Alphapreneurs

Ep#7-Why Entrepreneurs Fail Without the Right Financial Plan | ft. David Williams

• Rayhan Aleem • Season 1 • Episode 7

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Join us on today’s episode of #Alphapreneurs, where host Rayhan Aleem chats with David Williams, GM and Partner at CBD.

David begins by sharing insights from his career consulting some of the most powerful investors in the region, revealing industry methodologies for planning profitable exits, building effective networks, and avoiding common pitfalls faced by both young and seasoned entrepreneurs.

He also sheds light on the early days of entrepreneurship, where founders may display an invincible drive to carry their businesses on their shoulders, often without seeking the help they need. This tendency can make it difficult to accept feedback, driven by the fear of being judged. 

👉 Follow David Williams on LinkedIn: https://shorturl.at/iloCh

👉 Website: http://www.cbdcorporateservices.com/
👉 Follow CBD on: LinkedIn: https://shorturl.at/BeuMs

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𝗪𝗵𝗼 𝗔𝗺 𝗜?

My name is  Rayhan Aleem, Founder and CEO of 𝗧𝗮𝘅 𝗦𝘁𝗮𝗿 and 𝗔𝗹𝗽𝗵𝗮 𝗣𝗿𝗼 𝗣𝗮𝗿𝘁𝗻𝗲𝗿𝘀. At  𝗔𝗹𝗽𝗵𝗮𝗽𝗿𝗲𝗻𝗲𝘂𝗿𝘀 podcast I sit with top industry leaders for in-depth conversations that dive deep into their success stories, market dynamics, and firsthand tips on entrepreneurship and profitability. Whether you're just starting out or already running your own business, 𝗔𝗹𝗽𝗵𝗮𝗽𝗿𝗲𝗻𝗲𝘂𝗿𝘀 offers something valuable for everyone.

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  -𝗪𝗲𝗯𝘀𝗶𝘁𝗲:  https://www.alphapartners.co
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𝟮-𝗧𝗮𝘅 𝗦𝘁𝗮𝗿:
  -𝗪𝗲𝗯𝘀𝗶𝘁𝗲:  https://www.taxstar.app
  -𝗟𝗶𝗻𝗸𝗲𝗱𝗜𝗻: https://bit.ly/3ZVjzPD

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David:

Partnering with one like minded people and two, offering a service that an existing business doesn't offer is a great way to start because you can't be doing everything in anything So you've almost got to learn to trust either your business partners or other employees and get the right level of skill We're seeing big multinational companies coming and setting up in the UAE, not knowing what they've even set up in terms of their financial year And then six months down the line or nine months down the line, changing their financial year, which out here, because of the legal costs, you have to get involved, can be quite costly And they're like, what it costs me that amount to change year end

Rayhan:

Welcome to the Alphapreneurs podcast I'm your host, Rayhan Aleem, founder of Tax Star and Alfa Pro Partners Join me on each episode as we talk to inspiring Dubai based entrepreneurs who share their stories, challenges and secrets on building world class businesses I'm excited to welcome David to the show today David has an impressive 19 year track record in corporate and operational finance, making a significant impact on every role he has taken on He started working in the big four before moving on to industry, and is now working for himself With CBD at CBD, he has set up the accounting and advisory division overseeing critical areas, such as client financial reporting, corporate finance, and tax compliance David, welcome to the show thank you for joining us today I want to dive into your experience and why you chose finance as your profession Obviously, now you've run your own business, and you advise on accounting as well I, myself, I did a degree in biochemistry and I went into accounting, right? And not many people know that And some people who do know that question me why I did that and I'll probably go into that later Why did you choose finance? Why did you choose the profession of finance, as opposed to anything else?

David:

So I think for me, obviously I got into probably accounting and finance and law all at a young age, probably during high school I like something that I want to get involved in And so when in Australia, it's much more structured than like you said, biochemistry and then get into finance That's, you don't really do that in Australia Everyone follows a set path, do stuff You tend to study at university The field you're going to go work into And so I was 17 and I was like, I really want to go do a three year degree Do I want to become a CA? Or a CPA and I was like, you know what? Start my degree I'm gonna actually start working in the field as well So I applied a bunch of different companies, even before I started university Oh wow And then started working basically at a, at PKF in Australia Yeah Tax, personal taxes, benefits tier two

Rayhan:

accounting firm Correct Yeah

David:

