Business Therapy: Why do we have key money?

Post by Loaay

emptyshop

A small shop in Souq Al-Manakh, the marketplace for stock and real estate trading back in the day, would’ve easily sold for KD20 million in the late 70’s and early 80’s. That’s around KD2 million per square meter. Why? Because you could only trade if you had a spot there. Excessive but when small traders were making millions a month, you can see why the amount sounds like a catch. Today, you can easily find shops in major malls being offered for anywhere from KD50,000 – KD500,000 just for key money alone. So when everyone is technically renting the space, why do we have key money in the first place?

The first clue is in the name. I’ll hand over the key of my shop to you for a certain amount. So it’s not about you buying the place as much as it’s for me leaving it, and to you specifically, of course. You could say it started as a form of incentive and a nice way out. But as new and hot places are always in demand, people started to jump on them as a way of making money. For example, it’s quite common to find a shop in a new mall opening only to shut down in nine or twelve months to be sold to someone else for a good hefty profit simply because all spaces are occupied and other businesses want to be in that mall. While that first business may look like a failure to consumers, in reality, the whole thing was just a pop-up shop waiting for the next buyer.

Sometimes, because the buyer is emotionally attached to that location they offer a lot of key money to put their hands on a place believing that when they are ready to leave, they will get their money back and more, which beats putting it in the bank these days. Of course, there’s always the risk of not being able to sell it when you need to, but as with any business there’s always a risk. Sometimes, it’s a personal vendetta. If I don’t want someone from a specific family to have that shop I’ll pay whatever it takes not to give them a chance. Let’s not forget, we are in a tribal society. There are many other reasons why companies and entrepreneurs lean towards paying key money. There are also many policies put in place by some developers to encourage and others to discourage the exchange of key money.

So what should you do if you can’t afford to pay KD300,000 key money for your small café business? Well, you could always focus on a different set of customers that exist somewhere else more affordable. For example, having your café somewhere dead but behind some office buildings and sell to them directly through delivery. Maybe you could encourage complimentary businesses to join you in a new place where you can start a new trend in that area. Alternatively, you could start another business you’re passionate about that’s more cost effective to start. In this case, key money was your ‘barrier to entry’ in marketing terms. Tip: Taking a loan to secure key money is not something I would recommend as you’ll needlessly give yourself sleepless nights and probably a stomach ulcer thinking about all the ‘what ifs.’

Post by Loaay Ahmed, a strategic business therapist since 1995. He currently lives and works in London, UK, while earning his master’s in Service Design and Innovation, and managing knightscapital in Kuwait. For Loaay’s advice on business or work matters, send a short email to loaay@knightscapital.com. Regrettably, only the questions chosen for publishing will be answered.


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Business Therapy: So you have an app idea. Now what?

Post by Loaay

apps

Developing an app can be as complicated or as simple as you think it could be. But before you jump into sketching the user interface (UI) or panic about not knowing how to code (most people with app ideas in the Middle East don’t) here are a few questions for your braincells to process:

– Is it an independent main service such as Talabat or is it an add-on tool to an existing offline service such as Mercedes-Benz Kuwait?

– Will that target audience actually like to use an app for such service or would they prefer another approach?

– Is it something you will charge for? If so, is it compelling enough to charge fees for as the case in the gaming app iKout? If it’s free, how will you generate revenue?

– How much traffic do advertisers need to see before they jump in? Can you generate such a volume within a small market like Kuwait or do you need to think regionally or globally? How long will it take you to get to that volume? Can you survive all that time without income?

If you’re still on the path of app development, then I have two steps for you: research and prototype. For research, you need to first understand the potential users’ needs and wants, and current behavior with apps. Observe closely how they use and feel the app’s prototypes. Your research questions should be insightful and not “likes and dislikes” types. One of the best research methods is observation because you see what people do and say naturally in action. Prototyping can be a 3D mockup, graphically designed paper templates that your testers can manually link to each other (not an actual app), alpha and beta stages, and so on. Prototyping can vary and it’s a quick and affordable way to test the user experience (UX) and UI without spending a significant amount of time and money to develop the app. At a certain point, if the concept and design are validated enough to roll out then launch and keep researching and prototyping, it’s a never-ending cycle.

