Category Archives: Business Essentials

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

Ten Years of Business in Kona: Our Five Smartest Moves

Kona Impact will soon celebrate its tenth year of business in Kailua-Kona. I remember very well the early days when the phone did not seem to ring very much, and we were not as focused as we are now. It took some time, but it was great to beat the odds: 50% of businesses don’t make five years, and according to this article, 96% don’t make it ten years.

So, we’ve obviously learned a thing or two over the years.

Here are five decisions we made that, I feel, were critical to our success:

  1. We kept expenses low at the beginning. A lot of new businesses look for prime office or retail space and spend a lot of money on newspaper advertising. We didn’t. Our first office space is now affectionately called “the dungeon” as it was a small, windowless space in a fairly run-down building. We spent almost nothing on print advertising and nothing on radio or television. This allowed us to have the resources to weather the inevitable financial storms we faced.
  2. We have done spectacularly well online. Even ten years ago, we knew that the best, most cost-effective place to be found was online. Over half of our initial clients came to us after finding us through online searches, and to this day, a large percentage of our new clients come to us through search (with the other biggest percentage coming through referrals).
  3. We knew when to throw in the towel. We had five pillars of our business when we started, and within a year, it was evident that two of these pillars were not working out. The demand was just not there, and, truth be told, there were other businesses in town more established and better at these things than us. We quickly stopped offering these services, cut our losses, and focused on what we were really good at. Failure was a great teacher!
  4. We identified inefficiencies in the market. After trying many times to buy local and support our local businesses, we gave up trying to send clients to some providers in town. Their customer service, products, and quality were horrible, so we saw an opportunity. Growing into the general printing, wide-format printing and signage businesses made a lot of sense, since we were already doing the design work. They were mostly unimaginable when we started; now they are a big part of our product mix.
  5. We have been active in the community. Kona is a small town, one that relies a lot of word-of-mouth marketing. For me, one of the best business (and personal) moves I made was joining the Rotary Club of Kona. Each week we have lunch and an outside speaker gives a presentation. The presenters are mostly community leaders, and their presentations are great ways to know what is happening in Kona and the issues facing our community. Another part of Rotary is the awesome community service projects we do like vision testing for our Keiki, building parks, planting trees, and fundraising. The connections in Rotary have not only provided me some business but also helped me meet some simply wonderful human beings. I highly recommend any entrepreneur at any stage of his or her business to focus on face-to-face connections in a service organization, a church, a sports team or any group of like-minded people.

Like any business, there are hundreds of decisions that we have made that have got us where we are. Some, have been disastrous, and others have been helped Kona Impact prosper.

kona impact logo

Ten Realities of Business in Hawaii

Hawaii is a paradise for visitors, so much so, that many who come here on a vacation decide to stay. The allure of the ocean, the tropical landscape, and the great year-round weather, make the Hawaiian Islands a great place to live.

Doing business here, however, is another story. It’s not to say that running a business in Hawaii is any more difficult than running one the Mainland; it’s not if you understand and accept some of the unique challenges. In fact, many of the things that are challenges, can also, if understood correctly, result in huge opportunities.

Here are ten thoughts on running a business in Hawaii

1.       The big box stores rule most retail.

Don’t even bother trying to compete with the big box stores. In Kona, Hawaii, where I live, we have Lowe’s, Home Depot, K-Mart, Walmart, Target, Office Max and Petco. If you want to open a retail business, don’t even think of trying to compete with the big boxes; they will win on price, selection, and convenience. Find a unique concept, something that you can do at good margins if you want to go into retail.

2.       Franchises don’t do make sense (for the most part)

High shipping costs and a relatively small population (except in the Honolulu metro area), make it difficult for a lot of small and medium-size franchise businesses to do well. There are no economies of scale for a one-off chain restaurant, and the dispersed population on the islands makes it hard to open many units. So, if you can deliver franchise quality systems for auto repair, cleaning, accounting, jewelry, home services, and others, you will be able to do well and avoid the onerous franchise fees and costs.

3.       The three-legged chair economy: tourism, real estate, and construction

The Hawaiian Islands’ economy is mainly based on tourism, real estate, and construction. Some add military spending for Oahu. Our agriculture, technology, education, research, manufacturing and medical sectors contribute relatively little, on a percentage basis, to our overall economy. Many newcomers will gravitate to these pillars; for example, there are many more realtors than there are properties for sale. Most construction workers can get a job  right off the plane.