Yeah And the, it was quite interesting'cause the division I was working in got carved out and sold by PKF to another business to focus on salary tax, salary packaging, and fringe benefits tax And so I think that experience when I was like 17 to 20 showed me so many things of not just the tax side of it, but seeing a business get restructured, seeing management change, seeing how things work in the background and at the same time working, sorry, studying at university in the same field, it just all connected and I was like, you know what, let's, make something out of this But since then, it's almost like there's so much, like people say finance, there's so much in finance to get involved in, you've got the audit side, you've got the tax side, you've got the management reporting side, you've got strategic sides, you've got, budgeting, forecasting, there's so many angles of finance And so for me, I think experience all of that over my career has been interesting and challenging It's, yeah, it's probably say I probably fell into it

Rayhan:

Yeah And, as an entrepreneur, I've, I come across a lot of entrepreneurs and finance or accounting is not their greatest subject or, and they're not good with numbers, And the fact that you have a finance background gives you that headstart when you When you're running your business, because ultimately you run a business to make money, right? Unless you're running a charity and so how has that helped you with your business? As you've worked with, you work with CBD and you've built the accounting division, how has that helped you grow your business from, being a person from finance? I think

David:

the biggest thing when it comes to entrepreneurs, and this is on both sides of the fence of helping entrepreneurs and actually doing it yourself as well, is the trust and understanding going, what is that game plan? How do I execute something? Because you see a lot of entrepreneurs have an idea, but they don't know how to execute that They don't know how to plan that They don't know, how, the cogs work in the background And so I think a lot of it, it comes down to trust, but also comes down a lot to communication and so for me, one of the things also, again, going back to my career when I was quite young, I was probably two, two years out of university and my ended up working, with my old lecturer and he got me back to university to teach as a tutor at my university And I was like, first I was like, hold up, I don't feel I'm qualified to do that but he was like, give it a go You never know what you'll learn and just do it So I ended up doing that for about three or four years while I was working both at Queen's and Audit Office in Australia, the government and Ernst Young, and it was a good kind of, recruitment tool as well But at the same time, it helped me figure out that I learn one way, which is completely different to how you might learn And so having to deal with so many different people in a room and trying to get them to understand the same concept, that's really helped translate when I'm dealing with entrepreneurs, because some entrepreneurs, you meet them and they're like, their numbers focused, but their numbers focus operationally, not compliance or audit or tax wise Some of them will just focus on EBITDA Some of them won't care about EBITDA They'll just focus purely on revenue Some of them will just focus on a balance sheet because I think balance sheets are the most important So it's trying to assess what does that individual understand and how then do I make the whole network work around them? So they understand, yeah, that is one metric, but these other metrics make sense And this is how this helps that metrics And it's those connections And I think that's been the biggest help for me, setting up my own stuff is having that and knowing all of that So obviously my business is helping other businesses So having that understanding to help my business and help their business at the same time, just

Rayhan:

So David, it's interesting to, to, hear that you was a teacher, you was working for EY and you was also working for the government, as your full time job One of the things that I find is when I'm talking to my clients about numbers, about accounting, about finance You have to teach some of the basics so they understand how certain transaction can affect, the P& L and the balance sheet So I'm assuming you have those types of situations as well, where you get to use skills that you've built with teaching to help educate what's going on, the P& L and balance sheet

David:

Exactly And so particularly with entrepreneurs it's really about breaking down what they know and what they understand of a P& L, a balance sheet, a cash flow, those types of things, and then figuring out what their take on is it So I just find a lot of the times when I meet new clients, I just take time to listen, to hear what they're going through, how they're going through it and how they assess their business And then once I understand that, then you can build everything else around that You can connect, the P& L focus, you connect that to cash flow, you connect it to tax, you connect it to audits compliance whereas some of them, if they're a bit more, balance sheet focus rather than P& L focus, and they're like, they're trying to sell the business in a few years and do that kind of stuff and fundraise and that kind of stuff you start with that and then build into, the P& L and this does this and you need to hit this much revenue or this much EBITDA and that's going to drive your balance sheet in certain ways or, create value in a certain way for you to get assessed and valued and that kind of stuff So it's really about understanding them first And then building off that

Rayhan:

So David, you've transitioned from an employee to an entrepreneur Congratulations What are some of the lessons that you've learned, being an employee versus an entrepreneur? And for some of our listeners who are thinking about starting their own business, what kind of advice would you give them?