One of the hardest things in app development is if you can’t code. Teaming up with the right developers is a make-it-or-break-it factor. In general, avoid using outdated or complicated programming languages. It’s best to educate yourself about the types of questions to ask developers. Working with freelancers might be more affordable, but it has its flaws. If you feel up to the challenge of learning how to code by yourself in Kuwait you might want to visit Coded. This week’s tip: Stick to the core big idea and don’t be tempted to add all the bells and whistles from the get go. These are my thoughts. What are yours?

Important: I’m not associated with any of the apps/companies mentioned in this post nor I’m recommending them as a benchmark. They are added for reference purposes only.

Post by Loaay Ahmed, a strategic business therapist since 1995. He currently lives and works in London, UK, while earning his master’s in Service Design Innovation, and managing knightscapital in Kuwait. For Loaay’s advice on business or work matters, send a short email to loaay@knightscapital.com. Regrettably, only the questions chosen for publishing will be answered.


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Business Therapy: Seven ways to fund your startup in Kuwait

Post by Loaay

Funding in Kuwait

In a market that offers tenure jobs to any citizen hired in the public sector, the notion of being your own boss and taking responsibility of generating income sounds like sheer madness to most. Only those who are born with an appetite for taking risk, who have a burning desire to bring their vision to life, or who have been groomed slowly into the role, can make the decision to become an entrepreneur. That being said, once you made that decision to start your own business in most cases you need some paper (a.k.a. moola, dough, or cash.) There are many options; here are a few for you to consider:

– If you were an ex-banker or worked in the financial industry in general you could use your contacts to fund your startup by attracting a number of companies to own shares in a new company (your startup) assuming that it’s a large project that can generate the kind of profit such companies look for.

– Taking a bank loan is another option. Bear in mind that when you have monthly installments your business idea must be cash flow positive (i.e. if you supply wholesale and get paid after 90 days you could run out of cash at any month and not be able to cover your loan for that month).

– You can always turn to family and friends for funding. WARNING: If your friends and family are not businesspeople they could either be impatient and push you for faster returns, ask for a buyout because they suddenly need the cash, or feel free to interfere in running the business. If you have no option but to ask friends and family, then make it crystal clear that you want the money as a loan or as investment with potential dividends but not as managing partners. Either way, buy large boxes of Panadol.

– Being funded by a government programme such as the Kuwait Small Projects Development Co. initiative is another option if you were Kuwaiti, know your business and willing to run it yourself. It has an exit option so you can own the business eventually all by yourself.

– Although technically there’s no legal platform for crowdfunding you can always get your commercial license going along with accepting online payments like Knet and credit cards and then use social media to ask your target audience to purchase your developing product in advance in exchange for some unique benefits conditional to the fact that you’re doing something new. Visit Kickstarter to have an idea.

– Partnerships work well only if the partners’ skills complement each other (think Yin-Yang) and be clear from Day Zero what each is responsible for and respect each other’s boundaries even when you disagree about the decision.

– Ultimately, if you can start your own business without giving up any equity then you’re in a sweet spot. If you don’t have the cash yet but you can save it in a year or so, go for it. You’ll be better off.

This week’s tip: before you decide on any type of funding, know what you want to achieve and be clear on why you want to achieve it. Then see if the price you pay for that funding (and there’s always a price) will jeopardize your focus and goals. If it could, either put in place conditions that can protect your vision or walk way from that funding option.

Post by Loaay Ahmed, a strategic business therapist since 1995. He currently lives and works in London, UK, while earning his master’s in Service Design Innovation, and managing knightscapital in Kuwait. For Loaay’s advice on business or work matters, send a short email to loaay@knightscapital.com. Regrettably, only the questions chosen for publishing will be answered.


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Business Therapy: Is the Kuwaiti market ready for Uber?

Post by Loaay

As far as the regular Uber cars (a.k.a. uberX) the experience in London can be mostly described as no frills. The driver takes you from A to B and you’re done. A few drivers from a certain ethnic background try to cheat the system. The platform is designed in a way that the driver doesn’t know the destination until he starts the trip. To avoid accepting a short trip that won’t make them a lot of money, some drivers call you to ask about where you’re going or falsely start the trip on the system and either way if they don’t like it, they’ll cancel or worse ask you to cancel because they’re “stuck on the road”. According to Uber rules, if you cancel the request when the car is less than five minutes away from you, you’re charged £5.00. Of course, I complain through the app and within minutes they apologise in an email and refund me. Not that much of a pleasant experience, and that’s in London. Strange enough, the driver’s attitude in New York is much better.

