Interview with Bilal Ballout, Co-Founder, BMB Group
BMB Group is one of the largest Chocolate and Arabic sweets manufacturers in the MENA and GCC Region. With operations in the UAE, Qatar, and Saudi, BMB employs over 1,000 people and last year appointed its first non-family CEO. Starting the company in 2006, Bilal Ballout, Mohamad Ballout and Mohamad Khachab, aimed to conquer the chocolate and confectionery sector in the UAE and beyond. The three entrepreneurs went well beyond their initial ambitions and are set to grow even more in the years to come. Tharawat Magazine asked Bilal Ballout about his entrepreneurial journey, the demands of growth and the introduction of a professional structure into the family-run company.
How did you get started in this industry?
We grew up in an entrepreneurial household. My father built his business from scratch; he established the first coffee, nut and sweet shops in the UAE. Growing up, I remember seeing him roast the nuts and coffee himself. He taught us the tricks of the trade: how to keep costs low, how to expand and most importantly how to retain the necessary mindset for entrepreneurship.
Maybe that’s why when I graduated from school I wasn’t happy in a corporate job. To take the time to find out what I wanted in life, I began working for my father. I helped in the kitchen making chocolate, roasting nuts and coffee, before I became interested in the purchasing side of the business. I realised that we‘d been using the same suppliers for years, and they never needed to negotiate with us; they knew they were the only supplier in the market. Upon finding myself negotiating a lost cause, I realised there was an opportunity.
I called my brother and asked him if he wanted to start our own trading company. He was still at university but supported the idea immediately. After some research on chocolate suppliers who didn’t have UAE partners, I flew to Singapore and asked a chocolate producer there to give us a chance. At that time – 2006 – I had no office, no warehouse and I was only 22. But I got the contract!
What did you do once you got the client?
I started thinking about how to provide the service I got hired for! I asked my father for collateral, and we raised a loan from the bank with our business plan. We got a warehouse and hired our first employee; he was the driver, warehouse guy, secretary, sales guy and everything else in between! Together we painted the walls and built a small cold-room, and when the first containers of chocolate arrived, we unloaded them ourselves.
I started calling potential clients – bakeries and patisseries – and said: “We’ve got chocolate,” but it was a slow start. The economy was going well, and no one cared about reducing their costs. We were barely making ends meet.
We were supplying chocolate factories but more and more suppliers came to market and competition was tough. When the crisis hit, being small and lean was an advantage. Pretty soon we decided to start making the chocolate ourselves. At that time Lebanon was the regional leader; all the chocolate shops in the UAE bought their finished products from Lebanon. Here in Dubai, we had only five suppliers and their offering was very limited. We started with two chefs. Today, our facility includes over 1,000 plus staff producing chocolate and sweets with state of the art equipment from Switzerland, Belgium, and Italy. We’re now the largest private label chocolate manufacturer in the GCC.
What happened when your brother and cousin joined the business?
When my brother Mohamad finished university and joined full time he brought the business to a new level and we saw accelerated growth. Then when our cousin Mohamad joined us five years ago, that was another decisive moment because he brought the potential for internationalisation. With his zest and instinct for other markets, he expanded our operations throughout the GCC and worldwide.
You’ve recently gone through restructuring. How did this change come about?
We were accepted into Endeavor – a mentoring and growth platform for entrepreneurs around the world. The mentoring sessions had a huge impact on us. We were at the stage where we were asking ourselves “What now?” We realised we needed to put a strategy in place for our future.
We knew we would need to hire people who are better at this than we were. So we started transforming ourselves into a global brand and redesigning our processes to become a dream company. We need the company to be governed in its best interests and not by our family dynamics. Now we are aligned.
Were you worried that your visions would grow apart?
We have the same vision. But at the end of the day, we want this company to outlast us. We hope this will be a global brand, but it needs a good framework to withstand the coming years.
We have always understood that this is our dream, but it doesn’t have to be that of our children. We’re happy to live this dream, take this journey with the people who are joining us now and then pass it on to the next capable hands. Interestingly one of our mentors at Endeavor, Aziz El Azarifi, became our CEO and brought in so much industry experience.
Getting him on board was crucial but also complex. We had to understand that to scale up we needed to take a step back and let others make the decisions.
Was it difficult for your new CEO to take over?
Today, we report to the CEO but retain our positions on the board. The three of us are happy with that. To be honest, it depends on finding the right CEO. He’s the captain steering the ship. He’s given it structure, and he works with the same energy and dedication to the company that we do.
Was it hard for you to take on new roles in the company?
Letting go was the hardest step, but once you let go there’s no going back. There were mixed reactions from our employees. The CEO had to find ways to communicate with us in a constructive way, and we had to let him do his job. Our CEO handled it well. He’s very smart and treats us as individuals. He’s doing a great job.
What are the lessons you learnt about being a successful B2B entrepreneur?
First of all, never adopt a victim attitude. You have to go consistently after what you want and don’t feel sorry for yourself. This is easier said than done because in that first year when you are trying to open a factory it’s not very glamorous. You wake up and think: “I could have got a job somewhere with a fixed salary”. But the more consistently you go after it, the sooner that moment comes where you can see things moving.
The second piece of advice is to do the maths properly. So many entrepreneurs underestimate how much it costs to set up manufacturing operations. I can’t emphasise enough how important it is to keep your costs low at the beginning. The reality of industrial manufacturing in our region is that you have slim margins for errors.
Thirdly, you want to stay competitive so keep your overheads low, but make sure your employees have a good lifestyle. We have a happiness manager whose sole job it is to make sure that the experience of our suppliers, clients, and staff is a unique and happy one. That kind of thing is quite rare these days, but we feel very strongly about it.
Finally, once you start growing, invest in talent! You cannot scale sustainably without the right people in the right positions.
What if you have to let people go?
That never gets any easier. But you don’t want to keep people who don’t share your values or who don’t contribute. Letting one person go for the greater good of everyone else is the right thing to do. We’ve parted on good terms with 99% of the people we’ve had to let go.
Has this journey changed you as a person?
Yes. This journey is very rewarding but very lonely. Not many people understand what it’s like when you go through the rough times. You’re steering the ship; you can’t speak to anyone, and you need to solve your own problems. Often when you’re young, you’re not prepared for that. But at the same time, it’s great because out of the last ten years, no two days are ever the same!
How you deal with this level of uncertainty is very dependent on how confident you are in yourself. You also have to accept the fact that you’re learning. I’m lucky that I had two partners. How did it change us as people? It’s like the millionaire who doesn’t care if he loses his millions because he knows that he can make them all over again. It’s not what you get in the end that matters, it’s about how you get there.
Tharawat Magazine, Issue 30, 2016