David:

Yeah, so I think that the biggest thing is obviously being an employee, you're very focused on your job, your remuneration, you are focused on the business and trying to grow the business and, the business targets and five year plans or three year plans, that kind of stuff But when you're the one setting those and trying to execute that there's a lot that goes on behind the scenes and having the right support around you personally is a big one but also professionally, because obviously, when you're an employee, you need another person, you go and get that approval or you've got a certain size team You can rely on people already When you're doing it from scratch, you're almost starting from yourself and a lot falls on your shoulders And there's some learning curves The biggest thing I think is particularly being an employer, I was always one where if it wasn't getting done right, I'll just get in and do it myself Or if I didn't have the time to train someone or educate someone to do it, you just get into it yourself As an entrepreneur, you don't have time for that because you can't be doing everything and anything So you've almost got to learn to trust either your business partners or other employees and get the right level of skill of other people around you to help you with that And then you can focus on those types of things That's one of our pitches as well We're talking to new clients It's let us focus on the back office You focus on your business We'll take care of all the compliance and other things as well So

Rayhan:

yeah, I like that And how about, your, the jump that you made from employee to entrepreneurship How, was that for you? When you look back, obviously it's a big jump for a lot of people It was a big jump for me when I became a, when I made that transition What kind of words of encouragement would you have for others who wants to other, some of our listeners who want to make that move?

David:

I would say there's a few people you always trust So there's people you've worked with, you trust, there's people who might've mentored you trust Speak to them because they know you very well And bounce your ideas off them and don't be afraid to tell them your ideas of judgment, listen to the criticism and take it on board and learn from it I think the biggest thing with me is like holding things back and not being open enough about it and saying, I've got this idea, I've got that idea, because you can only fine tune an idea when other people hear it and go, Oh, he's a hole in your plan You might not be thinking about that kind of stuff So I think learning from that, I think And so for me, like the transition into being, this was, I was more looking to go not part time, but, do the fractional CFO, fractional FD kind of roles obviously when we worked together initially, that's when you were stepping out to set up your stuff, we were still, engaged on a few things and projects And I was like, that looks fun Like I've always enjoyed, problem solving let's do that for two or three different clients And, some of the people I used to work for, they were the ones initially I was contracting back to while I was Trying to decide we're gonna live in America, we're gonna live in Dubai And then, as I was trying to find new clients, that's when this opportunity presented itself and we approached CBD And they were the ones who were like, hey, you've got this skill set Have you ever thought of doing this? And I hadn't I'd thought about it, but dismissed it very quickly But then when they brought it up and they were like, do you think you can do this? And I was like, I can do it But thinking, do I want to do it? That was the big thing for me, I think getting over that but then, like I said, once you've got the support around you and another big one was, like leaving full time employment for me, there was a, there were a couple of friends who I'd helped on the side, and even my wife, like she mentioned to me a couple of times, like you thought of working for yourself And other people are like, hey, David, you give us advice on the side here and there, we'd pay for this kind of advice if you do that, if you ever set your own thing up, let us know, we'd love to help you And on top of that, I think I've had staff members work for me In previous roles have always said to me, if you ever go do something yourself, let me know I'd love to come join you And it's those things that, one of those messages doesn't make you, make a plan and go do your own business But I think when I look back over probably the last 5 to 10 years, and that being brought up as a theme, I think when you hear it enough It gives you the belief that's I'm saying, speak to those people, to get the belief from, your mentors, people you worked with, not people just above you, but people below you or, on the same level as you, they might have ideas and how you've impacted them You've got no idea until you have those conversations

Rayhan:

I had a previous guest, mutual friend, a man scope, a Habibi guy, similar journey to you So he left Xero And when he started his business, he, was approached by quite a established business to set up shop in Dubai when they're based in Malta And you've been through a similar journey in a sense that I'm assuming CBD approached you, you've got amazing accounting skills and finance skills and the kind of they do business set up and you can build the accounting arm, especially with corporation tax coming in as well so I guess for some individuals who are looking to make that journey, it's not you go and start a business and have no support You've had that support as well And I guess that's one really good way to jump into entrepreneurship Do you want to just tell us a bit more about that journey? How did that conversation work? was there any doubts in that process? would you encourage others to do the way that you, the approach that you went through for in your journey to entrepreneurship?

David:

