Business Archives - Page 29 of 67 - Michael Horesh Business Coach and Mentor

7 April 2015

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Categories: Afternoon Tea in Jerusalem, Business, Israel, Palestinians

The Palestinian Economy Minister has resigned. The economy itself is reaching yet another crisis point, ostensibly because Israel has withheld nearly US$ 0.5 billion in excise taxes that it has collected on behalf of Ramallah.

Read whatever report you want on the Palestinian economy, and the picture is desperate; high unemployment (especially amongst the young), zero or negative growth, minimal water reserves in Gaza, and more. The international community believes that Israel can and must do more to help.

So I had to ask myself who is paying for all the heavy duty equipment being smuggled into Gaza? This must be worth millions.

This is no isolated headline story referring to large sums covered up. Let us recall those tunnels that Israel destroyed in the war last year. Well, apparently many new ones are being dug, on both the Israeli and Egyptian side, and funded by Iranian petro dollars. Interestingly, construction methods have altered to allow for both cement and wood.

Thus, it is imperative to consider. Can you imagine the benefits to the local population if the Hamas government ever preferred to invest in its own people rather than killing Israelis?

Actually, a similar statement can be made of the BDS movement, an international campaign designed to boycott Israel, just as the Nazis banned associations with Jews. To date, the credit profile of Israel has remained unharmed. However, according to Kristin Lindow, senior vice president at Moody’s Investors Service and Moody’s lead analyst “the sanctions do run the risk of hurting the Palestinian economy, which is much smaller and poorer than that of Israel…”

It is very clear why the Palestinians need these sums immediately from Israel. Whether in the West Bank or in Gaza, they have refused to set up a formal system to collect taxes. And historically, for all the grand promises, Arab governments do not deliver on their promises to send aid…except for Qatar and Iran.

So that leaves the excise taxes, which Palestinians claim make up 70% of revenues – shall we say, declared revenues – of the Palestinian Exchequer. And that assumedly is why many Palestinian civil servants, the largest employer in the economy – are not being paid properly.

Only here comes another misfit. A full month before Israel began to withhold the funds, Gaza’s public sector went on strike, as the workers were not being paid. In other words, I have to ask if President Abbas is fiddling his books merely in order to make Israel look bad? After all, he has been prepared to reject Israel’s compromise solution, which will transfer about half of the money to Ramallah. (The rest will pay off Palestinian debts to Israeli statutory authorities).

While the Palestinian coffers may be empty, the prime causes of the situation are not so obvious. Yes, the economy is in a dreadful state. As the IMF declared, having stated a war with Israel, Gaza has been pushed into a recession. That said, there does seem to be an awful lot of spare cash floating around, hidden out of view by the higher echelons of Fatah and Hamas in Ramallah and in Gaza.

Did I mention that the Economics Minister, Mohammed Mustafa, resigned, as he was disgusted by the endemic corruption he discovered?

5 April 2015

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Categories: Afternoon Tea in Jerusalem, Business, Israel

For many 17-18 year old Israeli geeks, their dream is to be recruited into a crack computing unit in the Israeli army. From there, you can hope and pray for and millions in exits after a decade or so

To reach that far-off star is not so easy in reality. Yet that is just what Daniel Ramot and Oren Shoval achieved last week. Their company, Via Transportation is barely three years old and has just raised US$27 million.

What is intriguing is that these two entrepreneurs have been bold enough to encroach on space that was assumed to be the sole property of Uber Taxis, Hitch and a few select others. What we are talking about is: –

…a ride-hailing app that groups up to five passengers who are heading in the same direction, and sends a professional driver in a sedan, SUV or van to pick them up within 10 minutes, and drop them off together. Rides cost $5 or $7.

And the attraction? No surge pricing! “Riders are assured of the flat fee they will pay for a ride within a given city zone, more like a bus ticket or subway fare.” In parallel, suppliers are paid by the hour and thus are happy to participate, as compared to the grumbles heard from Uber drivers.

So which investors have climbed on board? Chemi Peres, son of former Israeli President, has signed up through his successful investment house, Pitango. Another well-known name is Roman Abramovitch, owner of Chelsea Football Club.

This is a clever app. In effect, sophisticated algorithms are matching the needs of unknowns, who wish to journey around town, quickly and efficiently. It is open to users of both iOS and Android. There are already 40,000 subscribers.

Although only available in the New York area, there are roll-out plans for other large cities. And of course, the Israeli entrepreneurs have the eyes on the commercial potential of the global market.

4 April 2015

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Categories: Blog, Business, Israel

This is one of those years, when the Jewish festival of Passover and the Christian festival of Easter coincide.

And it is a time for people to whiz off messages to each other over the internet. Most are pretty standard, but occasionally you get one with a difference. And the one seen here is a definite favourite. (Thanks Jeanine).

As a business coach and consultant, I wanted to pass on a thought that I find pertinent at this time of year, especially as we spend a few hours reading the Hagaddah – the book which recounts the exodus from Egypt.

For me, the story telling is all about finding a new meaning every year in words that never tire on me. Yet, in our day-to-day life, we readily become bogged down with turgid phrasing, which just turn off our customers and others.

