Author Archives: brian

What to do when your web designer leaves town

We get this call three or four times a year:

  • Caller: Can you get my website back online?
  • Kona Impact: Maybe, do you have website hosting?
  • Caller: I don’t know. My web designer left town and she took care of it. It’s not online now.
  • Kona Impact: Can you contact her?
  • Caller: No, she moved to Colorado, I think. Her website is off, too.

Unfortunately, there is not much we can do to help at that stage. If you don’t have a backup of the website, the original designer is gone, and the server on which the website resided is no longer hosting your website, there is little we can do to help.

There are a few things you can do to ensure that you don’t find your website offline when your web designer leaves town.

  1. Ask for a backup of your website when it is completed. The files probably won’t mean much to you, but a competent techie guy or gal could easily re-establish website hosting from a proper backup.
  2. If your web designer made your logo, ask for the following file types: Adobe Illustrator, Encapsulated PostScript, Adobe PDF, Jpeg, and Png. The Illustrator and EPS files (and perhaps the PDF) are editable files if you have the proper software. This will allow you to change your logo, resize it and manipulate it for various uses.
  3. Ask your web designer where your website is hosted and who controls the billing and administration of that account. If your web designer has your website hosting under her hosting plan, you will not be able to maintain the billing and hosting for the website. Seriously consider asking your web designer to move your website to a hosting account you control.
  4. If #3 is not possible, ask for full access to the website, including all logins and passwords.
  5. Make sure you have a way to continue paying for the hosting charges.

If your website is old and not optimal for your needs, consider making a new one. This is a perfect time to start anew and get the online presence you have always wanted.

At Kona Impact, we have been designing and hosting our clients’ websites for over 12 years. We do realize that our clients’ websites are very important to their businesses. As such, we have a firm commitment to ensuring that our clients’ websites are online 24/7. We keep cloud, onsite and offsite backups of websites, and have a plan to ensure that any business disruption will not result in issues for our clients.

We Serve Everyone….Except…

There have been a few stories in the media recently about businesses refusing services to people they don’t like. One news story was about a  cake baker in Colorado who won a favorable ruling in the Supreme Court, giving him the right not to make a cake for a wedding for two gay men. Another story in the news was about the spokesperson for President Trump being asked to leave an upscale restaurant because the staff/owner did not like some things about Trump.

My reaction as a business owner is, fine, ok, we have a right to serve who we want, though not serving someone because of race or other protected statuses will get you into a boatload of trouble (as it should).

Every business has customers or clients who are not welcome in the store or on the premises. But, this is almost always due to the behavior of the customer and usually (I would hope) not about one’s race, gender, sexuality or political affiliation.

Kona Impact has made things for the Tea Party (a far-right group) and Occupy Kona (a far left group). We have had atheist, Muslim, Jewish, Jehovah Witness, Mormon, Evangelical, Conservative Christian and Liberal Christian customers. We have several gay customers. We have done projects for an “adult” retailer in Kona, as well as projects for bars and CBD businesses.

We have turned down two businesses–an “escort” and pitbull breeder that breeds fighting dogs–in the past 12 years for the same reason: these businesses are illegal and, truth-be-told they, not the kind of business I could honestly put my full effort and energy into.

My thinking is simple: if a person comes to us for services, I do not care about the circumstances of that person’s life or business. I don’t care if he or she has beliefs or a lifestyle different from mine; I just want to give them the best possible product or service and get paid. If I refused a customer based on who he or she is, I am 100% certain I will not change that person and he or she will find another provider. I will have gained nothing.

I know that the baker in Colorado felt his moral, religious, opposition to gay marriage was a good reason to deny service to the gay couple. This is fine; he can serve who he likes (though he should not expect to be welcomed in his community with such bigoted views). I would not patronize an establishment I knew to have such policies. Likewise, I would avoid the restaurant that rejected the Trump staffer. That is my choice.

I do tend to look at business as business. I am not trying to change the world by selectively serving customers based on who they are. I will, and have, refused clients based on their behavior. Rude or disrespectful to my staff or me? Adios! Pay invoices late and only after great effort on my part? Find a new provider! Gay, Jewish, Occupy Kona member who sells CBDs? My door is open!

