James Kerr, owner of SuperGeeks, is holding on to his design plans to remodel the headquarters of the computer service and repair business given the current slowing of Hawai'i's economy.

Kerr believes it's prudent to withhold the capital outlay for now. But that's about the only thing he's holding back on as Hawai'i's economy slows and worries mount about the Mainland sliding into a recession.

"There's always opportunity around you; you just have to look for it," Kerr said.

"It doesn't matter if it's an up cycle or a down cycle."

That could sum up the attitude of many Hawai'i businesses as the state's economy eases off the gas pedal and growth continues to decelerate from the heady gains earlier this decade. There's been myriad scary headlines, ranging from slow or no growth this year for the local economy, to consumers shelling out more for gasoline and groceries to visitor counts possibly declining this year.

The booming cruise ship market has had a semi-bust with NCL America's pulling out two ships, home sales aren't as numerous and unemployment is beginning to edge up, reaching an about four-year high in the latest figures.

Meanwhile some economists are saying the Mainland economy already has slipped into recession and could have the potential to be the worst economic downturn since World War II.

For now, the prognosis is that Hawai'i won't lapse into a contraction this year. But the forecasts aren't rosy for Hawai'i either, with the University of Hawai'i Economic Research Organization forecasting forecasting a 1.9 percent decline in visitor arrivals and personal income adjusted for inflation to grow by a mere 0.3 percent.

It projected companies in transportation, utilities, finance, real estate and accommodations and food service will lose jobs this year.

The state Department of Business, Economic Development and Tourism's forecast is slightly less cloudy, but calls for inflation-adjusted gross domestic product to grow by 2.5 percent, the smallest gain since 2002.

All this has some business managers thinking about what steps they should be taking. In keeping with the optimistic character of small-business people, many are trying to figure out how to make the slowing environment work for them.

"We want to make sure we're growing," said Kimi Caswell, an orthodontist who maintains three offices on O'ahu. She recently hired another staffer and is giving some thought to taking advantage of a slowdown in commercial real estate to buy an office.

"We always try to take the optimistic outlook."

A business owner survey released by Bank of Hawaii last week shows those who say prospects for the economy are much higher or somewhat higher in the next 12 months stood at 7.5 percent when the poll was taken in February.

That was the lowest total since one of the twice-yearly surveys in March 1997 and compares with the nearly 61 percent response found in August 2004.

At the same time, Bank of Hawaii found the business owners were more confident about their own prospects. Roughly one-third expected higher sales and slightly more owners expected to increase capital expenditures than those who would lower them.

On Kaua'i, Certified Public Accountant Patrick Ibbs said most of his small-business clients are doing well aside from general contractors and subcontractors, who are feeling the pinch of a slowdown. He said those companies are shedding employees as things slow because labor costs are among the contractors' largest expenses.

"All the other ones, they're doing OK," said Ibbs, who operates a Lihu'e-based accounting firm.

Maui Real Estate Broker Joseph Pluta said he was well-positioned to weather any downturn, having learned his lesson in the 1990s when real estate markets slowed here. He said that during that period, he went from operating a brokerage with 14 Realtors, to basically a one-man operation who leases employees to handle office and administrative work.

He said by running a lean operation, he is better able to act quickly to changes in markets.

"When things like this happen, new opportunities arise," Pluta said. "It's just slowed down a bit, that's all. It hasn't come to a full stop. Hawai'i still has an international appeal."

Kerr also is seeing the current period as a chance to gain ground on competitors. He said he was fortunate to decide to tighten up spending last year when SuperGeeks had its 10th anniversary. He shed unnecessary expenses and subscriptions, took auditing in house and decided to handle public relations on his own.

"You start asking 'What are these expenses, why are we paying them,' " Kerr said. "You'll discover there's money there."

He also is looking for a silver lining in the slowing economy. The demise of CompUSA earlier this year presented an opportunity to gain new accounts. Kerr has increased his hours of operation and stressed to employees the need to be smart, friendly and responsive to customers.

"As long as we're helping that client get what they want, we're always going to have that client," he said.

Kerr also is looking at adding two new locations because commercial leases are less expensive now, and believes there will be greater demand for fixing computer systems since more businesses will look to fix rather than buy new systems.

Kerr said some of the above comes from lessons he learned when he worked for Sony Corp. in Tokyo and had a mentor who stressed that businesses shouldn't blame poor performance on anyone but themselves.

"It's a cycle, so if we just stick it out and stay lean and mean, we'll be fine. In the end, we'll come out of this cycle even stronger," he said.