On the serious side, look at these statements that are so often used when we portray ourselves, but are actually close to irrelevant. We consistently market ourselves and our companies in such a clumsy and nonsensical manner. Why?

And for a laugh, yet in a similar light, consider this clever TV analysis of President Obama. Want to understand him better? It is all about what he does not say. We simply forget to say what is going to win over others in the room, however obvious it may be. Again, why?

Whatever your faith, may you have a great week….and just give a little extra thought to what you are about to say next.

1 April 2015

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Categories: Afternoon Tea in Jerusalem, Business, Israel, Jerusalem

The problem is a common one for businesses throughout the ages: How to increase sales, especially when they seem to be going in the other direction?

Advertise – new products – additional services – etc, etc. These are all well-known techniques, and can work.

As a business mentor, I am thrilled to report about how my client – call him David – tackled a downfall in revenue. He is the owner of a pet shop just outside Jerusalem. Having set up his business a couple of years back, the culmination of a childhood dream, David enjoyed back-to-back monthly increases in sales for much of this period.

Towards the end of 2014, David became weighed down with bureaucratic demands from the local authorities. Next, there was bad weather, which forced people to stay at home, and that was followed by a general slump in the local economy. Before my client had realised it, he was facing a cash drain. Customers were going elsewhere.

What could David do?

First, he analysed his competitors. They were challenging him on key products, such as large bags of food, at times slashing prices to the bare bones. David matched them, but went even further.

David had fathomed out that others had lowered prices on a series of poor quality products. He had no problem explaining this to his customers, casually offering them alternatives. These happened to be more expensive and carry a higher margin. But for the customers’, their beloved pets were being fed the best.

And just to ram the point home, if a client chose the more expensive product, this kicked in ‘reductions’ on several other items. All of this was supported by a small leaflet campaign and a few adverts in the local paper.

Did this work? In March, historically a quiet time, sales leapt around 20%. Bingo! Further, profitability was not sacrificed, as so many clients found themselves immune to higher costs. Anything for our pets in the Holy Land!

However this case study begs a question. If it is so simple to create such a change in the way brands are perceived by others, why do so few of us adopt similar strategies to raise sales?

27 March 2015

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Categories: Afternoon Tea in Jerusalem, Business, Israel, Jerusalem

One of the most common themes I come across, when meeting with the owners of small and medium-sized enterprises (SMEs), is their inability to create new sales.

These people are often erudite, well-educated, experienced, possessing a firm understanding of their industry. However, converting all that brainpower into new cash in the bank is often too complex for them.

My role? I am the business coach and mentor, who is supposed to uncover for them the path to utopia. What are they missing?

First, a quick reminder. SMEs lack resources. I am not just talking about extra cash. There is rarely the time, let alone the personal, available to devote to sophisticated marketing campaigns. The CEOs need instant results, driven by a minimal set of inputs.

I am describing this background, because the subject came up this week with three of my Jerusalem-based clients. They appeared to eye me with a combination of desperation, combined with a look of challenge. ‘I bet you really do not know the answer’, they seemed to be asking.

So, one after the other, I took them through a very practical four-step process.

1) Who are the potential clients sought after? Define them.

2) Where are they located?

3) Who do you know in these areas?

4) And why have you not called your contacts for a reference or introduction?

The point is that most of us tend to wait for new clientele to come our way. We are passive in our approach. At least that way, it allows to justify emotionally / mentally why ‘we are so wonderful but others just do not understand it’.

Instead, we should be more proactive, focusing on where the money is waiting for us and then talking – communicating directly – to the current owners of the fortune. And amazingly, most of these contacts are right in front of us. To prove my point: This is why so many successful SMEs can be found on LinkedIn, a social media tool designed to make the global world of commerce much smaller.

Over the past week, some of my clients in Jerusalem have been busy on the phone, reconciling themselves to months of forgone opportunities. And yes, I believe that the first contracts have started to come in.

26 March 2015

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Categories: Afternoon Tea in Jerusalem, Business, Israel, Jerusalem

Around the world, Israel is associated with the phrase the land of milk and honey. Blame Moses for the phrase, which originates in the Book of Exodus. Yes, it is true that the modern-day communists from China have purchased Israel’s largest milk cooperative.

In parallel fields, Israel has become a leading player in the international wine industry. One of my particular favourites is the Ella Valley Winery, located south of Jerusalem. The rose has a lasting flavor on the tongue.

However, in the past few years, the country has seen a major challenge to these traditional, biblical beverages. Whiskey, specifically Scottish malt whiskey, is a massively growing phenomenon, amongst many different sections of society. Why?

A few years ago, the British embassy lobbied the Ministry of Industry to reduce tariffs of such imports. As a result, sales shot up by 180% in 2014. In another move, some brave entrepreneurs set up a distillery north of Tel Aviv, called Milk and Honey (sic!), under the guidance of a Scottish taster. While the final product has yet to be released, a Moonshine version has received rave reviews.

Earlier this week, I attended the second annual “Whiskey Live TLV” event in the heart of Tel Aviv. Packed out! Young, and old, Jew and non-Jew, everyone was having a great time. Once inside, I made a direct line for one of my specials, a Balvenie 17 Year Old Double Wood. And my compliments to Chivas Regal for putting on an excellent and entertaining tasters’ session.

