Author Archives: brian

Kona Businesses and Barriers to Entry

Wouldn’t you like to own a business where there is no competition? Better yet, wouldn’t it be great not to have to worry about competitors coming into your market? There are, of course, very few businesses that have such high barriers.

barriers to entry

In Kona, Hawaii some of the big barriers to entry include the following:

  1. Exclusive distributorships. Many people don’t know that the major car dealerships in Hilo and Kona are owned by the same company. So, in effect, if you want to buy a new Toyota on the Big Island, you have to buy from the one dealer (with two locations) with the exclusive rights to the Big Island. It’s highly unlikely that Toyota would grant another distributorship on the island, so our local Toyota dealer is in a very enviable position: a monopoly.
  2. Government regulations and permitting. The old joke about slips at the harbor was that you needed to buy a “business” to get a slot. The business was an old, beaten up boat in a slip. The boat was worth nothing, but the slip was worth a lot. Another area with insurmountable barriers is Mauna Kea summit tours. There are no permits available, and the supply of tours is much smaller than the demand, so those with permits have a very protected and profitable market.
  3. Customer loyalty. Many B2B businesses that come to Kona Impact complain about the “old boys network” in Kona. They claim that they will offer better prices, products or service, yet the “old boys” don’t give them the time of day. I’m not so sure how much this is true, but loyalty to businesses you know and trust does create strong barriers to entry.
  4. Capital Costs and Market Needs. Some machinery-based businesses and transportation businesses require hundreds of thousands, if not millions of dollars, to get started. Given the small Kona market, it does not make sense to have two businesses doing the same thing. If you think of Kona Trans or a few of the big snorkel charter businesses, you can see how startup costs would be a formidable barrier to entry.

If we look at a business like Fair Wind, we can see that they have all four of the above barriers to entry (an exclusive spot at Keauhou Bay, Kealakekua Bay mooring permit, high customer loyalty and huge startup costs), which is probably why they are the envy of every water recreation business.

Here are few things we see as ineffective barriers to entry for Kona businesses:watch The Revenant 2015 film now

  1. Reliance on new technology. We’ve seen this with several upstart businesses: they buy into a new technology, thinking it will be so compelling that it will dominate the market. I’ve seen this with video production/filming, printing, cleaning machines and products and lot of franchise based businesses. The problem is that technology inevitably improves while costs  go down, so the presumed barrier is very short lived.
  2. Relying on saturating traditional advertising. I’ve seen businesses start in Kona that do big, full-page newspaper ads hoping that will kick start the business. Then, after spending several thousand dollars in a short time, they realize the foolishness of such a big print ad spend. That old saying about not putting all your eggs in one basket is very apropos when it comes to advertising.
  3. Using predatory pricing. This is another often ill-fated approach to building a business and establishing barriers to entry. Rushing to the bottom in pricing is a sure-fire way to make you busy and broke. Changing the perception that you are a low-cost provider (often associated with inferior goods and service) is a very hard perception to change. We often find that the low-price entry has often miscalculated costs of doing business in Kona, and, over time goes out of business because it is unable to achieve profitability.

When you are starting or buying a business in Kona, Hawaii, think carefully about what barriers to entry exist and how you can create more. Some business with very low initial barriers to entry includes massage therapy, real estate and landscaping. That does not mean that these are horrible career choices; it just means that you need to work hard to differentiate yourself from your competitors. You also need to keep innovating and marketing to find sustained success.

For a great list of barriers to entry, click here. Take a look and figure out how many you can buy into or create.

Kona Impact
75-4499 Luhia St, E-7
Kailua-Kona, HI 96740
808-329-6077

Bad for Hawaii’s Businesses: Tax Inversions by Multinationals

I don’t find Washington politics that interesting, to be honest. I know I will have more effect on my standard of living by getting up every day and providing value for my clients and love to my family than complaining about what happens in Washington. I don’t feel getting all riled up about politics and politicians to be that productive.

