Doing Business with the world’s model ‘Startup Nation’

Entering the Israeli Market: Business Advice and Strategies

Every country has redeeming strengths that can lift its economy to great heights. Indian business magnate, N.R. Narayana Murthy, said, “…every country has to recognize its competitive advantage and liberate its strengths to be a partner in global trade…”

Some countries, like Israel, are totally committed to this mission of reaching spectacular heights of economic development. As Jon Medved, CEO of OurCrowd, a Jerusalem-based investor platform, said, “We don’t have huge natural resources, so we have worked hard to develop our skills-base in the country.”

True enough, the tenacity of Israeli citizens has led the country to become the world’s model “Startup Nation”, with Tel Aviv ranking second only to America’s Silicon Valley. Furthermore, it is Israel’s startups that are responsible for the country’s enviable reputation for building better-than existing products. With one startup for every 1,400 people in Israel’s 8.5 million population, the country currently has around 6000 active startups and companies. In 2012, an international study ranked Tel Aviv second only to Silicon Valley, as the best place in the world to launch a high-tech start-up company.

Despite the many hurdles and challenges thrown at Israel since it was formed in 1948, the determination of its citizens gradually transformed it from a small, closed economy, to one using modern technology in manufacturing.

As far back as 1998, Newsweek named Tel Aviv one of the world’s ten technologically most influential cities. By 2010, Israel had 140 scientists and technicians per 10,000 employees – one of the world’s highest ratios of these professionals.

Moreover, today, entrepreneurs across the world, are robustly competing to connect with Israeli innovators.

If your company too is seeking an opportunity to enter the Israeli market, you would do well to note some of the main factors influencing strong business relationships, and how to get your business to a smooth start, before engaging in cold calling as a sales strategy. As American entrepreneur, Mark Cuban, says, “Value is measured in the total upside of a business relationship, not by how much you squeezed out of any one deal.”

Understanding legal and cultural differences in doing business in Israel

When you come into Israel as a freshman entrepreneur, the legal and cultural differences can be quite challenging upon arrival. Running a business in North America and running a business in Israel are quite different.

Before setting up business, seek sound professional advice from lawyers, accountants and business people in your field already operating in Israel. In fact, find out as much as you can about doing business in Israel, before you begin.

How to locate your Business

If your command of Hebrew is poor, planning to open your business in a community that has a large number of English speakers, such as the greater Jerusalem area, Bet Shemesh, Raanana or Modiin, might be a good idea.

Moreover, if your business is focused on the international market, you should be able to work almost entirely in English.

Until you get your bearings and a handle on doing business in Israel, you may find it easier to explore Internet-based business opportunities, for your initial months in Israel.

Personal connections matter in business

To Israelis, personal connections are vital, and the business culture is casual and informal. Thus, it is always a good strategy to get a local contact who can give you a good reference to a potential business partner. Once the introduction is made, the potential partner is expected to visit in person to establish a relationship with the Israeli counterpart.  

Israel has a rapidly growing franchise industry

 If you are looking to operate a franchise in Israel, the concept has been popular in the country since its introduction in the mid-1980s. Currently, Israel has over 250 local and international, small and medium-sized franchise businesses operating in the country in 37 different sectors. Almost one-third of franchise businesses in Israel are in merchandising, particularly in the apparel and fashion industry, while lifestyle, cosmetics and health-related businesses are also popular. Other franchise companies are in real estate, brokerage and educational services.

E-Commerce is an important component of sales

 Shopping is a popular pastime in Israel; with extensive Internet access, e-commerce appears to be a good marketing avenue. Infact, the e-commerce market in Israel has steadily risen in recent years. Nearly 70% of Israeli Internet users currently shop online, and this figure is expected to increase in the future.  

Israel has 6.64 million Internet users, comprising 4.5% of the total internet user population in the Middle East.

Direct Marketing is popular, door-to-door sales is not

Mail inserts, social media platforms and the internet are the most common direct marketing strategies. Door-to-door sales are not commonly seen, and is considered a nuisance in Israel.

Telemarketing and unsolicited text messaging are not considered legal. 

Electronic Advertising is popular too

 Advertising in Israel is commonly handled through commercial television and radio. Cable and satellite TV offer shopping channels. The commercial television station, Channel Two, and the state-owned radio station, Kol Israel, carry advertising.  If you are considering setting up a business in Israel, there are also international cable channels, through which to reach Israeli consumers.

 Therefore, despite the initial challenges of doing business in Israel, it will all come together eventually, for a successful venture, over time.  As former Prime Minister of Israel, Shimon Peres, said, “If a problem has no solution, it may not be a problem, but a fact – not to be solved, but to be coped with over time.”

About the Author
Scientist turned techie. Founder at Neliti & Reputio. Interested in sharing lessons learnt from Tel Aviv's bustling technology ecosystem.
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