Local businesses know full well the ‘price of paradise’

Cost of shipping, labor are just two of the major barriers to doing business on an island

Business partners Emily Kunz and Kathryn Dahm started out with just a passion for healthy eats and the local food movement. Over the past six years, they've built up Choice Health Bar in Lahaina, which gets 95 percent of its produce locally and has grown popular enough that the owners plan to open a second location in Whaler's Village in Kaanapali in July.

"The community has helped us make our business happen," Kunz said during the Hawaii Small Business Conference on Maui last week. "I think it's one of the most receptive cultures for new businesses that I've personally lived in."

Last month, University of Hawaii economist Carl Bonham said technology and small business would drive Hawaii's long-term economic growth. And while Maui provides a supportive environment, every business has its obstacles, owners said at the conference, which was put on by the county Office of Economic Development and the Maui Economic Development Board.

"I think we're very receptive to new businesses," county Economic Development Director Teena Rasmussen said. "But I think there's some cost barriers to being able to get in and start a new business. The cost of renting space, the cost of shipping goods in and now, of course, the cost of labor, and just the fact that people have to be able to live here."

Business & Red Tape

Tom Reed, owner and president of Aloha Recycling, started his business 24 years ago after leaving his job at the Haleakala observatories. He wanted to get into the environmental sector.

"Nobody on Maui was doing anything with recycling glass at that time," he said. "Everything was going to the landfill."

A new technology for pulverizing glass was available, so Reed made glass the foundation of his company and branched out to other materials after that.

Now, the Kahului-based company has 27 employees and a contract with the county to run recycling facilities at the University of Hawaii Maui College, Makawao, Haiku and Kihei.

Reed said some of his biggest challenges are state regulations, as well as the time it takes to obtain permits and to get reimbursed for the money that Aloha Recycling shells out to customers who turn in recycled goods.

"Cash flow is a problem especially in our business, because our business is based 100 percent on cash," he said.

Because they have to wait to get reimbursed, "in effect our company is loaning the state of Hawaii all of that money," Reed said. "It's really a substantial sum. . . . We have to borrow the money in order to do that."

Jason Bach, the business manager of Lahaina Grill and the Lahaina Ice Cream Parlour, also struggles with regulations, from signage size to expensive equipment requirements.

For example, it cost the ice cream parlor $30,000 to $40,000 to install a grease trap. But Bach saw it as an advantage for established businesses, which get less competition because of high costs.

"Newcomers don't have that type of deep-pocket resources," Bach said. "We're able to bite the bullet."

But it's bad for business on Maui, he said.

"Government is keeping people from entering into small business by imposing unrealistic regulations," Bach said.

Waiting Game

Shipping is a perpetual headache for Hawaii businesses, but customers don't always understand why they have to wait so long or pay a little extra for products.

"They used to complain about, 'Oh, why is it so expensive?' '' said GeAna Saffery, brand ambassador for T-shirt company Wai Life. "You realize I have to ship it from the Mainland?"

Saffery and her family started the Wailuku business four years ago. Her parents own a silkscreen business and her partner, Mike Mercer, is a tattoo artist.

"My parents were like, 'Well, he can draw. Why don't you try to put it on shirts?' '' Saffery recalled. "My other half, he draws, he digitizes everything, my brother prints and I sell. It's a strictly family-run business."

Shipping time and costs are the biggest issues for Wai Life. It's the same for Wailuku-based Alexander's Designs and Remodeling. The business began as Rick's Custom Cabinets in the 1970s and is now owned by Rick Alexander's eldest son, Palani. The company does construction and remodeling that ranges from repairing tubs to full demolitions, said sales representative Nikki Caccamo.

"A lot of our clientele are from the Mainland that own condos, rentals, stuff like that that need to be remodeled," Caccamo said. "The fact that it takes 6 to 8 weeks to get their cabinets in is just ridiculous. And then they think, 'Well, I'm just going to go to Lowe's and it'll be faster.' . . . It's going to take the same time for them, too."

"You can only move a plane so fast and a ship so fast, so I get it," Caccamo said. "But it's hard."

Room to Grow

Overall though, businesses said the county provides adequate resources and that the island was a good place to grow. As Saffery said, "Maui supports Maui."

In March, island unemployment dipped to 2.9 percent. While that sounds like a decent number, it cuts both ways.

"That means everyone who wants a job has a job," Rasmussen said. "When (businesses) try to find employees, they're really just taking from some other businesses."

A shortage of employees has put restaurants, retail stores and many small businesses in a tough spot. So employees work longer hours. Owners fill in for absent or vacationing employees.

"The joke is, 'The good news is we've got really low unemployment. The bad news is we have really low unemployment,' '' Rasmussen said. "For employees, it's definitely causing wages to go up. But it also at the same time doesn't make the job any easier, because you don't have a deep bench of people to replace you if you're going to be absent."

As businesses help drive Maui's economy, some hoped for the right kind of growth.

"I want us to succeed, but at the same time, I want to make sure Maui stays Maui," Saffery said.

"But at least with the small businesses, you know it's not these large infrastructure and corporations coming," Caccamo added. "It's still small."

Kunz admitted the permit process is tough and there are many rules to follow, but "things change, and you've got to get through it."

"Small businesses really are able to make a personal connection with people and show them what Hawaii is all about," Kunz said. "I'm optimistic about the future. . . . I see that the industry that we're in is really booming, and I'm just trying to keep up with demand in a way that makes everyone happy -- the employees and our customers and the community at large."

* Colleen Uechi can be reached at cuechi@mauinews.com.