Israel is a country full of surprises. The international headlines may limit readers to stories about geopolitics or high-tech. In reality, this land with over five thousand years of history is replete with new and exciting offerings, reaching out across traditional boundaries.

23 March 2015

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Categories: Afternoon Tea in Jerusalem, Business, Israel

Israel’s election is over. It appears that Netanyahu will form the next government. That will take place, only after all the pathetic customary coalition negotiations unveil themselves over several weeks. And in the meantime, the country has to endure troubled relations with America, the fallout from the disgraceful electoral language towards the non-Jewish population and the repercussions of the divisive language used during the campaign.

There are few saints amongst these maneuverings. Yet quietly in the background, Israeli society has shown some remarkable resoluteness, at least in one specific sphere. The economy, especially the high-tech sector, is doing very well.

I am not just talking about the Tel Aviv stock market, which continues to record new highs. Just consider this random set of news items.

Facebook looks set to expand its R&D office in Tel Aviv.
Similarly, Apple, following the visit of CEO Tim Cook to the Holy Land, is due to open an 800 person facility in Herzylia.
“Taurus Asset Finance, a U.K.-based financier, is launching a fund that will enable retail investors to invest in start-up technology companies in Israel and the United Kingdom.”
The value of exits in 2015 up to early March alone had already passed the US$1 billion mark.
Military exports remain strong.

Now, let us not get too carried away. The new Finance Minister, whoever that may be and whenever he is appointed, has a host of challenges ahead of him. Officially, the country has yet to pass a budget for the year. And due to the stupidities of the country’s political system, core elements of the plan may be rejected by the Finance Committee of the Kenesset. The rising cost of basic commodities, the bubble in the housing market, restrictive practices by unions and conglomerates, and more – they all require solutions.

And yet? What the country seems to be demonstrating is its resilience to the incompetence of the political elite. Away from the headlines, in line with the tradition of being a start up nation, many Israelis are just trying to get on with it, and even succeeding.

20 March 2015

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Categories: Afternoon Tea in Jerusalem, Business, Israel, Jerusalem

I was fascinated by John Blakely’s blog: “A tale of two cities – listening to the system”. He asks the question that many business coaches and mentors face. How can we change the spirit of an organisation?”

Blakely takes as his starting point the success accredited to Rudy Giuliani, the former mayor of New York. The man who slashed crime believes that he gave a voice to the spirit of New York. from there followed the necessary change.

An interesting approach. Blakely wonders how that model can be applied to commercial firms and organisations. This week, I was faced with such a challenge.

In my case study, I made my way to a manufacturer of housing products near Jerusalem. An established outfit, they have suffered from competitors encroaching on to their space. Further, in an effort to slash costs, advertising budgets have been thrown out of the window. Nobody can find out about their quality services, which are not the cheapest on the market.

The owners are frustrated, restricting themselves to putting out fires in the factory, as opposed to creating a new strategy. In parallel, they are demanding, a quick turn around.

And here is the catch. On the one hand, any their clients will end up spending a lot of money. Yet, the drive to their building is simply unappealing, to say the least. As I tried to explain the dichotomy, the conversation became uncomfortable. I was challenged heatedly. How could my theories possibly be related to making a sale?

Looking for a different approach, I asked my client to step outside and to tell me what he saw. The immediate response was one of near refusal. He only sluggishly rose from his chair. He spent several minutes, claiming that everything looked normal; no need to fix anything and nothing could be fixed anyway due to by-laws.

So, I challenged my client. Who could see the building in order to stop there? Why would anybody park in an area full of litter, when they were being encouraged to lay out lots of good money? What stopped him from creating a welcoming presentation of his products, enveloped in a backdrop of green shrubbery?

There was little further discussion. The man went back inside and produced a tape measure. I was assured that within two weeks, new signs will appear as well as other features. And with a touch of irony, two minutes later a good client walked in and jovially asked the same questions I had posed. My own customer must have felt that I had set him up.

Psychologists teach us that change is not easy for most of us. It is particularly hard for CEOs, who have become encrusted in practices that are known and safe. These ‘cushions’ hide the fact that these same practices are failing! It is the role of the business mentor to show the client, even when the resistance may be fierce, to show why change is not just necessary but feasible and even potentially fun.

17 March 2015

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Categories: Afternoon Tea in Jerusalem, Business, Israel

After hundred days of campaigning, Israelis go to the polls today. Pundits have no idea who will win. And due to the vagaries of coalition politics, the party with the largest number of Kenesset members may not form the government.

Back in January, I argued that there were “5 economic reasons why Israel may be in for a change”. I wrote:

If you listen to the chatter of the candidates, government and opposition, it is all about the economy; what is and what is not in people’s pockets. It is a matter of ‘perception and feeling about spending power’………(And) when Netanyahu mentioned defense and geopolitical issues, his comments drew strong applause and cheers. When he touched on the economy, the activists in the hall were ominously and erringly quiet.