Two things, however, get my goat. I don’t like waste, and I don’t like unfairness. I expect all my community to pay its fair share of taxes, as I do, and when the government has my money, it should not waste it.

tax-avoidance

It seems, however, that something has gone vastly wrong in our country. Today I heard of another merger of companies—Tyco International and Johnson Controls—which will become “headquartered” in Ireland to save the businesses about $150 million in U.S. corporate taxes. The Pfizer and Allergan merger is expected to “save” them billions of dollars a year by becoming “headquartered” in Dublin, Ireland. This is called tax inversion.

This charade has to stop. I suspect that none of the executives, head offices, R&D facilities, production facilities, marketing departments, etc. will be moved to Ireland. It’s simply moving the business registration abroad.

These companies will still benefit from all things taxes pay for in the United States: IP protection, a transparent legal system, military spending and national defense, research grants and subsidies, federal highways, ports, health care subsidies and all the state and local benefits like schools, police and roads.

Tax inversion lets some of the biggest companies in the world receive all the benefits of United States without sharing the tax burden of what supports these benefits. In other words, they are taking a lot and giving very little. In the long run, we can’t all be takers if there are not enough givers.

Sure, you can argue that the law allows them to do this, and any sane business executive would be foolish not to take advantage of ways to lower taxes and provide a better return on investment to shareholders. I get this.Watch Full Movie Online Streaming Online and Download

The laws need to be changed. I don’t know the how or what: much smarter people than I should figure this out.

As a small business owner, I pay a lot of taxes, but it would be impractical, very difficult and, indeed, unethical to shirk my tax responsibilities. It’s all about fairness.

In the end, when the large multinational corporations avoid taxes, someone has to make up for that revenue. It will fall, in part, on the small and medium-sized businesses in Hawaii.

If you, too, you find tax inversion to be something that is contrary to principles of fairness and good governance, let your representatives know:

Hawaii’s Elected Leaders

Senator Brian Shatz
300 Ala Moana Blvd., Rm 7-212
Honolulu, HI 96850

Senator Mazie Hirono
300 Ala Moana Blvd. Rm 3-196
Honolulu, HI 96850

Congresswoman Tulsi Gabbard
300 Ala Moana Blvd, 5-104
Honolulu, HI 96850

Congressman Mark Takai
300 Ala Moana Blvd, 4-104
Honolulu, HI 96850

Make a (Kona) Impact: Buy Local – Office and Art Supplies

Kona Impact has been in business nearly ten years. We recently took a deep look at the kind of businesses that have been the clients that have kept us in business; we found that almost all are locally owned. This is despite the fact that locally-owned businesses comprise only a small part of our local retail economy.

The big box stores: Walmart, Target, Costco, Home Depot, Kmart have huge amounts of revenue, yet very little of that profit stays on the island. With few exceptions, most of their products are shipped in, and all the profits are shipped out. Not to mention most of the well-paid management jobs (and decisions) are not here.

small business kona hawaii

For lack of a better way to say it, Kona Impact wants to be known as a “local evangelists.” That is, we want to sing the praises and shout from the mountain tops about the value of local businesses. To that end, we will try to draw attention to local gems of local entrepreneurship.

I’ll introduce two today. They are NOT our clients, but I am a customer of them.

Imagine if just ten percent of the art and office supplies purchased at Walmart or Office Depot were spent locally? My guess is that would add a job or two to our economy and keep a few hundred thousand dollars on island, money that would circulate again and again through our economy.

Akamai Art Supply & Kona Coast Office Supply – Big Box Alternatives

Akamai Art Supply, located above Home Depot, has just about every art supply you could imagine. I have bought glue, poster boards, notebooks and colored pencils here. I wish that I had some, well, any, artistic ability, as I think this would become a hangout spot for me. What I do buy, however, is always very reasonably priced, and the selection is exceptional.

Next time you’re thinking about buying art supplies, stop by Akamai. They probably have what you need, and the money you spent here will stay here. I would also add that by supporting small specialty shops, you are keeping them in business. So the next time you need a tube of lime green paint right away, they will be there for you.

Kona Coast Office Supply

This is another store that we want in the community. Where else can you buy one sheet of Baronial Ivory paper? If you want a whole ream, they have that, too. My point is that by buying your boxes of paper, pens and desks here, you are supporting a place that also has the obscure and hard-to-find items.

