Hawai'i small businesses cope with economic crisis
| • | Agencies assist small businesses |
By Susan Hooper
Advertiser Staff Writer
In the more than two months since the Sept. 11 terrorist attacks, Hawai'i's economy has suffered in a painful variety of ways. Hotels, airlines and other large tourism-related businesses have lost millions of dollars in revenues and laid off thousands of employees. Families have been hit hard, with both spouses in some households taking their places on the unemployment line.
Small businesses, often considered the backbone of the state's economy because they collectively employ the majority of Hawai'i's workers, have not escaped the economic fallout. Many of those who rely on visitors for their sustenance are as vulnerable as the biggest tourism firms. And small businesses that cater to local residents also have lost customers, because layoffs — and the continuing threat of more — have made local shoppers wary of spending.
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Copy Shop Inc.
Brian Zinn, president and owner
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Creative Memories
Kathleen Davenport, consultant
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Piano Planet
George Nellas, founder and president, and Douglas Saunders, co-owner
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Purrfect Pals Pet Service
Donna Olayan, president, and Renee Okinaka, vice president
In spite of the difficult times, however, consultants say some small businesses are doing far more than surviving. Assistant U.S. Trustee Gayle Lau, whose office administers bankruptcy filings for the state, said he hasn't noticed any surge in small-business bankruptcies since Sept. 11. Filings are up about 12 percent over the year before, he said, but that's consistent with the overall level of increase in filings since the first quarter of the year.
"There are businesses that are doing well," said Laura Noda, O'ahu center director of the Hawaii Small Business Development Center Network, a service of the University of Hawai'i at Hilo.
"And many of these are not reliant on tourism or the visitor industry — for example, technology, software, and nontourist services. And so although there are a lot of companies suffering, we still see entrepreneurs that want to start new businesses and companies that are flourishing."
In troubled times, most small businesses have a key advantage that big businesses traditionally lack, says one Honolulu accountant and business consultant.
"Small-business people, by their nature, are both creative and flexible, and that's what makes small business what it is," said Daniel Bowen. "For a large business, it may be very difficult to be flexible in the short term. But small businesses are exceedingly flexible."
For those small-business clients who have been hit hard by the sharp downturn in tourism that followed the attacks, Bowen said, his advice has been simple: "What we are telling them is do everything they can that's within their means to shift some of their customer base to other segments of the market. And frankly, that's the only advice there is."
Small-business owners might have other suggestions for their peers, including finding ways to cut costs and increase the efficiency of staff and equipment. George Nellas, president of Piano Planet, a two-man business that sells pianos in Iwilei, says: "We just have to work harder and work smarter, and we have to grow our market, because our market is shrinking if people are losing their jobs."
For some small-business owners, perhaps the most unsettling aspect of the post-Sept. 11 period is its lack of resemblance to any other time in their history.
"When Hurricane 'Iniki hit us (in 1992), we knew what the damage was and we could assess the damage and assess how long it would take to recover," said Andrew Poepoe, Hawai'i district director for the U.S. Small Business Administration. "But this one, it's hard to put a handle on it and assess and say that the tourist trade will be back at a certain period of time. We can't look at it and say, 'This is the damage that the terrorist attacks have done to us, so it will take us this long to come out of it.' "
The inability of even the experts to categorize the current crisis may be one of the toughest obstacles facing many Hawai'i small businesses.
"There are so many uncertainties out there that people can't really see the light at the end of the tunnel," said Noda. "Sometimes it's hard to be optimistic in these troubled times."
Nevertheless, several Hawai'i small-business consultants said they have seen no lack of the stubborn resolve that characterizes most successful small-business owners caught in any difficult circumstance.
"I don't detect any change in determination and grit," Poepoe said.
Bowen said his small-business clients are doing their best to make the necessary adjustments he has recommended.
"They're certainly trying, and time will tell which ones are successfully about to do it," he said. "But I have quite a lot of faith in small business. That's where the innovators are."