4.       It’ll cost ‘ya

Almost everything in Hawaii will be 40%-100% more than the Mainland. Ninety percent of our food is imported, as is 100% of our building materials, vehicles, petroleum-based fuel and manufactured goods. Milk is $5-$6/gallon, gas is 40% more than most places in the Mainland, and a “starter” home will be $500,000 and up in most places. Our electricity costs are the highest in the country. One of the problems new business owners have in Hawaii is that they don’t have a good grasp of expenses, and they make poor decisions based on a lack of understanding of local costs.

5.       Self-sufficiency is essential

One of our pieces of equipment needs to have a part replaced every year. The part is close to $1000, but to have the tech from Honolulu fly over to replace it would add $2,500 to the cost. We quickly learned how to do the work ourselves, and have saved $15,000 over the years.

For many repairs, there might not even be a service person available on the island. For others, the parts might be days, weeks or months away. Shipping costs will make some products prohibitively expensive. Skills like basic carpentry, mechanics, welding and “duct tape ingenuity” are very valuable on the islands, and can make the difference between staying in business and shutting the doors.

A well-planned house lot can provide huge amounts of fruit and vegetables a year due to excellent year-round growing.

6.       What makes it bad, makes it good

You can look at all the challenges of doing business as obstacles or opportunities. For example, the lack of fast casual chain restaurants, make for great opportunities for restauranteurs to open restaurants without the costs and constraints of franchising.

Several local food manufacturers have had great success developing products for local consumption. We all have to eat. Even though their supply and manufacturing costs are high, they can offer specialty products at a decent price point compared to imported food.

There is seldom enough business for more than three prosperous companies in many sectors of the economy on the neighbor islands (excluding Oahu). Become one of those three, and you’ll have some great barriers to entry protecting your livelihood.

7.       The best location on the island: online

The great equalizer to global commerce is the internet. I know of many local entrepreneurs who run their business from home in Hawaii. Many savvy business owners can leap frog their local competition by establishing a solid online presence and becoming much more visible online than their local competitors.

8.       For every season, churn, churn churn

There is a huge amount of what I call “churn” in the Hawaii economy. Thousands of people move here to retire every year, and thousands die and move back to the Mainland every year. We see a huge amount of people who come to Hawaii in seek of paradise or a fresh start and soon become homesick or discouraged and leave. There is no land more geographically isolated in the world than the Hawaiian Islands, so, as one would expect, a lot of people come and leave.

This can be an opportunity. I know of one Realtor who has sold the same condo five times in ten years, each time earning nice commissions. Property managers here can charge a premium, and local contractors, it is well known, make more money for the same work when dealing with temporary or off-island residents.

9.       You’re not in Kansas anymore; get over it!

This should be self-evident. Hawaii is not Kansas, nor is it California, Canada or Kentucky. There are tremendous opportunities for entrepreneurs here, but there are also huge obstacles, many of which might not seem apparent to a Mainlander. If you are hell-bent on living like you did before you came here, you’re going to pay a price, both monetarily and mentally. For example, if you need a softball league, there is one, but a much better choice might be joining one of the popular paddling teams. Apples can be expensive, but papayas are very inexpensive. It will be very expensive to repair a Volvo here, but if a Toyota works for you, you’ll be fine.

hard business in hawaii

10.   The quality of life in Hawaii can be exceptional and that matters…a lot!

My home is ten minutes away from one of the best beaches in America, and my garden grows year-round, supplying me with hundreds of pounds of fresh vegetables and fruit every year. I own one long-sleeve shirt, and I wear sandals all weekend, year-round. That level of quality of life is, in my mind,  what I “buy” with my hard work and perseverance with my business. It’s not easy; it never is.

We all know that Hawaii is ranked high in taxes, regulations and the cost of doing business. We also know it is ranked low in education, workforce development and pro-business initiatives. These are realities, and they are not going to change anytime soon.

Anyone seeking to start a business in Hawaii needs to go in with his or her eyes wide open. Accept what is, and find opportunities where they exist.

Kona Impact | 329-6077

To Complain is Human, To Resolve Through Awesome Customer Service is Divine

I found myself on the phone yesterday talking to the customer service people at one of my largest suppliers. We spend about $15,000 a year with them and what we buy is, by my estimation, very high-margin goods.

