x Abu Dhabi, UAEFriday 28 July 2017

How I keep my business rolling

When I decided to expand my father's tyre firm in the middle of the downturn, my friends thought I was crazy.

Muhanned Refai has invested Dh2.5 million in his family's tyre company since June 2009.
Muhanned Refai has invested Dh2.5 million in his family's tyre company since June 2009.

Our company, International Trading and Engineers Equipment Enterprises, was established by my father in 1989. We import, export and distribute tyres in Jordan, Dubai and many other countries in the Gulf region. I am from Jordan, and we have three big stores there. When I was 17, I started working as a sales manager for my father. I brought in smaller accounts, such as tyres for school buses and small transport companies. I have two older brothers. Ahmed is 31 years old and works for Visa. Mahmoud, the eldest, also works for my father's company. Generally, my father was a little strict with money. As children we always knew that our mother would give us what we wanted, so when we thought that we needed extra money we always went to her without telling dad.

I had a weekly allowance of 10 Jordanian Dinars, or about Dh50. When I graduated from the Private University of Amman, studying banking and finance, I told my father that we should expand the company to Dubai. Some people thought it was a bad timing with the financial crisis, but I thought it was great timing. In June 2009 I arrived in the UAE to establish the Dubai branch - Moh'd Al Refai General Trading LLC - and I am now 28 years old.

We started slowly and chose our customers carefully. My goal was to sell tyres to big companies that are not too affected by the recession. One of my first clients, for example, was RAK Ceramics. They sell their products all over the world, and I took them on by supplying their tyres for lorries and large loaders. It was a very good account. My other clients include local companies such as Furit building tools, Oceans Ready Mix, Golden Ready Mix, Ahamada RAK, True Mix and Quality Ready Mix.

At the moment I am mostly just trying to cover my expenses. I am waiting for the boom in Dubai, because I think it will come again one day. When I first arrived last June my father and I invested Dh1.5 million in the Dubai project, which went towards renting a warehouse, registration, getting a trade licence, hiring employees and materials. Since then I have invested more, about Dh2.5m in total. Meanwhile, I have approximately Dh2.5m in sales, and I will continue to invest more in the business once the economy improves.

Money collection is a big problem. For me, I don't get shy when it comes to collecting my money. Let's say I am owed Dh100,000 from a company for my tyres. They say: "Come by next week, come by next week." Sometimes this happens for a very long time. So we go there every day and speak to the owner. I tend to give people 90 days' credit, but in Dubai they usually take 180 days or 200 days. But in the end you keep pushing and you get money from them. In fact, I have three employees who work only on money collection. They go out every day to collect, and occasionally we'll bother a client every day for an entire week.

We were actually speaking the other day about doing more business in Abu Dhabi, because we think customers will be better in the capital. I think they will have more money. In total I have seven employees - three Jordanians, two Indians and two Pakistanis. I have seven clients worth Dh2.5m in sales since starting the company. If we continue on this for another year I think we'll have 20 customers, and I don't think we'll need more than that.

I now live in Dubai in a new community behind the Arabian Ranches. I don't spend a lot of money on myself; I tend to spend on tyres. These goods are a very safe investment. At any time I can sell my tyres at cost, so there is no risk involved. I was thinking of buying a house in Dubai, but right now I think the market is too dangerous. My next step is finding a good property deal though, because we are building a business base here, and I want to have a permanent home.

Right now I am paying rent for a villa, and I consider this a loss. I don't like to rent at all. Right now I have to pay Dh130,000 per year. It's not too expensive, but it's still a loss. When I do spend money, I like to dress well and will pay good money for clothes. I also enjoy travelling and will spend on trips to India, Turkey, Canada and throughout Europe. In addition, I put money aside for when stocks go down enough, and then I buy. Let's say Tameer Jordan Holdings, the real estate developer in Amman, goes down to Dh0.5 per share, as it did around six months ago. I buy stocks like this that are very low, and then I leave it for a while. I picked up shares for 8,000 dinars, which is about Dh40,000.

Now, the share price is Dh0.85. I could sell and make a profit, but I will wait a bit longer. I would like to move on to the next investment soon, and I am trying to understand this stock market more. Overall, I think it's always a good idea to save up some money so you can be ready for the next investment opportunity around the corner. Of course, my biggest focus and investment is my business. I have a plan for every six months, every year, every two years, and beyond. After three years, company sales should be Dh30m a year, and this will happen once we start exporting.

We are thinking of exporting to Saudi Arabia, Oman, and around the Gulf. From the business in Jordan we already export to countries such as Iraq and Libya. We import our tyres from China and Turkey. We use Boto for lorries, which is a Chinese tyre manufacturer, and from Turkey we order Ozka, and these are for machines such as agricultural tyres and fork lifts. We bring them all by sea, which can take around 26 days depending on location and the date of shipping. When I need goods in Dubai quickly, however, I get them by lorry directly from our warehouses in Jordan. You always have stock, but sometimes a client needs something urgently.

Looking back, it has been difficult starting a business during the financial crisis, but I think this is a good time for entrepreneurs to establish foundations. Most companies care only about sales, which are important, but now is a good time to focus on other things because the market is slow. I am currently building a foundation to create sales. The more foundation you have, the stronger you will be in the future.

* As told to Jeffrey Todd