Despite being the third generation in a family of entrepreneurs, Moustafa Banbouk, a Lebanese national in his mid-50s, recalls how his parents never raised his pocket money allowance as a lesson in keeping spending in check. "Don't bite more than you can chew," he recalls his parents advising him as a student.
"Being in a business-oriented family, I could enjoy a lavish life. However, my parents used to give me limited pocket money and told us to restrict our spending within that cap. So, even if we wanted to buy something or eat out in an elegant restaurant, we used to stop there, as our pocket money wouldn't allow us to avail of those things," said Banbouk.
This helped him control his desires and learn to live within his budget, which later he employed in his professional and business life to never over-spend beyond the financial means. Banbouk is not a UAE resident yet, so he makes multiple trips between Beirut and Dubai to launch his new start-up, an online portal purely focussed at slashing delivery times of conventional e-commerce retailers.
Lesson #1: If you overspend, you will end up in debt and financial stress.
Banbouk said you sometimes need to walk on a tight rope while doing a perfect balancing act in business. "I learned finance basics early on as I belong to a business family of real estate developers. So, I inherited strict financial discipline – that helped me survive all the way and navigate out of various crises in the last three decades."
I learned finance basics early on as I belong to a business family of real estate developers, and this is how I inherited strict financial discipline
"Before starting my own business, I worked in my family business. I learned the trade of designing a project, developing it and selling it - to the hand-over and post-delivery phase. Moreover, financial discipline kept me on my toes and taught me not to overspend on anything. So, we maintained a healthy balance sheet to avoid falling into debt."
What has been your experience in launching a business in Dubai?
Banbouk said Dubai-based online portal Veppy.com is his first venture outside his home country, which is in a new area of what is known as ‘q-commerce’, a new field to him. Q-commerce (‘quick commerce’) - sometimes used interchangeably with ‘on-demand delivery’ and ‘e-grocery’ - is e-commerce in a new, faster form.
With the surge seen in online buying, q-commerce is a fast-growing online shopping or e-commerce segment that delivers products to customers within the shortest possible delivery time ranging from 30 minutes to 3 hours, depending on the distance of the deliveries – as opposed to the earlier waiting period of between 24-48 hours, if not more.
Despite his limited experience in q-commerce, Banbouk launched the online platform just last week on August 27, while banking on his knowledge and skill-set in running multiple projects in real estate and construction.
"I am a civil engineer and a third-generation businessman engaged in Beirut, Lebanon's real estate and construction business. I have delivered around 50 projects over the last 30 years of my business career in Lebanon."
What made you start a new venture in a nascent field like q-commerce?
Since the world is going digital and online shopping is growing faster than any other sector, Banbouk decided to launch this online portal after a lot of research. "Our research found a gap in the online quick delivery segment, or the on-demand shopping (q-commerce), which is still under-developed in the Middle East," he explained, when citing these reasons why a business in such a field can create revenue in the UAE.
"Other online shopping platforms might have ignored them, but we won't. We want to empower the MSME (Micro, Small and Medium Enterprises) and give them a good business platform to evolve and grow. MSMEs are one of the largest employers in the UAE economy."
Banbouk said whether you call the business e-commerce, q-commerce or online shopping start-ups – all are technology companies. “To provide the best technology company, you need the right technology brains and partner with them,” he added.
"My priority was finding the right technology partner to deliver the business. My founding partner and I have put our hard-earned capital into this start-ups venture. We worked for the last eight months to fine-tune the technology and the marketplace – which was made ready for deployment."
What have been your expenses to start a business in UAE?
Banbouk stated their investment, so far, has been relatively small. He added that, like any business-to-consumer start up, most of the funds are spent on marketing – to make it popular among the consumers for engagement – once the marketplace goes live.
"We haven't embarked on the most significant spending avenue – the marketing. The start-up is being rolled out. Our marketing budget will kick in later this year once we go into operations and fine-tune any glitches. We don't have a fixed budget in mind, but usually, a start-up spends about a $1 million (Dh3.67 million) in marketing, depending on the nature of the business."
Banbouk is still based in Beirut, Lebanon, so he stated their expenses are higher than others settled in the UAE, including travel costs, short-term accommodation, setting up of a business license, consultation, finding the right technology partner and development of the business.
"Every time I fly back and forth, I stay in the UAE, and where I still do not have a home means I spend more money than others who made the UAE their first or second home."
He added, on average, one would spend anywhere between $5,000 (Dh18,365) to $10,000 (Dh36,730) per trip on air ticket, hotel stay, local transport, food and other expenses – which a UAE resident investor won't have to pay. “I have travelled regularly between Beirut and Dubai at least twice a month for the last seven months.
We don't have a fixed budget in mind, but usually, a start-up spends about a $1 million (Dh3.67 million) in marketing
"We would have invested a few hundred thousand US dollars – including my travel expenses – as we focused on the IT solutions – the e-commerce portal and the IT architecture. So far, we didn't have to invest in human resources, logistics and office space. We have just got our office and license.
"The actual expenses will start now, as we hire people to rent a large warehouse and transform it into a fulfilment centre. Besides, marketing will require heavy investment to create the right kind of consumer engagement. We will invest a few million US dollars in 2 to 3 years."
What were your main challenges when starting a business?
He added that initially, the most crucial part was finding the right technology partner to translate the vision into a proper technology architecture.
"It has been done, and we got ready to hit the ground running. I believe we have spent the money wisely so far. The more significant challenge lies ahead – when we get into the operational side of the business and marketing and promotion of the marketplace, which will determine our success."
Lesson #2: Ensure your balance sheet is well balanced between assets and liabilities, cash flow, income and expenditure, etc.
Banbouk said business is about taking risks, but smart business people take calculated risks. "It is essential to know the risks inside out and have proper business planning – from Plan A to Plan B – so that you have enough options to fall back on if things go out of hand."
When planning a new venture or project, the entrepreneur advises his peers who are starting out to consider all possible adversities – natural, man-made or economic challenges, after which you plan a few options, including your back-up plan – one that you can fall back on.
"The first option, or Plan A, is based on the fact that everything is fine and there aren't any challenges; say it costs you $100,000 (Dh367,000). Then Plan B could include an adverse economic situation, say inflation or rising cost of materials, or a COVID-19 pandemic-like situation.
"What do you do? Plan B will help you to overcome the adverse conditions. Plan B will guide you to complete the project with a different strategy and cost structure, maybe with an escalation of 30 per cent on the original cost."
Banbouk concluded that financial planning and discipline are always crucial to a business and its owner’s success, while adding that proper budgeting is vital, and sticking to the budget is essential.