Big Steps For Small Business
For some small-business owners in Hawaii, the writing was already on the wall, prior to Sept. 11. “The trend we’ve been seeing over the past five years is that small businesses have gotten smaller,” says Sen. Sam Slom, president and executive director for Small Business Hawaii. “In the past, they were three employees with a 1,000-square-foot store. Now, they have 500 square feet with one employee, or they’re working out of home.”
For many other small businesses in the state, 2001 was supposed to have been their year, the first profitable year. “What we’re seeing more right now is a sense of futility and frustration,” says Jane Sawyer, assistant district director for the U.S. Small Business Administration. “Some of the phone calls we’re receiving are ‘Just when we thought we were going to make it, this is the straw that broke the camel’s back.”
That sentiment was universal across the Islands, immediately after Sept. 11. In a survey conducted by the Hawaii National Federation of Independent Business that month, 35 percent of small-business owners in Hawaii had planned to reduce wages by about 25 percent. Another 35 percent said they had planned to reduce employee work hours. Here is what the survey also found: six out of 10 businesses had been scrambling to keep their companies alive. Approximately 7 percent of business owners had said that the terrorist attacks had a “devastating effect” on their operations, while 50 percent had said that the attacks had a “significant effect.” The rest of the respondents said they were affected “somewhat significantly.”
Even the federation’s nationwide survey on small-business optimism last September fell to its lowest level since 1993. Only 10 percent of business owners anticipated better conditions, compared with 25 percent in August. And for the first time in the survey’s 15 years, business owners were pessimistic about sales gains before January 2002.
Industry leaders say assistance is readily available. Small Business Hawaii, a 26-year-old private organization, provides small businesses with mentoring and network opportunities. “We work one-on-one with specific problems, and we bring people together to share ideas,” Slom says. The U.S. Small Business Administration has extended the eligibility for the Economic Injury Disaster Loan program to include businesses that have sustained economic losses from Sept. 11. To qualify, businesses must be directly affected by the destruction of the World Trade Center, damage to the Pentagon, or some other federal action. As of November, 125 business owners in Hawaii had inquired. Approximately 1,973 applications were issued nationwide, including the 50 states, American Samoa, the Northern Mariana Islands and Guam. At the time of this writing in early November, the Small Business Administration was taking steps to expand the loan eligibility.
Small Business Strategies
Elvira Lo, owner, Elvira Chocolate
Last year, the U.S. Small Business Administration named Elvira Lo the Small Business Exporter of the Year for the state of Hawaii. Her 12-year-old business, Elvira Chocolate, exports confections to Asian countries, as well as to local retailers and U.S. military bases. Exports grew by more than 200 percent in the past two years. “We’re struggling now,” says Lo, after Sept. 11. “My Japan market is very steady, and my Taiwan market used to be very strong. But after 9-11, it’s like a 90 percent drop.” A number of clients had cancelled their shipment – orders made prior to Sept. 11. The company let go three of its 15 employees. “This is the first time we’ve had to let people go,” she says. “Every year, we’ve had positive growth. We’ve been very lucky so far.” Lo refuses to compensate by cutting back on ingredients. Instead, she offers her clients special prices and other value-added incentives. She recently visited mainland China, where she saw the potential to export chocolate-covered macadamia nuts.
Renee Okinaka and Donna Olayan, owners, Purrfect Pals Pet Service
It was exactly one year ago when preschool teachers Renee Okinaka and Donna Olayan launched their pet-care service, Purrfect Pals Pet Service. Their business plan was straightforward: feed the pet, change the water, clean the litter box or cage, and walk the animal if needed. The cost: $12.50 for a 45-minute visit, plus a small mileage fee. Purrfect Paws was on track with its business goal last summer, as vacation-bound pet owners left their animals at home for days, even weeks. “August was our busiest month, and we were on a good rate of growth,” recalls Olayan. That immediately changed after Sept. 11, when federal authorities closed airports for two days. Realizing that their business was too travel-oriented, the duo immediately changed strategies. They added pet exercise, watering houseplants, and turning on the lights to their list of services. Today, the majority of their clients live in East Oahu – businesspeople who don’t have time to care for their pets. Olayan and Okinaka, who both are accredited pet sitting technicians, have a minimal marketing budget. They rely on word-of- mouth advertising.
Ken Komoto, owner, Flyin’ Hawaiian Balloons
This balloon store on King Street is all about celebration. So it was no surprise when business deflated by about 20 to 25 percent after the Sept. 11 terrorist attacks. For a couple of weeks, solemn customers could not find a reason for balloon bouquets, balloon animals or helium tanks. Ken Komoto, the owner who bought the 19-year-old company from its previous owner a little more than a year ago, has no employees. He works anywhere from 80 to 90 hours a week. At the time of this writing (early November), Komoto expected business to return to normalcy, thanks to Christmas, Valentine’s Day and graduation season. “Helium costs the same, insurance doesn’t go down and rent doesn’t go down,” he muses. “And I’m willing to work around the clock.” One thing he doesn’t have to do is advertise. The balloons speak for themselves.
Do you like what you read? Subscribe to Hawaii Business Magazine »