Let's talk about Saudi SMEs

2020 has definitely not been an easy ride for business owners in Saudi, struggling to understand the impact of the pandemic on their business and to come up with the winning 'survival strategies'.

What are the main pain points facing small businesses in the kingdom and what have the authorities been doing to enable their economic potential?

To understand the reality of Saudi SMEs, I spoke to Abdullah Alkhorayef, Member of Riyadh's Chamber of Commerce. Here's what he told me:

Financing

Many small businesses in the kingdom find it hard to access loans from banks due to high fees or complicated processes. In fact, SMEs in Saudi only account to 5% of total lending, with the government planning to take this percentage to 20%.

• The SME Authority in Saudi is supporting businesses with funding using special tools that are less costly and require less procedures, Abdullah Alkhorayef said. It also grants them support with shared services including IT, accounting and HR. Here's more about this initiative.
• Alkhorayef advised entrepreneurs looking to setup their business to seek support from the SME Authority, as it will help with crafting their business model and provide consultancy when it comes to setting up and running operations.
• The government stimulus aimed to limit the impact of the pandemic on small businesses has worked extremely well, Alkhorayef told me. While the program that lasted for three months provided direct help, it has also encouraged the community to provide support- including like landlords providing some exemptions for their tenants.

Riyadh's Chamber

• The Chamber is the bridge between SMEs in Saudi and government entities, Alkhorayef said. It supports businesses in lobbying, conducting economic studies, training, and consultation.
• The Chamber is working on a number of projects including data gathering for the industrial sector, with the goal of creating a hub that allows small businesses to share machines instead of investing in ones.

The heavy burden of fees

Fees, including Saudization's, are often a big financial burden and a practical challenge to small businesses. So how should they deal with this challenge? I asked.

• There will be some supporting programs to help small businesses find the right Saudi talents, Alkhorayef told me. Businesses should understand why those fees are imposed and develop creative ideas to work around them. One idea here may be to provide compensation to Saudi talents to attract them.

Abdullah Alkhorayef also spoke about how SMEs in Saudi can gain a competitive edge. Check out the full interview here:

100% foreign ownership in Saudi with affordable license prices?

'I don't see why not. With Vision 2030, everything is possible,' Abdullah Alkhorayef.

What are the main hurdles facing your business in Saudi? Drop them in the comments and join the conversation using #SMEClinic.