And this is what happened in the election run up. Netanyahu was perceived as arrogant by many, not understanding that both the lower and middle classes find the cost of living too high. His opponents capitalized on the theme, taking it further to question the current Prime Minister’s overall ability to govern.

And here’s the irony. We read last week that: –

Treasury officials are preparing bullish new estimates for economic growth this year as data coming in for the final part of 2014 and early 2015 show growth rebounding at a faster pace than anyone predicted ……Finance Ministry officials said they are now expecting Israel’s gross domestic product to expand 3.5% this year. That would mean a much faster pace of growth than the 2.8% officials were talking about last summer when they provided the first estimate ahead of the 2015 budget.

So the Israeli economy is booming. The problem for Netanyahu is that either not enough people believe it – feel the positive change – or the benefits are restricted to the better off.

Those economic headlines that hit the newspapers refer to factories laying off hundreds of workers in the south of the country, where the economy is notoriously weaker. Deflation is so severe that the price index dropped 0.7% in February. In a recent poll, barely 13% felt that the country’s overall economic position had improved during the life of the outgoing government. On a personal level, the figure was slightly higher at 21%.

I have maintained and continue to argue that Israel’s economy is dynamic and sound. There are key structural problems, such as the restrictive practices of the unions in key sectors like the ports or the power of vested interests to keep the prices of basic foods higher than necessary. That said, Israel’s stock market is at a record high, the currency is strong and official unemployment levels remain low at under 6%.

However, on St Patrick’s Day, Israelis are going to the polling booths to pass their verdict. Will encouraging financial stats, wrapped in a seductive green of the day, be enough to return Netanyahu to his throne? Or will the masses reject his lists of promises, which have yet to be converted into action items, and take a chance on something new?

16 March 2015

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Categories: Afternoon Tea in Jerusalem, Business, Israel, Jerusalem

The question comes up time and again. “How do I make those first sales”?

I am a business mentor, with many clients located in the greater Jerusalem region. In English or in Hebrew, over the past few weeks, I have been approached by a new non-profit organization, a provider of alternative medicine, a consultant, shops, and more. They all want to know the solution to that great secret: how to ramp up revenue, and quickly.

When working with these teams, it is often surprises just how many people are unable to ask even the most elementary of questions. For example: –

What are they really selling? For example, McDonald’s is actually offering ‘ a fund family experience’, wrapped in unhealthy burgers.
What is the market looking for? And frequently the answer is not price-centric.
What are their strengths? Why should anybody buy from them?

The list is far more extensive. However, together what these probing thoughts add up is the construction of a branding policy. Yes, even the smallest and newest commercial outfits need to position themselves from the outset amongst their competition.

Just recently, I have been following Jonathan Gabay, who has launched a new book “Branding Psychology“. Gabay is often seen on BBC and Sky TV pontificating on how multinationals cunningly direct our purchasing habits. And while his book focuses on conglomerates, it has much to teach owners of small and medium sized enterprises (SMEs).

First, whatever your message, make sure that it is crisp and brief. The attention span of the mind of consumers can be measured today within a few seconds. People just do not have the patience for waffle. Just look at the adverts on TV, which seem to be shorter every month.

Second, the branding must be transparent. Internet, smart phones, wireless technology – they have all conspired to ensure that false messages are whittled out very very very quickly. In today’s global market, if you are deemed a peddler of false services or faulty products, you are doomed for a decade………..unless you invest in an expert in reputation management on social media. The recent bizarre story of the New Zealand milk scandal has rammed home this lesson.

In any typical country, SMEs comprise over 90% of total productivity. So many owners spend their time running from one problem to another, putting out fires. A little bit more effort in creating a strategy and a strong brand should lead to a far more focused result, and that means healthy sales

13 March 2015

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Categories: Afternoon Tea in Jerusalem, Business, Israel, Jerusalem

It is almost like an opening line of a joke. Three investment scouts from Unilever, GE and Boston Scientific came together at the Jerusalem Business Networking Forum (JBNF) Biomed this Tuesday. The aim – to explain what and why large conglomerates seek from Jerusalem-based bio start-ups.

There are over 250 multinationals in Israel with r&d centres. For many of them, Israel is as key focus point. For example, of GE’s 6 global centres, one is in Israel. Of the 50 firms in the GE Venture Group, at least 10 are Israel centric.

The panel was excellent. One key point that I picked up on was how conglomerates review young companies. The emphasis is no longer on the technology nor even the team. What counts today is a strong business model, reimbursement and the proof of potential revenue streams. Start ups – you have been warned!

However, what fascinates me even more is why these leading commercial heavy weights target Jerusalem as a bio growth zone. The city boasts less than one million inhabitants. It is a geopolitical nightmare. It is the centre of at least three religions, each imposing layers of conservative values on their followers. And yet….as the organisers of JBNF observed:

There are over 1,000 life science companies in Israel with over 110 of them based in Jerusalem. A major contribution to investment in Israeli life science are global companies, with over 15 global companies with R&D centers based in Israel with technology scouts, company acquisition and VC funding scorching the Israeli science. Over the last decade, over 15 major acquisitions took place in Jerusalem, with Oridion Medical acquired by Covidien, while Omrix was bought out by Johnson and Johnson.