I don’t claim to know how Uber will legally operate in Kuwait – that’s if they manage to make it happen. However, if they open the door to individuals as they do elsewhere I am concerned about the quality of the experience customers will have. The Kuwaiti market suffers a great deal from poor customer experiences caused by both sides: untrained and/or unfriendly staff and rude or unresponsive customers. I know I’m generalising but this is the mainstream scene. With immature consumer behaviour and a lack of professionalism from drivers who feel empowered to treat you anyway they like when they’re hiding behind the app’s platform the experience can be rigged or ruined in spite of regulations. That being said, Uber claims to be strict with drivers who receive poor ratings. Regardless of the business model Uber chooses, it would be better for the Kuwaiti market if Uber offers existing taxi companies to join their system conditional to following strict regulations that can be monitored. At least, we’ll have less horn-honking on the streets from taxis trying to get the attention of people walking by. This week’s tip: Expanding from one location to another is a sound move, if and only if, you can consistently maintain the standards of operation everywhere.

Post by Loaay Ahmed, a strategic business therapist since 1995. He currently lives and works in London, UK, while earning his master’s in Service Design Innovation, and managing knightscapital in Kuwait. For Loaay’s advice on business or work matters, send a short email to loaay@knightscapital.com. Regrettably, only the questions chosen for publishing will be answered.


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Business Therapy: What if you thought you were in the wrong market?

Post by Loaay

business-therapy

Last week, a solopreneur in Kuwait approached me for help after reading my Business Therapy intro post. Her main product is gift boxes containing genuine gold, frankincense and myrrh (a.k.a. in a Christianity context as the gifts given by the three kings or wise men). Apart from how niche her business is being in a Muslims-dominated country selling to Christians, her problem is quite common to many solopreneurs I met before. For what it’s worth, let’s call her Jane. She came across the products accidentally. She was emotionally engaged. Jane felt she could purchase the raw material and package it herself and make it available for others whom would appreciate what the items stand for – a classic lightbulb moment.

Quickly, Jane learned about what really meets the standards of gold, frankincense and myrrh. She worked on the packaging and started to sell at local seasonal bazaars with modest revenue and managed to have her products displayed at an important cultural centre. A basic website for the EU market was setup. Her social media accounts got activated. Yet, so far not so good: no sales. What Jane did, as many small businesses do, is spend great energy on the product or service side and not much, if any, time on understanding who the key customers are, where they are, what they want, and how to reach them. Controlling quality is essential to offer good value. However, what’s the point of the greatest service ever designed if nobody is aware of it and using it?

In celebration of being in business for 20 years I’ve been giving away one-hour strategic business therapy sessions to micro businesses and charities that can’t afford it. Jane and I had a session online and discussed a few possible directions. For the Kuwaiti market Jane is targeting churches, embassies and cultural centres that target foreign newcomers to Kuwait. She’s also seeking out a low-cost chain management services provider to store some stock in the EU and ship directly from within the EU considering how slow and costly shipping from Kuwait to the EU would be. And finally she’s also arranging to meet a few churches in the UK during her summer trip next year. This week’s tip: Knowing your own industry is one thing, knowing how to grow a business is another. You need both to make it.

Post by Loaay Ahmed, a strategic business therapist since 1995. He currently lives and works in London, UK, while earning his master’s in Service Design Innovation, and managing knightscapital in Kuwait. For Loaay’s advice on business or work matters, send a short email to loaay@knightscapital.com. Regrettably, only the questions chosen for publishing will be answered.


