Is Tel Aviv a Haven for Small Businesses?

The city is making an effort to attract and keep small businesses, renovating key commercial districts and creating a new unit within the municipality, but not everyone thinks it's doing enough.

The excavating equipment came to Tel Aviv's Sheinkin Street in November 2011, ready to upgrade the once-trendy commercial area. The sidewalks were repaved and bike lanes added, in a bid to attract more customers to the street's shops and restaurants.

But shoppers fled for the duration of the renovations. "It was catastrophic," recalls Nevo Shahaf, manager of the boutique candy store I Love It. "Everything was topsy-turvy and fenced off. No one could get into the street for eight months. Sales fell 98%. My staff would end the day with 50 shekels in the cash register. A lot of businesses didn't survive."

Business is back to normal now, Sahaf says, and he has no complaints about how the city treated the street and its store owners in connection to the construction work. "I lived here 10 years ago and I remember what was here. Today the culture of buying at the corner store is in decline and malls are blossoming," Shaf says, adding, "The city is trying to help. They came to us and asked what would help to revive the street."

The city's helpful attitude may be one of the reasons why greater Tel Aviv is the least risky place in Israel to open a small business. According to a survey by the business research firm BDICoface, the likelihood of a new business surviving in the area for more than five years increased from 29% in 2006 to 34% in 2011. The second-least risky area was the Sharon, followed by Jerusalem.
"The city's small and medium-sized businesses are a growth engine and an important source of employment," says Tel Aviv City Council Member Arnon Galadi. He heads the city's business development unit, which was formed 18 months ago and has helped Sheinkin's businesses to lure back customers after the construction work was completed.

Last week the city launched a new, Hebrew-language website that aims to provide critical information for people starting a new business. The site, tlv-biz.co.il, was created by the city and TheMarker and is sponsored by Bank Hapoalim. It includes information on the number of existing businesses in a particular area, demographics, parking availability, a calculator for estimating municipal tax rates and information on market rates for buying and renting space.

The newest challenge to Giladi's unit comes from a High Court of Justice ruling last month ordering the city to crack down on convenience stores and other small businesses that open on Shabbat, in violation of Tel Aviv's own bylaws. Giladi says his office has received many calls from worried owners of small businesses. He suggests the city will have to change its bylaws to allow business in some parts of the city to remain open on the Jewish Sabbath.

Restaurants, bars and other places of entertainment typically have the most dealings with city officials. Owners of such businesses who were interviewed by TheMarker say the municipality generally treats them fairly.

"Occasionally I get written up by city inspectors for having tables out on the sidewalk after 11:00 P.M., but it's not heavy-handed. If they see a single table outside that I can't bring it in because there are diners still using it, they will take that into account," says A., the owner of a restaurant and bar in southern Tel Aviv who asked not to be identified.

"It seems they've been instructed to give us a little breathing space," he says, but he also recounted an incident demonstrating the municipality's rigid side. As A. tells it, one NIS 475 fine for having tables outside after 11:00 P.M. ballooned to NIS 1,475 over a period of years, after his partner forgot to pay it, and the city put a lien on A.'s bank account with no warning.

"I called the law office that collects city debts and they said they not required to warn me. There's no one to talk to," A. says. The city says its policy is to notify businesses that are in arrears for municipal taxes and other payments.

Shahaf and A. agree that despite the drawbacks, Tel Aviv offers business a tremendous economic advantage. "The population is strong economically, there are lots of tourists and something is always happening – summer events, street parties, the Pride parade and events that don't happen in every city," says A.

But some business owners say the city does not do enough to attract shoppers. "Businesses open and close frequently, which cheapens the street," says Shani Mifano Hasin, owner of the Imelda Fortuna boutique, on the north end of Dizengoff Street. "I would expect the municipality to organize activities that bring a crowd, like the Rothschild Boulevard street party. Businesses would join in," she says.

City officials expressed surprise at Mifano Hasin's complaints. "Dizengoff is one of the hottest streets in the city," says one, adding, "The city operates a designer fair at Dizengoff Square and a flea market on Thursdays and on weekends. Many pubs and cafes have opened up and down the street. We'll soon be renovating the Beit Lessin Theater and the Hod Passage."

Parking is another problem. "Since they closed the Arlosoroff Street parking lot, people have stopped coming because there is no place to park. The city hasn't found a solution," Hasin says. "Even the store owners don't have a place to park. I live in the city and come by bus, but it is absurd that a business that pays municipal taxes and signage fees isn't entitled to a parking permit."

City officials said in response that they cannot issue parking permits to the owners of all of the more than 50,000 businesses operating in Tel Aviv, and gives priority to residents when it comes to parking.

Eyal Toueg
Tomer Appelbaum / BauBau