It's the people that make a difference

Many economists say the route to recovery from the downturn will be through growth in small and medium businesses.

Entrepreneurial groups from around the world certainly have their eyes on the many opportunities within the Middle East.

In the last two years I've received countless e-mails requesting an insight into the setting up of a business in the UAE.

I don't profess to be an expert in this field; there are of course organisations like The Mohammad Bin Rashid Establishment for SME Development that can provide more structured advice. However, I thought some experiences from a business owner that has survived 17 years in the region might provide an interesting perspective.

First, don't get carried away by the initial enthusiasm everyone has for your business idea, product or service. The UAE can be one of the most encouraging countries when you first seek feedback on bringing a product to the market.

Everyone is optimistic, willing to meet you, listen and be encouraging. Yet, it does not mean that they will buy from you.

I've worked with small businesses that are struggling after one or two years because their revenue does not match their initial forecasts. This is the land of opportunity though. If you have a clear purpose, solid idea, great people and the start-up capital, then the UAE is a great place to launch a business.

Trust

The key is building trust within the business community. You'll not succeed if you want to swoop down and make a fortune in a short timeframe. Those days are long gone.

You need to put in some serious grit, build relationships, networks and prove that you can genuinely deliver. Even if you are a part of a larger international organisation and setting up a branch here, I recommend a more conservative approach. With trust being central to clients signing on the dotted line, a good approach is to look for talent with experience in the region.

Making the right people decisions in the early stages will make or break the business. As can understanding the culture of the region. I recently met the founders of two SMEs in the service industry, which both started in early 2008. One is flourishing; the other recently closed up shop.

I asked the owners, independently, what happened over the last two years. Both had focused on the people they hired in the early days. So what went wrong for one?

Overseas talent

The company that wound up operations had recruited a number of highly qualified professionals from the UK. They started with some good prospects, but believed they had missed the boom time and struggled to realise the deals. Salary overheads were high and the marketing expenses too steep to try and get their name known in the market. It just wasn't a sustainable set-up.

The second company, which continues to grow, made some local hire decisions in the early days, with performance incentives rather than huge salaries. They still attracted qualified professionals, but the difference was they knew the market, the culture and had a network of clients.

They did need a period of adjustment to the changes with their new company, but were closing deals within six months. Same industry, same timeframe, similar starting capital — just the people and their ability to earn trust differed.

The past two years have been challenging for many businesses and especially for small businesses, with cashflow being the biggest hurdle for most. I recall being told by Verne Harnish, author of The Growth Guy six years ago, that it is worth spending the right amount on a good accountant. Again get the right people.

The importance of building trust does not mean clients in the UAE are not attracted to the newest, latest, greatest thing. It's been a personal bugbear of mine that they will often bring in consultants or suppliers from overseas because it's deemed to be more up-to-date and better than something that is already here.

Despite this tendency, I believe that, in the service industry it is the people that ultimately make the difference.

The writer is the CEO of biz-group, a corporate training, team building and business strategy consultancy.