Why Jerusalem?

Bio Jerusalem, a branch of the Jerusalem Development Authority, has secured a large and growing number of grants for new biomed companies in the capital of the Holy Land. These include tax breaks, reductions in city rates, aid to recruit new senior workers and more. These benefits can be worth hundreds of thousands of dollars spread over several years.
The Hebrew University of Jerusalem is quite simply an excellent campus. It is in the top 200 hundred globally, the leading Israeli university. Overall, Israeli campuses are ranked in the top ten for innovation. People literally spill out from their studies, straight into commercial labs, and that is no exaggeration.
820,000 people is a relatively small base from which to create a strong bio eco centre. However, it is important to emphasise that the very diversity of the population – Jew / non-Jew, Ultraorthodox / non-religious, Israeli born / immigrants from over hundred countries, etc – makes for a highly motivated and innovative dynamic. Just enter any of the bio hubs, such as the Hadassah Research Labs and you will hear a multitude of languages being spoken up and down the corridors.

The demand in Jerusalem for more, improved high-tech parks exists and is continually growing. One key explanation for that is the success of the biotech sector in the city, arguably in spite of all the restrictions it faces.

4 March 2015

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Categories: Afternoon Tea in Jerusalem, Business, Israel, Palestinians

If you stand on a vantage point, near the Erez Crossing Post in Israel and then gaze over into Gaza, it is still possible to see streets of destruction in the northern part of the region. The war last year between the two sides left countless without homes, a woeful economy weakened further, and relief agencies screaming for extra resources which are drying up in the winter mud.

As far as UNRWA is concerned, only about 5% of all aid pledged is actually donated. And in the meantime, Israel is to blame. The regional superpower, whose guns caused the destruction and with a Prime Minister, Netanyahu, despised by Obama et al, the government in Jerusalem makes for an easy target of the verbal hate for those trying to help the Palestinian cause.

Of course Hamas had provoked Israel into a massive retaliation, having launched hundreds of missiles from Gaza earlier in 2014. Moving on from the war of words, key facts have emerged this week that demand us to consider an alternative understanding to what has caused the economic demise of Gaza.

1) The blockade of Gaza. While Egypt has maintained a complete blockade of Gaza for about 12 months, Israel continues to let in humanitarian aid. In fairness, nobody claims that this is enough, especially rebuild those homes in a reasonable space of time.

However, I was struck by a recent BBC report, which clearly showed how Hamas is reconstructing its offensive tunnels against Israel.

In other words, Hamas is yet again taking materials that arrived via Israel, which are designated for civilian use but are in short supply, and then they are using them for military purposes. What the BBC film in effect demonstrated was why the autocrats in Hamas are thrilled that Israel embraces the economic theory of free trade!

2) Power supplies. On an average day in Gaza, few people will receive more than 12 hours of electricity. According to Israeli military authorities:

Israel supplies 125 MW of electricity via 10 power lines. Egypt provides 32 MW, and the power plant in Gaza provides 60 MW. Currently, the power plant has the capacity to produce 80 MW, but is not operating at full capacity due to the PA’s lack of financial resources to buy fuel. In 2014, 62,520,470 liters of diesel fuel were transferred from Israel to Gaza via Kerem Shalom for use in the power plant. So far in 2015, 13,866,880 liters of fuel for the plant have been transferred. Plans to upgrade the abilities of the power plant, such as operating on natural gas instead of diesel fuel, and currently being investigated.

Now, we know that a Hamas rocket attack on Israel during the 2014 war cut the power line between Gaza and Ashkelon. And it is accepted that a Qatari grant to support the power plant in Gaza has been used up. What is not clear is why, despite such hardships, Egypt does not provide more support nor why the Hamas military remain able to manufacture new Kassam missiles. The facts are at odds with established norms.

3) Water reserves. One of the true tragedies for Gaza has been the correlation between the Hamas investment in an offensive military infrastructure and the parallel destruction of the water levels in the region. Nothing, but nothing, has been done to preserve the precious few supplies left and which are in danger of becoming salinised permanently. Under the 1994 Oslo Accords, such tasks are the responsibility of the local government.

Today ironically, the Ma’an News Agency in Ramallah reported that Israel is to double the amount of water it releases to the Gaza Strip. This is possible, because Israel is considered a world leader in building desalination plants, such as in Ashkelon.

So if the facts do not correspond to the ‘let’s accuse Israel game’, here is another misfit. Gazans are openly purchasing products made in Israel.

Various kinds of Israeli-made snacks, juices, soft drinks and biscuits were accumulated on the shelves and in large refrigerators at Metro mall and other supermarkets all over the Gaza Strip, while in the West Bank, the Palestinians had decided to boycott these products.

And one final idiosyncrasy: Contrast all the despair and poverty in Gaza to Rawabi, a brand new Palestinian city. Located west of Ramallah, the contractors have not shied away from using Israeli building products. The city is about to be connected to Israel’s key water reservoirs. Many of the first 450 families are under 50 years old. Bottom line – Rawabi shows what Gaza should have been and what it still could become…through cooperation and a willingness to accept Israel.

In the meantime? The Gaza economy is a ruin, fostering little hope for its people.

