STarTing a BuSineSS
The Magazine for SMall and MediuM Size BuSineSeS March 2008
Israel’s Business Arena
Translation from original Hebrew article
entrepreneurs
Building BusinEss March 2008
Translation from original Hebrew article
entrepreneurs
Building BusinEss March 2008
Being unfamiliar with Israeli culture and norms of behavior - both on the personal and business levels - are also a disadvantage to Olim who want to start businesses. In addition, many new immigrants find it more difficult to build their businesses because they are lacking the network available to native Israelis through family, army and university. This lack of network also extends to the funding element of a business, with Olim feeling like “outsiders” in banks and financial institutions. Institutions are hesitant to take risks and provide funding unless they’re confident that an entrepreneur has what it takes to succeed. Without a network of connections, Olim often face difficulty in arranging for the necessary start up funding. They are also unfamiliar with the financing process in Israel and are unaware of hidden costs and customary terms. Despite these risks and challenges, many Olim have successfully built up businesses marketing their professional skills, services and products. Their advice is consistent with that of the NBN employment professionals: research the industry in Israel well by working in the field. They caution that even for someone who comes with many years of experience from abroad, it’s important to be “hands on” here, as the professional arena in Israel is significantly different. Prior experience will help an Oleh advance rapidly but is generally not adequate enough preparation for starting a business in Israel. Another major ingredient for success is finding a mentor, someone who knows the business well in Israel and has had the experience of setting up a successful business here. A mentor can be an invaluable resource for any entrepreneur, especially a new immigrant. Proper budgeting is also crucial in starting any business. Experienced entrepreneurs recommend calculating how much money will be needed to run the business for at least one year -- including the amount needed to live on – and realize that, realistically, one needs two to three times that projected amount of capital to give the business a decent chance of surviving. The stories of most entrepreneurs include a recurring theme: it always takes longer and costs more than was projected. Poor cash flow will kill a business – even a profitable business. Olim who have started hi tech companies believe that Israel presents an excellent forum for developing an idea, prototyping it, and getting it to the stage where it can be sold, as these stages leverage the best of Israel: brain power and innovation. They find it more difficult to take a hi tech business to the next level: global sales, marketing and mass production and feel that these stages are best left to the larger global players. Those involved in international businesses also emphasize the importance of gaining a global vision of their industry by traveling to conferences and meeting with companies, partners, and potential customers. From these conventions and conferences they get a sense of what’s needed and the direction the industry is going. Olim with service- based businesses found that they were able to jumpstart their client bases by volunteering their services to other small businesses or non-profit organizations who could not afford professional services. This enabled them to build a portfolio and often led to paying clients as word of mouth took over. In today’s hi tech, global economy, entrepreneurs also have the option of running businesses that are not Israel-based such as e-commerce. In preparation for Aliyah, some Olim created online stores or businesses which can be run from their computers anywhere while others learned the medium post-Aliyah. Online businesses allow individuals to leverage their business knowledge and utilize previous experience despite the move overseas. Some professionals, such as
radiologists, accountants, graphic artists and lawyers, have been successful in establishing online businesses which continue to service clients from overseas.
Learning from the experience of previous olim
The Nefesh B’Nefesh Employment Department provides assistance to Olim in a variety of ways. Via its database of employment buddies, the employment staff pairs Olim with the appropriate professional, most of whom have been through the process themselves. Olim are encouraged to speak with these individuals to jumpstart their market research and networking and to learn from their experiences. NBN also encourages Olim to enlist the help of MATI, the Business Development Center, which is a government funded initiative available to help Israeli citizens with their business ventures. MATI provides one-on-one counseling as well as subsidized sessions with accountants and lawyers. Nefesh B’Nefesh, in coordination with MATI and other government bodies, offers heavily subsidized comprehensive English language courses that walk Olim through the process of setting up a small business in Israel.
Starting a business in a new land
While Israel presents many obstacles for the new Oleh entrepreneur, it also presents an opportunity. Israel is a wonderfully entrepreneurial society, open to innovation. Advice for the new Oleh before taking the plunge: be prepared!
Kim Ephrat
While it is difficult enough to start a business when you have full mastery of the language, are familiar with the ins and outs of the culture and business climate, and have a network to rely on, factor in being a new immigrant to a foreign country and it seems like a recipe for failure. Yet, Nefesh B’Nefesh Olim have successfully started and are running a wide range of businesses including everything from hi tech companies to grant writing services, psychotherapy practices to online marketing businesses, photography studios, public relations companies and dog grooming parlors to mention just a few. Though they face many challenges, some Olim are finding that their entrepreneurial spirit and the innovative climate of the country play a large role in their ability to find a niche and succeed. Any entrepreneur who undertakes the starting of a business faces obstacles along the way, but for new immigrants there are additional challenges that must be taken into account prior to creating a new venture. Doing thorough market research, writing a viable business plan, securing funding and finding the proper professional guidance are a few of the most basic steps in starting any new business, but for new immigrants these are not enough. For this reason, the Nefesh B’Nefesh Employment Department encourages new Olim to work for an employer, learning the intricacies of an industry, to become familiar with Israeli culture and to learn the language before going off on their own.
Businesses run by Nefesh B’Nefesh Olim are showcased in the NBN Business Directory, www.nbnbusiness.co.il, a site designed to provide business owners with free advertising online. The site’s advertisers include hundreds of businesses such as medical services, business development consultants, cell phone and communications services, personal trainers and more. Over 600 businesses so far are advertised in the directory. In addition, the Nefesh B’Nefesh web site, www.nbn.org. il, has comprehensive information for Olim, helping them connect with different business resources that are available and providing advice to help them get started. Another service provided by Nefesh B’Nefesh is a panel discussion that takes place each year, where successful entrepreneurs in Israel share their experience and knowhow with new Olim who come to hear their stories and “learn the ropes”. Despite the challenges inherent in starting and running a business, many Olim have found that it can be a very rewarding experience. While Israel presents many obstacles for the new Oleh entrepreneur, it also presents an opportunity. Israel is a wonderfully entrepreneurial society, open to innovation. Advice for the new Oleh before taking the plunge: be prepared!
The writer is Associate Director of Employment at Nefesh B’Nefesh
The stories of most entrepreneurs include a recurring theme: it always takes longer and costs more than was projected. Poor cash flow will kill a business – even a profitable business.
Without Connections
Most new immigrant entrepreneurs find that their lack of fluency in Hebrew presents a tremendous challenge. They are at a disadvantage in negotiations at every level – from negotiating for office space to dealing with government bodies or suppliers. Contracts and other legalese are substantially more difficult to understand, even for those with strong Hebrew skills, forcing new immigrants to incur the additional expenses of hiring employees to perform tasks that in North America they could have done by themselves.
Translation from original Hebrew article (March 2008)
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www.nbn.org.il