Author Archives: brian

Moving Beyond “Busy and Broke”

As a small business owner, I spend much of my day talking with other business owners and managers of larger business. I have had this conversation hundreds of times:

Business Owner: “How’s business?”

Client: “Oh, we’re really busy. Putting in a lot of hours and everyone is working hard to get the orders out.”

We all know this is just a conversation starter, like, “How are you?” But, if it were a genuine conversation, which sometimes it is, the next question should be: “Are you making money?” In other words, are you busy and broke or busy and profitable?

Unfortunately, many small businesses end up in the “busy and broke” category. Activity and sales do not necessarily equate to profits.

borke concept

How do businesses end up in this trap?

  1. Pricing products or services too low. At Kona Impact we work with hundreds of businesses a year and find that underpricing is far more prevalent than over-pricing. The business owner thinks –often mistakenly so—that his or her customers are extremely price-sensitive, so to keep customers and gain market share, prices are kept low. This is seldom the case. Customers are very service sensitive and great service will give you opportunities for better pricing.
  2. Wrong products. Kona Impact does make a lot of business cards a year—probably well over 150,000 cards a year—but we make almost no money off these. We do, however, hope that those who need business cards also need signs, websites and marketing help. These are the products that keep our lights on. Our product mix, overall, is profitable, but we do certainly have no or low margin products to introduce customers to us. If all we did was low-margin printing, we would certainly be busy and broke.
  3. Excessive costs. I see many entrepreneurs become intoxicated with the idea of being in business and as a consequence they spend, spend, spend on things that they do not need at that time. A fancy office is nice, but this means you start every month with a big expense. Maybe that old delivery truck can make it a few more years. Borrowing money creates a monthly obligation…..with interest. If you are not making money because of high expenses, think of reducing your overhead to put a little more in your pocket every month.
  4. “Friend and family discounts.” Sure, we all want to be known as nice people, especially in a small community like Kona, Hawaii. I like to say that I could give away over half of my time and materials if I said yes to every request I get from fundraisers, non-profits and people within my circle of friends and acquaintances. Long ago, we realized that saying yes to everything meant we would not be building a sustainable business. We do give away a lot, and we do offer discounted pricing to organizations we support, but we now do so much more selectively than in the past.
  5. Not working efficiently. This encompasses everything from equipment to work processes. If your machine is half as efficient as your competitor’s, you need to work it twice as hard to get the same output. If your employees are not well training and supported, you might be paying a lot for meager results. If an employee is not contributing meaningfully to the bottom line, put some effort into retraining, reassigning job duties, or if he or she is not a good fit, finding a replacement.

The solution to being busy and broke is to look at your products, pricing and processes to see where you can find greater efficiencies and opportunities.

How to Be a Better Customer or Client

We’ve most certainly entered into another boom time in Hawaii. Home prices are up 50% or more since the bottom; the stock market is booming; tourism will see 7% year-to-year growth and unemployment is less than 3%. One builder I know has a three-year backlog of projects.

This, of course, is good news for our economy and our locally-owned businesses. It does, however, present some challenges if you want a house built or remodeled: there are very few qualified and available providers. If you want to go to your favorite restaurant, the one you could always just show up and get a seat, you might now need a reservation. If you are looking for a new vehicle, you might not have much bargaining power as many popular models are sold as soon as they get off the delivery truck.

customer and suppliers

So, what are some strategies you should consider as a customer to help you get what you want in a timely manner?

1.  Establish relationships. At Kona Impact, we try very hard to buy our supplies and procure our services locally. We want to be on a first name basis with our suppliers, as we know it gets us better service and access to preferential treatment if we have a special request.

2.   Leave some meat on the bone. Every business has clients who are always trying to cut costs to the point of being a “no profit” or “minimal profit” client. If you don’t let your suppliers make a fair and reasonable profit, you should expect to always be at the back of the line for the best customer service and delivery of products or services. I know, this is not the way it should be. That said, it is!

3.   Be loyal with small and big projects. At Kona Impact, we have some clients who always come to us with their $10-$75 projects and go elsewhere for all their bigger projects. The fact is that we make very little profit, if any, on these small projects, and it is the big projects that keep our doors open. At the end of the day, if you aren’t letting your supplier make any money off you, he or she has very little incentive to maintain you as a client.