Yeah, no, definitely I think partnering with one like minded people and two, offering a service that an existing business doesn't offer is a great way to start obviously I approached initially CBD to try and say, Hey, have you got any, big multinational companies that might need a bit of transfer pricing help or audit support or, budgeting and forecasting review kind of stuff like more the FDCFO kind of stuff That's why I approached them initially And it was in that first meeting when I met with him, they were like, Hey, now that we understand what you do, and I gave them a whole spiel and, I've worked through tax, audit, consulting, advisory, valuations have done kind of, probably the A to Z of finance, you'd say over my 19, 20 years and so they identified, Hey, we've got this gap at the moment where, you know, giving a lot of clients a way to other accounting firms and that kind of stuff And they were like, would you be interested in coming on board? And it took us probably, I don't remember the exact time, but probably three to five months to actually figure that out, how this would actually work Cause initially, obviously my hesitation was, I wanted to do more of the fractional CFO advisory, very high level stuff, more, low volume, high value, let's say, whereas their business model is probably, probably more, high volume or medium volume with medium value slash low value kind of thing So it was trying to understand each other and really get to know each other and go, can we see something working here? And I think, after that three, three to five month period, we went, yep, there's definitely something here I can support on this We can support on that And then again, it was about just having open conversations with what is the first year plan? What is a three year plan? What is that kind of target? And then for me, it was going, can these guys support me in what I want to do? And at the same time, can I change my scope or my vision to include what they want me to do? And the biggest kind of roadblock for me was, working in government, working at big firms like EY and Deloitte and PE firms and family offices I'm used to big, larger numbers, larger companies, but obviously with this and understanding CBD helps companies set up from scratch or multinationals move into the thing, moving to the UAE the, hardest part was, Dealing with so many clients all the time, dealing with, low numbers, where it's just a shareholder, rejected some money and hasn't done anything with it yet So for me, that was a big learning curve but again, it was open, honest conversations at the start to go, you have to deal with these clients to deal with the whole portfolio, so to speak, because you're for them a service as they grow the next few years That's when these services you want to offer will be available So again, it's like I said, it's being open and honest with your business partners and telling them, this is what I want to do They can see the gaps, they poke holes in it I come back and go, this is how I can bridge that And then poke holes, in their plans And then eventually come up with a kind of bulletproof plan that, we've executed this our first year and now it's going great We've hired some employees now, on our side of the business and yeah, we're just looking to grow and got so many things and plans the next few years it's an exciting time

Rayhan:

David, when I first met you, we were both in Dubai and you mentioned to me previously you used to live in Abu Dhabi and used to drive up and down the E11 and you used to miss Abu Dhabi when we were working together So now that you've lived here for quite some time, what would you say is your preference now? Is it Abu Dhabi? Is it Dubai? How do you compare the two cities?

David:

It's hard and I suppose it depends on the kind of work you're doing, and what you want to achieve out of your work and job satisfaction I think from a personal point of view, I think I've known people in Abu Dhabi that have been there, 10 years I've been in the UAE 10 years now Some of them have been there 10 years, 15, 20 years Not that you don't get that in Dubai, but you get more of the people you meet in Abu Dhabi tend to stay longer, tend to have bigger families and, the likes of that But a lot of the roles you're working in government, working for big multinationals and that kind of stuff, whereas it doesn't feel, Very entrepreneurial like environment So obviously Dubai has that For me, the difference is a warmer lifestyle because wakeboarding is a wake park in Abu Dhabi There's not one here in Dubai, we'll get down to the beach and go wake surfing out here, which is great So you can still do a bit of that But I think for me, the F1, Yas Island, all of that was a big plus for my kind of life, especially coming from Australia, we love those outdoor sports and having access to that not that you can't do that stuff in Dubai, but it just seems, more centralized in Abu Dhabi to do that so yeah, it really depends on what kind of job, what kind of career you want And also, where you're at in life Obviously, I know people, here now moving out, Arabian ranches and past Arabian ranches Now, people used to live on the Palm and the Marina and downtown areas Now everyone's moving out as they get larger families Whereas in Abu Dhabi, that seems to be the norm kind of thing yeah, it's hard to pick between the two I was just let wherever I was working decide but yeah, I think, you get people from Dubai who are like, oh, Dubai is better than Abu Dhabi People from Abu Dhabi are like, Abu Dhabi is better than Dubai I don't like to do that comparison I just to go, I like both for different reasons and I'm going to appreciate both for both different reasons

Rayhan:

I guess a shameless plug for CBD is you set up holding companies in ADGM and you can set up operating companies in Dubai, right? So you get both the best of both worlds

David:

Exactly That's a good point Yeah

Rayhan:

You've been a fractional CFO, part time finance director for not just small businesses, but large businesses as well Global businesses, to be honest I know that each level of business has their own challenges but when you're working as a CFO, what's been some of the key mistakes that you see other entrepreneurs or other businesses make that you're able to come in and say, look, this is what you're doing This is how you should do it And this is like the outcome of your advice for that business I

