This is part two in a three-part series on business development with Chaim Ellenbogen. In the first part, we discussed the trend of Israeli companies to scale up, Chaim’s experiences building Checkomatic, and advice for Israeli founders.
This part of the series will discuss building a new specialty division based on an existing business. Chaim will share advice that is especially relevant for Israeli companies.
Many entrepreneurs think of growth in terms of building new products and services. Others think of exporting or opening offices internationally. Your approach was to start a new division with a specific business focus. How did you make that choice?
I looked externally and internally. Externally, I considered expanding to other products and services that companies ordering checks need. Should I try to sell office supplies, stationery, even computers?
What stopped you from expanding that way?
It would be possible to start, but not to last. Did I have a competitive advantage there? Could I compete with more prominent players who were already selling those products? For me, the answer was no. So I decided to look abroad.
Where did you look?
I considered expanding to Europe, Asia, and the Middle East. But after carefully considering it, I realized that although there was a large market with a lot of growth potential, it was not suitable for me. I would have to take on a new language, culture and manage the logistics of going abroad. It is one thing to see national growth projections and another to be part of that growth.
I also recognized that it’s easy to get pulled into the hype. It sounds exciting to tell colleagues, “I am starting a new branch abroad.” And who doesn’t like the idea of traveling as part of the business?
It can be right for many companies, but wise business leaders need to ask themselves, “Is this the right move for my company?” Don’t get lost in the hype or fool yourself about the risks.
What did you do next?
I asked my clients a simple question: “What can I do to make your job easier?” I got a wide range of answers. Some wanted lower prices, improved service, or compliance with an outdated software program. Many people said they wanted to ability to get checks the next day.
Then I charted the responses according to the size of the client’s business (their company size), how much business they do with me, and several other factors.
What did you find?
I used the responses to help improve my business. When a client said they wanted improved service, I looked into it. Who was managing their account? Had anything gone wrong with their checks? What were their expectations?
When a client said they wanted lower prices, I asked them what they would be willing to give or give away to get that? Would they consider bulk orders? Did they realize the difference in high-quality paper and printing vs. cheaper alternatives – and what could that say about their business? Several clients told me that a competitor had offered them deep savings. After speaking with me, they read the fine print – the ‘discounts’ all involved cutting corners somewhere along the line.
Clients overwhelmingly said that they wanted the ability to get checks the next day. Sometimes they wanted to do big bulk orders and save a few dollars, and sometimes the same company was willing to pay more to get their checks quickly. That was the start of ChecksNextDay.com.
What advice would you give to Israeli founders looking to build their business and possibly start a new division?
Start with your existing clients first, and listen to them. What do they want? Time to delivery is a factor that many businesses can use to start a new division or premium service.
Can you tell us an example?
Suppose you have a cybersecurity company. How much time does it take to go from a prospective client calling you to get them fully operational? Can you cut that time in half? Can you cut that time in half again?
What would you say if the CEO of a big company calls and says, “I want it done ASAP.” Would you have a team ready to do it? Would you have to say that it is the end of the business day here and that you can start on it in the morning? That could cost you a big client.
Medical equipment and devices are in demand worldwide, and Coronavirus disease (COVID-19) has only made it more intense. What would you say to a medical supply company?
Many medical supplies companies set up dedicated websites, phone lines, and sites for priority products. Few take the next step of leasing warehouse space next to international airports. Yes, it may be more expensive to lease warehouse space by Ben Gurion Airport than outside the centre. But, when a client calls and says, “How fast can you get it here? I need it ASAP.” Can you deliver? It’s business, and it’s saving lives.
In the next part of the series, we will discuss how Chaim scaled his start-up with a third division.