The Dubai government recently published a report on small and medium enterprises (SMEs) in Dubai. Dubai is home to 95% of all SMEs in the UAE, and many of the points could apply to businesses based elsewhere too.
In this article, we’ll look at the importance of SMEs in the UAE. Then we’ll explore what the report tells us about UAE SMEs and digital technology. Finally, we’ll include practical tips on how businesses in the UAE can use digital technology to grow their profits.
SMEs in the UAE
The UAE is a regional hub for businesses of all sizes. Many businesses choose the UAE because of its generous tax incentives and political stability. To put it simply, the UAE is a great place to do business.
UAE SME Definition
Businesses in the UAE are classed as SMEs if their turnover and staff numbers are below set figures. The exact figures depend on which sector the business is in:
- Manufactures should have a turnover below $250 million, and fewer than 250 staff.
- Trading companies should have a turnover below $250 million, and fewer than 200 staff.
- Services businesses should have a turnover below $200 million, and fewer than 200 staff.
Why are SMEs Important to the Economy?
SMEs are vitally important to the economy of the UAE. The 400,000+ SMEs represent 94% of all businesses, and employ 86% of the private sector workforce. The overall impact of SMEs in the UAE is huge. Excluding oil, around 60% of the UAE’s GDP comes from SMEs.
Sources: National Bank of Fujairah’s report on SMEs, Dubai Government report on the state of small and medium enterprises 2019.
The SME Digital Transformation
SMEs have an advantage over larger competitors. Smaller businesses can often adapt to exploit new opportunities more quickly. The SME digital transformation is a great example of this.
Why is Digital Technology Important in Business?
Every year, using digital technology in business becomes more and more important. Digital technology makes manual operations faster and more efficient. It also provides new channels of communication. In the simplest of terms, if your business isn’t using digital technology, then your competitors will. And they’ll get ahead because of it.
A Helping Hand for the Little Guys
It used to be difficult for small businesses to compete with larger, more established companies. In the past, most small businesses were local. Their owners could only dream of scaling up if they received funding. Nowadays, that has changed.
The internet allows micro businesses run from a kitchen table to compete with giant corporations. Essentially, if you can build a website, then you can market your products or services to the whole world. Options like email marketing and pay-per-click advertising make it easier than ever to target the right customers. And targeted advertising doesn’t just produce better results, it’s also more affordable in the first place.
Learn more: This Zigurat article on the SME digital transformation focuses on how digital technology helps smaller businesses compete.
Despite all the advantages of digital technology for small businesses, many are still ignoring this golden opportunity.
Levels of Digital Readiness
One of the key areas in the Dubai Government’s SME report is the level of digital readiness. The report’s authors looked at how well SMEs in Dubai have embraced digital technology. Their findings were mixed.
On the positive side, the report shows that Dubai SMEs have a moderate to high level of digital readiness. 98% of SMEs use computers and/or laptops, while 74% make use of tablets and/or smartphones. Most use this tech for day-to-day tasks like document management and customer communications. 74% also use cloud storage solutions for secure, convenient backups and document sharing.
The report points out some recent improvements. In 2013, just 50% of Dubai SMEs had a website. That rose to 71% by 2019. The authors also noted improvements in the features included in these websites. 11% now include live chat functionality, while social media integration is a feature of 54%.
So far, so good. But the report highlights a significant weakness among Dubai SMEs: Less than one in four – 23% – use ecommerce platforms to sell directly to their customers. Unsurprisingly, overall revenue percentages from ecommerce are much lower than in many developed countries.
Digital Technology for Small Businesses
The importance of digital technology for small businesses is clear. But many UAE SMEs aren’t using digital tech to its full potential.
29% of SMEs in Dubai still don’t have websites. If your business is one of them, then website development should be your top priority. Of course, the same applies if you’re based elsewhere in the UAE too.
In the past, building a small business website usually meant hiring a web developer or agency. This approach is easy – but expensive. Today, many owners of UAE SMEs prefer to build and maintain their own websites.
For most businesses, a simple website that showcases what they do or sell is all they need. Using a website builder is the perfect way to achieve this. We developed our own Website Builder to empower SMEs to get online fast, with no fuss. We’ve also developed a guide to building a website using this kind of solution.
Self-hosted WordPress websites are the next step up. You’ll need to select the right type of web hosting. Look for a plan that offers good performance at a reasonable price. For optimal security, you’ll need to keep WordPress up to date. This is especially important if you sell online, or manage customers’ data. An easier alternative is a managed WordPress hosting plan – this will free you from the hassle of updating WordPress yourself.
77% of Dubai SMEs don’t have an ecommerce store. Of course, ecommerce stores aren’t needed for every kind of business. Let’s say you provide a local service like home maintenance. You may just need a website that includes your phone number and email address. This way, you can book appointments and give your customers quotes.
But let’s imagine you run a small shop. You could easily grow your customer base by building an ecommerce store. This would allow customers across the UAE to order from you. You could even go global, with options like international shipping.
Building an ecommerce store doesn’t have to be complicated – or expensive. Our Website Builder allows you to build an online store in just a few clicks. If you already have a WordPress website, you’re halfway there. That’s because there’s a powerful WordPress plugin called WooCommerce that turns standard WordPress websites into online shops.
WooCommerce works well for most ecommerce stores selling up to a few hundred different products. That covers the needs of most SMEs perfectly. If you need to sell more products than this, you might prefer a dedicated ecommerce platform. Magento is the perfect choice. Whereas WooCommerce is a plugin that adapts WordPress for ecommerce, Magento was purpose built to power large online stores. At tasjeel, we’ll soon be launching a new web hosting option with Magento preinstalled.