The problem was that they sold me several items on their website that I needed asap. I paid more for shipping—several hundred dollars—than I did for the products. I was fine with that, as I needed everything the next day. It turns out that they did not have the inventory they represented on their website, and the first order was not shipped. Ok, stuff happens, and I had a day of leeway, so I ordered a comparable product, paid for overnight shipping (again) and thought my problem was solved. Alas, they again sold something they didn’t have, and I was without the supplies I needed for one of my high-value clients.

The order snafus were serious, but the worst part was the complete lack of communication from the company. Not a call. Not an email. Nothing.

customer service concept

A simple call after the first order saying they were out of stock and could ship a comparable product (there are many that would have worked) would have taken care of my needs. Simple. Positive.

A call to them a day later was an exercise in frustration. The first person to answer the phone had no information, and to be honest, had no power or proper training to deal with anything. Her supervisor, perhaps jaded by life or the job, was worse; very defensive and full of excuses.

Here’s what we all should be doing when our businesses let a customer down.

  1. Listen to the customer and let her get all of her thoughts out.
  2. Ask questions, paraphrase and make sure you understand the issues.
  3. Show understanding of the customer’s feelings. If this does not come naturally, make a list of appropriate phrases and keep them visible in your work area.
  4. Apologize for the mistake!
  5. Only give excuses for things that are temporary. By this I mean, if you couldn’t ship because FedEx had delays due to weather or your machinery broke and is being fixed. Most people can understand temporary or unforeseen issues.
  6. Do not give excuses related to poor management, poor inventory control or lack of staffing. Your client doesn’t want to hear about your problems: he called to solve his. The best thing you can do is work internally to fix your systems to avoid future letdowns. Nobody wants to see your company’s dirty laundry.
  7. If you can’t solve the problem—often true with new and low-level employees—have the sense to get the caller to someone who can. There is nothing more frustrating—from the customer’s perspective—than being given the runaround and being condemned to voice mail hell. That only breeds additional frustration and lack of confidence in the business.
  8. It should be obvious, but, SOLVE THE PROBLEM! Sometimes the solution is to just listening to someone who wants to vent. It might mean repairing or replacing equipment or giving some additional technical support.
  9. Give something a little extra. A one-time discount, an extended warranty, some additional product at no additional cost. Make the customer feels as if you appreciate her, and you want her business in the future.
  10. Ask the customer if you have solved his problem! You might be surprised how the perceptions of the customer service rep and the customer differ.

The important thing to remember is that a customer who takes the time to call, email or a write a letter has probably not been lost. With a little listening, understanding and problem solving, you can probably keep customers who take the time to let you know of problems.

The unhappy customers who don’t reach out are the ones you have probably lost. They are also the most dangerous to your business, as they are likely to tell many others of their negative experiences.

Kona Impact | 329-6077

Regulatory “Disasters” and Business in Kona, Hawaii

A few days ago, I wrote about natural disasters and how they could destroy a good business overnight. I wrote this not to scare or discourage; my goal was to promote preparedness.

I saw today two possible game-changers that come from a different source: government actions. I make not claims about whether these make sense or are good policy; I just want to highlight another set of threats to business viability.

government-concept

Banning Dolphin “Swims”

The National Marine Fisheries Service of the National Oceanic and Atmospheric Administration announced a proposed rule change that would ban “dolphin swims” within 50 yards of our coastal spinner dolphin populations. Good or bad, this means that many businesses built on the idea of dolphin swims/encounters will no longer be able to take tourists and drop them in close proximity to dolphin pods. There are many boats that advertise dolphin swims, and it’s common to see four or five boats with 30-40 swimmers around and in spinner dolphin pods.

These businesses will have to change, and I would guess many of these will see reduced revenue because a “snorkel trip” sounds way less appealing to many than a “dolphin swim.”

Expansion of Marine National Monument, Papahanaumokuakea

About a decade ago, President Bush created a federally-protected area in the northwest part of the Hawaii. It was a huge area that was off-limits to commercial activity, including commercial fishing. President Obama has now quadrupled the area to almost 600,000 sq miles. Again, good or bad, this will affect the livelihood of many commercial fishing operations, and force them to compete in international waters for fish. Prices for fresh fish in Hawaii are likely to rise.

These game changers, many would argue, were predictable. Anyone watching a handful of boats descend upon a pod of dolphins could probably imagine that this behavior was going to be looked at by environmental agencies and possibly be considered detrimental to the dolphins’ health.

