DUBAI: Regional micro, small and mediums-sized businesses (MSMEs) are keen to expand, but find raising cash and finding talented or experienced staff a challenge, according to a new survey from Pearl Initiative.
The NGO surveyed a thousand MSMEs from the Gulf Cooperation Council (GCC) — 70 per cent of them from Saudi Arabia and the UAE — for its latest report, the GCC SME report.
The full report will be released in a few days, but executive director Carla Koffel and programme manager Jack Mikaelian presented some of its findings at a press conference on Wednesday.
The survey found 89 per cent of MSMEs in the region plan to raise capital over the next year or two — a very high figure, Koffel said — and 71 per cent plan to increase their headcount or expand geographically.
Yet the top challenges they say they face are an absence of talent (43 per cent), the economic conditions (41 per cent) and the absence of cash or finding (39 per cent).
“They’re wanting it, and they’re having trouble finding it,” Keffol said, noting that firms’ expansion plans and major challenges were in direct opposition to each other.
The survey also looked at MSME’s corporate governance. It found 59 per cent of MSMEs had established a board to help ogvern and direct them, but in 71 per cent of cases the CEO acted as chairman of the board. 17 per cent of MSMEs did not have management or executive committees. Only 33 per cent had succession plans in place.
Koffel said that not every MSME needed a board, but as each grew it would find a point where having one was beneficial — perhaps if it needed to raise capital or expand into a new region.
“What gcorporate governance can do is, if an SME is looking for funding, if you have a board, that helps,” added Mikaelian. “By implementing key areas of corporate governance, that main challenge of getting funding isn’t eliminated, bit it’s a little bit easier to acquire. “The statistic of 89 per cent [looking to raise funding] tells us that only 11 per cent have the funding they need.”
Pearl Initiative plans to use the survey to create information packages for SMEs on how to implement corporate governance, including advice on selecting board members. It also plans to spend much of 2018 running workshops at events by partners and other organisations with an interest in SMEs, such as Dubai SME, Dubai Chamber and other professional groups.
In an interview with Gulf News after the conference, Koffel said the most important factor for SMEs was “I think businesses just being aware that it’s not only the good idea, it’s not only the innovation, it’s not only the passion and the hard work, but then how they set themselves up, and small things that they can be doing that make their operation of the business more efficient and more effective can have a really big impact on their profitability, on their success, on their ability to grow and find funding.
“That awareness that these types of issues can really support them in reaching their goals.”
She added that MSMEs should also be clear about defined roles and who was responsible for decision-making in particular areas.