An article by Karim Khorshed, co-founder and CEO of CEQUENS

In recent years, the world has realised the importance of small and medium enterprises (SMEs), which now represent 90% of all businesses globally. These enterprises account for over 70% of global employment and contribute to 50% of the global GDP, according to the United Nations' report "Micro, Small and Medium Enterprises and the Sustainable Development Goals," as they possess immense potential to support economies, drive growth, increase GDP, and reduce unemployment rates.

While fully believing in the important role played by large corporations in stimulating the economic growth of countries, whether developed or developing, SMEs are no less important than those giant institutions. To that effect, now more than ever, there is a pressing need to highlight and support smaller companies that are witnessing rapid growth. This can be done by spreading awareness about the culture of entrepreneurship and innovation, encouraging economic diversification by entering new industries, and conducting constant research and continuous development to enhance competitiveness between different companies. This all-encompassing approach will not only support SMEs but will also improve the quality of services and products provided to the final consumer to achieve sustainable development.

However, it's important to note that the current situation of SMEs is far from dire. In fact, governments are becoming increasingly aware of the impact and value that SMEs and startups bring to the table. Many are implementing supportive legislation and investment-friendly policies, offering facilities through funding institutions and business incubators, or engaging with the investor community for funding. These efforts aim to create an attractive investment climate, stimulate competition, and enable sustainable economic growth.

Funding is not enough

Despite concerted efforts, studies show that 90% of startups fail to achieve their goals within the first five years. One of the primary reasons is poor financial management, as an inability to effectively manage budgets often results in rapid depletion of funds. Additionally, inadequate understanding of market needs and customer preferences significantly hinders growth. Startups also falter when they fail to adapt to changing market dynamics and technological advancements, causing them to deviate from their goals. Lastly, another common pitfall for startups is losing focus by attempting to achieve too many goals simultaneously, which often diffuses team efforts and leads to failure

A case in point is the Indian startup Pepper Tap, established in 2014 as an e-commerce and home delivery platform. Despite securing an impressive $51 million in funding, according to Startup Cemetery, the company shut down in 2016. Cultural preferences at the time favoured in-person grocery shopping as a family activity, which created a significant barrier to adopting the platform. Furthermore, the market was not ready for such services, leading to what is termed "Profit Margin Compression," where rising costs outpaced profits. The company offered discounts that strained its financial resources, undermining profitability and sustainability. 

I think one piece of advice for aspiring business owners is to never stop learning. I firmly believe that if things become too comfortable, there's likely a problem. Entrepreneurs must learn from past experiences, theirs and others, whether successful or failed, and continuously develop their skills and knowledge.

Another tip is to always ask yourself if your product is still solving a problem. That’s not to say that entrepreneurs constantly need to reinvent (although that is a definite perk of the job if you ask me!) but they should constantly seek new market opportunities, leverage technological advancements, and review all aspects of their business, including strategies, goals, and decisions. Moreover, building a strong network helps entrepreneurs gain the necessary support and guidance; as such, seeking out communities and contacts is essential. Finally, I cannot stress enough the need to be flexible. Successfully leading a startup requires constant pivoting and adjustment to overcome obstacles.

The X factor

For startups to thrive through different stages of growth, several factors are essential. Success requires more than just an innovative idea or adequate funding; it demands the integration of various elements. Chief among these is assembling a well-rounded team equipped with the skills and expertise needed to achieve the company's objectives. A clear and comprehensive business plan helps guide team efforts and align them with the desired outcomes.

Equally important is understanding the target market, timing entry effectively, and adapting to changes in the macroeconomic environment. Entrepreneurs must remain highly agile, regularly review objectives and focus on developing unique products or services that address genuine needs. 

In conclusion, despite the challenges, the entrepreneurial landscape has witnessed rapid and positive growth in recent years. This evolution continues to inspire entrepreneurs and innovators to enter one of the most dynamic and investment-attractive sectors in the Middle East and beyond. Fuelled by their ambitions and groundbreaking ideas, they are poised to establish thriving businesses that contribute to local economic growth and sustainable development.

Like anything in life, you have the opportunity to seize it, so let me conclude with a timeless question: Are you prepared for the challenge? I sincerely hope that you are.

Disclaimer: This article is enhanced by AI.