What are some other areas where we might expect rule changes that will put some businesses out of business?

The manta night dives have always been a point of contention by locals, environmentalists and tour operators. It used to be two or three boats with 10-20 people in the water; now, on some nights you’ll see perhaps 75 people in the water. There have been rumblings of new rules lately.

Mauna Kea access and tours. There is a lot of discussion about Mauna Kea access and use. Expect that there might be some drastic changes for those who run tours on the mountain.

Beach activities. The surf schools at Kahaluu Beach, the beach wedding providers and the kayak rental businesses up and down the coast might see their ability to do business affected by state of federal regulations.

Fish collecting. Some of the Kona coast is off-limits to fish collectors, those who catch, bag and sell ocean fish to the aquarium trade viagra 20mg. With a stroke of a pen, the practice could be banned, regulated or highly taxed. This is a highly-contentious issue for many, and it would only take a few people in the right places to stop this activity.

The one thing all of the business activities mentioned in this post have in common is that they rely on public land and oceanic resources to operate. I see that the businesses that tend to create the perception of environment overuse or affecting cultural resources tend to face significant risks of regulation. If I were in a business dependent on land, ocean or cultural resources, I would consider ways to cooperate and lessen perceived impact to avoid Washington, D.C or Honolulu-center regulations.

Killing the goose that lays the golden egg, has a predictable outcome.

Four Natural Disasters that Can End Your Business in Kona, Hawaii

Many of the threats to the future of our businesses in Hawaii are controllable. Building strong relationships with clients and customers help a business withstand new competitors entering the market, and having good insurance policies can protect against damage to premises caused by fire, wind or water.

Here are natural disasters that have all occurred in West Hawaii:

  1. Earthquakes. On October 15, 2006, a 6.7 magnitude earthquake  occurred just off the Kohala Coast. The damage to hotels, residence and many of the older buildings in the Kona-Kohala area was significant, with several collapsed sections of buildings and structural damage to many buildings in the area. There is no question that Hawaii Island is in a very seismically active area, with several locations susceptible to large earthquakes.
  2. Tsunamis. The tsunami caused by Japan’s Tohoku earthquake in 2011 affected the Kona coast more than many people realize. Many of the stores at the North end of Alii Drive flooded, as well as the whole first floor of the King Kamehameha Kona Beach Hotel. The Kona Village, a very exclusive and private resort on the Kona coast—one of Steve Job’s favorite vacation spots—was flooded and has yet to reopen. The Hilo side has had some huge, destructive tsunamis within the past 100 years.
  3. Lava Flows/Volcanic Eruptions. This is often talked about in town, as all of Kailua Village is within 30 minutes of being inundated by a lava flow from Hualalai volcano, which forms the eastern boundary of the village. A significant lava flow to the ocean would sever all land transportation routes in North Kona. The last eruption of the Hualalai was about 200 years ago, and it is classified as an active volcano.
  4. Hurricanes. Many people assume that the height of Mauna Loa and Mauna Kea will always provide a huge barrier to hurricanes hitting the Kona area. There is a lot of truth to this, as we have never felt the wrath of a hurricane like “Iniki,” which devasted Kauai in 1992, but there are many recorded accounts of hurricanes affecting the Kona area, and our location in the middle of the Pacific guarantees that hurricanes will always be a threat.

As a business owner, there is little you can do protect your livelihood from being affected natural disasters. The worst case scenario—widespread destruction to our community—might make your business unviable. There are, of course, ways to mitigate damage by taking common sense earthquake, wind and water damage precautions. Likewise, reviewing insurance coverage and making disaster planning part of your business planning are a good idea.

emergency checklist

 Kona Impact | 329-6077

Where is the best location in Kailua-Kona, Hawaii for a business?

A leasing agent will proclaim, “location, location, location” to entice business owners to “stretch” their budget and find a prime spot for their business. For certain, location does matter, but it matters much less than many people realize. Times have changed.