4.   Pay immediately. Never ask for a service or product for which you don’t have the money to pay. There is nothing more aggravating in business than customers who mistake a business for a bank or financing company. Here’s the simple questions every business owner asks himself or herself: Which is better, $300 now (when the job is done) or $300 thirty or sixty days from now? By paying on time, you are immediately put the front of the line for projects, as you are a guarantee of immediate, no risk, cash flow for the business.

5.   Don’t waste your supplier’s resources, which for most companies is time. Assuming that your supplier can effectively fill all the time he or she has with profitable work, wasting the time of your supplier is wasting his or her money. Typical ways customers waste the time of a business include: 1) not spending the time to figure out what they want, 2) coming to a meeting or appointment unprepared, 3) excessive design or order changes (see #1), 4) not following through on a project once it has begun, 5) excessive calls or email, and 6) a lack of planning and consequently always putting the supplier in crisis mode.

We like to say the following, “Everything has a cost. It is who pays that makes the difference in the sustainability of a business.” Ideally the client assumes all costs and the business can make a reasonable profit. All the items above are ways for clients to reduce unnecessary costs and build relationships with business. There is, of course, no free lunch, especially in times of a boom economy, so whatever customers or clients can do to make it easier for businesses to help them, the better access they will have to timely products and services.

Celebrating a Decade in Business: Lessons Learned

Kona Impact is proud to be celebrating our tenth year in business. We started when the economy was robust in Kona, Hawaii, and then we soon suffered a recession that devastated our real estate, construction and tourism sectors. Those bad times are behind our community now, but not forgotten.

We’ve learned a lot over the years; we would not be here had we not. We’ve seen 100+ businesses come and go in Kona. We’re seen small startups become big and big business evolve and change to get even bigger. One thing is certain: in 10 years of business we’ve seen it all, including a strong earthquake and a tsunami!

Here sre five things we’ve learned:

  1. Start with twice as much money as you project you’ll need. I’ve seen many business that have great ideas, but they soon run out of capital and have to shut their doors before they reach a point of sustainability. I don’t think Kona Impact would be here today if we didn’t have sufficient reserves to make it through early years.
  2. Pick low hanging fruit, but keep your eyes on the higher-hanging fruit. We have always welcomed clients that may only make us $25 on a project, but we also know these small, low profit projects are not going to pay a lot of bills. Over the years, we have developed products and processes to help us identify and attract large businesses. They are harder to get, but they are essential to the long-term growth and stability of our business.
  3. The market is always speaking; listen to it. We like to tell entrepreneurs who seem to have a revolutionary idea: you are either a genius or an idiot. By that I mean, either you have figured something out that nobody before you has figured out, or you have solved a problem that doesn’t exist. Prolonged poor results are telling you something. Listen.
  4. Low price and high quality are incompatible. Customers want both. You need to convince them that they want high quality and reasonable prices.
  5. No business is an island. I see a lot of new businesses in Kona that suffer a rather quick demise. One thing I have seen common to these quick failures is that they have almost no community connections. They don’t buy locally. We don’t see the owners in our paddling and Rotary and Lions clubs. We don’t see them sponsoring fundraisers or donating to local non-profits. We don’t meet the owners at our places of worship. They don’t volunteer. They are ghosts to people who live here. The consequence is that we don’t visit their businesses and they soon perish. My advice: get as many of your supplies and services from local vendors; join a church; join a Rotary club (there are three in Kona); paddle; contribute products or services to non-profit fundraiser; get involved!

One more thing we tell clients: if we had all the answers, we’d be on our yacht today enjoying a cold drink. The above are just some ideas and worth at least what you are paying for them!

happy birthday kona impact

Hawaii Mold and Flood: A Better Mouse Trap

One new client of Kona Impact is Hawaii Mold and Flood. We were excited to work with them as they truly offer a range of services unsurpassed by their competitors. We all see the franchise mold remediation businesses around town, but few people know that they are extremely limited in what they do. Hawaii Mold and Flood is different.

