The Emirates News Agency reports that SMEs represent 60% of UAE’s GDP, and employ 42% of the country’s workforce. In fact, 94% of companies operating in the country are SMEs. In an ever-shifting economic environment, and with technology constantly reshaping the way businesses operate, what do SMEs need to thrive and not just survive?
1. Financial Literacy
Possibly the most important skill any business needs to have no matter the size, this knowledge is the building foundation of any sound enterprise. This applies doubly so for SMEs, as their funds are often much more limited in comparison to larger corporations, and for them to survive and stake a claim in their respective market they need to make educated investments and business decisions.
To alleviate this, the UAE has developed a handbook to provide SMEs with the knowledge they need to navigate the evolving Gulf market. The handbook, aptly titled “Financial Literacy for SMEs”, was created by the UAE Bank Federation (UBF) to aid smaller sized businesses with managing their finances, dealing with debt, and other aspects of operating a business.
2. A positive working relationship between the SME and a bank of choice
Capital is the bread and butter of any SME, and acquiring funds and other forms of capital is crucial for an up and coming business. Credit availability is always a concern; it is therefore a good idea to find a bank you trust that you can build a relationship with, or develop an established working relationship with your current bank, as this will reap rewards in the future.
The relationship between an SME and bank is fast evolving from a debtor and creditor relationship to that of a collaborative affair. In December 2016, the Australia/New Zealand Banking Group partnered with UK firm Invapay to develop an entirely new service to offer customers.
Forbes’ Frank Sorrentino reports, “… having the right banking partner can make a difference. Businesses have numerous options for securing a loan, from large commercial banks to online lenders and smaller community banks. For small and mid-sized businesses, community banks can provide more than credit. They can often offer a level of service that can help businesses navigate financial challenges and delineate a path to growth.”
3. SMEs need to be digitally literate
Information technology and the internet have both forever changed the face of business-customer interaction. Statista forecasts that by 2019, 2.71 billion people will own smartphones. Media planning and data analytics firm Zenith forecasts that by the end of 2018, two-thirds of adults worldwide will own smartphones. Tablet, laptop and PC sales are on the rise, with Statista forecasting that 408 million units will be shipped by the end of 2018.
The numbers don’t lie. With customers owning more electronics than ever before, and with buying attitudes shifting positively towards online shopping, it would be financial suicide for an SME to disregard the potential of utilizing whatever digital tools it has at its disposal. Many businesses, SMEs and otherwise, are embracing their technological side. Restaurants, for example, are ditching food orders over the phone for in-app ordering, through businesses such as the Middle East’s Talabat.