Fundamental Principles for Startup Growth

The recent developments in the kingdom of Saudi Arabia geared toward realizing the vision 2030 laid out by the Custodian of the Two Holy Mosques King Salman bin Abdulaziz and the crown prince Mohammed bin Salman, the start-up companies are seeking to keep up with this transition and to be one of the most pioneer entities with its jurisdiction.

The vision 2030 has lightened the dark side of businesses; therefore, the companies are hurrying up to adapt certain principles to build up their status and it is not a secret that applying such principles is of high importance while they gain approval from the public and private institutions to share the desired aspirations and upgrade the status of the kingdom globally and locally, where the institutions are attempting to achieve success and boost their businesses for the prosperous economy, thus they tend to maintain either their desired profit rates or sustainable businesses.

For this purpose, the ‘Working Capital Management’ policy has been applied, and it revolves around improving cash flows through adapting certain principles, leading to a growth in profit rates and a realization of liquidity. For instance, the institutions may face decline in liquidity rates owing to the failure in achieving the proper balancing between supply and demand as per the market needs, inducing the accumulation of inventory and an increase of payables accounts.

If the institutions wish to raise the efficiency of their liquidity, they shall focus on the principle of Inventory Management in terms of minimizing the injection of overall liquidity into the inventory without detailed adequate considerations to avoid the lack of purchasing power or the disruption of supply chain.

Further, they shall manage their payable accounts through restructuring their debts due to the creditors and revisit the credit terms to maintain a good relationship with vendors and to sustain their businesses.

They are also required to manage their receivable accounts through tackling the amounts due by the clients in terms of granting credit facilities and factoring the vouchers.

Although the concepts are well-known, they entail the specialists’ judgment in the financial and management advisory since the concepts themselves have wide horizons.

As to the mega institutions, the ‘Mergers and Acquisitions’ policy has spread all over the world to increasee the capital for business continuity.

Despite that fact that such transactions are led widely, it is worth noting that these transactions have been escalating obviously to realize the Vision 2030.

This in turn reflects to what extent the institutions are interested in dealing with the exceptional and unprecedented challenges.

Undoubtedly, the Saudi Government has contributed in many facilities to develop the partnership between the private and public sectors and to attract foreign investments, leading to the double economy within the kingdom where the most promising time periods lay ahead under the wise leadership that seeks and still supports the various industrial sectors such as banking, oil sectors etc.

Twitter Account: @sahar_rmt