Hawaii Mold and Flood

Hawaii Mold and Flood

We used to think that the national water damage franchises offered complete solutions for water damage, mold testing and repairs, but they don’t. Kona Impact found out the hard way.

When our old office had extensive water damage, the mold remediation company came in, tore out the walls, did their thing, and left. We spent two weeks waiting for the repair people to come in and fix the walls and flooring. We never did receive a mold report. That was very stressful and costly for us as a business.

If we had known of Hawaii Mold and Flood at that time, we would have made one call and received the following services from them:

  1. Mold testing, which would have been done on the spot with their Instascope Mold Detection Machine. We would have known the results immediately, instead of waiting for a sample to be sent to a lab, with two weeks to get results.
  2. Water damage removal. All the water damage we had would have been taken care of.
  3. Then, Hawaii Mold and Flood would have repaired our premises. No waiting for a separate construction/repair team.

We would have had everything done by one company:  from mold testing to clean up to repairs. This, of course, saves the property owner and tenants considerable stress, hassle and time.

We hope that our clients and people in Kona, Hawaii never have flood or mold issues, but if you do, make your first call to Hawaii Mold and Flood: 808-345-2221

Think and Behave like an entrepreneur

First, let me note that I work with hundreds of entrepreneurs a year and have worked with thousands over the years. I have seen remarkable success and complete failure; winners and losers at the game of business. What I write here is not about any one Kona Impact client; instead it is an amalgamation of traits and behaviors I have witnessed over the year.

Successful entrepreneurs (defined as those that can make a decent living with their business):

1. Don’t focus on low-value activities. In other words, they spend their time on the things that add value to their business. We’ve had clients spent ten+ hours on their business cards. Imagine if they spent two on their business cards and eight hours contacting potential clients? Or, if they spent 8 hours on the content of their website? We had one client sketch his logo on a napkin, and probably spent another ten minutes looking our design concepts before deciding. He received an excellent logo, one that is easily recognized in our community, because he knew ideas and concepts and paid us to handle the details. It’s still, to this day, one of best logos we’ve made.

2. Treat people well. If you’re a grump and don’t like people, don’t hire them and don’t work with the public. The people I know who are the most successful entrepreneurs in West Hawaii have achieved this success, in part, because they are exceptional with people skills. From the top to the bottom of their organizations they show respect for their employees and customers. They attract the best employees, and have very little turnover.

3. Seek a high level of a quality, but don’t demand absolute perfection. Quality is key in any business, but perfection, for most, is wasting a huge amount of resources for perhaps a five percent improvement. If you have 95-99% quality, be happy and move on to the next project. Micromanaging and incessant focus on that last bit of quality means that you are missing many opportunities for achieving more.

4. Look forward, not backward. When I was working at my part-time job in high school, I pushed a dolly into a glass door. The window shattered. The owner came over, looked at the door, and said to his son, the manager, “call the glass company.” That was it. Back to work. It took me some time to realize that getting angry or firing me would not have been productive. After all, it is not a mistake I would ever make twice. Spilt milk, as they say. I see forward-looking business owners all the time, and they are, overall, much more successful than what I call the could-of-should-of-would-of entrepreneurs.

5. Innovate with caution. Every day we are bombarded with software, machines and ideas that are supposedly going to revolutionize our businesses. I find most of the successful entrepreneurs take a very measured approach to change. Most do not seek out technology with the idea of changing their business dramatically; instead they seek new products or ideas as a way to evolve—to change over time—what they sell or what they offer.

entrepreneurship

I like to think of entrepreneurism as a process of becoming. There is no point where one can usually say, “I’ve done it. I am an awesome entrepreneur.” Instead we need to look in the mirror, seek feedback and strive to evolve and get better every day. Lots of base hits: few home runs.

At Kona Impact, we strive to support business owner—new and experienced—as they navigate the waters of business.

Another Retail Chain Store Gone in Kona

What is going on with our national retail chains? We’ve lost Radio Shack and Sports Authority in the past year, and Payless Shoes will follow soon. Sears, in its corporate filings, says its long-term viability is questionable. They own K-Mart, so that, too, is in peril. The current Ross building in Kona was made for a Circuit City store: it never opened.