David:

think the biggest one here across the GCC, particularly in UAE So the lack of audits historically They've been to quite a few number of businesses and when lifting up the hood to see what's under there and just check what's going on is moving numbers that aren't locked or set you speak to the CEO and he's Oh, I've got a 10 million number from the 23rd, 2023 You speak to the COO and he's got a 15 million number And it's like, how do whereas when you get audited, people then go, okay, that's the number And that kind of makes sense and if it's not auditing, having that kind of, close down of the books, locking of numbers, communication of the numbers around the business I think that's, what's missing a lot in businesses out here in the UAE And sometimes sharing information, because sometimes people will just hold the information and tell other people what I'm making and that kind of stuff, because for some reason they feel it's important and secretive Sometimes it helps the business grow if they're on the same page, CEO and COO or other different department heads, for instance, or different operational heads because they're in competition, they don't want to share certain things, but I think sharing and reporting the right way helps growth throughout obviously we're going to see this landscape change obviously with audits coming in a lot more with obviously what is it every, company that's about 50 million dirhams has to be audited going forward from a tax perspective, we've seen a lot more renewals for licenses of companies the regulators, Maydan, if those kind of come, those kind of regulators, actually asking for audited accounts now, go on to the days where you just fill out a form and go, we don't need to be audited or that, that kind of stuff So I think now they are actually going to be pressing on that And the banks too, I think we'll get a bit more involved in these, types of things forward But I think we'll see that change, which is good, but I think it's again, coming back to entrepreneurs and educating them on the change and educating them This cost is a valid cost because they see a number and they go, I don't want to pay that What can I do to not have to pay that? I don't want to be ordered to anyway, so they don't see the benefit in that I think having the conversations around how an audit will help them in the long term, whether it's, creating value, getting, evaluation done and they need audited information or they're looking to exit or looking to grow or get financing or attract investing Having the audit Is, item number one on the list for me, but I think educating them that way, I think is, really ideal I think that's probably the biggest kind of issue I'd say, I'm going to flip it here and go when I was doing CFO work and actually in businesses and trying to help them grow I think the biggest thing I used to make mistakes on was not understanding operations KPIs or operations So I'm focused on, P& L, I'm focused on the balance sheet, I'm focused on that, but what's driving the revenue, is it a sales volume number? is it a sales unit? Selling price, for instance, those kinds of things so I think this transition to what I'm doing now Has helped me understand that more and help connect with other people as well, because sometimes a business is more focused on, Oh, I've got 200 sales rather than the revenue from those 200 sales And then also on top of that, what's the profit from those 200 sales? Having that distinction, I think is pretty key So again, it's getting your finance and operational leaders together and being on the same page because together is how you can grow the business Individually, they grow in different directions, but it might not head, might not be for the business overall I think joining those two together, I think, is a big one

Rayhan:

I have to admit, I never heard of CBD until you mentioned it to me a few years ago, that you was working, you was gonna, you was talking with them, obviously they're quite a big business set up company, and they're doing great work as well What kind of things do they do for entrepreneurs out here? and what makes them stand out from the competition?

David:

Yeah, so I think, let's, deal with the name first, CBD We get that a lot, especially from American clients in Australia, CBD is Central Business District So like the financial center or downtown or city center or something like that The central business district is where the name comes from Obviously they started probably over 10 years ago now, and they were more around, nominee structures and setting up here in the UAE for, foreign companies and that I think they're just naturally involved as for an ownership, got allowed here, not having to have a local partner own 51 percent and, They were just in the right place and just grew naturally over the years And then as more things opened up, and the free zones, they've just been in the right place at the right time, growing and growing and for me, what really attracted me them and why I reached out to them initially to see like approach some of their clients as I was building my own thing on the side, was the two business partners, Kyle and Helen, Kyle's very involved with the Australian, business councils that come across from Australia side And, Helen, she's the vice chair now of the British Chamber of Commerce here in Dubai with the British Business Group so they get a lot of business coming from, their home countries out here and how to set up So I think having that connection to home, particularly on the Australia side for me, and even though I worked for Deloitte London for a little while as well, I helps, me be, do what I wanted to set up initially So that's where they set up and focus their kind of clientele on and they're quite connected to a lot of lawyers out here as well, which is helpful because, lawyers and accounting tend to go hand in hand When you're doing projects, when you're doing projects, structures, that kind of stuff They might not get along all the time, but there's a, mutual respect Let's say that, but yeah, no And then so like with the business has just grown and developed And so now obviously I came on board this year to open up accounting and tax for them we now offer this year as well, relocation services we have a relocation manager named Lisa who helps, client people who are moving across here find schools for their kids, because they're having to move, from Singapore or UK or US, and they don't understand the market here Find housing, be it a rental or a purchase, or connect them with the right agents to go and find that kind of stuff as well We do, cultural training as well That kind of stuff so they can understand what does it mean or, people coming from here and want to understand it quickly so they don't offend anyone, that relocations team could help set those kind of, those, kinds of things up And then the more interesting one that's come on board the last few months is, TBD's also got involved in manpower or employer of record, so this means, if people need someone hired temporarily or not on their visa and they want them on our visa, we can do that We can hire basically involved with them on our visas We're then responsible for, their end of service benefit, that visa, all of that kind of stuff, making sure they're getting paid through WPS All that responsibility comes on us And effectively the client then just pays us a number every month and then have to think about in a service benefit, the air tickets, all of that kind of stuff So it's a, it's an interesting model And I think, there's definitely something there and we're exploring that more, not just on the manpower side for visas, but also on like a contract environment Cause everywhere in Australia, US, UK, You have people who work three months, six months, or come in for a month, and you don't really have that here because of the way visas and employment kind of works yeah, I think there's definitely growth that we're going to be doing that in the next

Rayhan:

And you have offices around the GCC and beyond or just GCC?