When Office Depot opened a few years ago, I, too, went it wide-eyed and excited about all the “possibilities.” What I found, however, was low-quality furniture (that I had to assemble myself) and prices that were comparable to Kona Coast Office Supply. So, in the end, spending my money locally made a whole bunch more sense.

For certain, you will, at times, see me in Walmart. I don’t know of any locally owned businesses convenient to my home or work that sells motor oil, dental floss or Band-Aids. I do know of local businesses that sell paper, pens, drawing pads and adhesives. For them, I will choose to buy local.

I’m Proud of this One-Star Review!

I’ve been online long enough to remember the famous 1993 cartoon, where one dog is “talking” to another dog. He says, “On the Internet, nobody knows you’re a dog.” It’s an internet classic .  The joke is that the anyone can post anything online.

Well, 26 years later and we still (and always will) have people who take to their keyboard and write without thinking. Fortunately complete privacy is no longer (and probably never was) possible.

Last weekend, we received a one-start Google + review from Anela Bonafede. Her review is attached to her name, so I did not have to do any detective work.  I have never met her, nor have we provided business services to company any for which Anela works.

Her review was, “Refusing business because of possible competition with kayak businesses.” (one star)

anela bonafede review of kona impact

I quickly connected this review to a call I had last week. A guy called and said that we were highly recommended by another business. He said he was in the kayak rental/tour business in Kealakekua Bay. I stopped him right away and told him that I probably couldn’t help him because I was already working with a tour company at the Bay. I had a handshake agreement that I wouldn’t work with competitors of my client for marketing work, but I would for signage.

My client has become very successful, partly because of the work we have done for him. He also runs a great business. Given that there are only a few businesses working (legally) in that area, growth can only come from taking customers from another business. That is, the pie is only so big and to get a bigger piece of it would require someone else getting a smaller piece.

Helping a competitor would mean taking business away from an existing client.

We are unwilling to do that. We agreed—for good reason—not to do that. End of story.

So, our one-star review from Anela Bonafede (who I don’t know) is because Kona Impact will not engage in unethical behavior. I am very proud of this one-star review.

I ask Ms Bonafede the following:

  1. If Kona Impact was willing to cheat an existing client to help you, don’t you think we’d do the same to you eventually? Why would you want to work with a business that didn’t keep its promises?
  2. Do you run the kind of business that doesn’t honor agreements? If so, why would Kona Impact want to work with you?

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

Free “Buy Local” T-shirts at Kona Impact

We did a lot of thinking last year about how we can help our community become a place where entrepreneurism thrives and locally-owned and operated businesses start, grow and prosper.

We all know the numbers: very little of the money spent at big box retailers cycles through our community. We know, for example, that a big part of every dollar spent at a locally owned business stays here and helps create a stable and vibrant community.

Late last year we ordered 100 t-shirts (from a local business: CG Tees) and are now giving them away to anyone who stops buy. I was delighted when two of our clients who sell organic lettuce (Aina Tribe) said the shirts will become their “uniform” when they are selling at the local farmers markets.

Our offer is simple: stop by and get a free shirt. First come, first served.

This is the beginning of our “buy local year” at Kona Impact. To celebrate ten years as a locally owned and operated business, we want to give back a little, to give a hand up to those small and medium-sized businesses that have helped us succeed. More to come…. Stay tuned!

buy local kona

Business Lessons from David Bowie

A life well lived, a game well played: David Bowie (1947-2016, RIP)

It’s hard not to imagine anyone from my generation, the one before it, and perhaps current generations, who has not been inspired and touched by a David Bowie song. For me, it was “Changes,” which I played incessantly as an early teen. It spoke to me.

david bowie business

Now, some thirty years later, I look at Bowie a bit differently: a trendsetter who figured out how to stay relevant and wealthy throughout his fifty or so year career. He knew the business of art, and, yes, he played the game well, very well.