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Business Therapy: Problems and Solutions

Post by Loaay

business-therapy

In a recent business event in Kuwait, I asked the audience: “What would you do if one of your employees rushed over to you saying, “There’s a long queue at the counter in the new store”?” Most of them replied, “Open another counter.” The long queue issue disappears and everything is back to normal, right? Wrong. While opening another counter might be a quick fix to minimise the customers’ negative experience, a long queue is a result of an issue, not the issue itself. And without knowing what the actual problem is how can you tell if you have the right solution?There are many reasons why such an incident occurred: the employee may not have been well-trained; he or she is just slow; your process is too long; an IT meltdown; the store is poorly designed; or some customers are queuing for the wrong reasons, just to name a few. To start go to the store with your team and observe. Take pictures and videos if possible. Discussing a long queue is one thing, being there or at least seeing photos of it helps framing the challenge. Next, map the customer journey (and the employees’ too). Breaking down the current customer experience step by step allows you to spot pain points that may have led to the long queue or to even bigger issues. One particular advantage is that it allows you to see the business from the customer’s perspective – a critical tool for innovation and development that many managers and business owners don’t practice enough.

What follows is analysing your value chain, a formal way of referring to your suppliers, vendors, or strategic partners’ interactions with the business. What areas is the business weak in because of the quality of the services you receive from your value chain and what areas are strong because of it? This analysis helps to realistically evaluate solutions. Last step is mind mapping. Basically, layout all the data you gathered and look for insights and repeated patterns that can give you clues for possible solutions.

You might think by now that the steps above are theoretical and needless because you understand your business, your industry and your customers well enough to jump straight into the solution. That’s exactly where you’ll miss great opportunities for development. Innovation is a process that depends on design thinking principles and tools. Not knowing such tools makes managers rely only on their own experiences and intuition, which are great but not enough for sustainable growth. This week’s tip: Only when the right problem is identified can you explore possible solutions.

Post by Loaay Ahmed, a strategic business therapist since 1995. He currently lives and works in London, UK, while earning his master’s in Service Design Innovation, and managing knightscapital in Kuwait. For Loaay’s advice on business or work matters, send a short email to loaay@knightscapital.com. Regrettably, only the questions chosen for publishing will be answered.


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Business Therapy

Post by Loaay

business

Back in 1999 (stop singing that Prince song) an automotive dealer came to me for help with their ongoing promotional campaign. They were two weeks into it and their sales figures were poor and time was ticking because every promotion permit has a deadline in Kuwait. After redirecting the campaign’s proposition and visual layout through their agency, the promo was reintroduced into the market. Results jumped up by 40%. To say the dealer was ecstatic is an understatement. Their General Manager asked me to execute the marketing and advertising plans and tactics of their three-brand automotive collection. At the time, I only offered strategic marketing planning and advisory services. I thought it was an interesting path to explore so I started to hire designers and turn the business into a small marketing agency. That’s when Mark and I shared a journey.

In a way, both Mark and I were new to this experience. His first job out of university and my first time managing a team. When two strong personalities work together you’ll either produce some great work or unleash tornadoes everywhere. And we did both. Regardless of the ups and downs of the creative execution journey, I didn’t find the interactions with the clients or the profit from that line of business as rewarding as I thought they would be. A few years after Mark moved on to his next learning work experience I decided to go back to the basics and focus on providing one-hour advice sessions, one-page plans, training workshops and jam sessions (facilitated discovery and brainstorming meetings); the kind of work that fulfils me as a strategic business therapist.

Last year (in 2014), Mark and I talked about the idea of offering some sort of business related content on the blog. I’m no stranger to writing about business issues. Some of you may have read my Two Cents articles at bazaar magazine where I answered questions from managers and entrepreneurs since 2009. We had a couple of ideas on what to write about and we left it at that. Mainly because I was planning two things for 2015: expanding the business to the UK market and starting my masters in Service Design Innovation. In Q4 of 2015 I am now in the UK running the new business and going through my masters programme. Since the dust has settled, I thought the time is right to pick up the conversation.

Having said that, one of the worst things to do in business is to assume on behalf of your target audience when you could just ask them. Would you be interested in having a business therapy post every week or so? We could talk about any challenges or opportunities that revolve around business, branding, marketing, management, customer experience, entrepreneurship, service design or anything else related to my experience. From time to time I might talk about the Kuwaiti and British markets similarities and differences, if this is of any interest. So, what do you think, lovely people?

Post by Loaay Ahmed, a strategic business therapist since 1995. He currently lives and works in London, UK, while earning his master’s in Service Design Innovation, and managing knightscapital in Kuwait. For Loaay’s advice on business or work matters, send a short email to loaay@knightscapital.com. Regrettably, only the questions chosen for publishing will be answered.


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