The reasons for this disaster just do not reside with Jerusalem, nor Mr. Netanyahu, nor the Israeli army. As long as Hamas continues to divert core resources for its military needs, residents in Gaza are unlikely to confront the phenomenon of sustained economic growth.

3 March 2015

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Categories: Afternoon Tea in Jerusalem, Business, Israel

For most Israelis, the date of the 17th March cannot arrive early enough. The dull campaign for a general election that few wanted will thankfully come to an end. The result is still uncertain. Maybe voters will be turned off the current incumbents due to economic reasons. Alternatively, will there remain enough people who will be prepared to stick with the ‘devil they know’?

Whoever takes up the reigns of power in the Spring – historically, Israeli election’s are followed by weeks of coalition negotiations – they are likely to greeted by a pleasing financial scenario.

Tax Revenues: A pattern is emerging of increased tax revenues, especially from direct taxes paid by corporations. This is often a sign that there is latent growth within the economy, as well as better tax collection systems. “Finance Ministry sources now expect that the tax collection target for 2015 will be set at around 270 billion shekels — 10 billion shekels higher than the draft 2015 budget presented.” Healthy.
Tel Aviv Stock Market: TASE has spent much of the past two weeks reaching new record highs, in line with trends of other global markets. This is a double bonus. It is not just that stock markets tend to reflect the future expectations of players in the financial markets. The Israeli stock market remains a key channel for companies to raise new investment.
Unemployment: “At 5.9 percent, Israel had one of the lowest unemployment rates in the developed world last year.” This figure is especially impressive, considering that the war with Gaza in the summer of 2014 severely impacted on the economy for months.
The gas industry: Israel’s regulators have invested much time and energy in changing the rules for overseas investors in the country’s new, lucrative off-shore gas industry. That said, the dream is coming true. As expected, royalties from the reservoirs will top US$250 billion this year, and with more to come.

All very encouraging news. So why are people not feeling this change? Why are retail sales remaining depressed for now? And why is there a feeling amongst my clients that the next government could blow these gains?

2 March 2015

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Categories: Afternoon Tea in Jerusalem, Business, Israel

It is almost as if we have grown up with the phrase: Governments choke us with their paperwork. Yet, we find ourselves passing this ‘disease’ on to the next generation. And paperwork especially clogs up small businesses, the backbone of many an economy.

It is an international phenomenon. It is estimated that Obama’s attempts to cut red tape have actually added US$23 billion in costs. In the UK, the government has released yet another scheme for small businesses, although one cannot fail to notice that this is just before a general election. And it is probable that over 4 years in office, the Conservatives have added billions in extra paper work.

Why is the issue critical? Look at any economy in the world. Typically, 95% of output is generated by small and medium-sized enterprises. These people may not make headlines, like Google and Boeing, but their taxes keep the wheels of fortune churning for countless others.

In theory, Israel, the so-called start-up nation, should provide a refreshing approach to this gloom. For years, the government in Jerusalem has provided subsidized funds for mentoring schemes, directed at small companies. The Office of the Chief Scientist matches investment funds for high-tech enterprises. There is a growing base of networking hubs and incubators.

And yet……….Underneath the hype, there has been a growing feeling that something is going wrong. Take the mentoring programme; of the hours allocated, maybe 10% has to be devoted to completing forms.

Just as damming is the Israeli culture of paying people late. On the one hand, local and central government should not be short of cash. Yet, in Israel, the private sector regularly pays out after 30 or 60 or even 90 days. The public sector has become accustomed to adopting this warped culture.

For a large company, that may not be a problem. However, if you are a small business, reliant on such contracts and tenders, your cash flow is unlikely to be strong enough to weather such delays. Remember, weak cash flow is a prime cause of the failure of small operations.

What do I mean? I know of one case, where a local town council deliberately held up payment to a building contractor for about 12 months so as to pressure him into lowering the final price. As for the mentors and coaches, they are frequently paid months after carrying out assignments. By the way, to apply to participate in a tender, each company has to immediately pay a registration fee, on time.

The point? All good politicians around the world pay lip service to the concept of the need to build up the small business sector. However, few create any practical policies. And most are happy to ignore the limitations and restrictions that their own civil servants impose on those they are supposed to be helping. The result – bureaucracy wins and economic growth is impeded, to the detriment of all.

20 February 2015

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Categories: Afternoon Tea in Jerusalem, Business

It is a classic line about business coaches and mentors that they are supposed to be good listeners and possess an ability to empathise. They do not have to be an expert.

A lesser known side about coaching is the need to ask difficult questions – not just about the business itself, but also regarding character issues that impact on overall performance in the commercial workplace. For example, a common problem I come across is that people are genuinely ‘afraid of success’.

Here is a typical case scenario of what I mean:

I will ask a CEO what it is that they need to make their business grow. At this point, they confidently list of a number of standard generalities that could apply to any operation, anywhere in the world. When I demand specifics, the verbal wheels start to grind to a halt. For all their knowledge and experience, they seem unable to state how to make their company stand out above the rest.

