The GCC's small businesses need to prepare themselves for bankcruptcy
A simplified GCC-wide regulatory environment and new bankruptcy protection laws are key components that can help regional Small and Medium Enterprises (SMEs) develop into profitable organizations, the head of Abu Dhabi’s Trade and Export department said Wednesday.
Dr. Adeeb Al Afifi, Director of Foreign Trade and Export at the Abu Dhabi Department of Economic Development, said regional governments have a crucial role to support SMEs by implementing consistent and transparent policies that help attract potential investors – a constant bane for SMEs across the region.
“There are some very basic ways that regional governments can provide support for SMEs, many of which they are already doing but some which could still be implemented,” said Al Afifi, a headline speaker at this month’s SME Congress & Expo, taking place on Dec. 16-18 at Abu Dhabi National Exhibition Centre.
“One of these is harmonizing regulations throughout Gulf countries that would uniform business practices and reduce the costs for businesses that operate across the region. This is important because one reason SMEs struggle to attract investment capital is because they tend to have a domestic market perspective only, which limits their growth potential – investors like growth.
“Governments also need to implement bankruptcy laws that allow those that make an effort to start a business, to recover and try again if they fail.
Not all ideas will work. In the United States, most entrepreneurs fail an average of six or seven times before being successful. The reason they are able to keep on trying is because bankruptcy laws allow the individual or the company another chance to get it right.”
Held in strategic partnership with the Abu Dhabi Department for Economic Development, the inaugural SME Congress & Expo is being launched this year to provide an important learning platform for regional entrepreneurs and SMEs to successfully launch, grow and finance their businesses.
According to investment capital firm Envestors, around 60 percent of investors reject projects from UAE SMEs in the first 30 minutes of evaluation, while a further 25 percent are rejected within the first three hours.
Al Afifi said the reason is because a lot of SMEs lack the necessary fundamentals to entice investors. He added: “Many SMEs do not have the right documentation, particularly financial documents needed by investors to make decisions.
“To that end, governments should make some areas of business operations mandatory to improve corporate governance, such as maintaining financial documents – balance sheets, profit & loss sheets, and forecasting. This is currently not a regulatory requirement in the region.”
Al Afifi added: “Given the critical role that SMEs have, and will have, in the economic diversification of Abu Dhabi and the wider regional economy, the SME Congress & Expo provides an ideal platform to communicate with SME owners, entrepreneurs, management consultants, and other stakeholders that have insights in this exciting business sector.”
“This is an important event to pass on what the Abu Dhabi Department for Economic Development is doing to support SMEs, but also to learn from those who own and work for small businesses.”
The three-day strategic conference and training workshops at the SME Congress & Expo are designed to help SME owners navigate the complex landscape of owning and running their own business. A dedicated exhibition floor meanwhile will enable entrepreneurs to meet new partners and suppliers that will help their businesses expand.
By Dr. Adib Al Afifi
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