These are the brands I grew up with. I remember the joy of going school clothes shopping at Sears and K-Mart as a little tyke. When I was a teenager, I bought my first CD player at Radio Shack. I even worked a summer in a Radio Shack store, and had a great time playing with all the gizmos and gadgets when the store was empty.

The reality, however, is that all these stores hold a place in my memory from thirty-plus years ago; I have shopped these stores very little in the past 10-20 years.

The simple answer, the one we hear from the management of these stores is that online and over-capacity in retail are responsible for their demise. These are certainly true and are a big reason why some big box and specialty retailers are failing, but is there more?

I think there is.

Here’s why I shop online:

  1. Selection. Radio Shack in Kona would have—at most—a few choices of keyboards, speakers or any other gizmo I wanted to buy. Amazon has tens of items in each category. I always felt like I was compromising by settling by selecting among the few choices available at Radio Shack.
  2. Information. In the old days, you would rely on the salesperson’s recommendation. Nowadays, I can use the reviews of hundreds, and sometimes thousands, of consumer when looking at the products online. I trust the crowd to steer me right. Most chain retailers control the information, and that’s just unacceptable in this day and age. There is even a car dealer in Kona that blocks cell phone signals at their dealership to decrease the information available to consumers. Because of this, I took my business elsewhere.
  3. Price. Just this morning, I was looking at a wall mount for a television. The one I liked was $55 at the local big box store; I found a better one online for $28, including delivery.
  4. Time. My time is very valuable to me. If I can order a product in five minutes online, that’s at least 25 minutes of time I save if I have to go to a local big box retailer.

commerce concept

Is there any hope for chain stores and big box retailers?

Of course there is. Stores like Wal-Mart and Target offer a lot of goods that just don’t make sense to buy online (toothpaste, frozen pizzas, alcohol, and various sundry items), items that sell best when the consumer can see the product (clothes, fabric, shoes) and things that are needed right away (a toy for the tots, spaghetti sauce or a quart of oil). These big box stores—Wal-Mart, Target, Lowe’s and Home Depot—do things well, for the most part. Their selection is good and all four have done a good job of integrating delivery to stores and real-time inventory on their digital platforms.

The trend toward online sales and the subsequent demise of specialty chain retailers is inevitable and will continue. Consumers have changed. Technology has enabled unparalleled access to information. Technology has also created immense efficiencies in the supply chain and distribution systems of Amazon, creating huge barriers to competition.

If I were a betting man, I would bet on K-Mart, Macy’s, Office Max and at least one of our chain automobile supply stores, being in peril in the next handful of years. They can, of course, pivot their business strategies and maintain relevance long into the future.

 

Five Ways to Grow Revenue for Your Kona Business

In the last post, we looked at how reducing costs 10% for your Kona business can have a large impact on how much your business is able to generate in free cash flow. Another way to increase your free cash flow is to increase sales. Note, however, sales at any costs, especially when expenses are uncontrolled will not have as big an impact as reducing costs.

So, we’ll use the numbers from the previous example: a Kona business that generates $300,000 in revenue with 80% expenses, resulting in a net profit of $60,000. If you increase sales 10%–a good number for a mature business—you’ll see about $6,000 in profits more at the end of the year ($300,000 x 10% = $30,000 additional revenue – 80% costs = +$6,000).

How can increase sales 10% for your Kona business?

Add new products or services. Take a look at the competitive landscape for your business in Kona. Are there businesses that are doing a poor job of meeting their customers’ needs? At Kona Impact, we went into several business areas due to the lack of reliable providers in our community. Another place to look is at similar businesses on the Mainland. Are they offering products or services that you could add? I’m not a fan of chasing fads, but if you can find products or services that will add long-term value to your company, consider growing by expanding your offerings.

Increase prices. There is always a fine line between charging the right amount and charging too much for your products or services. Too much and you’ll lose loyalty and run the risk of a lower-cost competitor entering emerging. Too little, and you’re leaving money on the table. From our experience at Kona Impact helping hundreds of businesses over the years, we find that businesses, especially startups, often charge too little out of fear of losing (or not gaining) customers.

kona business

Grow your online presence. Truth be told, most Kona businesses do a poor job with their online visibility. The cardinal sin, of course, is having no online presence. An old, outdated website is another big problem for many local businesses. The gold standard: modern, dynamic website that is mobile friendly is not met by most Kona businesses. Getting your online presence right can make a huge difference in the number of new customers you attract.

