Risks faced by SMEs
The number of SMEs has increased in Kuwait since the establishment of the National Fund for SME Development (the “SME Fund”) in 2013. The SME Fund accepted 245 project applications in 2017, 44% of which were commercial business ideas. The amount of financing approved that year was KD 50,125,458 and resulted in the creation of 850 jobs for Kuwaitis. Since its establishment until the end of 2018, the SME Fund spent a total of KD 167 million.
There are certain risks that SMEs are exposed to in Kuwait’s market, and to manage them and mitigate their outcomes, firms need to be able to identify, analyze, treat, and monitor these risks. For the sustainability of a project, it is helpful to know what the kind of risks an SME might face, which is further discussed in this article.
One of the main risks to monitor for is Operating Risk, which is uncertainty from associated core operations of a business and is linked with the variability of product demand and prices of supplies. There is also the risk of changes in human resources or the hiring of incompetent or fraudulent employees and failed processes for the internal operations of the business.
Risks faced by SMEs
Kuwait's Holistic Development And Consulting Helps Entrepreneurs Understand Risk Management
Launched in 2016, Holistic Development & Consulting was founded by Abdulrahman Al-Duaij and Abdulaziz Al-Houqal when they noticed that there’s an opportunity gap between SMEs and advisory firms from a risk management perspective.
The duo -who are both Managing Partners- has a combined 20 years of experience as risk managers in Kuwait Finance House, wherein, daily, they met entrepreneurs with ideas that required direction and guidance when dealing with market exposure and volatility. They witnessed that most of the defaulted businesses have common issues that revolve around weak financial management, bad quality of data and limited know how in managing liquidity which resulted to massive default.
“We realized the help that entrepreneurs needed was not accessible to startups,” says Al-Duiji. “We believed with our experience and academic backgrounds, we are able to make a difference.”