How Israeli small businesses came through covid – the lesson for 2021
With over half the population now fully vaccinated, Israel is close to creating a ‘herd-immunity’ effect. It seems that the economy will have contracted by only around 3%, brilliant compared to other members of the OECD. Combine the two factors and the suggestion is that the Israeli economy could see a massive leap ahead in the immediate period ahead.
There is mild optimism in the retail sector. “H&M Group’s & Other Stories will open its first two Israel stores in the fall of 2021″. In the hard hit tourism sector, the international chain “Four Seasons” is planning its first move into the Israeli market.
And as for the start-up sector, covid hardly seemed to impact. There is a deepening shortage of skilled workers. And just yesterday, news was released of yet another two companies, Cellebrite and Autotalks, that are on the brink of reaching Unicorn status.
However, drill down to the old-fashioned small businesses, and it is there that you will find the pain and the unemployment. Summarising a report from the Bank of Israel, the newspaper “Globes” reported that:
The Israeli economy entered the Covid-19 crisis is a pretty good state, but the cumulative damage of the crisis, up to the time of the writing of the report, is estimated at 5% of GDP. The Bank of Israel writes that this is four times the damage from the entire sub-prime crisis of 2008, and is similar to the cumulative damage during the two years following the dot.com crash (2001-2003).BoI: Covid-19 damage to economy 4 times sub-prime – Globes
I was speaking to two small business owners yesterday, looking to move ahead in 2021 after a roller-coaster previous 12 months. On reflection, they realise that what had happened is that they had been fortunate enough to be show resilience early on in the fight.
What that meant on the ground was that they somehow jettisoned the panic button early on, looked around and rapidly developed new business models. This year, they are looking to employ additional members of staff. In effect, they had on boarded the old lesson of business that life is dynamic and thus you can never rest on your laurels.
I believe that this approach was typical of most of the teams I worked with last year. What is equally significant is that 2021 looks to be characterised by an viewpoint of: ‘Got through covid. Now let’s develop an aggressive sales policy”.
Where is the government support in all of this? The Bank of Israel believes that:
The government, however, needs to conduct itself within orderly frameworks and in accordance with long-term fiscal rules in order to preserve the credibility of fiscal policy – something that is difficult, if not impossible, in the current political situation.
However, the country has had no effective central policy making for over two years. And despite the general election on March 23rd, no new government will be formed before the end of April, at the very earliest.
I salute the skill sets of the independent Israeli business trader!