Non-Profit Does Not Mean No Money

I was talking to a graphic designer the other day about a project she had recently completed. She said, “I won’t charge them much. They are a non-profit.” Curious, I asked her what she thought the budget of the non-profit is. She had no idea that the budget of the agency was, from what I have heard, about 6 million dollars a year.

After talking with her a little more, I realized that she is a very kind-hearted person and felt that by charging the agency less, she’d be helping them with their mission. I could understand that, and, indeed, Kona Impact has often given services and products to local non-profits as a way to support their mission. I feel it’s part of our responsibility to support the community in which we live.

It’s important to look at non-profits through the lens of a business person, though. Some, like a small community outreach programs for homeless youth, might have a budget in the thousands, so any contributions of time or services would be much appreciated. Any money not spent would likely go to supporting community projects. These are great organizations to do pro bono work for, especially if you are new to the design business and you want to build your portfolio.

At the other end of the spectrum is non-profits supported by government grants or large foundations. This typically includes medical services non-profits, which are funded by insurance payments and Medicare, animal services, which receive state and county support in many communities, and many social service non-profits, which often receive federal and state funds. These have many full-time staff members and directors who are all reasonably compensated. They are professionally run and have a budget for outside services.

I wryly told the graphic designer that she is probably the only person who is not making sufficient money when she does work for the agency. All the staff and other suppliers are making a reasonable salary or profit, and she should consider doing the same. She could then be compensated fairly for her work and then, if she chooses, donate time or money to other nonprofits with lesser funding or resources.

Many years ago, Kona Impact decided to support a few non-profits that we knew had little funding. They also had to be organizations with a mission in which we believe. Currently, we donate a lot of products and services to the Aloha Theater, a youth sports organization, Rotary International, and our local Rotary club. We give generously to these organizations. We also try to give heavily discounted rates for other organizations that do good in our community, but we do run a business, so if our buyer is a large, well-funded organization, we do like to make some money on the jobs we do.

Just say “No” to increasing the General Excise Tax on Hawaii Island

The General Excise Tax (GE Tax) is a tax on the gross sales of a business. Currently, it is 4.166% for Hawaii Island businesses and an additional half a percent higher on Oahu. There are very few exceptions: it is collected on basically all goods and services including clothes, food, rent, automobiles sales and just about everything else. It is a very broad tax.

Recently Mayor Kim has floated the idea of adding a half percent to the tax, which would be restricted to in use road projects. He would then reallocate the funds that he had budgeted for roads for other County of Hawaii services. This is will grow the county budget 6-9%.

It is a bad idea…a very bad idea.

It’s bad for businesses

Let’s assume a business is a perfect monopoly; that is, they have 100% complete control over their sector of the economy. There is no competition. Adding a half percent to the GE tax would result in a direct pass through to the buyer/consumer of .5%. The consumer pays more, but the business would, in theory, suffer little, as buyers have no choice. They could, though, consume less if the prices become prohibitive. The power company, HELCO, is the only company I know that has no competition—a perfect monopoly.

I think this is the model Mayor Kim has in mind: businesses on the island are perfect monopolies.  Increasing taxes won’t hurt businesses that much because we don’t have much choice. Tourists will come regardless of prices and local businesses will not suffer because they will just pass on the tax to consumers and other businesses.

This is where our mayor’s incomplete understanding of business shows.

Every business, with few exceptions, competes globally. The small shop that sells souvenirs likely buys the products from a distributor in Oahu that collects and pays the GE tax when it is sold to her store. The owner then collects and pays the GE tax when she sells the items. At some point, the cost of item becomes prohibitive and Hawaii becomes prohibitively expensive to visit. Restaurants, hotels, vacation rentals, taxis, tour providers and so on will all suffer when increased taxes make them too expensive for travelers. That’s the tourism sector.

Now let’s look at any business that retails items to individuals or businesses that live here. Add a half percent increase in the price of nearly ALL goods and services and life here becomes more expensive.

