Author Archives: brian

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.

Customer Service: The Expected is Ordinary. The Unexpected is Extraordinary

We don’t always get it right at Kona Impact. Occasionally we don’t treat our customers the way we like to be treated. Sometimes we lose an email in our inboxes, misplace a phone message or fail to provide the communication we should. No excuses. Not “buts”.

Most of the time we’re able to provide the level of service that makes our customers feel appreciated, valued and welcomed. This is not always easy when we work on up to 100 projects (many of them small) a month.

I don’t think we deserve an award for doing what we should. I always tell my daughter that she doesn’t deserve a cookie for doing what she should. Special rewards are for doing the extraordinary. (That said, a smile and a please will usually overcome my principles.)

exceptional customer service

Here are a few things we do that go beyond the ordinary:

Help Find the Best Fit – We send a good number of jobs to other companies these days. We used to take all jobs that we could do, but we were, perhaps, not the best provider in town. We now try to steer potential clients to the best provider of what they need, even if it isn’t us. Many callers are surprised when we tell them our competitor could do the job better, faster and less expensive than us.

Absolute Honesty – I was watching a show on travel scams the other day when they were doing a segment on ticket touts outside of the Vatican. They asked several of these touts if they would get a chance to meet the Pope. All answered, “yes.” Those, of course, are big lies. At Kona Impact we don’t tell clients that an exterior banner will last for years. It won’t. We don’t give teaser price quotes and then ask for more money later.  If a client has information we know to be incorrect, we give them the truth. I wouldn’t want a supplier lying to me, so we don’t do it to our clients.

Quick Turnaround—We more than doubled our work space a few years ago. The biggest benefit of the large space is that we can have ample inventory and we can work on many projects at once. I love answering the question, “How long will it take?” with “One or two days.” For those accustomed to long wait times, it is certainly unexpected. It’s even more satisfying to be able to turn some projects on the same day. One of our clients, a well-known TV show, would send us projects at 5 am from LA, and want to pick them up at 8 am. While it made for extremely challenging days, we never missed a deadline.

Delivery-Many of our clients are stuck in their office, restaurant or work bay all day. For these customers, we do our best to offer complimentary delivery for their orders. With a bit of planning, we can combine deliveries, customer visits, and, oftentimes, lunch.

Site Visits—I know of one sign shop in Kona and one in the Kohala area that charge $100+ to go look at a premises for a sign, even if they don’t get the job. Even then, it’s hard to get them out of their shops for anything but the biggest projects. Perhaps they are understaffed or working alone, but it seems to be predatory to ask to be paid just to make an estimate. I can understand why they do this, but I don’t agree with their reasoning.  I know from years of doing this, that site visits are essential to getting the customer the correct product, with the right materials and the right size.

The things that we should always be doing—good communication with clients, quality work, fair prices—do not make us exceptional. Doing these well are the base of any business, and if you don’t have them figured out, you won’t be in business very long. The unexpected—helping clients, even if it means  losing a job, absolute honesty, quick turnaround, delivery and site visits-are part of what I believe sets us apart.



Customer Service 101: Dealing with Malcontents and Agitators

I once had a restaurateur, owner of one of most successful restaurants in town,  tell me that one of the best things he did was to ask some customers not to come back. These customers would frequent his restaurant, but all they did was to bring grief to the waiters, the cooks and the management. Nothing was every right for them, and they would have at least a few complaints every time they came. Finally, the owner decided that these customers were not a good fit for the restaurant, and he strongly suggested to them that they should find a new place to eat and drink. The wait staff was happy; the cooks were happy and his management team was also happy.

The traditional customer service view is to do anything reasonable to make customers happy. This makes sense, and in our experience 80% of complaints, if handled appropriately, lead to future orders and retained customers.

But, what about the customers best described as malcontents or agitators? These are not your run-of-the-mill customers with legitimate concerns. Provide a reasonable solution for most customers, and they will accept it and move on.

unhappy face

Agitators and malcontents, however, have the following characteristics:

  1. Repeated complaints about relatively minor issues
  2. An unwillingness to accept reasonable solutions to their issue
  3. Using language and body language that is confrontational
  4. Framing their complaint as an us-versus-them battle
  5. Disrespecting low-level staff
  6. Trying to convince others to join “their side”
  7. Bullying behavior

After years of dealing with thousands of customers at Kona Impact, I’ve learned to differentiate between legitimate, solution-oriented complaints and malcontents who are just trying to create confrontation. We encounter maybe two or three malcontents a year. I strongly suspect that the malcontents have fairly persistent and deep-rooted personality issues, and I am fairly certain they are that way with many businesses, colleagues and friends. My job is not to try and fix their problems.

So, what can you do when you encounter the agitators and malcontents in business? The first thing is to do all you can to provide top-notch customer service: 1) listen to the customer, 2) empathize, 3) offer reasonable solutions, 4) keep calm and use non-aggressive language, spoken in a calm, measured way, and 5) make sure you follow through if do come to a consensus about how to solve the problem This should solve 95%+ of your customer service issues.

If you have come across a true malcontent and agitator and have done all you can, here’s what you can do:

  1. Agree to disagree and leave it at that. Accept that you will never get a win-win solution.
  2. Be mindful of any need you have to “win” or “have the last word”. That is the strategy of a malcontent, so let them “win” and “have the last word”.
  3. If you determine the situation is intractable and the person is causing undue stress for you or your business, tell he customer he or she will need to find a new provider.
  4. Tell the customer that his or her behavior is not acceptable at your establishment if he or she is disrespectful or disruptive.
  5. Do all you can to remain calm, resolute and polite. Agitators will feed off your reactions.
  6. If you believe the situation has become unsafe, it’s time to issue a no trespass order or call the police. Another option is a restraining order.

