Business Councils Vital Lifeline for New Entrepreneurs
25 Aug 2010
Foreigners wishing to set up a business here can feel daunted. This is where business councils representing their country of origin can help. “In a country where a support network is so important, no small or medium enterprise can succeed without the help of others to understand the environment, local customs, and for contacts with private or governmental, French or local entities,” said Fabienne Lucas, director at the French Business Council, Dubai and the Northern Emirates. “Nothing is more precious than having someone who understands the situation explain to you the do’s and don’t’s as seen through French culture before starting [a business here].” Initially, language can also seem an insurmountable barrier. When you have difficulty understanding Arabic, translating written materials like contracts can get tricky. Here too, a business council can help as the FBC does by providing a low-cost service to translate official documents for its members.
Business councils representing various countries help newcomers to the UAE set up businesses. Almost all major communities represented in the country have business councils that assist them in the initial days.
Specialised knowledge
The specialised knowledge provided by the business councils about the local market and practices can point entrepreneurs on to the right track. “The business council can direct them to the right people or institutions,” said Lucas. “We benefit from our privileged relations with lawyers, free zones, official representatives and a lot of professionals specialising in setting up businesses in the UAE, and we share all our contacts with members.” The strengthening economic recovery will create more business opportunities in the region. New players find depend more on such support networks than established businesses. More so as many of them are small or medium businesses.
The FBC has recorded increases in the number of its member enterprises each year since 2002, with the proportion of SMEs in their ranks always being the largest. Moreover, its 2010 membership survey showed the UAE was the preferred base from which to do business across the region. “Connectivity is the major reason why SMEs look to Dubai as a base,” Prashant Gulati, secretary-general of the Indian Business & Professional Council (IBPC) told Gulf News. “It does however lack support in the setting up and the financial support required to set up and encourage small businesses, especially for expatriate-owned companies.”
Major presence
For every nationality that has a major presence in the country, there is a business council. “It is important that the business council provides whatever support it can to its countrymen, who are planning to set up, and assist in developing and enhancing the local economy,” Gulati said. Entrepreneurs who are starting up should inquire with their local business council about the services on offer for start-ups. The FBC can provide for a business centre, shared assistants and recruitment services. Another benefit to being a member is the opportunity to network. For instance, The IBPC regularly organises dedicated events where speakers are invited to provide specialised information to members of the network. “The biggest support SMEs can find is a chance to interact with their peers, especially the successful ones who have been here and are leaders in their line of business,” Gulati said.
The FBC recently created ‘Club Synergie’ dedicated to SMEs. Every two weeks, 12 to 15 SMEs interact over a three-month period. At the end of the sessions, they get to know each other better and are able to find and refer business opportunities amongst themselves. In other words, a re-run of the ‘One for all, all for one’ maxim.
The benefits to being a member of a business council:
- The member can get help in conducting market surveys, find distributors, understand the best way to set up the firm and assistance in tapping human resources or hiring staff
- An opportunity to network with potential clients, partners, distributors, other businesses from the same sector. To get in touch with all those potential contacts on your own will take years!
- Knowledge of the market through experts in different fields
- Benefit from the solidarity of the different business communities in a global network
- To create awareness of SMEs by listing in the directory of the business council
This article originally appeared on Gulf News
Stock options could benefit UAE companies
7 Sep 2010
Giving employees a share of the business through stock options are an important incentive for staff and increases the resilience of a company during an economic downturn, according to a recent report by Cass Business School, in London. However, this staff incentive is not easily available in the UAE. While EOB’s have proven to be resilient during the downturn, the number of business in the Middle East offering this business model are much less common compared to the UK or US due to the local ownership regulations. In most cases, stock options for employees are simply absent.
“The set up in the UAE is not very conducive to employee-owned companies as our law here does not support stock options. It’s not easy to build mutli-levels of shares and it makes it difficult for people to use share holding as a form of incentive for employees,” Prashant Gulati, the secretary general of the Indian Business and Professionals Council in Dubai, told Gulf News.
While EOB’s have proven to be resilient during the downturn, the number of business in the Middle East offering this business model are much less common compared to the UK or US due to the local ownership regulations.
Part ownership
An EOB is a business that is owned in whole or partly by its employees. Employees are often given a share of the business after working with the company for a certain period. If local companies choose to implement this option, an offshore structure will have to be created which can be complicated and expensive.
“Although it is possible to build an employee-owned business in the UAE, the sponsorship model, the majority expat population, the transient nature of the work force, and company law requirements create an environment in which employee-owned businesses are more challenging to build and run,” Dr Armen V Papazian, financial economist and CEO of Keipr, a consulting firm that specialises in business analytics and intelligence told Gulf News.
The UAE business landscape is dominated by government owned corporations and family conglomerates which are not the typical candidates to introduce employee-ownership. Medium enterprises, which tend to be located either in free zones or as domestic companies set up in partnership with nationals have owners as employees for visa sponsorship purposes but the vast majority of them are not typical employee-owned businesses, Papazian says.
However, international companies such as Mott MacDonald a management, engineering and development consultancy that have extended their EOB model to the Middle East, say they are experiencing success.
“The EOB model has aided our growth in this market, as expansion is financed through the company funds with a confirmed policy of growth decision making. The model also provided us with more resilience during the economic downturn. We have been able to support our clients through difficult times, with a view to long term business relationships,” said Paul Looker, from Mott MacDonald. “In the Middle East at present many of our publicly owned competitors have been under stress with their stock market positions, so being structured as an employee-owned business has been a major benefit for us.”
“Resilience … has been neglected as a crucial aspect of company performance over the past two decades. Instead, business strategy and public policy have been dominated by an unremitting focus on maximising share value.” said Joseph Lampel, professor of strategy and entrepreneurship at the Cass Business School, London.
This article originally appeared on Gulf News