Ready and waiting
When Harel Wiesel, the owner of Fox Group, opened his first business, he had already made a financial decision that accompanies him until today: Withdraw only 50% of the profits for dividends and invest the other 50% in the development of the business
Harel Wiesel, 52, owner of Fox Group, has no problem recalling the financial decision of his life. After all, this was also the first financial decision he had made at the beginning of his business career. Even today, when he controls one of the biggest groups in the fashion, footwear and household products industry in Israel, with an annual turnover of NIS 2.3 billion, he still sticks to the fateful decision he made at the time.
“I went into business in 1990 when I was only 24,” says Wiesel, “and the decision I made then, and which accompanies me to this day, is to withdraw only 50% of the company’s profits in favor of dividends. Never withdraw all the of the profits. The other 50% I keep in the business and invest it in a very reliable and conservative way, so I build a very strong business with a lot of quiet to do the right things without pressure.”
Why?
“Because in our businesses there are ‘ cycles,’ ups and downs. I saw great businesses that fell because of one bad year, and a business could close due to a bad period, even though it could have been excellent for the long term.”
And this won’t happen to you?
“Today, I sit on long- term loans and invest them in the most solid way, and the combination of these two things has made our group very financially strong, whose risk component is lower.”
And that was true even when you established your first business at the age of 24.
“That was also true for 1990, although not in that volume of course, so when the business was small and good, I took a loan of NIS 5 million for seven years and put the money in the bank. I took into account then that the ‘ delta’ – that is, the gap between the interest rate I pay and the interest rate I can get in solid investments – is 2% a year. I mean, between NIS 50,000 and NIS 100,000, that I will lose. But I knew that in the end this loss would pay off, because it gave me the possibility of running the business with long- term thinking and without pressure.”
What gives you this quiet?
“A lot of businesses are forced to make decisions that may be good for the short term, but in the long run they are not true, and when there is no pressure you do not look at results for another three months but for another year, even two.”
What would you advise entrepreneurs in their early days to do in such cases?
“To plan in advance a few months ahead, and at the same time, three years ahead.”
How do you deal with bad times?
“When, God forbid, you have a bad period, usually it is also a bad time for the whole economy. And here I want to emphasize that Fox has never had a really bad time, there have been good times and less good times, but we have always earned money and all together we have made hundreds of millions of shekels. It should be remembered that when there is a bad period for the economy, those who have cash in the coffers will always be better off.”
Everyone is reminded of the global crisis at the end of the previous decade. How did you deal with that, for example?
“We continued to run the business and make decisions without pressure, when we always kept the rule – half of the profit we withdraw and half we invest in the company.”
And this decision, which you go with, as I said from the beginning, is your idea or someone else’s?
“From the outset, it was mine. I decided to take this business line, and even when we became a public company, we continue to stick to it. This is the strength of Fox Group, and this is what
gives us the opportunity to look ahead without pressure, as it is proper to conduct any business.”
What is your most important personal business decision?
“The decision to recognize what you are less good in – management – and to create a team that is better than you in these matters.”
Your two brothers, Assi and Yiftach, are partners in the ownership of Fox Group. In your experience, can family decisions be integrated into joint ventures?
“They can integrate well, but on that condition that in every discussion the success of the business is placed above all, and egos are put on the side!” This article was written in cooperation with Bank Hapoalim.