Once you understand the local system it's straightforward, but you need to study the market.
Starting small but thinking big
At the end of 2004 Suzi Croft and Manar al Jayouchi were considering opening a humble coffee-and-bagels shop in Dubai, but then hit upon the idea of incorporating a broader catering component. That meant digesting a whole new menu of administrative challenges as they established the business as a limited liability company (LLC), but four years on, it was clearly an inspired move. Today, the pair employ 85 people, and their thriving food service business, Appetite Catering, recently picked up the Lloyds TSB Small Business of the Year Award 2008 in recognition of its success.
Its original 800sq ft operation, run through a kitchen in Al Ghusais district, opened in July 2005, but such was the growth of the business, the determination of both managing partners to expand their enterprise and the labour-intensive nature of catering that the duo decided to trade up to a considerably larger site - seven times the size, in fact - in Al Quoz, which opened in Sept 2007. But it hasn't all been smooth sailing.
"We had around Dh30,000 (US$8,167) as cash flow when we started and we went through that in five days," Mr Manar said. The pair were fortunate to sell 20 per cent of the company to two friends who injected money into the operation - but they still had to ride out some tough times. "We were on our own and had to work day to day. When we moved, we didn't have the funds either, but managed to work it out with banks, friends and partners, and we built the business up slowly and surely."
While starting a business of any size can appear daunting, Mr Manar says that once you understand the local system it's straightforward, but you need to study the market. One of the pair's biggest challenges was recruiting document-holding drivers. "If you're starting a small business in a growth economy, it's obviously a different scenario to now - but it still had its challenges," he said. "Finding a contractor to do the job was difficult - they aren't interested in jobs worth a few hundred thousand when they can get big contracts worth millions."
He advises that whatever figure you have in mind for your budget, multiply it by two. "It's probably not going to be double the amount, but it's more likely to be nearer that than your original figure." Having belief in your business is critically important, he added. Mr Manar saw a gap in the market for quality, tasty, fresh food for off-the-shelf consumption, and stuck to his retail guns. "Accept there will be bleak and dark days, but stick to it, and don't let anyone change your mind," he said.
Today their business has branched out into three distinct areas: retail, mainly supplying sandwiches to Spinneys; catering for corporate functions and events; and delivering products directly to offices. "Retail is important in terms of our brand exposure, but catering for events is our fastest-growing category and most important in terms of cash flow, and then we have our office deliveries." Mr Manar is proud that 20 per cent of the staff who were at the company on day one are still with him, and repaid that loyalty by splitting the Dh 50,000 prize for the small business award with his staff. "The team is responsible for the success," he said.
The three-year-old Lloyds TSB Small Business Awards has served as a focal point for fostering entrepreneurial talent. Any UAE-based business with up to 100 employees and less than Dh100million in revenue can apply for the prize. More than 90 businesses entered the competition this year, and they were whittled down to a final pool of 15. The panel of judges comprised senior executives from the awards' sponsors. Richard Musty, head of consumer banking for Lloyds TSB Middle East, said: "Small and medium-sized enterprises are the cornerstone of any economy and we are proud of our association with this sector."
Bank of Baroda is also doing its bit to help small businesses here, launching an "SME Loan Factory" initiative for companies with annual turnover of up to Dh75m and total working capital requirements up to Dh15m. In addition, Visa announced the expansion of its merchant offers programme for small businesses throughout the UAE. Visa business cardholders can now access more than 130 discount offers, including country-specific, regional and global programmes designed to help business owners achieve their goals.
Government support The strategic plan of the Federal Government, in tandem with the Ministry of Labour, explicitly supports small and medium enterprises and encourages the development of young entrepreneurs. The Ministry of Labour has signed many agreements with youth-project support institutions, such as the Mohammed bin Rashid Establishment for Young Business Leaders in Dubai, Rowad in Sharjah, and the Khalifa fund for small and medium projects' support in Abu Dhabi, as well as the Saud bin Saqr programme for youth projects' support in Ras al Khaimah. These entities are together laying the foundations for the sector's future growth. In addition, the Ministry is in the process of establishing an integrated service centre to support small and medium-sized enterprises.
Nidhal Haidar, representing the Mohammed bin Rashid Establishment for Young Business Leaders, said his organisation provides low-interest financing to SMEs in the range of Dh80,000 to Dh3m. Companies can take up to eight years to pay back the financing, and the programme includes a grace period of three years. As a bonus, the financing is available not only to start-up companies, but also to existing businesses with expansion plans.
The organisation regularly holds networking events designed to bolster links with the business community, such as the Government Networking with SME Members programme, held in collaboration with Emirates National Oil Company and Dubai World Trade Center. Together with Tejari, the business-to-business online marketplace for emerging markets, which is a unit of Dubai World, it has also launched SMELink.ae, its online portal specifically catering to small and medium-sized businesses. Registered members gain access to an online community of more than 250,000 members.
Omar Hijazi, CEO of Tejari, says: "The launch of this portal marks another landmark addition to the rapidly expanding portfolio of services provided to Tejari members. We are pleased to partner with the Sheikh Mohammed Bin Rashid Establishment For Young Business Leaders to provide SMEs with easier access to a global base of buyers and sellers and to introduce new trade channels to the market." Mawarid Finance, in co-ordination with Saud bin Saqr Programme for Young Business Leaders, held a discussion forum in November - attended by 300 young entrepreneurs - on the relationship between Islamic finance and small and medium-sized enterprises.
Mrs Rehab Lootah, the vice president for corporate communication at the Mawarid Finance Group of Companies, says it is vital that small companies spend time developing their marketing and communication strategies. "We can't stress enough how important it is to build strong relationships with the media," she said. Starting up The starting point for every business hoping to operate in Dubai outside a free zone is to obtain a trade licence, which is issued by the Department of Economic Development (www.dubaided.gov.ae). Its e-services section features information on costs relating to the issuance and renewal of trade licenses.