By Munirah Al-Fayez
KUWAIT: Kuwait Times interviewed Sultan Al-Farhan, a business and tech advisor, about a prospective recession and its effects on businesses and individuals. He spoke about how everyone should deal with it. Farhan, who worked in banks for many years in the credit analysis sector, where they analyze companies to look at their sustainability and projected future, said a recession could happen due to many different reasons. But in general, it would be a due to problem either in demand or supply. For example, in 1973 the rise in oil prices was due to a decrease in supply, since some governments decided to place an embargo on petroleum exports.
“This increased the price of petrol and gas, which as a result increased all prices. How did governments resolve this issue? They solved it with negotiations and conversations. Countries that were affected by this sat down and had a conversation with countries that stopped the supply, and the problem was solved.” What we are going through currently, according to Farhan, is a result of the war in Ukraine, which increased the price of grains, barley and almost everything else, including the logistics of the supply chain. The other thing is, after the pandemic, the interest rate was hiked, he explained, which resulted in high costs, and high costs do not allow growth to happen.
“The recession is growing and taking a long time because the solution is in the hands of central banks and the Federal Reserve, but they are not helping in making the problem easier. In Kuwait, we are lucky, because the country is helping a lot. However, businesses and individuals need a backup plan. They need to act in a way where even if the country is not able to help, they would be able to manage,” Farhan said.
Six streams of income
According to Farhan, for an average person who is not a business owner, having six different streams of income is necessary. However, he said since Kuwait is very helpful financially to its people, an average Kuwaiti person can survive with only three or four streams of income, but six is optimal. When it comes to a business that wants to save money and survive a recession, for example a restaurant, Farhan suggested they look at the demand. He explained that a restaurant can remove items from the menu that do not have high demand, make their menu smaller and focus on what has high demand. If there are three waiters or chefs working at your restaurant and not a lot of people dine in, Farhan suggests reducing the number of hours and close early, or open at a later time to cut costs.
“Also, if people are only ordering from your restaurants and are not dining in, why don’t you become an order-only restaurant? Or you can do the opposite if people only dine in and rarely order food delivery. By doing this, you will save money. However, these measures must only be used in case of a crisis, because these decisions have a huge effect, therefore, they need to be based on numbers and studies.” According to Farhan, whoever does not have the skills necessary to understand and communicate with AI will be in a position where they would have to exit the market. He explained this is exactly what happened during the Industrial Revolution, when people who did not want to innovate were left behind.
Farhan explained that AI makes everything much more convenient and efficient because it does things with the snap of a finger. This does not mean that AI will steal jobs — it will make them more efficient. He stressed AI is a skill that needs to be learned rather than something to be intimidated by. According to Farhan, what we see now in AI is only “the tip of the iceberg” of what is to come.
“In Kuwait, we are as individuals in a very safe position, because the country is bearing the burden of the people. We can see this in the financial support and high wages in the country. This is a huge responsibility on the country and Kuwait is trying to help in providing an environment where a person would be able to easily become an entrepreneur and start their own business, even if it was digital,” he said.
Lastly, Farhan advised young people who have just graduated and are looking for a job. “Work at a company that matches your interests. If you want to start a business, work in the sector you are planning to start a business in and be reasonable — do not rush things. Expect starting a business to be tiring in the beginning. Consult business advisors, bankers, mentors and people who are in the same sector as you. You can sit with these people weekly or monthly or whatever timeframe suits you best.”