By Lubna Hamdan
For SMEs, there's nowhere to hide in an economic crisis, when they're often the first to go. And the Covid-19 outbreak is not making it easy for them to survive. But, as with any crisis, there are some who will be spared.
When physical presence sits at the core of your business, social distancing is your worst nightmare.
So when Dubai announced the shutdown of all fitness centres to curb the spread of Covid-19, Amelie Hua was left with an empty cycling studio and a similarly abandoned bank account.
The founder of Motion is just one of many small business owners who have been heavily affected by the chilling pandemic.
“We closed on March 15, so we basically have no revenues at all, because clients aren’t coming to the studio,” Hua tells Arabian Business.
While the UAE introduced a $34bn stimulus package in a bid to curb the virus’ economic impact, it remains unclear how much – or how little – it will help SMEs to survive. And although banks are more willing to provide loans, Hua says it will only hurt small businesses in the long run.
“In France they’re helping small companies. Here [in Dubai] they’re trying to do something but it’s not clear, it’s very general, like ‘we’re going to dedicate AED1.5bn to help businesses’ but there’s nothing concrete. I feel they’re more willing to give easy access to loans than helping the business financially, so I don’t think in the long-term it’s really helping, because businesses like me, I don’t want to get a loan except if I have no choice, but in France they’re helping without any loans, cutting rent fees, cutting electricity fees, giving some support financially.
“They’re doing some steps in Dubai, but it will be really dramatic for small businesses. I have a lot of friends with small businesses in Europe and they have all closed already. It’s over [for them]. It’s really hard,” she says.
Since the closure of the studio, Hua has adapted her business model to offer her consumers weekly bike rentals paired with unlimited online classes run by trainers and the founder herself.
“We decided that since we have the bikes, we’re going to rent them [out]... So you can rent your bike and pay for classes online where people who have the bikes can access the videos. We charge AED1,000 for the bike, its delivery and the access to the videos online,” she says.
Yet revenue from the bike rentals will cover only a part of the studio’s rent. And it will have to do much more to sustain the business.
“Financially, we need to do more because it’s really small compared to what we were doing every month, but at least it covers a part of the rent. The thing is, we only have 30 bikes, so the maximum we can do is 30 bikes. That’s 120 rentals per month, which still doesn’t cover our charges,” she says, adding that Motion’s landlord is flexible with rent payments, allowing the studio to pay in installments.
What is keeping the studio alive and running is its loyal customer base, with clients having rented all the bikes within an hour of their online debut.
“We closed on March 15th, so we basically have no revenues at all, because clients aren’t coming to the studio,”
“It’s crazy because we sold the bikes in one hour. Everyone wanted the bikes, because our clients have been coming to us for a long, long time. The experience online is different than the experience in the room, so we didn’t really want to do it, but our clients ordered the bikes.
“I wouldn’t invite a first timer [to rent] because it’s still not the same [experience], but yes it works really well for our [existing] clients. We are already fully booked for next week… It’s interesting because the fact that we had to close has pushed us to find money online. We discovered people really liked it and will continue after Motion reopen [its studio] so it makes us want to do something online even after opening of studio…” she says.
Motion’s existing clients have even offered to financially support the studio by prepaying for future packages once it reopens its physical location.
“What is also really interesting is that we have a lot of people who knew we closed and who wanted to help us financially. They said we can pay some packages in advance if you need some help, and we got a lot of messages from people who wanted to help us, so a lot of people wanted to rent the bike because it will help Motion cycling stay alive,” she says.
And while Motion is the norm for most SMEs suffering around the world, Yanzo is the exception. Since the spike in coronavirus cases in the UAE in February, the Dubai-based virtual personal assistant which can find, book and deliver products and services has seen a 60 percent rise in revenue month-on-month, according to co-founder Tarek Osman.
Business has been so good that he’s had to turn down orders.
“We started seeing the boost in the first week of March, and it’s still growing as we speak. Usually we grow at 15-20 percent month-on-month given we’re a start-up, but now we’re doing 50-60 percent month-on-month without any marketing or advertising… I didn’t expect the epidemic to grow, we didn’t see it coming this fast but things were happening really quickly and we’re actually turning orders down because we can’t handle the demand right now.
“We’re turning down 20 percent of orders that we’re getting per day,” he says.
It’s a good problem to have.
Osman describes the start-up as “the perfect middle man,” with a wide network of suppliers and logistics partners that allows it to provide customers with the best deal in the market, be it for an iPhone, a luxury designer bag or most recently, grocery items, without having any employees on the ground.