It’s never enjoyable to deal with someone who you cannot make happy no matter what you do. Fortunately, this is a very small number of people.

Existential Threats to Businesses In Hawaii

A few things in today’s newspaper caught my attention: 1) Governor Ige is likely to veto a bill that would have prohibited new fish collecting licenses, and 2) a story about how the recent publicity about rat lungworm disease might be affecting locally-grown produce. Both of these stories highlight what I call “existential threats to business”; things that, in a very short time, could completely destroy a business.

We often here the phrase “existential threats” in reference to things that could wipe out humankind on earth. These include asteroid impacts, extreme climate change and on local levels, earthquakes, tsunami and volcanoes. I think the term also works well for business.

Here are five existential threats to businesses in Kona, Hawaii.

  • Earthquakes, tsunamis and volcanoes. Yes, all three occur in Kona and all three are expected to happen again, sooner or later.
  • Government regulations. Governor Ige, if he did sign the fish collecting license law, would make it a dying industry. Likewise, our DLNR or federal authorities could shut down parts of our lucrative ocean recreation industry: banning or highly-regulating out “dolphin tours” or our manta night snorkeling/diving. The Public Utilities Commission basically killed the rooftop solar business when it took away net metering. We now see very few solar company vans or installation in Kona: regulation killed the business. One of the big fears in our agriculture industry is the possibility of a widespread immigration crackdown: many farms will be forced to shut down.
  • Environmental changes. Many bee farmers stopped their businesses when the Varroa mite became widespread on the island. Many farmers have basically given up on using their land because of little fire ant infestations, which makes it very hard to get pickers on the land. The outbreak of rat lungworm cases this year could result in lettuce and raw produce farms to lose their markets. Rapid Ohia death has wiped out thousands of acres or tree-covered forests in a matter of months.
  • A 300 pound gorilla enters the market. Many small retails and service business would be at great peril if a Mainland chain or well-founded locally-based competitor entered the market. When Sports Authority came to Kona, several small sporting goods companies were forced out of business. I know of a few businesses that are barely keeping on because of franchise chains with their purchasing power, superior supply chain management, high ad budgets and fancy stores, coming to town.
    300 pound gorilla
  • Death of principal. Many family-owned businesses face existential crises when the patriarch or matriarch of the business dies. The family, which is often less committed to the business , has to decide to continue running the business, sell it or shut it down.

All of these existential threats are very real possibilities for the majority of small and medium-sized businesses in Kona. There are, of course, many more, but these are some of the ones that should keep business owners awake at night

What’s there to see and do in Kona, Hawaii?

A few weeks ago, I was in Los Angeles airport getting ready to board a flight back to Kona. The person next to me (clearly a tourist) sensed that I lived in Hawaii, so he struck up a conversation about things to do and see in Kona. His family had six nights and we going to stay at the Marriott Courtyard King Kamehameha Kona Beach Hotel. He couldn’t say all this and manage to get out “the Marriott King hotel in Kona.” I knew what he meant. His kids are teenagers.

So, what’s there to see and do in Kona for a family?

Ocean Activities

For the kids, I’d highly recommend going scuba diving. All the dive shops have what are called “introductory dives”, which is basically scuba diving with a dive master by your side. You don’t need a license and it will open your eyes to a whole new world.

For the family, the manta night snorkel is one of the highest rated activities in Kona. The manta rays to come near shore areas at night to feed on the plankton, which is attracted to the dive lights. It’s best described as manta ballet. All the dive boats do a good job of providing for a safe and enjoyable experience.

Snorkeling at Kahaluu Beach is another fun and enjoyable activity. It’s also free is you have snorkel gear. The beach area is protected so the waves are very calm. This are also lifeguards, so it’s a great place to go if you’re not accustomed to ocean snorkeling. Waning: don’t touch or harass the turtles! There are also surf lessons available (fee based) at the north end of the beach.

Deep sea fishing will set you back a big hunk of change, but imagine the fun of reeling in a few hundred pound tuna or a possibly a thousand pound marlin. There are few places in the world with a better chance of catching a big one than Kona, Hawaii. We recommend TOPSHAPE Kona Fishing for a deluxe boat and experience and High Noon for those on more of budget.

Land Activities

For a great morning trip or afternoon trip, visiting one of the Kona coffee plantations can’t be beat. Our favorite is Mountain Thunder Coffee Plantation, which is just above Kailua-Kona and is home to some of the best organic Kona coffee you’ll ever taste.

It’s a bit of drive, but visiting Mauna Kea will take you to a new world. The visitors center is as high as you can go is you don’t have a 4 wheel drive car, but it’s still a great place for star gazing and learning about the solar system. There are tours to the top, but they can be very expensive.

“The volcano” (actually there are five, but this refers to the active one) is on the other side of the island and will take at least two hours to reach. If you can see the lava flowing at night, as it often is in the crater, it’s a spectacular experience. Check the park website for lava flow information.

Kona, Hawaii is also home to hotel luaus, parasailing, dinner cruises and all the other expected activities in a tourist area.

One thing I recommend to tourists is to commit to eating all their meals and doing all their shopping at places they have never been to before. So, avoid the big box stores and chain restaurants and seek out places with local flavor and goods..