What has been the biggest trend in consumer behavior the past ten years? Buying online. When goods and services become too expensive in Hawaii, people will buy off-island. This has already had a huge impact on the ability of many businesses to survive and will only become more pronounced with an increase in the GE tax. Businesses will go out of business and consumers will have less ability to keep their money on the island by buying local. Almost every business competes globally–from a small fabric store to our vacation activities providers. Become too expensive, and people will look elsewhere.

It’s bad, really bad, for low-income residents.

Let’s also take a look at consumers. Poor and lower-middle class families have no choice to spend the majority of their income on basic consumer products like bread, milk, clothes, and rent. Many of these people are living paycheck to paycheck, so it’s going to have the biggest impact on them. They might spend 95% of their income on necessities; whereas, a wealthy person might only spend 30% on necessities. Another .5% is a lot when you’re living with no disposable income. This is what they mean when they say the GE tax is high regressive: it places a bigger burden on the poor than the wealthy.   

So, what’s the solution?

To me, it seems to be abundantly clear: cut or reallocate spending. That is, live within our means.

If the public is clamoring for new and better roads, we should find ways to cut other parts of the budget. Our economy and all the associated taxes – real estate, gasoline, vehicle registration – are adding millions a year to our County’s coffers, and this trend will continue. Hold expenses where they are, and there will be many millions of dollars added to the County’s budget every year. This is inevitable if the other taxes are unchanged. We can simply grow our revenue keeping rates as they are, as the increase in property values and the growth in our island population and tourism will, over time, provide millions of dollars of extra revenue.

We can do what every family does–set aside money over time and save up the money for big projects. We can make priorities. As a consumer and business owner, I appeal to our leaders to exercise fiscal restraint.

New Entrance at Kona Impact Headquarters

We recently installed a large display on the entrance to our office. Previously, we had a nice blue entrance; this time we decided to go for green. The material is see-through, so from the inside of our office, you can see out clearly. From the exterior, you can see the graphic, but not the inside of our office.

see through vinyl

Immigrant and Non-Native English Speaker Clients

Last week we started several new projects, and nearly a third were projects for people who speak English as a second language. All grew up outside of the United States and were now running businesses on Hawaii Island.

This is not unusual: a large number of our clients fit the profile of immigrant, non-native speakers of English. Many of these new clients come to us from referrals and almost all visit or call at least once before starting a project, so I feel we’re doing something right.

When I started Kona Impact 12 years ago, I looked at the skills and ways of doing business that would attract a wide variety of clients. I had lived abroad for most of my adult life, so I knew this could be an asset: I was a good listener, and I could communicate clearly to those who didn’t speak English fluently. I was for many years what my many of my clients are: living in a new culture and speaking a new language, at times not very fluently.

I greatly enjoy talking to clients from different countries. In the past week, I’ve worked with people from China, the Marshall Islands, Korea, France, French-speaking Canada, Mexico, and Germany. I enjoy the focus and hard work these people put into their businesses. It’s not easy, I know, and if you add the challenges of language and unfamiliar laws, it can be even more difficult.

Here a list of things I keep in mind when dealing with non-native English speakers:

1. Many are highly-educated and accomplished, often holding advanced degrees. I always assume they are intelligent, hard-working people, even if their English might be limited or imperfect.

2. They are highly motivated to provide for their families and achieve their version of the American Dream. I seldom see anyone who works harder than an immigrant.

3. Listening (on my part) is the most important skill I can have when speaking with someone who is speaking in their second language. Take time. Don’t interrupt. Allow for a slower conversation speed.

4. Provide what they may be lacking. Many immigrants may not know some of the laws that they will need to follow. Insights into the Hawaii business culture are often appreciated. Give them the best information you have, even if it might contradict their understanding. Be honest and forthright 100% of the time.

5. Connect them to resources. If I see a person is about to start a business and they don’t have it registered, and they don’t have a tax license, I show them where to do that. Over the years, I have developed a large network of friends and clients. If I know of someone a new client might benefit from meeting, I’ll often share contact information. I believe that businesses need a network to succeed.

6. Understand that they may have different approaches to payment and negotiation. Some of my clients come from countries where it is customary to negotiate most prices. I understand that and try to work with them, which usually results in a nominal discount in the project cost.

