Home Grown

Small businesses of all sorts are sprouting on the Garden Isle as residents catch the entrepreneurship craze

June, 2006

It was mid-April—a couple weeks after a seemingly never-ending bout of deadly heavy rainstorms tore through Kauai, leaving a national disaster and a distressed community in its wake—and it was clear, the island still hadn’t recovered. Piles of debris littered the streets and sidewalks. Small boulders and fresh chunks of land lay resting alongside the mountains they had slid off. And outside the Kauai Marriott fronting Kalapaki Bay, the guest parking lot, formerly home to scores of rental cars, was full of yellow tractors removing heaps of mud.

Indoors, however, it was a completely different story. Sure, businesspeople and island leaders made small talk about how the rain had lasted an unprecedented 40 days and 40 nights. But it was clear that not even rains of biblical proportions could cast a shadow over the event that had brought them all together—the island’s first-ever Small Business Expo, hosted by the Kauai Chamber of Commerce.

Inside the Puna Ballroom, where a healthy mix of retailers, financial institutions and small business-advocates exhibited goods and services from their respective booths, expo attendees were abuzz with business enthusiasm. People couldn’t stop talking about what they’d learned in the workshop series, which focused on important issues such as employee recruitment and retention, workers’ compensation and best practices. And others raved about the “notable” lineup of speakers, including the executive director of the Hawaii SBA, Jane Sawyer, director of the State’s Department of Labor and Industrial Relations Nelson Befitel and leadership training guru Rosa Say, who gave the keynote address.

It was obviously a nice change of pace for island residents, as business replaced weather as the topic du jour, and people were reminded that, despite all the gloom and doom, the island is still very much open for business.
“The event really exceeded our expectations. We were expecting about 70 attendees, but ended up with about 100. Close to 200 [attended] the SBA awards dinner [which proceeded the event]. And the booths seemed to be a real big success,” says Chamber of Commerce President Randy Francisco. “We’re all really happy with the overall turnout. And I think it was encouraging to some people who may have been unsure about the opportunities that Kauai has to offer.”

Business Is Booming

Francisco himself was once one of those people. Originally from Kauai, the Waimea High School graduate was one of many Kauaians who never returned to their island home after leaving for college. After attending the University of Hawaii, Francisco built a very successful career on Oahu, primarily developing work-force training and economic development initiatives within the UH system—but gave little thought to moving back home. And then one day, late last year, as Francisco thumbed through The Garden Island, he stumbled upon an article detailing the Chamber’s search for a new president. It was a full-time, paid position, and Francisco’s interest was piqued.

“I was away for about 30 years, and I began thinking about all the things I had done in work-force training and economic development and international education. The community as a whole here is facing so many challenges, and I thought about what an opportunity it was to bring all that knowledge and experience back home, and to do some good and make a difference,” says Francisco.
On the bright side of the unemployment issue, however, is that overall, there are more jobs available on the island. Many business owners say that’s the reason they can’t find qualified workers—because there are simply more jobs competing for them. And they’re right. With all of the islands’ major sectors (including real estate, tourism and everything in between) revving on full throttle—business on Kauai is booming.Little did he know, however, that through his efforts to learn about and address some of these community issues, he’d be gaining firsthand knowledge. “The chamber is a nonprofit, so I was expecting a salary cut from what I was accustomed to, and I was okay with that. But when one of the first questions I was asked [at the interview] was, ‘Where are you going to live?’ I had a feeling I was in trouble,” he says, laughingly. Much to the relief of the board, Francisco had already decided he’d be moving back in with his father, which meant nominal rent, which meant salary was a non-issue. “I’ve never seen people’s body languages go from that tense to that laid back, like theirs did when I told them housing wasn’t an issue,” Francisco says. Their overstated relief went to show just how big of an issue affordable housing is, when it comes to finding skilled workers on an island with an unbelievably low unemployment rate of 2.8 percent.

A nice side effect of all this growth has been the development of smaller, niche industries, as well as a healthy number of new small businesses. The Hawaii Business Research Library shows just under 4,800 businesses currently registered on the island, however it’s difficult to compare that figure to years past, since there are no agencies, government or otherwise, that cull business registration data on an annual basis for public consumption.

Nonetheless, evidence of growth is everywhere.

Susan Tai, Director of the Small Business Development Center of Kauai, says, “There’s definitely an increasing trend toward entrepreneurship and small-business development here. We can tell because the number of client sessions we book with small-business owners has been on the increase, but as well, it’s obvious just by driving around the island.” It sure is. Everything from activity and tour companies to LA-style boutiques, have sprouted across Kauai, many of which weren’t there the same time last year.

“The reasons we’re seeing an increase in entrepreneurship are manifold,” says Tai. “But I think one important factor is that the concept of self-sufficiency and independence—separating oneself from the staple of the economy, which is really tourism and hospitality—has really caught on here.”
The ironic thing is that the very things these entrepreneurs seek to get away from are the very things enabling their newfound freedoms. “A lot of [these new businesses] are born from or touched by tourism. They’re spider legs coming out of tourism,” says Kauai Visitors Bureau Executive Director Sue Kanoho. “And while we’re happy to see that growth in other industries, I think it’s important for people not to forget what really the anchor and the cornerstone of the island is—tourism.”