Kailua-Kona has some easily defined areas for businesses:

  1. Kohanaiki area. This goes from Queen Kaahumanu Highway mauka for a few miles.
  2. New Industrial Area. This area is most well-known for a few big box stores: Costco and Home Depot. There are a few hundred small and medium-sized businesses in this area.
  3. Old Industrial Area. It covers the area between Kuakini Hwy and Queen Kaahumanu Highway (mauka-makai), with most of the area on Kaiwi Street and the side streets of Pawai, Alapa, and Luhia Streets.
  4. Alii Drive. From the pier to the Royal Kona Resort (the in-town portion), most known for restaurants and tourist shops.
  5. Kuakini Hwy. The area from the Old Airport to Lako Street.
  6. Kona Coast Shopping Center and Lanihau Center, the two little strip malls on Palani Rd.
  7. Crossroads Shopping Center, anchored by Safeway on Henry Street.
  8. Kona Commons: Petco, Office Max and some chain restaurants.
  9. There is very little Class A office space in Kailua-Kona. http://www.areadevelopment.com/AssetManagement/Directory2013/primer-differentiating-office-space-class-26281155.shtml

The first point is that if you are going for the tourist crowd, locating your business as close to Alii Drive as possible makes abundant sense. That’s where almost all the foot traffic is.

Now let’s consider the value of the shopping centers—Kona Coast, Lanihau, Kona Commons and the Crossroads Shopping Center. These are the only places with a big volume of street/parking lot visibility by residents and visitors. All the other places have relatively poor drive-by traffic combined with street visibility. In other words, if you are looking for customers to see your business while driving around town, there are few good options.

Which brings me to the point of this blog post…

The best location for your business to be in Kailua-Kona, Hawaii is online!

The Kohaniki, Old and New Industrial areas in Kona are just fine for most types of service and retail businesses if you have a solid online presence. If you’re selling fabric or kitchen tiles, signs or legal services, your customers are likely to find you online. Referrals and other advertising work, too, but, in the end, many customers will come to your through your website. To fail at online marketing is to fail at a modern business necessity.

In the “old days,” businesses had to pay big money to compete for prime, street visible locations because that was how people would discover new businesses.

That is certainly a good way to attract new customers, but we have seen many businesses skip the high costs of a prime location and do a superior job of online marketing.

So, the next time a leasing agent starts harking about the value of a great location, keep in your mind that the best locations these days are at the top of Google, Yahoo, and Bing.

Kona Impact | 329-6077

Is it time to kill your blog?

Blogging can be one of the most powerful tools you can use to attract people to your website and business. If you add just two entries a week, which shouldn’t be hard to do, you will have over 100 more pages of information about you and your business online in just one year. Many business websites are only 3-5 pages; you can have over 20 times more opportunities to be found in a relatively short period. That said, online marketing through content creation can be a challenge for many.

blogging concept

Here are some reasons to give up your blog:

  1. You are unable to add at least two posts a month to it. A “dead blog” makes your whole business look dead, so removing your unused blog from your website will make your business look more alive.
  2. You find that you are writing “off-topic.” The topic, of course, is anything directly related to your business—product, services, etc.—or things directly related to your industry. If you’re a retail shop, and you find yourself ranting about politics, it’s time to disassociate your business and your personal life.
  3. Your blogs are poorly written or edited. Let’s face it: writing is not a natural skill for many people. Reading, however, is. So, if your blogs do not make your business look good, stop.
  4. You have almost no understanding of search engine optimization, and you don’t want to learn the basics of keywords and content creation. A big reason to have a blog is to use it to attract new customers through search. If you don’t have a clue how to write optimized text, you’re probably doing it wrong. If you enjoy writing, spend a few hours learning about search engine optimization. If you don’t enjoy writing, and you don’t know what you’re doing (and don’t want to learn), it probably makes sense to spend your time doing other things to grow your business.
  5. You’ve run out of ideas. This should almost never be the case, as your business is always changing. If you’re stuck, check out some other blogs for like businesses. But, if you’ve reached a total impasse, and you can’t imagine writing anything more, it might be time to stop blogging. If you have a lot of content already online,  don’t remove your blog, as that still brings value to your business.

At Kona Impact, we go through a series of questions with every web design client regarding blogs. The worst thing is for a client to pay for a blog and never use it. It makes the business look bad, and it wastes money. Even though it means less revenue to Kona Impact, we often advise business owners not to have a blog. We do make sure he or she knows about the business value of a blog, but, in the end, we don’t recommend things with a direct value to the client.

Should you blog? 100% yes! But, if you can’t, or you haven’t, it’s time to reassess your priorities and focus on other ways to grow your business.

Kona Impact | 329-6077

Why are there so few franchises in Kona, Hawaii?

