Lebanon 25 Fast Facts - The Leading Indicators of Lebanon's Next Economy

THE LEADING INDICATORS OF LEBANONʼS NEXT ECONOMY
LEBANON 25 Fast Facts
23 June 2010

The Lebanon 25 expect to grow strongly in 2010 and act as incubators of new companies.

Today, AllWorld released “Lebanon 25 Fast Facts,” offering the first snapshot of how Lebanon is creating new economic value and what the constraints are faced by growth entrepreneurs.

50 companies competed for a spot on the Lebanon 25 and each company competed based on strenuous international standards including completing a detailed survey of business strategy and operations and providing audited statements or an audit letter to verify revenues.

The Lebanon 25 is divided into 18 Ranked Companies and 7 Companies to Watch. The 18 Ranked Companies meet AllWorld’s international criteria of size, age and performance, and are ranked based on their sales growth between 2006 and 2008. There are 7 Companies-to-Watch – companies that show all the characteristics of a fast growth company but are too small or too young. These are companies we believe will become future contenders.

The findings suggest that Lebanon can be a strong location for growth entrepreneurs, particularly in Food Services, High-Tech and Telecommunications, and in PR, Media, and Marketing. The Lebanon 25 as a group has created 776 jobs since company inception, and most of the companies project robust grow over the next six months.

The Lebanon 25 are strong compared to other countries in “entrepreneurial intensity” with winners having founded 58 other businesses that are still operating and with 80% planning to start another company in the next two years. Several of the entrepreneurs have also helped employees spin off as companies. In total, for Lebanon 25 are responsible for creating over 100 other companies, a 1:4 ratio. The Lebanon 25 act as a powerful incubator.

While growing an average of 22% a year between 2006 and 2008, this is lower than other AllWorld country rankings that tend to be in the 30%+ range. With continued political stability, and the return of entrepreneurs to Lebanon, we would expect the growth rate to rise.

Most of the companies were started in the 1990s, giving the Lebanon 25 a unique strength in start ups and “restarts” – mature companies that grew rapidly after the war.

The main constraint to growth is finding qualified managers and employees and availability/cost of working capital. These are constraints experienced universally by growth companies.

The Lebanon 25 Fast Facts

The Lebanon 25 grew an average of 22% a year between 2006 and 2008, and they represent diversified industries, with Food Services in first place and High Tech & Telecommunications and PR, Media and Marketing tied for second place.
The number 1 company is Food Trends Corporation known for its Leila Restaurant chain, growing 600% between 2006 and 2008. Founder Joe Abrass’ vision is to operate across MENA with 30 or more restaurants in five years.
They average $3 million USD in revenue in 2008, and 43 employees. The average size is small with only two companies exceeding $10 million USD in 2008 sales – Wooden Bakery and Teletrade Computer Systems.
The average first year cost of starting a Lebanon 25 company was $172,000 USD of which 80% was financed with the founder’s own funds.
The founders were an average of 29 years old when they started their company. The youngest founder was 22 when he started his business, element^n.
The top two constraints to further growth are finding qualified talent and the shortage/cost of working capital - universal problems for growth companies. Other impediments include: “lack of support from government”; “lack of support of local banks and challenges finding the right investors”; “political unrest”; “grey market, smuggled goods, poor commercial legal systems”; and “lack of effective infrastructure / Internet”.

Employee Advancement

The Lebanon 25 offer a strong environment for employee training and advancement with 87% offering ongoing training and development, 67% offering performance based financial bonuses, and a full third offering equity, profit sharing and structured mentorship to employees.
Further, several of these companies act as incubators, encouraging employees to spin off as entrepreneurs. One company, World of Light and Electricity, has birthed 10 entrepreneurs and sees this as one of their main missions.

Economic Outlook - The Next Six Months and Beyond

Most companies project revenue and job growth of 5-25% in the next six months. In the next two years,
- 65% of the Lebanon 25 want to bring in outside investors, which is high relative to other countries.
- 80% of the companies have plans to start another company in the next 2-3 years, which translates into 28 new companies.
- Currently, 35% of sales come from outside of Lebanon, and as a group they project sales outside of Lebanon to present 46% of revenues by 2011.