7. Above all, treat them with dignity and respect and show appreciation for their business. These are universals in business, but perhaps a bit more critical for someone who might be apprehensive and a bit wary of people taking advantage of them

I hope that in the future Kona Impact will continue to be a place that attracts a wide variety of clients from around the world. We look at these clients as an important part of our business and do enjoy helping them achieve their business goals.

Kona Businesses for Sale – Four Scenarios

Like any community, Kona, Hawaii has a range of businesses for sale at any given time. Some are gems in the rough and some are close to closing and no amount of effort can save them. I like to think about Kona businesses for sale as falling into four categories:
1. Turnkey Profitable
2. Distressed – Avoid!
3. Distressed -Fixable
4. Retirement

Profitable Turnkey
These are the dream businesses: they make money, and a new owner can take over and run successfully right away. An example might be a retail shop in a prime location with a history of strong cash flow. This type of business seldom stays on the market very long, as there are lots of people looking for this type of “dream-come-true” business.

Here are some things to look out for when you see a business listing for a Profitable Turnkey business:
1. Are the books clean? Have taxes been paid and do bank deposits match with the declared income? If the owner claims a lot of off-book revenue–cash–be wary of such claims as they are easily exaggerated. Look for professionally prepared books backed up by tax returns.

2. Is the owner claiming a salary? A business with $100,000 in free cash flow might not be so good if the owner, her husband, and children all have to work at no cost to keep the business going. Many small restaurants are only profitable because of “contributed labor”.

3. Check the lease of the property very carefully. It might not be transferable or might be expiring soon, which means the building owner will hold all the cards when negotiating a new lease.

4. Confirm suppliers and make sure they will provide like pricing and servicing going forward.

5. Be sure to check the business’ online reviews and overall online presence. I see a lot of restaurant and tourism businesses with only mediocre reviews online. This will affect the businesses’ ability to be profitable in the future.

Lastly, look a the price very carefully. Turnkey Profitable businesses are very rare, so they are often priced well above the actual value. A great company at a bad price is a bad deal!

Distressed – Avoid!
This describes a lot of businesses for sale in Kona, Hawaii. Tell-tale signs are a relatively low price, unfilled taxes (cash flow problems), a bad location and a significant amount of negative online reviews.

Here’s an old joke in Kona: How do you know a restaurant in Kona is about to close? It’s for sale!

There are three essential things to do when looking at any distressed business:
1. Look at the numbers. What are sales? What is the cost of goods sold? What is the monthly overhead? Is the owner working for free?
2. If sales are low, why? The reality might be that there is very little need for the products or services. If the market has already spoken; that is, the business has not been sufficiently profitable for some time, it will probably continue to do so into the future.
3. What can you possibly do that hasn’t already been done to change the game? Every entrepreneur I know if an optimist (and that’s why I love working with them). That said, if the business has been failing despite the efforts of the current owner, what can you do that will change the game? I have seen some restaurant locations change ownership and theme six times in the 17+ years I have been here. These areas, for lack of a better word, suck, and there is nothing that can be done to make them work.

Distressed – Fixable
Everyone who buys a “Distressed – Avoid!” business imagines that it is in the “Distressed – Fixable” category. If they just change the marketing, the business will succeed. The product selection was too wide/narrow, so they just fix that, the company will become profitable. A few new recipes and we’ll get people back to restaurant….The list can go on and on.

The truth is that a business in a terminal condition is unlikely to change–even with new ownership.

How do you know if a distressed business is fixable?
1. Look for a business that has had problems due to the owner’s personality or health issues. A new owner will solve those problems quickly. Likewise, if the problem is poor employee training or morale, this can change.
2. Look for good financial fundamentals. Are the products and services high margin? Is there room to put some of the profits into fixing outdated equipment, anemic marketing or automation? Can you implement efficiencies to expand the margins?
3. Talk to suppliers and customers and see what can be done to fix broken relationships and forge better service or product offerings in the future.
4. Most of all, be brutally honest with yourself: If others have failed, what can you do that hasn’t been done to change the underlying dynamics of the business?