David:

Just the GCC So we're obviously most of the staff are here based in Dubai We have the ADGEM office We're a CSP down there and then we've got probably four or five people out in Saudi then we have salad offices in Qatar and Oman So we offer services across the country Those key jurisdictions but also we help, we do help clients with US or UK or Australia and Singapore items that they might have to do Obviously being a narrow scope and, with the disclaimers of we're not tax lawyers in those jurisdictions, but here, this is what we can help you with and help you Again, for listening This is what we can educate you on, and this is the connection between the two and what you might need to do, and this is your responsibility

Rayhan:

What kind of things do you do? what would you encourage an entrepreneur who, a new entrepreneur who's going into business, what kind of activities do you do and how does that help you as an entrepreneur to help you perform even better when are continuously taking on challenges and, growing your business as well?

David:

Yeah, I think obviously, sports a big one for me I think also just having the connection to people and meeting like minded people helps big things that I've been doing the last few years is not very good at golf, but I'll go get involved in a couple of golf sessions with a couple of other people And, you make connections through those or you go to a golf day and you make, business connections, not just personal connections but at the same time you're relaxing So having that kind of, you're not switching off completely, but you're switching off enough and, meeting other people and then understanding their stories, understanding their connections either to Dubai or overseas I think that helps you stay balanced because you're not 100 percent focused on work, but you're not 100 percent switched off either I think having that little balance in between Likewise, paddles really taken off here the last few years as well So I've gotten involved with paddle, and again, it's, one of those it's a nice sport because you can, play, but you can also have a chat It's not footy or basketball where you're like, it's just intense, 100 percent the whole time, you've got a chance to have a connection and have a conversation So that's what's helped me bridge that gap, but for me, I definitely always finding the time to go, wakeboarding or wake surfing, when I had, when we had the dogs out here, they're currently in America, but they're moving back next year when we had the dogs out here, having to switch off because you'd take the dogs out for a walk, that kind of stuff Those forced breaks, sometimes you don't need them Or you don't think you don't need them, but then when you're out there and you're actually going for a walk, you're like, oh, this has really helped in that problem I was thinking about three hours ago, I couldn't find a solution for It's just popped into your head because you're focused on something else and your body's relaxed So I think definitely finding that balance is key But again, it's finding what works for you some people I know, reading books or watching a show and switching off completely Some people like to go, sit on the beach or, sit by the pool That to me, sounds so boring, just sitting there doing nothing, but that's how some people switch off So again, it depends on the person, but for me, I would encourage people to explore the different avenues and see what works for them Cause a lot of the time, I didn't know it worked for me until a few years ago I was just always doing 101 things And then I was like, Hey, what do you like doing by yourself? so do things with others, but do things by yourself and figure out what helps you get that balance Whether it's waking up early or staying up late, some things work Sometimes it's a combo I know sometimes I'll wake up super early and just attack the day because I know I'm not going to get any emails for anyone to distract me There's other days where I know, you know what, I want to get a good night's sleep and really sleep in and I'll stay up late and work and then just, completely catch up the next day So again, it's finding out what works for you and then applying it and then, not making it a rule to always follow This is always going to work But then when you feel it not working, try something different

Rayhan:

So David, we once worked for a company I won't say who, and it was owned by a private equity company as well and when you work with many businesses, there's a life cycle So they'll start, they'll then get finance they might exit, they might sell part of their shares to another business And in each stage of this kind of process There needs to be a valuation Now I get a lot of questions about valuation because an entrepreneur they've spent their, their, blood, their sweat, their tears on building this business and they've forsaken the regular income So they get some income and some dividends, but ultimately they're building an asset And it's always interesting for them to know what is the asset worth? Is it, worth me doing this business, for example? So you, as a CFO, I know you advise lots of businesses, whether they're startups multi billion dollar, businesses And I know you're also a valuation expert as well So for the entrepreneurs who would like to know more about valuing a company, what kind of advice could you give? how would you value a business? We don't want to go too technical, obviously, but how would you value a business and, what kind of advice can you give to an entrepreneur?