I had a great chat with a local business leader the other day.

He is part of a business that, I’m certain, will continue growing in size and profits. Simply put, it’s innovative, has an excellent brand, and the product line resonates with consumers. That’s all great, but the most impressive part of the business is that it is intensely focused on local vertical integration; that is, locally-grown products are processed, packaged and distributed—all while trying to keep local farmers and suppliers in the process.

During our conversation, we talked about what our businesses were doing, and, surprisingly, we found that many of our clients were their clients and suppliers. Almost all the names we both mentioned were mutually familiar. We ended up chatting about the community of small and local businesses in Kona, Hawaii that is committed to creating a better, more sustainable community. And don’t be fooled; all of these businesses are for-profit companies with a keen eye on bottom line results. They are all—from what I know—profitable, some very profitable.Roblox HackBigo Live Beans HackYUGIOH DUEL LINKS HACKPokemon Duel HackRoblox HackPixel Gun 3d HackGrowtopia HackClash Royale Hackmy cafe recipes stories hackMobile Legends HackMobile Strike Hack

Many franchises on Hawaii Island don’t do that well. In fact, there are relatively few franchises in Hawaii compared to the Mainland. There are many reasons, of course, but I think one of the reasons is that many franchises do poorly here because of a lack of connection to suppliers, and to some extent, consumers. For example, a franchise will be unlikely to use any of the following local services: accounting, marketing, advertising, design, signage, public relations, and add to that most of the franchises must source their supplies from the franchisor. The craziness of a sandwich shop flying in bags of week-old lettuce, peppers and tomatoes is case and point. They just don’t have any connections to the community.

I remember getting a call from a franchise owner several years ago asking if I’d like to buy his business. When I heard about his lease obligations on his equipment, his building lease (it was expensive because the franchisor made him lease a space in a “high traffic” area) and the percentages he had to pay to his franchisor (as a percent of gross revenue) for fees and contributions to the advertising pool, I knew why he was leaving quickly. His business made no sense on an island. His business was bleeding cash at an unsustainable rate. I didn’t even want to ask him about where he could buy his supplies!

kona hawaii

What’s an entrepreneur to do in Kona?

First, if you are considering a franchise, do a lot of legwork and be very circumspect of the franchisor’s claim. Is the business right for Kona? Are you sure there is sufficient demand in our small community—200,000 or so on the island, maybe a 1/3 of that in the Kona-Kohala areas? Can you achieve the same goals without a franchise? What are your true expenses to setup and run the business? Are you able to source locally? Do you have a plan for making connections with consumers and businesses in the community? How can you connect with customers outside of traditional media like TV and newspapers? Will your franchisor help you with local marketing campaigns?

In the end, I would argue that few franchises make a lot of sense in Kona. Subway and McDonald’s—both locally owned—seem to have some good economies of scale, but there are few one-off restaurants or other businesses that seem to do well. Part of the reason, I believe, is that franchisees are looking for a Mainland business model to do well in Kona, and it’s just not that easy to do in a small, isolated community.

Summer Fun in Kona

Summer’s here! The kids are out of school, and moms and dads hopefully have a few days off. Here are a few things going on in Kona this summer.

Kona Car Show and Fitness Expo – June 25 – A lot of people have been talking about this event. It’s sure to be the biggest and best car show and expo in Kona in many years. At the Old Airport.

Kona Marathon – June 26 – About 2,000 runners will take part in one of the signature marathons in West Hawaii. Starts in Waikoloa

Fourth of July Parade – July 4 – As they say, you’re either in the parade or watching it! This promises to be a great time for Kona residents and visitors to go down to Alii Drive and enjoy a parade.

summer

Here are a few businesses that can add some fun to your summer adventures.

Kona Splash and Bounce – If you want to entertain the neighborhood or throw the best birthday party ever, consider renting a bouncy house or water slide in Kona.

Another great way to entertain the young and the young at heart is a snorkeling trip to Kealakekua Bay. Our favorite is Sea Paradise.

For the more adventuresome, rent a kayak at Ehu and Kai and paddle across the bay.

There are, of course, many free activities for summer in Kona. The public library has many programs, and, if you are sweating at home, air conditioning! Another nice day out can be had at the Kokua Kailua Village Strolls, where they shut down a big part of Alii Drive and open the space to vendors and some musicians. The next one is July 17.