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Dubai News

Dubai's small businesses prep for tough Q2-20, with many expecting steep sales decline

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22-May-2020

Dubai: A majority of UAE businesses - 56 per cent - are bracing for a drop in revenues by more than 75 per cent in the second quarter, with those in the travel and tourism space the worst affected. Disruption in cashflow and being cut-off from access to customers in the UAE remain the biggest concerns for these businesses, based on a survey by Dubai Chamber and shared with business houses.
 
According to a Dubai Chamber spokesperson, "The Dubai Chamber surveyed 1228 out of 245,000 companies in Dubai in April when the lockdown measures were in the most strict phase. 331 of these companies expressed fears over the potential economic toll due to the consequences to their businesses of COVID-19.
 
"The survey participants were mainly small businesses that had fewer than 20 employees who's operations have been affected by the global pandemic, and their sentiments were based on the expectation that the strictest lockdown phase would be prolonged."
 
Among key sectors, all those from the travel and tourism sector said their sales will be down by more than 75 per cent, and next came those real estate, with 62 per cent saying they will see declines by the same level between April to end June. And 56 per cent of respondents in the hotel sector stated their sales would dip by this level.
 
What’s most disturbing is that 48 per cent of respondents in the survey said they “don’t have a plan” to handle a global disaster. While 37 per cent said they were developing such a plan, only 15 per cent said they were actually implementing one.
 
Industry sources say that the UAE’s investments in the telecom and digital infrastructure ensured businesses and organizations were able to switch most of their processes online once it became clear that the COVID-19 was not confined to be a China issue.
 
Remote work, remote everything:
In this regard, businesses, local and international, managed to get their people armed with means to work remotely. It helped even those businesses that had to manage everything on the fly.
 
"The Government will continue to monitor and offer support where necessary to help all of Dubai's business community during this time. Similar results have been observed in business sentiments in across the world," the spokesperson said. "We anticipate that business confidence will improve significantly in the coming weeks and months as businesses return to more normal operation."
 
Fear of failure:
But small businesses and their owners maintain short-term fears about what’s next. A fairly high 27 per cent of respondents said they fear going out of business within the next month, and 43 per cent said it could happen in the next six. Only 9 per cent rated such a possibility as “low-risk”.
 
Who participated in the survey:
Dubai Chamber conducted the survey among Dubai-based companies between April 16-22 to collect information on how COVID-19 pandemic impacted them and what challenges companies faced. The survey was answered by 1,228 CEOs/managers of companies across sectors. The companies also provided measures taken by them to mitigate the impact of COVID-19 on employees and operational continuity.
 
"Businesses around the world have been negatively affected and small businesses, in particular, are facing extreme challenges in this uncertain global economic climate," the Dubai Chamber spokesperson added. "In response to the need to support its SME businesses, the Government of Dubai has launched a stimulus package of Dh1.5 Billion aimed at reducing the impact the pandemic had on them."
 
THE FIRST QUARTER DRAG
 
According to the Dubai Chamber survey:
* More than 90 per cent of the companies mentioned a decline in turnover in Q1-2020 due to the COVID-19 pandemic.
* The big impact was mainly on small- and medium-sized companies.
* All companies in the hotel and restaurants, travel and tourism and financial services sectors had a decline in turnover in the first three months.
 

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