David:

Yeah So I think the, big one is obviously the value Again, when you're meeting these people for the first time, it's interesting to hear their take on it now, because then you can number one, deal with any misconceptions they have And two, once you understand what they have, you can then work around and go, okay, this is how I make them connect the dots some of them, when you're doing evaluation, some, again, it really depends on the business type, the exit strategy, and so many other things go behind it And when you're having these conversations with them, and you ask these questions to them, you can just see a lot of them haven't thought about these things They usually got an idea in their head because they've seen something from someone else or heard of a story, or read something somewhere and they're trying to replicate that in a different way Or they've maybe had success as an entrepreneur and sold a small business already And Oh, I can do that again very easily But they're going into a different field or a different industry or a different business type And what worked in their initial one isn't really working now So it's understanding, What's driving all that first And then once you have that, then setting up the strategy okay, we're going to focus on revenues or we're going to focus on, EBITDA, or we're going to focus on profit and we're not too worried about our cashflow because we've got financing So it's trying to figure out what that all looks like and how to drive that, some business will, finance to the hilts to drive revenue, to really show revenue because they know when they sell the business, the people looking to buy are going to be focused on the revenue Okay Not focused on the EBITDA because some businesses, when they look to buy They're just going to take all your sales They don't care about your costs They know they can do what you do cheaper So they're more just focused on the revenue So in those cases, you got to understand, okay, someone's going to buy me for my revenues and focus my revenues I'm not too worried about my costs So like you're saying, you forego, Profits now to drive your revenues

Rayhan:

So in that situation, it's a revenue multiple, correct?

David:

Correct Exactly But some businesses doing that, some businesses are focused on EBITDA and they will only give you multiple on EBITDA because they want to know the cost because they're going to, they know they're going to inherit And EBITDA

Rayhan:

is

David:

I, I described people It's like a, cashflow profit model is how to describe it And again, EBITDA or EBIT depending on what you're using is, it's, a metric obviously doesn't end up in balance sheets or PNLs and audited accounts and those types of things But it's, again, it's a method when we do this with a lot bigger businesses and larger entities in the past, we always go back to doing a discounted cashflow model, five year plans, 10 year plans, what are the assumptions behind that? And I'd almost encourage everyone to start with that model first, because once you understand that model, a full blown five or 10 year discounted cashflow model, everything in valuation can be broken down easier because when you're going through that You learn revenues, you learn the costs, you learn EBITDA, you learn all these things and you understand the drivers behind them And then from there, you can then assess different businesses and go, okay, this is how I need to focus on this Or so I need to focus on that whereas I know some businesses, they're focused so much on EBITDA, they've got cash reserves, they've got no liabilities And then they go to sell the business like, but there's always money in the business What, why are you not, then they get advice, just take the money out and we'll buy just the, for this amount We don't care about the revenues right now We're more focused on a different business strategy So it's trying to match up What I explain to people is match up your strategy with who you think is going to buy you or how you think you're going to exit, So once you have that defined, it makes everything else breakdown simpler And again, the biggest one is going back to the UAE in general is audits If you can get certain metrics audited and have that's the first thing people are going to look at when they, so that's your revenue number, but what's the right revenue number? Is it the 15 or is it the 13 million? I don't know which number to take, but if you have an audit set of accounts, they know what they can take because it's, it's been verified independently and not just that, in this day and age, a lot of holding companies, investment companies, you can get, those audited and you can, do fair, valuing and audits And again, you can do audits for two reasons You can do an audit for statutory purposes because you need to file it for tax or regulative reasons But you can also do audits, purely just for the, shareholders

Rayhan:

Voluntarily Correct Yeah

David:

just to get numbers verified So if you wanted to, fair value versus historical costs, like which one are you going to use? Most people just go historical costs because I'm allowed to an accounting standards, but the accounting standards stipulate that, but you can create your own accounting policies and go, I'm going to fair value all the businesses I own, even though my share price is only this amount because I obtained the business for that I'm going to fair value them every year and get that audited And then say you've got three years worth of that You show the growth of those underlying businesses to someone and it's been audited That helps you with your story long term I think the biggest thing is plan for it So if you're thinking of I'm looking for a three year or five year exit, don't wait till the last year to start it Start it now Start it early on because that then helps you, number one, drive the business Are you focused on revenues or are you focused on EBITDA? But it also helps you then figure out how to sell the story to an exit What we've seen a lot of times is people stumble, they don't get to exit, they end up getting financing, getting more loans in, and they get in this continual cycle until something really breaks or change so again, it's really understanding what are you trying to build and having those conversations, not just with the finance experts, back to your mentors, people you trust those kinds of people will help you understand what might also help change in the business strategy that will then impact on the valuation side