There Are a Lot of New Trucks on the Road

If anyone understands what Kanoho is getting at, it’s Daniel Decker and spouses Myca and Kim Paglinawan. Decker and the Paglinawans own neighboring businesses in the industrial area of Puhi. Decker operates a small auto body and paint shop, Next Level Customs, while the Paglinawans run a paint distribution company, M&KP’s Auto Refinishing Supplies. Neither business is one you’d immediately associate with the visitor industry, but both are quick to credit tourism for their healthy bottom lines. “There’s so many tourists on the island, no matter where you go, you’ll see a rent-a-car,” says Kim. “I like it though. It brings us money.”

On a slow year, the Paglinawans gross close to $250,000 in revenues annually distributing car paint. With no additional employees to cover, it makes for a nice, comfortable living for the couple and their 6-year-old son, Shaun. But Myca says money wasn’t the motivating factor behind starting the business. Originally, he and Kim were working as flight attendants, and Myca was painting car parts on the side. After the post-9/11 flight cuts, it became difficult for the Paglinawans, who were living on Kauai and commuting to Oahu, to secure flights back home.

“The commute was getting too hard, and we weren’t getting enough time with our son. So we brainstormed some ideas for starting a business. We thought about maybe opening a small auto body shop, but I didn’t want to have to paint every day,” says Myca. “But we did some research and found that there was a market for paint distribution, so we went with that.”

And just like that, the Paglinawan’s were in business. Their startup costs were minimal—just $20,000 out-of-pocket and a $50,000 SBA loan—but the rewards, they say, are enormous. “Now, if we have something to do with our son, we just close the shop, go and come right back,” says Kim. “We have a lot more flexibility. Of course, we work a lot more, and we work year round. We don’t take summer vacations.” That’s because summer is their busy season—the time when there are more tourists on the road, and therefore more fender benders.

Repairing rental cars, it turns out, is big business for small businesses on Kauai. M&KP client and neighbor Next Level Customs has contracts for repair work with four car rental companies on the island and is never at a loss for work. Proprietor Daniel Decker calls those contracts his “job security,” for while his real passion is doing custom paint jobs, it’s the rental car work that pays the bills. On any given month, Next Level Customs earns around $6,000 a month—or about 70 percent of its revenues—from contracts Decker has with rental car companies. “Tourism’s doing good on Kauai, and that work definitely keeps me busy,” he says.

True, tourism is booming. But if ever that end of the business ever drops off for Decker, he isn’t going to have to look far for work. “The visitor industry is one example of a sector on Kauai that’s doing well, but the economy’s up across the board. And that means locals are spending. They’re buying TVs and material culture things. And cars. Cars are one of the biggest indicators of Kauai’s booming economy,” says Francisco. “And I’ve been seeing a lot of new trucks on the road.”

IS TECH THE NEW TOURISM?
Tourism may be going gangbusters, but it isn’t the only big “T” on the island. Technology has been establishing itself as an industry to reckon with. Out in Waimea, the number of tech companies housed at the West Kauai Tech Center has proliferated, primarily a result of all the federal spending being poured into projects at the Navy’s Pacific Missile Range Facility. And on the other side of the island, in the sleepy town of Anahola, an Oahu-based firm called Hawaiian Homestead Technologies (HHT) has reinvigorated a small community of primarily Native Hawaiian families.

Kauai Economic Development Board Chairman Tom Cooper says that for several years, the industry’s growth has been nice and steady. “When I first got here, seven years ago, the tech center only had one building and it was only partially occupied,” says Cooper, who’s also director of operations for General Dynamics Advanced Information Systems. “Now, there’s two buildings, which are completely occupied, and there’s a long queue of people waiting to get space.”

Cooper says the industry has played an important role in attracting highly skilled workers to the island, particularly in an area that had been dominated for most of its history by agriculture. He says his company’s growth from two to 12 employees in 6 years is on par with other tech firms in the area.

In Anahola, rather than recruiting already-skilled workers, HHT trains and employs area residents with little or no technological skills. “We don’t care too much about people’s past careers or educational backgrounds,” says HHT President Myron Thompson. “We’re looking for people who are willing to work in a new field, yet want to work in their home community, and provide them that opportunity. It’s about community development.”

In that way, HHT has been highly successful. Not only has it created 10 new jobs for the people of the community, it’s been an overall economic boon to the area. “Once the people of Anahola saw the benefits of having an established and viable industry in their town, they started to think of other things they could do that would be beneficial to the community,” says Thompson. “They started a farmer’s market, and now they’re looking at alternative energy opportunities and some other things. So [HHT's] been a good model in providing gainful employment through economic opportunities, and our hope is that it’s one that can be applied throughout Hawaii.” –JLY

 

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