Expand your marketing. It’s easy to become complacent when times are good. Many companies reduce marketing expenses because business is good and they are running near capacity, so additional customers or sales are thought to be unnecessary. There might be some truth to this, but it is a bit myopic; the future is certain to bring ups and downs in our economy, so preparing for the bad times now is a prudent strategy. Even more important should be the goal of landing high-profit, low stress clients. For example, Kona Impact would love to see more convention and hotel business and less sole proprietors that want a business card design. We want both, but one is certainly going to add more to our bottom line. Expanding to direct mail, every door direct mail, online advertising, event sponsorship and getting some help with your marketing are sure-fire ways to do this.

Reach out to existing customers. This, in our conversations with hundreds of business owners a year, is one of the biggest misses for local businesses in Kona. It is much easier to sell to a business that knows and trusts you, than to prospect to new clients. Simple things like a call, a newsletter or thank you notes can go a long way to helping you sell more to existing customers or clients.

Kona Impact has been helping businesses in Kona, Hawaii grow for over ten years. We take a common-sense practical approach to dealing with the design and marketing needs of our clients. We don’t chase rainbows and ground our advice, services and products in what works. If you’d like to some help, give us a call at 808-329-6077.

Five Ways to Reduce Business Expenses for Your Kona Business

Small business success in Kona, Hawaii is often a matter of shifting percentages. If your Kona business is bringing in $300,000/year and your expenses are 80%, you’ll have $60,000 left for your efforts. Now, imagine cutting your expenses 10% (to 72%): you‘ll see an extra $24,000 a year in your pocket, which will raise your profits by 40%.

How could a small business in Kona, Hawaii save $24,000/year on $300,000 revenue?

Aggressively track expenses to maximize deductions. Track mileage using software like MileIQ or just keep a notebook in your vehicle. This can save you thousands every year. If you donate money or supplies to non-profits, c heck to see how you can deduct those items.  Remember, you don’t need to give any extra money to Uncle Sam; tax evasion is illegal, but tax avoidance is smart!  Possible savings: $2-5,000.

Take your bookkeeping in-house. For many small businesses that I know if Kona, bookkeeping and payroll fees are often upwards of $10,000 a year. Programs like Quickbooks can help you manage these tasks with much less effort than ever before. Possible savings: $4-$10,000.

Look carefully at how you can reduce costs with your supplies. At Kona Impact, we used to use a just-in-time system for ordering our printing materials. This kept our inventory costs low—a good thing—but we paid for it dearly in FedEx costs. We now are willing to tolerate higher levels of inventory if we can buy a palette of materials and save greatly on shipping. Consider buying paper in bulk at Costco and find ways to buy in bulk to reduce unit costs. Possible savings: $1-$10,000.

Kona business expenses

Focus on reducing at office expenses. Hawaii’s electric costs are 2-3 times those of the Mainland, so consider turning off office equipment at night and on weekends. Put your water dispenser on a timer.  Turn on the air conditioner for later in the morning and turn it off earlier in the afternoon. Consider room/zone air conditioners. Use natural light to reduce electricity costs. Consider changing to LED lighting. Water delivery is about $8/gallon, $832/year for two containers a week. The water dispenser in Wal-Mart charges $1.25 for five gallons, $130/year, and it’s the same water you’d get from a delivery service. Call your internet and phone providers; chances are there are plans available now that offer better products and less costs. Possible savings for your Kona business: $1-$5,000.

Have the right people do the right jobs. All employees don’t have the same skill sets and costs. Consider hiring a young, low cost employee for the some of the manual labor or small tasks. Many small business owners have a hard time delegating and letting low-cost workers do low-margin work. As a result, they end of doing a lot of tasks that add very little to the business’ profitability. Possible savings: A lot!