Rayhan:

And I guess, there are multiple ways to value a business, and sometimes you're using different methodologies So you could use a revenue multiple and EBITDA multiple and a discounted cashflow It's easier to work out your valuation based on revenue and EBITDA multiple because your accountant will provide that for you Yeah I guess with a discount in cash flows, not everyone can do that, right? Yeah and so someone like yourself can help them build something like that Correct and I guess the key, one of the key takeaways that you've mentioned is it's just really important to know who you're selling to or who you think you're selling to, because Maybe if you're selling to a company that wants your revenue, then your strategy for the next three years isn't necessarily going to be, I want to have a good profit margin It could be focused on that top line growth That helps the exit, in three years time thanks for sharing that

David:

And one other one quickly as well is obviously when you're going through this kind of cashflow models is it really educates everyone on budgeting and forecasting So in particular, if you can show budgets and forecasts for the last, three or five years, and you're achieving those budgets and forecasts, not wild variance differences Then when you tell a business, oh yeah, this is my next five years or 10 years you've got the evidence to prove it And if it's in the accounting package and software to go, Oh yeah, the budget's there and you can see the comparisons that gives you another kind of, lever when you're negotiating things going, Hey, listen, the revenues, we've always hit what we targeted These are our targets next few years And this is the growth on it And we can explain that growth and how we're going to explain that And that's usually the gap when you're negotiating a sale price That's usually the gap you have to bridge between the buyer and the seller So if you can help with that It helps with everything And also it helps the entrepreneurs understand budgeting is key, but not just that, how do my budgets work? What are they targeted on? And it helps them understand the business as a whole So coming back to, their focus on revenue, the focus on EBITDA, connect that to audits, connected to budgeting, connected to valuations, and then they realize, Oh, I can't just run a business doing this I actually need to plan I need to do other things again, the smaller business, you might not need to worry about some of these things, but The bigger businesses or SMEs and as they're growing, they need to think about it sooner rather than later

Rayhan:

So before we wrap up, what kind of projects are you working on? what's the best way some of our listeners can reach out to you? and is there anything that you want to talk about, or is there a particular message that you want to, encourage some of the, some of our listeners who are looking to become entrepreneurs, but you've made it easy for them through the way you've become the way you've gone through your journey

David:

Yeah So I think a few things and a few things we've seen recently is, financial year ends, actually Companies obviously just default and pick a, 31 December year end, but that might not fit to their lifestyle because they want to be away for Christmas and New Year's and other things and not just that, we've seen big multinational companies coming and setting up in the UAE not knowing what they've even set up in terms of their financial year, and then six months down the line or nine months down the line changing their financial year, which out here, because of the legal costs you have to get involved, can be quite costly And they're like, what? It costs me that amount to change year end? So I think, again, coming back to planning and these types of things, it's, quite critical to, just think about things in the next few years when you're setting up, maybe make your year end 30 September it can work with, you come back from the summer, wrap up then, it really just depends on what and how you want to do it Or, for instance, if you're most of the Southern Hemisphere, Do a 30 June year end, as opposed to 31 December, because that's just how, things work down there so it's, aligning to those kinds of things So that's, some of the themes we've been seeing recently The other projects, we're seeing quite a few more, US, things come across our plate Obviously a lot more into Saudi and obviously that's an area of target for us next year in particular as we this is our first year operations from an accounting advisory perspective so yeah, but we're unique in the sense that we help with on the problem solving side So we tend to get linked in when someone doesn't know how to do something or they've used other service providers or they've used other accountants and they don't know how to do something because it's new Obviously with corporate tax coming in and qualifying free zones and all this kind of fun stuff It's been a great learning the last few months and dare say more learnings will come as they release more information we believe as well but no, I think that the best way to get in touch with us is obviously we've got our website You can get in touch with us by email we've got a pretty big presence on, on LinkedIn as well, the CBD kind of group so yeah, there's multiple ways to get in touch with us, but obviously We're very involved in business councils, we run a few networking events as well So I have to link up and maybe get, you guys involved in some of those as well

Rayhan:

Yeah, no more than happy to join Thank you very much for joining us today, David It's been an amazing time Amazing to hear your journey and how you've become an entrepreneur and, you've transitioned from being a employee to an entrepreneur So I think that will give a lot of, our viewers, encouragement from that point of view And if they need to get company set up, they can come to you Exactly yeah, thank you very much No, thanks for having us Thank you for joining us on the Alphapreneurs podcast I hope you enjoyed the show Please subscribe and give us a five star rating and a review Your feedback is appreciated For show notes and more, check out the link in the description and connect to me directly on LinkedIn and search for Rayhan Aleem See you in the next episode