development – Government of Dubai Strategies for Survival 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 17

18 An Agency of the Department of Economic Development – Government of Dubai Strategies for Survival 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 18

19 An Agency of the Department of Economic Development – Government of Dubai If they can do it, why can’t you? 19

20 An Agency of the Department of Economic Development – Government of Dubai - End - Thanks Discussion


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