There are few recording artists who continue to grow throughout their career. There was Bowie the “space oddity,” “glam rocker,” “the Thin White Duke,” “the New Waver,” “the pop star,” and “the experimental/electronic”—all this over fifty years. Few can match that level of change. Michael Jackson had his childhood period and an adult career that (in my mind) didn’t evolve much. When you go to a Rolling Stones concert, admit it, all you want to hear is “Satisfaction.” Mariah Carey and Britney Spears are essential the same as they were ten years ago. The only musical performer that reaches the level of Bowie’s level of change is Madonna.

At Kona Impact, we have gone through a gentle metamorphosis over the years. Of the six initial pillars of our business, we no longer have three of them. They have been replaced by five new areas of business. In 2016, we hope to add two more pillars to our business. Change to us is not scary in the least bit; it is essential for our growth.

When we think of change, we think mostly of expanding and contracting things we do. It’s not an upheaval of our business model on a whim; in fact, every change comes from information we receive from customers. It’s not what we want to do; it’s what our customers tell us (in various ways) what they want us to do. Business to us is not self-indulgent; it’s customer-centric evolution.

Another thing Bowie did was to realize that his business, the music business is a business. In 1990, he gave up the royalties on his music catalog for ten years, creating “Bowie Bonds.” In return, he received a cool $55 million. I can’t help but think of Picassos going for hundreds of millions of dollars these days, more than Pablo could have imagined earning in many lifetimes. He led a good life, for certain, but most of the value of his work has been realized after his death.

My point is that innovation, protecting assets and knowing when to capitalize assets is part of what every business should do, whether it’s a construction company finding innovative ways to lease and maintain heavy equipment or a small mom and pop shop clearing out the storage locker and converting inventory to cash.

Like any small business, we seek ways to improve our financial position. We would love to see more clients pay with checks, as they save us 3% credit card processing fees. Ideas how to make this happen, including not accepting credit cards for large purchases, come up now and then, but this type of change is perhaps too bold. My point is that small businesses (and medium and large for that matter) need to focus on money; how to make more and spend less. Bowie, at least, figured out how to make more by securitizing his music catalog.

Bowie, the artist, will be missed, but we can always revisit the feelings of love, angst, introspection and joy by listening to his music. Bowie, the businessman, is someone we can study and emulate. How can our businesses stay relevant for years? How can we change? How should we change? What can we do to keep more of what we earn?

 Kona Impact | 329-6077 | 74-5599 Luhia Street, E-7, Kailua-Kona, HI 96740

The futility of repeating previous entrepreneurship habits – Is it time to try something new?

I was thinking the other day about what conversations I have that are the most frustrating. These are the conversations I have several times a year, and they all have the same script.

The entrepreneur…

  • Realizes she is struggling with her business.
  • Knows the business is important to her livelihood
  • Has used several off-island, low-cost providers
  • Has tried a lot of the do-it-yourself design, printing, signage and website services
  • Has a brand that is a mess, a hodge-podge of discordant messages
  • Has a website, often built on a “website tonight” template that looks horrible and does function correctly

She then comes to Kona Impact, and one of the first questions begins with, “How much is…?”

She (or he—I’m not referring to any one client I have had) has spent all her time, energy looking at the price of services, and, as a result, her business is a mess. She has sunk a good deal of money into trying to string together a mix-match of service providers and products, with the main concern being,

How cheaply can I get this done?

If this strategy was working, she would, of course, not be at Kona Impact. But the “race-to-the-lowest-price approach” to business seldom works.

If I can convince these entrepreneurs to understand that with all the focus on price, she will find little value, we can begin a meaningful conversation how Kona Impact provides immense value, but, for certain, not the lowest prices.

If she is unable to see value in what we do, the conversation will be reasonably short because we are not a low-cost provider. We have learned in ten years of business that no client wants ineffective or poor products though that is all a low price would allow us to provide.

Clients want effective solutions to their business needs, and to provide those, we need to charge a price that allows us to provide quality products and services.

Simply put, price correlates very highly to value; it’s impossible to offer exceptional products and services at low prices.

That is why, for example, contractors don’t buy their tools at Wal-Mart, and you don’t go to McDonald’s for a nice meal.

We encourage all entrepreneurs to look realistically at how and what they are doing. If you haven’t achieved the success to which you aspire, maybe it’s time to make fundamental in how you’re doing business.