Finally, if the business has a considerable number of negative reviews on websites like Yelp! and TripAdvisor, you will be buying the problems of the company, and worse yet, you will not be able to change this perception problem for a long time and without significant effort. Avoid!

These are often the best businesses on the island, as the owner has likely run the business fairly well and is a motivated seller. He will also have some emotional stake in the company, so there will be some incentive to help out the new owner and help her be successful.

A few issues in buying a business from someone who is retiring:
1. If it is the personality and connections of the owner that has made the business work, consider how much of that will transfer to the new owner.
2. Be sure to value the business properly. The value is what a reasonable person would pay for the business (assets, cash flow, contracts, reputation, etc) and not how much the current owner needs for retirement or her emotional attachment to the company.
3. You might be able to get creative financing from the owner.
4. Look at the books carefully. Numbers will not lie.

Buying a business in Kona, Hawaii can, of course, change your life. Living in paradise has a certain appeal. That said, knowledge of the business, its financials, and understanding where and how companies thrive in Kona are essential. A Realtor or business broker will seldom provide unbiased advice, as they only get paid when they make a sale.

Kona Impact has worked with more companies in Kona, Hawaii than probably any other business. We know Kona business and have been helping businesses owners start and grow their businesses. We are very attuned to the local business climate and have years of experience seeing what succeeds and fails. If you’d like to talk shop, give us a call. We can help.

Kona Business Report 2018

The key concept to describe the business situation in Kona, Hawaii is “at capacity.” Almost every business that we deal with at Kona Impact is in what I call a “busy and profitable” mode; that is, they are running full speed and making money. This contrasts with the worst case scenarios we have had in the past: “busy and broke” and “not busy and broke.” These, of course, are exaggerations and over-generalizations. That said, times are good now in Kona, perhaps too good for some business sectors.

Getting Things Done

Getting projects done has become an increasing concern for local businesses. We heard of one development that is “shovel ready,” but the developer can’t even get a company to do the lot grading. The bids that were received were prohibitively high, and there were no completion dates attached to the proposals.

I received a call from my dentist last week about my next, next appointment. They were booking appointments for September, a full seven months away. She “wanted to make sure I could get in.”

We know of one niche builder who now has a three-year backlog. They have stopped accepting architectural drawings, as they could not guarantee any preliminary work on new projects until 2019.

This lack of capacity in the construction sector has been good for construction company owners, but bad for those who would benefit from a supply of new homes: consumers, realtors and those who profit from home sales.

Kona Impact, too, is working near or over-capacity right now. We have worked extra hours and many weekends to keep up. We now turn away some projects, especially low dollar projects and projects from clients who have been less-than-ideal clients in the past.

We had dinner at Foster’s Kitchen in the Coconut Grove Center last week. Every place was crowded–a good sign for the bars and eateries in that area. We had an early dinner at 5 pm; by the time we finished at around 6 pm, there was a line of people waiting for tables. That seemed to be the case at every restaurant in the area.

The take-home lesson is that those who need something “now” need to be patient. Or they will need to have a good relationship with their service providers. If you want a new home, be prepared to pay a premium. If you are a client of Kona Impact, make sure you plan ahead, as our lead times are longer than usual.


We are at a point in our economy where anyone who wants a job can have one. The statewide unemployment rate is 2.2%, which is effectively full employment. It’s about half the national rate.

As a result of our strong economy, good workers are hard to find in some sectors. Employers that have poor conditions and low wages are scrambling to cover shifts. Many good employers are also struggling, so they are raising pay and benefits. Some have moved away from using (less reliable and loyal) temp workers to hiring full-time workers. Others have turned to temp workers to fill positions.

In the long-term, businesses will have difficulty growing if there are few available workers.

