Malta reported economic growth of 6.3 per cent in 2015 – and companies are contributing to that through a mixture of local growth and international expansion. But success is not automatic and there is no doubt that fortune favours the brave, those who are willing to take the risk and try something new.

Some did so through necessity. Many companies established themselves in Malta and became market leaders, forcing them to look overseas for new business. One such company was SMS, which took the plunge to represent its cruise operator principle NCL in Miami. Since then, its operations there grew dramatically and it now represents a total of eight companies – and has added operations in Cuba. In 2015, SMS handled 728 cruise calls in Miami with a forecasted 760 in 2016.

“For a small family company from Malta, the thought of taking on the giants in huge America was daunting to say the least. But we did and from little seeds this has grown and grown,” managing director Simon Mifsud said.

“This year SMS successfully tendered for cruise handling in a further eight ports all along the west coast of America and Canada, acting as port agents, ground operators and handling shore excursions. This is an enormous leap for a small Maltese family company, not only from the geographical point of view but also from a cultural perspective.”

His brother Sam, the managing director of SMS USA Inc, encourages other companies to take that step: “With the required ambition and drive, coupled with local professional advice, there is no reason for Maltese companies to be afraid of taking such a leap,” he said.

Of course, even saturated sectors in Malta can offer opportunity for those willing to carve out niche markets. One such company was Hotelogique, which realised that there were tourists out there who travel extensively and want something much more personal than an internationally-branded hotel.

Managing director Jankarl Farrugia, said that companies should not only look at overnight growth but should aim to expand slowly but surely.

“Hotelogique is a relatively new company, and considering that primarily we provide a very niche service and our target audience are very selective hotel owners/investors, growth as such is very contained and controlled.

“In three years we have two properties under management and another two in development while others are being discussed. Malta is attracting a higher end tourist that fits perfectly in the boutique properties we seek for management,” he said. Of course, he acknowledges that there are only so many boutique hotels that Malta can sustain – which is why Hotelogique will eventually also have to look overseas for growth. He is not daunted: “No support was sought in the initial phase of growth, but considering that we are looking at international management opportunities, we would like to look into some grants that are available through Trade Malta.”

Some growth is driven by government policy – such as initiatives aimed at boosting solar energy use. Alternative Technologies head Mario Cachia admitted that his industry was still very dependent on government grants.

“Until these are in place, we will continue to have ups and downs. While we understand the need for government grants to stimulate business, we believe that more education is needed in this sector so that investment can become a regular thing,” he said.

Companies should not only look at overnight growth but should aim to expand slowly but surely

Government does, however, help in other ways as he noted that Alternative Technologies benefitted from local schemes, namely Micro Invest schemes by Malta Enterprise.

“This helped with investment in training, technology, and the recruitment of new employees. Of course, we also invested our own money in finding and tapping into new markets,” he explained.

How to succeed in new markets is not rocket science, he stressed.

“We generally give great importance to technical competence, quality of products and services, customer service and most of all honesty.

“We have sourced new products and entered new markets, based on these principles. Still, when opportunities for expansion come, one should be cautious, especially given the small market we operate in,” he advised, repeating the point made by Mr Farrugia.

In some cases, government policy can disrupt a business model, rather than create one. One such case is the incentive for carers to enable the elderly to stay in their own homes, which has made the operators of residences for the elderly revisit their calculations. However, innovators like Hilltop believe that the government initiative complements, rather than challenges, their business model.

“In our fast aging world – and Malta is no exception – the number of older people is on the increase with fewer people of working age around to support them. Since putting large numbers in institutions will be less affordable than ever, we need to ask how the carers of today and tomorrow can be helped to be able to cope with their responsibilities and roles,” marketing manager Brad Bartolo Frendo said.

“Malta has a wide range of home care help services covering non-nursing, personal help and light domestic work to older adults or persons with special needs. The aim of such services is to aid beneficiaries to keep on living in their community as independently as possible. It also aims to provide respite and support for informal carers,” he continued.

What Hilltop has done is create an alternative for those who want to live independently, but not necessarily in the home they have occupied for decades.

“Hilltop Gardens Retirement Village wanted to create an inspiring community for the elderly who want more from their retirement, in line with the EU strategy of active aging.

“Yet it also offers the peace of mind that as one’s needs and dependency change over time, customised clinical and domiciliary care can be provided by qualified clinicians, nursing staff and allied health professionals.”

Hilltop also opted for a flexible model: its apartments are more accessible as they can be rented or leased – with the possibility of converting a rental or a short term lease to a longer lease if desired.

Companies don’t have to pick their way through all the potential problems and opportunities alone, of course. Michael Debono, the chief executive officer of consultancy firm D Consulta Ltd, has been pleasantly overwhelmed by the influx of companies.

“The economic growth that Malta is having is quite astounding especially when compared to our eurozone colleagues. This is mostly due to the benefits of a balanced and diversified economy.

“This diversification means that our company has benefited from new business emanating from companies seeking to set up shop in Malta as a base for EU targeting and also from giving advice to companies seeking expansion.”

But he is disappointed with the incentives being offered to companies: “Unfortunately some of the incentives in the market do not apply to operators in the financial services sector, which in my opinion is somewhat discriminatory and should be changed.

“On the other hand we have found local banks very helpful during those phases of growth necessitating bank facilities and guarantees which enabled us to participate and manage relatively big tenders and projects,” he said.

He advised companies seeking to grow to get advice on a variety of issues, from preparing fully-fledged marketing or business plans and applying for incentives and finance to tapping into EU funding opportunities.

Of course, banks do not only have a role to play in helping other companies grow, but have been seeing growth themselves. Bank of Valletta chief executive officer Mario Mallia said banks were very sensitive to economic growth, which generally translates into a higher take-up of financial services such as facilities and card usage, hence interest and commission earnings. But he warned that just as policies canpropel growth, they can also restrict it.

“Economic growth does not automatically translate into higher profits for Bank of Valletta. Ultimately the bank’s strategy is designed to address its micro andmacro environments.

“For instance, regulatory requirements are impinging significantly on the bank’s procedures, particularly now that the bank is directly supervised by the Joint Supervisory Team. Another important variable would be the persistently low interest rate scenario across major global economies, which impinges directly on the bank’s profits.

“The bank’s focus currently is to ensure its long-term sustainability and minimise risk, even at the cost of foregoing immediate profitability. Consequently, there could be economic sectors which are contributing significantly towards the economic growth of the country, but in which the bank is not currently investing, due to its cautious risk appetite. Therefore, technically the bank would not be partaking fully from the country’s economic growth.

“Having said that, one should not forget that the financial services industry in general, and Bank of Valletta specifically are ultimately main contributors to the economic growth of the country.”