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The Honolulu Advertiser
Posted on: Wednesday, October 24, 2007

Moving from cyberspace to storefronts

By Curtis Lum
Advertiser Staff Writer

Hawaii news photo - The Honolulu Advertiser

Allison Kim-Czerniak works on her computer at Alliway, her contemporary jewelry store at Ward Warehouse. Kim-Czerniak has taken her Internet-based business to the next level by opening a retail shop.

Photos by JEFF WIDENER | The Honolulu Advertiser

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Hawaii news photo - The Honolulu Advertiser

Allison Kim-Czerniak talks with a customer at Alliway, her contemporary jewelry store that opened last month at Ward Warehouse. Alliway began eight years ago as an Internet-based business.

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The Internet is more than just a source of information and entertainment. For some, it's the only way to do business.

People who otherwise wouldn't own a business are able to run a successful venture solely on the Internet. Many factors help them succeed, such as lower startup costs, no lease rent and very few employees.

So when an Internet-based business owner decides to make the leap from the comforts of a virtual store to an actual brick-and-mortar storefront, the experience can be overwhelming. Operating from a real store dramatically increases the cost of doing business, while not guaranteeing a boost in sales.

"It's scary. It really is," said Allison Kim-Czerniak, owner of Alliway, a contemporary jewelry store.

Kim-Czerniak launched Alliway eight years ago in San Francisco as an Internet-based business. She designed her own line of jewelry and sold it on the Internet. Kim-Czerniak also was her own wholesaler and was able to get dozens of stores nationwide to carry her products.

She and her husband, Steve, moved here three years ago for a "lifestyle change" and she continued to run her e-commerce shop.

"The Internet is very mobile," she said. "As long as you can ship, you can go anywhere you want.

But Kim-Czerniak also dreamed of having her own retail shop, and last month took the big step and opened Alliway at Ward Warehouse. Although she planned it for years, obtaining her goal meant many sleepless nights as she crunched the numbers and worried about raising the capital to see her dream through.

"We've definitely had to more than double how much money we put into the business and I will say that I've got an 80-plus-hour-a-week job from a 40- to 50-hour-a-week job, so it's definitely consumed all of us," said Kim-Czerniak, 38. "But that's the whole risk thing. It's being able to say, 'We're going to risk all of this, sacrificing our lifestyle and our bank account and hoping that it will all pay off and we'll profit from it.' "

Kim-Czerniak said the biggest obstacles included raising the capital, the amount of which she would not reveal, and finding a good location. It took her eight months before she landed the space at Ward Warehouse.

Kim-Czerniak said she had no business experience before she began Alliway and said her greatest sources of information were other business owners. She also continues to meet with retail experts so she can improve her chances of success.

"My research was based on the relationships I had with current people in the industry, like my buyers who owned stores," she said. "I went straight to people who did exactly what I did."

With just a month under her belt, Kim-Czerniak said it's too early to tell how successful her store will be.

"We're glad we opened in September because it's traditionally a slow retail month, so we can work out the kinks and get prepared for holiday sales," she said.

For Sasha and Rick Reichart, taking the plunge also has been filled with challenges. The Reicharts own cakelava, which specializes in wedding and custom-made cakes, and are in the process of signing a lease agreement for a retail shop.

The company was formed more than two years ago and takes orders via its Web site and over the phone. Up until now, Rick Reichart has used the facilities at the Culinary Kitchen Incubator in Kalihi to do his baking.

Sasha Reichart said business is great, but said it could be better because of the limitations of not having their own store. She said cakelava regularly turns down jobs.

Reichart said they are "comfortable" with the way the business is going, but said it's also been her husband's dream to have his own retail store. She agreed with Kim-Czerniak that finding a space has been the biggest problem.

"It's very difficult to find a kitchen space that's also a store," Reichart said. "It's essentially a restaurant and restaurant spaces are very difficult. Do they have all of the equipment in place? Do you have to buy them out for all their equipment? There's so many hurdles. It's almost easier how we're doing it now."

Like Kim-Czerniak, the Reicharts used their savings to finance the move into a storefront. But a spokeswoman for the U.S. Small Business Administration said business owners should consider other sources of funding to finance their ventures.

Jane Sawyer said it's risky to sink a big chunk of personal funds into a business.

"If they don't have enough working capital, that could be the death knell for a business. They've put everything into opening the facility and the sales are not going to keep up with their costs," Sawyer said. "They may want to get a little working capital through a loan or some kind of financial assistance to keep things on an even keel. You don't want to go into something and find out you're short cash and ruin your credit, too."

Sawyer said most businesses won't receive 100 percent financing, so they should expect to pump in some of their own money.

She also advised Internet-based owners to seek expert advice before making any commitments. Business advocacy agencies will be able to help develop marketing and business plans, as well as point out the many hurdles that an owner can expect.

Sawyer said one thing e-commerce owners need to know is where their customer base is. If a majority of their orders are from out of state, then it may not be wise to open a store in Hawai'i, she said.

"We're all in love with our own products and sometimes we're not giving them a real assessment," Sawyer said. "We need a reality check. A consultant or a workshop or something like that may bring everything into perspective."

Although Kim-Czerniak and the Reicharts are realizing their dream of owning a retail shop, they said they will keep their Web sites running.

Kim-Czerniak said Web sales account for about 20 percent of her business, and the Internet is a good way to advertise. Sasha Reichart said cakelava depends on its site to attract Mainland customers, particularly brides planning a Hawai'i wedding.

"There are quite a few who shop around on the Internet," Reichart said. "It helps that you can put something nice out there that people want. If we didn't put out what people are looking for, they would just move on to the next place.

Doing business over the Internet continues to grow as more people turn to their computers to do their shopping. The U.S. Census Bureau reported that e-commerce sales for the second quarter of this year amounted to $33.6 billion, a 6.4 percent increase from the first quarter of 2007 and a 20.8 percent jump from the second quarter of 2006.

"The Internet is very mobile. As long as you can ship, you can go anywhere you want."

Reach Curtis Lum at culum@honoluluadvertiser.com.