Is Hawaii the Land of Oz for Small and Medium-Sized Businesses?

“Toto, I’ve a feeling we’re not in Kansas anymore” Dorothy, girl lost in the Land of Oz

“The more things changes, the more they stay the same.” Alphonse Karr, French novelist

There is a constant pull, a tug of war, between the sides that argue Hawaii is a unique land, a place like no other, and Hawaii is a fundamentally like any other place to do business.

The truth is somewhere in between; that is, there are some unique aspects to business in Hawaii, and, for certain, most of the normal best practices found elsewhere tend to be apropos.

Here, are three “Land of Oz” business issues in Hawaii

  1. Hawaii receives an “F” for friendliness to small business. in a recent study by Thumbtack and the Kauffman Foundation. Much has been said about burdensome regulations, high taxes and employer obligations in Hawaii. Hawaii receives an “F” for its convoluted tax code and the onerous General Excise Tax. It is one of four states to receive an “F.” It is one of four states to receive an “F” for regulations. This is the reality of business in Hawaii.
  2. Personal networks often trump sound business decisions. These connections might come from shared ancestry–Asian, Hawaiian and Caucasian–or through shared educational connections– Kamehameha, Punahou and Iolani or through geographic ties (i.e., born here vs. “flew here”). These undercurrents are often unspoken, but they are very real and salient. You might not be able to break into certain parts of business or government just because of who you are.
  3. There are strong interest groups who often guide public discourse. Some Native Hawaiian groups are very effective at halting or greatly slowing down developments based on historical and cultural grounds. Environmentalist groups are very adept at using their voice and the court system to block developments, including the now-defunct inter-island ferry. Public unions for teachers and police have been very successful in ensuring a lack of change and strong union protections. No value judgments here, but a business owner needs to understand that there are many interest groups that can affect one’s ability to do business. Understanding these groups and working with them, when possible, can make a huge difference in the success or failure of an idea or project.

What is someone to do if they are thinking about starting a business in Hawaii?

The simple answer is to do a lot of research and know the lay of the land, so to speak. Talk to potential customers or clients, scope out your competitors. See what government permits are necessary and try to figure out what groups might be opposed to what you plan to do.

Make alliances with those who are likely to support you, including potential suppliers or others that might benefit from your business. Join groups of like-minded business leaders, including a Rotary club or your local Chamber of Commerce. Make connections through membership in a church, a sports club, a gym or a networking club.

Above all, set reasonable expectations and don’t be discouraged by things you can’t control. Thousands of thriving businesses exist in Hawaii; if you would like to be one of them, give us a call at Kona Impact 808-329-6077). We offer design and marketing solutions to small and medium-size businesses in Hawaii.

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