Other Tidbits

Despite the strong local economy, there does seem to be a lot of open offices and industrial space Kona. A person looking to start a business should have no problem finding an office and industrial space; good retail and restaurant spaces are always hard to find, but there are several decent spaces around town.
Our great highway debacle continues. The highway between the harbor and airport was supposed to be done by now. Looks like later this year, but I would bet on 2019 at the earliest. Depending on the time of a day, it can take 30-60 minutes to get from Hualalai through Kailua-Kona (or the reverse). Late and way over budget seems to be a fact of life for construction projects in Hawaii.
Planet Fitness, a large national chain, is scheduled to open this year in the old Borders location Henry Street. In a town saturated with gyms, this new gym will only prosper by eating some of the lunch of its competitors. I have my suspicion we’ll see a contraction in the fitness center market in the next few years.

Ola Brew is a welcome addition to the micro-brew/bar market in Kona. They make a variety of beers and ciders on premises. I’ve had several, and they are delicious. They have a good thing going and will only get better.
I got lunch from Cool Running, the Jamaican food truck the other day. I’ll be back for sure; the lamb curry with cornbread was just incredible. If you see this food truck around town, check him out; you’ll be glad you did.

My Rotary club used to have our luncheons at one of the big hotels in town. It was an excellent venue, with many pluses, but when they raised their fees for the second time in one year, we switched to the upstairs of Island Lava Java. I have to say; I enjoy the ocean views and fresh air more than I did the inside of a hotel. The food is quite good, too. I think the hotel got greedy with their pricing and thought we had nowhere else to go. They were wrong.

A similar thing happened when I went new car shopping last month. The salesperson at the local dealership seemed less-than-enthused about showing us the models we were considering. I even told him were cash buyers and looking to purchase right away.I left my full contact info with him after describing the car we wanted. Truth be told, we were most interested in the color at that point, as we had already decided to buy a particular model, a very common car in Kona. Two weeks after stopping by, there was no follow up, so I decided to see what I could get on Oahu. Within ten minutes I had made an offer–through email–for the exact car we wanted. Within an hour the salesperson and I had agreed on the price. We never talked. In the end, we figured that we saved close to $3,000 (which included shipping to Hawaii Island) on the car compared to the local dealer, who insisted on the “local area markup” a $1,500 surcharge added just because they can. I wonder how many other car buyers have given up on buying locally because of this.

The Thirty Meter Telescope is still in limbo. If it is not built on Hawaii Island, a clear message will be sent to those who want to invest in innovative and game-changing ventures on the island: the island is not a good place to do so. That, in my opinion, would be most unfortunate for our working men and women, their children and their children’s children.

Mountain Thunder Coffee Plantation has put a lot of effort into building a good Kona coffee farm tour business. For those who don’t know, the farm was bought out of bankruptcy in April of last year. While the farm has always produced exceptional coffee, the new owner has focused on improving the farm tours and providing better customer service to Kona coffee customers.

Ten Observations on Running a Small Business

I was talking to a young man starting a business the other day. He was very excited to be in business and ready to charge forward and make his mark. He has a service, a plan and is clearly willing to work hard to achieve his goals.

That conversation got me thinking about what would be the bullet points for running a successful business. That is, what ten things if mastered, would give a business the best chances for success? I know there are hundreds, but here would be my top ten:

  1. Everything has a cost.
  2. Figuring out the true costs of your goods and services should be the #1 goal of your business.
  3. Figuring out what you will charge people for your goods or services is the #2 goal of your business. Get #1 or #2 wrong for a long period of time, and you’ll be out of business quickly.
  4. Cost + percentage pricing for most businesses is inevitably less profitable than pricing based on the value to your customers.
  5. Make sure your business has some moats around key products. These might be exclusive distribution contracts, high-specialized skills (heart surgeon, artist, BMW-trained mechanic, ect.), extremely high barriers to entry for the competition, customization, etc.
  6. A one-person business is seldom going to provide exceptional earnings.
  7. Finding, training and motivating employees are the keys to growing a business. Money alone is seldom the top way to attract and retain excellent employees.
  8. You will be much more successful if you focus on bringing people up than putting them down.
  9. No business is an island, so treat your customers, suppliers, competitors, and community with respect and dignity. You’re all connected and need each other.
  10. When you own a business, you are responsible for everything. If you don’t want the responsibility for an amazing amount of issues-big and small-you’ll be happier working for someone instead of running your own business.