Just for the sake of comparison, if you increase your sales 10% for your Kona business, you will only see $6,000 in extra in your pocket ($300,000 x 10% = $30,000 additional revenue – 80% costs = +$6,000). Compare that to the $24,000 if you can lower your expense 10%! All things being equal, cutting expenses and maintaining revenue will have a greater impact on your financial success. The best outcome, of course, is to grow revenue and cut expenses!

 

 

Vehicle Graphics, Lettering and Wraps in Kona, Hawaiii

There are few marketing investments that will have a better return on investment than vehicle graphics. Done right, they can get your business’ name in front of hundreds of people a day, day after day, year after year. You will be marketing to people who live and work in your community.

Here are some of our Frequently Asked Questions for vehicle graphics in Hawaii:

  1. Do you do vehicle wraps?

If you mean full vehicle graphics on vertical (sides and back) AND horizontal surfaces (hood, roof, trunk), the answer is no. The UV rays and heat in Hawaii virtually guarantee and short lifespan for graphics mounted on hoods, roofs and trunks. The sun is just too brutal on even the best of materials, and we don’t want to sell anything that will not give the owner a good return on investment. There was a company called Kona Wraps that tried to make a business out of wraps. They went out of business in a year and left town suddenly.

  1. What vehicle graphics do you do then?

We make magnets, cut vinyl, printed and laminated vinyl and see-through materials. This covers about 90% of the vehicle graphics you see in Kona. If you have seen anything short of a full vehicle wrap, we can probably do it!

  1. How much is….?

There are three costs for vehicle graphics: 1.) design, 2) materials, and 3) install. All things being equal, a large, complex design will make all three of these costs higher. Most of the projects we have completed are less than $1,000 (though some have been higher); vehicle magnets are $100. We do not price our projects low, because we need to have the budget/time to do the job right, with quality materials.

  1. Do you have any recommendations for effective vehicle graphics in Hawaii?

We have three recommendations: 1) bigger is almost always more visible, 2) contrast (dark text on light background or light text on dark background), and 3) avoid clutter. Think about your essential message: what do you want someone who will see you for a few seconds to remember?

  1. Can we save money by self-installing?

Absolutely! We are happy to do the setup work and give you the install-ready materials. Things like PUC numbers, simple graphics and smaller stickers are relatively easy to install, by yourself. Larger graphics or strips of cut vinyl require more skills, but if you’re on a budget and want to give it a shot, we’re happy to sell you install-ready materials.

  1. How long will vehicle graphics last in Hawaii?

Cut vinyl will last many years; printed and laminated graphics less. It’s impossible to give an exact number, as a vehicle parked at the harbor all day will get a lot more UV and heat than a truck used up mauka on a farm. Most of our material is rated 4-7 years on vertical services by the manufacturer.

Ironman World Championships 2016 Signs and Printing Special Offer

The Ironman World Championships are always a great time in Kona, Hawaii. The athletes, their families and the companies add a vibrancy and level of passion to Kona that make it one of the most exciting places in the world. It’s a great time.

Kona Impact has been providing displays, banners, posters and printing services for many of the companies that come here for years. We certainly appreciate the work, and we enjoy working with companies from all over the world as they set up and operate their booths and retail locations.

This year we would like to give something extra to the companies that get their printing and sign jobs to us early. This will allow us to plan our resources better and will ensure that the all the print and signs are done when they arrive.

We like to say that getting your jobs in early means you will have one less thing to worry about! We take a photo of all completed projects and send them to the client, so that then can rest assured everything is done to a high standard of quality.

So, for all orders over $250 placed for Ironman before 16 September, we will give you some custom bling from Kona Impact and a gift certificate for a lunch at one of our favorite Kona restaurants: Lava Java or Huggo’s. Both are on Alii Drive and close to all the Ironman action.

If you place your order between 17 and 23 September, we’ll give you a gift certificate for a few cups of coffee or a smoothie.

We welcome orders for Ironman event printing, signs, banner, poster and vehicle graphics at any time time. We even have been known to deliver products on the night before, the day of and the day after Ironman. If you have a last-minute need, give us a call; we can probably help.

Kona Impact
808-329-066
74-5599 Luhia St, E-7
Kailua-Kona, Hawaii