Setting up a Business in Israel
We chatted with Laura. She shares her experiences as a small business owner, a Judaica designer and silversmith in the trendy Neve Tzedek neighborhood in Tel Aviv.
So Laura, you are an olah, can you please tell us why you decided to start a business in Israel?
I have a pretty unusual skill. I’m a contemporary Judaica designer and I wanted to design and make my own creations rather than work in someone else’s workshop.
Did you have experience in this field before opening your business?
I studied for 4 years in London. I got my B.A with Honors in silver-smithing and Judaica at the London Guildhall University. I made Aliyah and took two apprenticeships in Israel, The first one at the jewelry factory on Kibbutz Megiddo and the second one for a Yemenite Jeweler in Jaffa. These apprenticeships gave me a really good grounding.
Besides your university degree, did you have any business skills?
Yes, when I made the decision to open my own business several years ago, I took two business courses at MATI (The Israel Small & Medium Business Enterprise) in Raanana. One of the courses was all about setting up a business and the second one was a marketing course.
There are branches of MATI all over Israel and they run subsidized courses for new immigrants. Can you recommend the MATI course?
I can’t really say. I did the courses at MATI quite a long time ago – it’s about 15 years ago. I am sure a lot of the content has changed since then.
So many people neglect to do this, but did you do any market research before opening your business?
Yes. I did a lot of internet searches and physically went to shops that sold Judaica, mainly in Tel Aviv and Jerusalem
Did you have a business plan before starting up?
No, I am a designer, and I just wanted to create beautiful, innovative, meaningful objects.
Did your MATI course teach you how to write a business plan?
Not at that time. As I said before, it was a long time ago. Things have probably changed by now.
Do you need Hebrew in your business?
Yes, absolutely need Hebrew, particularly for communicating with my suppliers here in Israel. I have to deal with metal sheet and tube manufacturers for instance, and they don’t speak English. A lot of my clientele are Hebrew speakers as well. You can’t rely on a purely English speaking clientele in Israel. You have to know Hebrew. I also get clients via my website. Mostly those are Americans.
Did you clearly determine your target market before you opened your business?
Well, I started off very small, making mezuzahs from my balcony at home. I did my research as I went along. I didn’t start off with a specific business plan. I was just passionate. I just wanted to design and create Judaica.
Another thing that many small business owners neglect to do, is to research their competition. Did you do any of this kind of research?
Yes, of course! I spent a lot of time talking to them. We all make different designs though. But because of this, I see them as colleagues rather than competition.
What is unique about your business and the items that you design?
Well for a start, I’m a contemporary designer, and I express myself through design. Personally it’s very important for me to be unique. The Judaica items I design and create are inspired by space themes.
So you did a course in marketing with MATI. You did your basic market research. How do you actively market and advertise your business these days?
I don’t really have a budget for marketing and advertising. I rely on my mailing list, Facebook, blog and Twitter to keep in touch and reach new customers. I have high quality high resolution professional photographs so my work is often in the Jewish press, which is great free advertising!
Did you have the required capital to start a business, or did you have to take a loan?
I had to take a loan. Fortunately my parents stepped in, I borrowed 20,000 shekels from them and paid them back over 2 years.
Did you spend more money on getting your business going than you originally planned and anticipated?
No, I make sure I kept and I keep my overheads low.
Did you need any employees to start up?
No, I did everything by myself at the beginning.
What about renting premises; a studio or a workshop or do you work from home?
My studio is in the same building as my home. That is very convenient. I am always close to home if my children need me.
Being self-employed can be really demanding on your time. How many hours a day do you work? Does your business take up more of your time than you anticipated?
I choose my own hours, so if I am working late it’s usually by choice. If I’m busy at work it’s a good thing, so I don’t mind long hours!
Do you manage your books on your own or do you have an accountant who does it for you?
I keep track of all my sales and spending on Excel, but my accountant does all the accounting work for me.
A lot of entrepreneurs, especially olim, are put off by the Israeli tax system. Did you understand the tax system here before you started your venture?
No, I didn’t.
Is your accountant an Israeli or an Anglo-Saxon.
He is an Israeli. I met him when he gave a lecture on small business accounting at one of the course that I did at MATI.
Why did you choose an Israeli at that time? So many English speaking olim want to work with other English speakers – they feel safer with that choice.
My answer is simple: When in Rome, do as the Romans do… I am really happy with my accountant’s services. There is no need for me to change.
Have your ever thought if your business were to fail, what would you do?
I’d be devastated! I don’t know what I would do. Hopefully I would find a more lucrative design field to work in and keep up silversmithing as a hobby.
Now that you have worked in Israel for a number of years and been through the ups and downs, knowing what you know now, would you do it all again?
I can’t imagine doing anything else!
What advice would you give anyone wanting to start a business in Israel?
You have to really really want it. You need to constantly innovate and get ahead of your competitors and be willing to adapt as the market changes.
There are quite a lot of other things that you have to think about when you are self employed; for a start, there is no guaranteed income.
You have to make sure you have additional private insurance in case you are incapacitated for a long time. The National Insurance (Bituach Leumi), is not enough in this situation.
Although business owners pay V.A.T and income tax every two months in Israel, the income tax is based on your last year’s earnings.
The total amount for the current year is re-calculated at the end of the financial year, once you have submitted your annual return. You could get a nasty surprise and have to pay in a large amount of money that you had not budgeted on.
My advice is to calculate those figures half way through the year – so you can be prepared.
Anything else you’d like to add?
Yes. The security situation in Israel can really affect your business. For me the Intifada and the Second Lebanon War affected incoming tourism to Israel. Of course that affected the sales in the Israeli stores that I work with.
I had to make some alternative plans so I participated in shows in America. It was at that time that I opened my website with an on-line shopping cart which meant that my international clientele could continue to buy from me during those times.
These days, a website is a must.
Thanks so much Laura, you have really hi-lighted some important issues and given us insight into a number of important aspects of being self-employed. I am sure there are a lot of new olim out there who will benefit from the great advice you have given.