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The Honolulu Advertiser

Posted on: Wednesday, December 29, 2004

Thinking not so big

By Catherine E. Toth
Advertiser Staff Writer

It took Iwilani Isabell just three years to take her swimwear line global.

Claudia Neeley expanded what had been her catering-only business by opening The Boston Waffle Shop eatery, where she serves homemade waffles — on weekends only.

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Her Pualani Hawai'i Swim-wear is one of the best-selling lines in Hawai'i and growing in popularity abroad, but Isabell grew her business only as much as she could handle.

She limited sales to resort-style specialty shops. She hired reps to sell her line outside the Islands. She kept her business at home, and she never took out a loan.

"The way I've done it, I choose where I want to be," said Isabell, 41, who works from her Diamond Head home. "I've grown in manageable ways and I wanted to stay debt-free. I do everything different from everyone else, but it's working."

As a small business grows, owners reach a crossroad where they have to decide whether to expand their business to meet a growing demand or keep it small to ensure a certain quality of life.

This is a difficult decision for small-business owners who see the financial potential in expansion but must balance that against the extra work and investment it may require.

"Growth is a problem most businesses would love to have, but can indeed present challenges," said Michael C. Owens, a business consultant who conducts workshops, focused on entrepreneurship, at the University of Hawai'i Outreach College.

The two challenges, he said, are the inability to handle demand and an unwillingness to meet demand when it takes away from your quality of life.

Those who worry about growth impacting their lifestyle can either refuse additional work or increase the price of their products or services until demand shrinks, Owens recommends.

"Refusing additional work works best when you are offering a high-value product or service to a select clientele, especially where word-of-mouth is the primary marketing method used by the business," Owens said. "Since quality of life is often a function of having adequate income, the 'increase price' option can often maintain — or even increase — income while reducing the amount of work performed or products sold."

While many businesses welcome rapid growth, it can also indicate problems in the business, from improper pricing or staffing to inflexible attitudes, Owens said.

"Any growth rate that exceeds 30 percent per year will usually require some form of additional business funding or capitalization," Owens said.

After years of renting kitchen space, Don Akiyama decided to invest in his own kitchen and retail storefront in Pearl City — just two minutes from where he lives.

It was an investment. He went from paying $300 a month to rent a kitchen to $1,847 a month to lease a 1,500-square-foot one.

"We decided we wanted to have our own kitchen," said Akiyama who, along with his wife Kyoko, operates Made In Hawai'i Foods. "We took a big jump."

Akiyama went from selling other people's food products to making his own gourmet brand of jams, jellies, spreads and butters. He now sells his products at local farmers' markets and to specialty stores such as The Compleat Kitchen and Executive Chef.

But it came with a cost. The Akiyamas had to take out a second mortgage on their home and a line of credit. "There were times I couldn't sleep," he admitted. "But you just have to persevere, believe in the goals you set for yourself."

While leasing his own kitchen was an investment, Akiyama did it to enhance his quality of life. When he rented a kitchen, he could only use it at night. Now he can concoct new products whenever he wants.

"This gives us more flexibility," said Akiyama, 56, who retired from the city in 2002 after 31 years. "And being your own boss, there are advantages in that."

He's now able to focus on product development, which he hopes will be the payoff for his investment. He's developing an affordable line of jams and jellies — called Granny Bea's, after his mother — while beefing up his Web site and creating a speciality gift basket line for corporate giving.

"It's quite a bit," he said. "You have to juggle a lot of things at one time. ... But we can see the light at the end of the tunnel."

Customers have begged Claudia Neeley to open longer hours and cater more jobs.

But the single mom has resisted expanding The Vegan Gourmet, opting to keep her business small but profitable.

"I see the potential to grow, but it's more of a personal decision," said Neeley, 48. "Do I want to lose the quality and lifestyle I value in exchange for business expansion?"

Her answer has been no.

But she has allowed her business to grow in manageable ways.

About two years ago, Neeley began renting kitchen space at the old Manoa Shell gas station on East Manoa Road for a catering-only service. Soon she was flooded with orders, forcing her to cancel the delivery service or risk affecting quality.

"I decided to be able to grow I had to cut something," she said. "I decided to take a chance at cutting delivery. Luckily, no one really grumbled."

Since she moved into the former gas station, other businesses — a pizzeria, boutique and coffee shop — have moved in, bringing with them a steady stream of customers, especially on the weekends.

So about five months ago, she started the Boston Waffle Shoppe, serving homemade waffles on weekends.

While working weekends takes away time she could spend with her 12-year-old daughter, she does give herself two days off a week.

Growth is good. But being able to manage that growth without sacrificing any quality of life is key.

"I like being a small business and working in my community," said Neeley, who lives in Manoa. "I don't want to be a factory. I want to keep it small."

Reach Catherine E. Toth at ctoth@honoluluadvertiser.com or 535-8103.