While discussing issues that plague start-ups in the region, one of the most glaringly missing pieces is clarity. Clarity is essential to give rise to a scalable, effective and supportive ecosystem in any part of the world.

Let me tell you where I am coming from. I attended and judged an award for SMEs (small and medium enterprises) recently. While we were going on-line with what turned out to be an interesting panel discussion, what surprised me was the variety of definitions — or even the lack of a universal definition — of an SME.

The problem is further compounded by the fact that the words start-ups, entrepreneurship and SMEs are used interchangeably and almost as synonyms. While some entities like banks call companies with a turnover of less than Dh200 million as an SME, this kind of a turnover is but a dream for a start-up or an entrepreneur.

Clubbing all such ventures in one single bucket is probably one major cause of the constant refrain heard from entrepreneurs in the region. This group forms a very big and wide portion of the business ecosystem and, by its inherent nature, the issues and challenges are very different.

Almost akin to the analogy of humans and medicine, there is a need for special focus on each part of the spectrum. The pains felt by a company with an initial few employees and one that has a few hundred are completely different and require completely different diagnostics and remedies.

The entrepreneur and the start-up form the ones that are in the primary education phase of their journey into business. The team is usually small and probably green, usually trying out their hands on selling an idea or a service for the first time.

Their challenges are more of the nature of finding the right product, building the team, finding the right place to register the company, find resources and the first customers. It is at this time that they need far more than money in terms of support.

Government support

They need patient and innovation-ready clients who will support them in their quest to build the right product. It is also at this time that the role of government support becomes most important. The role of support organisations and those fostering entrepreneurship at this time is paramount and makes the difference between success and failure.

If we take the definition of SMEs as the banks define it, then it is easy to understand these companies as akin to graduates of business, now looking to go further. The issues facing them are more issues of scaling and financing their business.

The support and remedies required at this time are completely different and maybe are best solved by people more versed with management reorganisation and process restructuring. There is little need for the kind of support that entrepreneurship development organisations provide at this stage.

Job creation potential

Unfortunately, lack of clarity at the onset leads to confusion, and misguides those whose job is to support such efforts. Remember the majority of jobs and business revenue of most countries in the region is generated by these small companies, those with 20 or less employees. It is, thus, not hard to fathom the crossed connections these small companies are forced to deal with, despite the fact they are the most important sector of business.

What we need is a real definition of the terms start-up and SME. Or maybe make some new, clearer terms to define those in between so as to make the most of the effort, time, money and resources being accorded by governments, non-government organisations and self-support organisations to this sector.

We need to find the right remedies for the maladies that challenge us, but that will come with clarity. That's the clarity of knowing who to go to and when.

 

The writer is an entrepreneur and angel investor based in Dubai, as well as secretary-general of the Indian Business & Professional Council, Dubai.