Nefesh BNefesh

First of all, congratulations on considering starting your own business here in Israel. It is not easy. It is not without challenges and frustration. It is, however, possible and extremely rewarding.

I personally have started several ventures in Israel, including 3 popular branded businesses known both here and in the Jewish markets in the US – The Machsan, Blue and White Kids, and Sleevies.

I came on Aliyah about 18 years ago with a Harvard MBA and work experience in real estate.  After learning in Yeshiva for a year or so, I ventured out to start my first business here, The Machsan. The Machsan grew to have stores in Jerusalem, Beit Shemesh, and Raanana. We sold Odfei YeTzu or export surplus clothing made in Israel for the who’s who of American retail – GAP, Limited, Absorba, Sara’s Prints and countless more. I would buy up the overruns on the cheap and sell them at discounted prices. As the range of these surplus goods was somewhat limited, I supplemented the merchandise mix by adding my own production, as well. We made skirts and tops for the religious market and other basics, such as sweatshirts, which were not consistently found in Israel’s export surplus.

We understood our customer and constantly dialogued with them both formally and informally. We always worked to improve our mix of goods based on their feedback. We developed strong customer loyalty. Part of the service that we provided was not just great brand name merchandise at amazing prices, but a true American social experience – a warm, friendly sales team with exceptional store managers. It was beyond shopping -- it was therapy. We had customers that would regularly shop at our store several times a week.

As import quotas to the US opened up to much cheaper production countries, Israel lost all the business. My list of suppliers shrunk from 30 down to 3. So, after a good ten year run, I decided to close around 5 years ago. To this day, rarely a week goes by when I do not receive a sigh from an old customer reminiscing over the Machsan, a favorite item of theirs, or the social experience that we had created in our stores.

Since I love starting businesses -- taking an idea and building it into a reality -- I viewed this as an opportunity to start something new. I used my marketing background and manufacturing experience to segue the Machsan into Blue and White Kids -- another brainstorm of mine. Blue and White Kids would manufacture clothing made in Israel for schools, camps, and youth groups in the US.  Most American Jews and Jewish organizations would rather buy something made in Israel than made in the Far East. The idea of Blue and White Kids was born. To add to the market appeal, I also created a specific line of modern, yet modest clothing (such as skirts and ¾ sleeve tops) which are hard to find in the NY area, let alone in the Clevelands of America!

I had excellent clothing manufacturing resources in Israel as well as many US contacts (and contacts who had contacts), and the business started well. Pricing was tough, though, because despite being able to make the goods at a fairly competitive price, the shipping was high and shot up every year. The dollar plunged against the shekel, and my margins were squeezed making it harder to compete. American Jews do love Israel, but to a point!

Due to this, I have been funneling my school business to my new retail website. This is my current focus, Kosher Casual (www.koshercasual.com). KosherCasual.com offers the same great Blue and White Kids line, but the selling margins are better with pass-through shipping costs and less administrative effort. Most of our dress code school customers will now be buying directly through Kosher Casual.  By the way, if you are shipping small packages regular mail (with 2-3 week delivery from Israel) the shipping costs are comparable to US rates. This change in strategy highlights the importance for any business of having multiple channels of distribution to offer flexibility and added sales potential.

A few years back, a friend approached me with a sock with the end cut off. He said this is what the religious girls in his neighborhood were wearing on their arms so that they could wear short sleeve shirts and still cover their elbows. I played with a few ideas and finally created Sleevies. We identified a need in the market and found a solution. Our Sleevies offer comfort, fashion, and stay-up-ability that socks do not. We have been selling them all over the world ever since. I am now focusing on expanding the still very under- tapped wholesale and retail market. I will be coming out very soon with another brilliant complementary product to run with in parallel.

I have also just started offering small business consulting services here after years of giving free advice. I have signed on as an official consultant with MATI, Israel’s small business association, which enables me to offer this service at very subsidized rates. Please contact me if you would like to discuss this opportunity with me. As I said before, I love starting businesses.

When considering any business, focus on what you bring to the table -- your background, your skills, your resources, and your competitive advantages. If it does not size up well with the Key Success Factor of the proposed business, save yourself time, money, and effort and consider something that does. Key Success Factors are the primary requirements or conditions for your business’ success. Each business has its unique criteria. Putting together a business plan, even an internal informal one will flush out these issues and is not hard to do. 

Here is some additional wisdom about running your own business in Israel or anywhere. Firstly, do a gut check. Ask yourself if you have the right stuff to do it. I do not mean only “is your background appropriate?”, but also your motivation, your ability to organize your days and weeks strategically, and your ability to overcome adversity and competition. Secondly, know who your customer is. Do not start a business and then find out if there is a customer out there for it. Find a need in the market -- whether it be conscious or subconscious, and fill it. Offer what they want to buy, not just what you want to sell. Perceived value can take on lots of forms, and price is only one of them. If, for example, you want to sell something to tourists, get into their head. Who are your customers? What are their names? Do they have kids? Do they work? How often do they come to Israel? How many people like them come to Israel?

I remember when I was at Harvard Business School, my marketing class was doing a case study in industrial marketing where the product discussed was a technical industrial part used in heavy industry. Nonetheless, the professor would be walking around the room pushing a shopping cart as if he was a mom pushing her shopping cart down the aisle of a supermarket barraged with purchase opportunities. Your challenge was to visualize this and to get into the head of the customer. You need to understand their interests, their motivations, their budgets, and their alternate purchase options.

One last bit of advice: do something you love. It is hard enough to make it work when you do.  If you don’t love it, then just go get a job.

I look forward to hearing about your ventures. Please feel free to contact me in Israel at (052) 2 604206 or Swickley@netvision.net.il about my subsidized start-up consulting services.