Drill down, and you begin to realize that they are literally afraid of achieving something important for themselves. It is a barrier. Who put it there and why? Well, there are a multitude of reasons. For some of my clients, they have simply taken the concept of modesty too far. “It is a bad thing to stand out”, they were taught by all when they were young.

What interests me more is how to overcome the fear factor. My son has recently swam with sharks and sting rays. However, in preparing for a bunjee jump, he was scared. He simply looked down, stared at the vast space below him, laughed at it, and let go.

His father, this writer, was not thrilled. And yet, I hate heights. I am writing this from Northern Italy, where cable cars zoom around like underground trains in London. I have forced myself to take several overhead rides, and guess what? They are some of the most peaceful, serene few minutes I have experienced in the past few years. Fear gone.

Yes, not everyone can just ‘get over their issue. It may not be that simple. But for most of us, where does this live my clients, strategic leaders and managers?

Worries, concerns and fears are often installed inside us, when we do not realise it and for no good reason. My responsibility, as a business coach, is help others recognise these blockages for what they are; irrelevant mental rubbish.

14 February 2015

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Categories: Afternoon Tea in Jerusalem, Business, Jerusalem

Two separate conversations on two different continents, yet with one common denominator.

Episode 1: I was talking last week to a close friend in London. Self employed and working part-time, they are looking to double the number of hours they devote to new customers. “But how?”, they asked me. “Where will I find these people?”

Episode 2: My own client in Jerusalem is currently looking to ramp up their sales. Experienced, intellectually astute and with a long list of former clients, they too posed a similar set of questions. What could they possibly do to bring in a new set of revenue?

So what is the answer?

In the first scenario, we are talking about a top-class service provider, who does not use social media. My advice – talk to friends and acquaintances. Word of mouth, a.k.a. networking, is one of the most potent formats to securing the contacts you want.

As for my own client, I suggested that they create a mass email, offering quality and original content. They could then send it out to all former clients.

In both cases, the person in question was strongly urged to move a fraction away from their comfort zone. They needed to make a very practical effort – talk or contact those people who trust them. This is not old-fashioned cold-calling. What is being described is just ensuring that you put your business in front of people and explain why your core value should be of interest to them.

Obvious and practical, especially for small and medium sized concerns. However, how many of us actually get round to doing so?

I did hear from my Jerusalem client that they immediately received several positive responses to their mailing – all from merely reaching out to those who already know them.

12 February 2015

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Categories: Afternoon Tea in Jerusalem, Business, Israel

Most people only hear about Israel, when it is attacked by one of its neighbours. The truth is that Israeli tech is increasing a part of the lives of millions around the globe, and many do not even realise it.

It is not just that the Holy Land has become a hub for r&d centres for the multinationals and conglomerates. Apple’s Tim Cox will be officially opening an 800-person hub next week. It is more than Wix and Waze and Glide and others going from small start-up to mega exit in the space of a few years.

Israel offers key areas of excellence in core fields of new technology, sometimes in the most surprising of fields. Here are three recent case studies of what I mean.

1) Cyber technology. Although only a country of barely 8 million people, every year, it is estimated that there are at least 30 new cyber tech firms. Israel’s defense industry has helped to consolidate this international reputation. And this week, the former head of the 8200 secret military unit announced a new US$18 million fund, Team 8, to which even Google’s Eric Schmidt has contributed.

2) Aside from a weekly football and also a national lottery, at least superficially, betting is not a big industry in Israel. Yet Avi Shaked has created a on-line gambling company called 888 that is now the subject of a billion dollar takeover bid from William Hill. Not bad for a country that does not even boast a race track.

3) Israel has often found itself in the news for creating amazing medical devices. For example, just at how many people are now learning to walk again because of the determination of a family man from Haifa. Two weeks ago, it was announced that “Philips Healthcare and Teva Pharmaceutical Industries Ltd. recently launched Sanara Ventures — an incubator for Israeli medtech and pharmaceutical companies with global aspirations.” The initial fund is valued at US$25 million. Israel’s medtech sector is already valued at over a billion dollars.

The list here of Israeli brain power going global could be far more extensive. It is thus understandable how Bloomberg concluded that Israel should be ranked fifth on their annual Innovation Index

8 February 2015

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Categories: Afternoon Tea in Jerusalem, Business, Israel

For the Tel Aviv Stock Exchange (TASE), 2014 was a year of change. A new management team was brought in, led by the experienced Yossi Beinart. The institution moved premises. And for all the upheaval, the main TA-25 Index managed a 10% shift upwards.

TASE has seen some heady days since the turn of the century. Despite great geopolitical uncertainty, for a decade it outperformed most other emerging markets. It has joined the elite group of international stock markets. It is clearly a main generator of new financial growth for the Israeli economy.

However, the outcome for 2015 is looking confused. The Ha’aretz newspaper listed at least four reason why investors are holding back. These include economic uncertainty due to weak fiscal policy, key sectors failing to perform and the continuing quandary of too much money chasing too few quality stocks.

In parallel, the set up of TASE is raising questions. Using stats from Ernst & Young, the “Calcalist” newspaper compared TASE to 9 other similar exchanges, such as Sao Paolo, Toronto and Johannesburg. Bottom line, while the average EBITDA – profits before financial items and taxes – was around 50% for the table, TASE came in with a mere 20%.