 Kona Impact
329-6077
75-5577 Luhia Street, E-7
Kailua-Kona, HI 96740

learn from mistakes, move on

Do-It-Yourself Printing: What You Need to Know

Never before have the tools for making business cards, brochures and newsletters been so readily available. What used to be a $2,500 software suite, the Adobe line of tools, including InDesign, Photoshop and Illustrator, can now be rented for about $50 a month. Most off-the-shelf computers these days can handle nearly all entry-level graphic design tasks. These are good things, as small business owners are now empowered to self-design a lot of things for which they had to pay hundreds of dollars before.

Design is one thing (and not the focus of this guide), but taking those designs and making print-ready files is where many novices waste a considerable amount of time and money. Here are a few pitfalls and how to avoid them.

cmyk

There are two color spaces: RGB and CMYK. Red, green blue is primarily for web design and screens, and Cyan, Magenta, Yellow and Registration/Black is for print. The first step before you begin designing is to make sure you are in the correct color space for print: CMYK.

Size matters a lot. One might think that a 3.5” x 2” business card should be set up for 3.5” x 2” inches. This is incorrect. Printers have three important measurements: cut/trim, safety and finish size. The finished size is 3.5” x 2”, whereas the file size (to allow for cutting) is likely to be 3.62” x 2.12”. The safety line, the space in which all essential text and graphics should be is likely to be 3.38” x 1.88”. At Kona Impact we have new clients that provide us with a 3.5” x 2” file with text to the edges, and they wonder why we won’t print them. The answer is simple: the output will have text and graphics that is cut off. The important thing is to get a template for the print provider you will use prior to setting up your workspace.

Quality matters, too. There are two numbers we see every day: 72dpi and 300dpi. Seventy-two dots per inch is the quality of most web graphics. Three hundred is what is required for high-quality printing for business cards, rack cards and so on. A very common mistake novice designers make is to take a graphic or photo from a website and use that for a print project. The problem is clear: website graphics are only going to be 25% of the quality necessary. When you see a grainy or pixelated image on a print product, the culprit is usually a low-quality image taken from the internet.

Theft is theft. Every graphic or photo you see online is the property of someone. Taking a photo or graphic for which you do not have a license or permission is theft … and very bad karma, too! Many printers will not accept files with obviously stolen images or graphics. If you are looking for a particular image, go to a stock art company and buy the rights to use it. Also, see the information about quality (above).

Save correctly. Printers are very particular about the files they use. You may design in Photoshop or Illustrator, but your printer will most certainly want an Adobe PDF file. At Kona Impact, we tell our clients the following steps to get a file ready for printing. First, make two copies of your file: “working” and print. On your print file, flatten all layers and create outlines of your fonts. Google how to do this if you don’t know. Then save your file as a PDF at the highest quality setting. A Microsoft Word, Publisher, native Photoshop file or a native Illustrator file is not print-ready and will require extra work and cost to get ready for print.

A few other things. Watch movie online The Transporter Refueled (2015)

Your print provider will most likely print what you give him without checking for quality issues. It is your responsibility to check for file sizes and quality. Spell check. Print a sample on your office printer.

Make your files to the print-ready sizes. If it’s a two-sided document, you need two files. Do not save your PDF with registration or crop marks. Those will make your file size incorrect.

Almost all large commercial printers will not mix colors just for your project. That is, if you have a specific Pantone number that you need, find a specialty printer. This will cost a lot more as they will be able to mix the ink for your project and run only your project on the press. Most printers these days approximate color, and they get very, very close, but since they are running thousands of items on one sheet at one time, you may experience slight color shifts. If you print the same thing a few weeks apart, you will see slight differences. Either get over it or be prepared to pay a lot more for your printing.

Does it make sense to design and print your print collateral? Here are few variables to consider:

  1. Design quality
  2. Cost of employee time to make design
  3. Cost of software, computers, and in-office printer
  4. Cost of stock art
  5. The risk of providing a printer incorrect and unusable files.
  6. The cost of failing to get a print job done correctly the first time.
  7. Cost differential of using a retail printer (like Vistaprint) and a trade printer (only available through a print provider)

At Kona Impact, we have designed and printed several hundred thousand business cards, brochure and rack cards. As such, we can usually offer the best opportunity to ensure quality, while reducing risk and overall costs.