“We do all the backend bidding. So if you ask me for an iPhone, I’ll go to all the tech suppliers who can provide it and deliver it at the cheapest price. You don’t see any of the back end processing. We just come back with a quotation and charge you online,” he says.
And it all takes as little as 40 minutes. Customers can contact Yanzo through WhatsApp and within an average five-minute conversation, the backend bidding begins.
The cost can be as low as AED35 and as high as 15-20 percent if it’s a complex order related to events, although that’s not where Yanzo has seen the surge in business.
“It’s crazy because we sold the bikes in one hour. Everyone wanted the bikes,”
The start-up, which is part of the Wamda X incubator, has seen a trend in home gym equipment as more people workout at home due to gym closures as part of measures by the government to fight the coronavirus outbreak.
“Most orders are retail so shopping for different items. Since we have to turn down orders because we don’t have the capacity to fulfil them, we’re prioritising medicine and groceries because these are in high demand at the moment. And then comes any retail item after that, but there is a definite trend we didn’t see coming at all which is home gym equipment, so yoga mats, dumbbells, pull up bars, because people aren’t working out from gyms so they’re ordering these things to exercise from home,” Osman says.
He initially started the business with two co-founders to help business professionals and working mothers run their errands. But with social distancing requirements in line with the global pandemic, and people more worried about health than ever before, it’s provided the perfect fit for Yanzo.
It’s also being approached by retail brands with no e-commerce presence to help deliver items to customers and act as their personal shopper.
“Because of the drop in malls’ footfall, brands are using Yanzo to ease the shopping process for their customers,” he says, having partnered with the likes of cosmetics giant Kiko.
Corporates like Mashreq bank are even offering Yanzo as a “staff perk to motivate their employees to work from home,” according to Osman.
Yanzo is now growing its team and supplier network to manage more orders, and is looking to expand beyond the UAE.
Online recruitment platform Searchie, which uses artificial intelligence (AI) to allow companies to hire talent remotely from anywhere around the world, has also seen an 80 percent surge in its business in the first two weeks of March alone.
“It’s rising and the uncertainty of when this will all be over is creating an opportunity for us, because if it’s just a two week thing then people would like a temporary solution but they are treating this more seriously because no one can put a timeline as to when this will be over,” co-founder Sahiqa Bennett tells Arabian Business.
“The hiring is still happening. No client has turned around to us and said ‘we don’t need your platform’, so hiring is still happening; they just need to rethink the roles and it forces them to change some of their roles to guide that… People don’t talk enough about job seekers. Imagine your job seeking is now on hold and you as a candidate are on hold. We’re educating companies to rethink the role they had in mind and what it looks like working from home. How do their teams look working from home?”
“I’m sad about the fact that, globally, these unfortunate circumstances create the best conditions for us in the tech world, a lot of it is a mindset thing where people aren’t in a rush to try new things or ways to be efficient. People carry on the way they are, but when that’s taken away and drastic changes happen, companies are forced to grab whatever they can to function, which has benefitted us in a huge way where we’re getting inquiries in places we’re not even in, volumes are higher, we’re getting inquiries in the UK,” she says.
The hiring is taking place mainly in healthcare as providers look to recruit as many doctors and nurses as possible.
“Health authorities are bulking up their hospitals, so we’re helping companies and entities identify candidates. They don’t have the luxury of nurses flying in from countries so they need to find the ones that are unemployed or retired within countries… We have to think about people. We can’t have all these unemployed people which we will have from retailers, airlines, various sectors; we need to keep them employed where there is growth and a need. There are people who can move across healthcare that can help organise through finance, for example, without necessarily being a doctor or a nurse,” Bennett says.
In late March, the start-up launched an initiative that allows avatars to interview volunteers around the world so doctors don’t have to give up their time.
“There are actual doctors who are crying because they have no time to speak to volunteers – that’s how urgent the situation is. We’re doing this in collaboration with governments to make it available countrywide. It’s not happening in the UAE yet but we’re talking to the government now, but it’s available for hospitals here so anyone from the community can volunteer and that way hospitals can quickly renew video interviews to identify who can work under pressure, who doesn’t crack under these conditions, because some will be in the way or break down,” she says.
“The hiring is still happening. No client has turned around to us and said ‘we don’t need your platform’,”
Bennett also says hiring has continued across tech companies, e-commerce players, online services, pharmacies and groceries, which means Searchie may be amongst the few SMEs to be spared during a time when bloodshed is inevitable.
Yet the existence of promising businesses like the recruitment platform and Yanzo provide hope for the many others who are either waiting to be discovered or created, or even forced to adapt and find new streams of revenue.
Either way, the crisis has proven once and for all that entrepreneurship is not for the faint-hearted.For all the latest StartUp news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.