The key explanation for the gap lies with government regulation. It is cumbersome, creates paperwork and results in hidden expenses for all. In other words, those civil servants who are supposed to be encouraging foreign investors to visit Tel Aviv are ensuring that they go elsewhere.

Is there hope round the corner? Yes, there are signs that American financiers are looking to Israeli capital to finance growth in the real estate markets. It must be stated that the significant change will have to wait for after the elections of March 17th. The hope is that the new government will have the courage to initiate the necessary reforms, finally.

6 February 2015

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Categories: Afternoon Tea in Jerusalem, Business, Israel, Jerusalem

Over the past month, I have been presented with three new clients. All of them can be defined as small or medium sized established family businesses, operating around Jerusalem, Israel.

As a business mentor, with a specific interest in commerce and strategy, I was thrown the financials. I was supposed to come up with expressive excel spreadsheets that would explain away what had happened. From there, I was required to shine some light on the solutions.

Well, there were no prizes on offer when I proved that sales were stagnant (or worse), as the costs pushed upwards. As the clients took on loans, the finance line also bulged outwards. The cash flow….was not flowing freely.

My attention turned to the line of ‘gross profit’. This is often defined as the difference between revenues and the cost of goods sold. These costs can include purchases of raw materials and production workers. It was noticeable that in all three cases, this profit ratio was under 30% and dropping. In other words, there was not enough money to pay for overheads and fixed costs.

A business coach like myself automatically knows that an experienced CEO has already rushed to clamp down on costs. He (or she) knows how to squeeze his suppliers. He will fire workers if needs be. He will compromise on a price in order to achieve a sale. So what more can be done?

One person actually told me that he did not want to see my numbers. He had spoken to so many analysts in the past. What was he do with more percentages and comparisons?

I have previously commented on how many firms rashly slash advertising expenditure at this period. It is simple to do, incorrectly seen as a less painless option. However, what the financial statements do not reveal are the time management skills of the CEO. Very often, when a business is in trouble, the CEO finds himself stuck in the office, ‘putting out fires’. That is how he keeps control, but of what?

By staying inside, the CEO has no time to go on the road. He does not meet new clients. And that means extra sales are never seen by the accountants. Thus the cycle of commercial doom enforces itself.

All three CEOs winced visibly when I suggested that they come up with a work schedule that releases 20% of their time to direct marketing. They wriggled even more when I asked them to consider the alternatives – a further reduction in revenue.

4 February 2015

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Categories: Afternoon Tea in Jerusalem, Business, Israel

Wix is a successful Israeli start up, whose platform is the base for nearly 60 million websites. It is outperforming analyst predictions on NASDAQ. And this week, its clever advert during the Superbowl ensured that another 100 million plus people were exposed to its capabilities.

According to one Hebrew financial commentator, 2014 will see revenues of around US$140 million. Of that, US$10 million – about 7% – was spent on the Superbowl publicity stunt. And I am not sure if that included payments to the star performers.

Is it worth it? Yes, loads of new potential users, but for that price? Surely, Wix could have found a more effective medium? Worth considering, and yet……..

Tomorrow, I will start to work on the file of a new client, an established enterprise based just outside Jerusalem. They are in trouble, looking for an other loan, which will simply allow them to pay off a previous loan. A quick glance at the financials reveals that sales peaked 2-3 years ago. There has been an attempt to close down the overheads, and that includes advertising. Here, expenditure has shrunk by half.

Whoppee! A substantial saving, it would seem.

However, here is the catch. One of the lessons of the Great Recession of the 1930s is that those companies who survived the economic downturn tended to be those that had invested in advertising. They ensured that their customers and potential new customers knew where they were.

My client, like many before him, has opted for the opposite direction. Thus, faster than he can control his costs, I believe that his core revenue base is shrinking. Bad news. As his business mentor and consultant, it will be my task to point out the misfit.

Wix is a young, arrogant and assertive company with a bright future ahead. Its understanding of dragging eyeballs to view its service – the importance of not relying on past glories – is a lesson for all small companies around the globe.

Pages

Why the Palestinian treasury is bare – 4 questions

Via Transportation: bringing together Uber Taxis, Chelsea FC and Israeli chutzpah

Passover, Easter and the business coach

Want to learn an old-new trick in sales? The Jerusalem pet shop gimmick

Finding that magic formula for small businesses to make new sales

Israel – the land of milk, honey, wine, and…..whiskey?

Israel – election blues & hightech highs

Business coaching – helping the client recognise the need to change

Israel’s election – a ‘green’ economic warning

Why even the smallest companies need to brand themselves

3 reasons why multinationals are seeking out Jerusalem Biotech companies

Gaza’s economy, March 2015. Confusing the facts

Israel’s election – 4 economic positives

The sad truth of governments not helping small businesses

What are you afraid of, asked the business mentor?

One obvious yet ignored method to boost sales immediately

3 subjects where Israeli high-tech sets global standards

Tel Aviv Stock Exchange – where to in 2015?

A lesson for CEOs of struggling small businesses

What Wix can teach small business about spending on advertising

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