Kona Impact | 329-6077

Kona Impact is thankful for

Kona Impact is thankful for

…having great employees who do their best to provide awesome products and services to our customers.

…the several hundred businesses that chose to do business with us in 2015.

…our suppliers who have helped us go from two or three-day turnaround to same and next day turnaround this year.

…those clients and non-clients who run exceptional businesses, and by doing so, have shown others how businesses can and should be run.

…those who show how businesses should not be run!

…those who the Kona community who are volunteers, teachers and mentors.

…living in a country, despite its faults, that provides more opportunities and freedom than any other country.

Good Clients and Bad Clients: How to Identify the Bad

There’s a pretty accurate idea that 20% of your clients are responsible for 80% of your problems. I’ve also heard that 20% of your clients are responsible for 80% of your profits. We’ve found both—plus or minus 10%–to be true. Some days it feels like 1% of our clients are responsible for 99% of our problems.

As a rational business owner, it makes sense to identify the top performers regarding problems and the bottom performers regarding profits. Interestingly, we find a handful of companies that tend to be on both lists: a pain to deal with not very profitable.

Here are the ways to end up on both lists: troublesome and unprofitableWatch Full Movie Online Streaming Online and Download

Ask for prices on projects that don’t allow us to make a profit

The old “I can get this on the internet for $25” is a sure-fire way to make us say, “go ahead viagra france acheter.” We know, and the customer knows that buying something online requires shipping costs, costs to set up an account, shipping time and uncertainty about the quality of the product. So, when a customer tries this ill-advised bargaining strategy, he is really just trying to get a low price, a price much lower than we can reasonably offer. Simply put: if we can’t make a fair profit on projects, we don’t want them.

Most of the time we are very accommodating to clients who have a few no margin or very low margin projects, but when we have a client who only does very small projects (like $10 print jobs), we know that the costs of administering the account exceed what we make from the client.

In very blunt terms: if we can’t make any money from you, you are, by necessity, a low priority for us.

Excessive account maintenance cost / Billing issues

There is nothing more exasperating than dealing with clients who view paying invoices as “when we get around to it” instead of “the work is done; here is your money”. In the end, everyone pays, but how much hassle we have to go through to send multiple notices and the stress we have to maintain adequately cash flow certainly influences how much we want to work with a client in the future.

When we have two projects to work on, we always give priority to the client with a good payment history. This makes sense, of course, because we’d rather finish projects with a certainty of quick payment than a project where we have uncertainty.

If you own a business that buys from local suppliers, the best thing you can do is settle invoices quickly. Your suppliers, believe me, keep track of these things. If it comes time to ask for a favor or a project done quickly, the goodwill you establish through paying your suppliers promptly will ensure some reciprocity.

A good rule is never to ask for a project or product for which you are unable to make immediate payment when completed. If you need financing, go to a bank.

everything has a cost

Excessive Price Quotes

Our time is part of what we sell. It’s also always in very short supply. Every email or call you make takes some of our time. Of course, we don’t mind answering questions about projects and discussing options. That said, “estimate fishing,” where a business sends a low-level employee through the Internet to find the lowest price on a small project, can be great time waste for businesses.

A good rule of thumb is that if your project is under $100, get one, possibly two, price quotes and pick one. If you are asking for more than three price quotes for small projects, you are fishing and being disrespectful of the time of the people you are asking. If you are trying to save a few dollars, consider the time you are wasting calling around: to spend $50 in employee time to save $10 doesn’t make much sense.

Always try to look at what you are asking of a business from the businesses’ point of view. Are you spending more than you could be saving, considering your time and the time of the people that need to respond to your inquiries?

In the end, our goal as a business is to stay in business and to be here to serve our clients in the future. We also have a goal of having resources available to support good in the community. To do this, we have to make a fair profit on what we do.

 Kona Impact | 329-6077