Many of Hawaii’s nine million annual visitors fall in love with the Aloha State. If you’ve experienced the magic of the Hawaiian islands as a tourist, you might find yourself sitting at the airport with a heavy heart, planning your return—not just to visit, but to make Hawaii your home. And as part of that plan, you might dream of starting your own business in the islands.
Many Hawaii residents share this entrepreneurial spirit. In fact, around 800 small businesses get started in Hawaii every year. A WalletHub study of the best small towns to start a business ranked Hilo, Hawaii, and Kahului, Maui right around the top 500. However, that being said, around 800 businesses also call it quits in Hawaii every year, and Hawaii has been ranked as one of the most expensive states in which to run a business.
However, we know (and have worked with!) plenty of successful businesses in the state. If owning a Hawaii-based business is your dream, we’ve put together five areas for you to investigate to help you get your business off the ground.
#1: How Well Do You Know Your Island?
If you’re already living in the Hawaiian islands, you’ve probably gotten to know your island pretty well. And if you’ve lived in the state for a while, you know that every island has its own way of operating. The way to get things done on Oahu doesn’t automatically translate to success on Kauai, the Big Island or Maui or vice versa.
So if you don’t already live on the island on which you want to start a business, your first order of business is getting to know it well.
Some recommend living on your island for at least a year before you start a business. At the very least, get to know the business community of the island you’ve chosen. Go talk to some business owners, ideally ones who own similar or related businesses. Find out what works well for them and what keeps them up at night. Owning a business in the middle of the Pacific has its own joys—and quirks. Learning from other entrepreneurs can help you avoid common mistakes that others have already made.
Additionally, many businesses in the Hawaiian islands are built on relationships—genuine ones. The more of these that you can form, the better equipped you’ll be to do business in the small ecosystem of the island that you call home.
What’s the best way to get started? Each island has its own unique opportunities. To uncover the right ones for your unique situation, try a combination of online research and good old-fashioned asking around. Here are a couple of ideas to kick off your search:
- The Chamber of Commerce of Hawaii sponsors events on Lanai, Maui, the Big Island, Kauai, Molokai and Oahu that offer both educational and networking opportunities.
- The Hawaii Venture Capital Association offers monthly events in Honolulu spotlighting local businesses and issues.
- The American Advertising Federation’s Hawaii Chapter holds events in Oahu and on neighbor islands, with a focus on marketing and advertising.
- Hawaii’s Small Business Development Center (SBDC) hosts classes, educational workshops and events on Kauai, Maui, Oahu, Hilo and Kona.
- You’ll also find specialized entrepreneur social events on Meetup.com.
As you get established on the island that your business will call home, you’ll also want to get a clear picture of who your business will serve.
#2: Who Will Your Customers Be?
There are a number of ways of dividing up Hawaii’s population to understand your potential customer base.
At a basic level, however, you might want to consider the contrast in these two numbers:
- Hawaii saw more than nine million visitors last year.
- The state’s resident population is, in contrast, 1.4 million.
Which group will be your primary customer base? Before you answer “both,” make sure you think it through. People visiting Hawaii can have very different needs, budgets and concerns than people living in the state.
For example, consider a high-end restaurant with entrees in the $40-60 range. While a tourist with a good budget might not think twice about it, that kind of meal might be a once-a-year splurge for a resident who’s celebrating a special occasion—and if you’re located in a remote area without a lot of tourist traffic, that could create a challenge.
So as you begin to figure out the kind of business you want to start, make sure you understand your audience well. Deciding whether to serve primarily tourists or residents is just the first of many distinctions you’ll want to make as you zero in on your ideal customer. However, in a state whose economy is reliant on tourism, it’s an important one.
#3: What’s Your Plan for Your Business?
If you’re not looking for funding or securing a loan—both of which will likely require a formal business plan—you might consider skipping it altogether. Some studies have even suggested that there’s no correlation between writing a business plan and the success of a start-up.
However, other studies have shown that entrepreneurs who write a business plan are 2.5 times more likely to follow through and actually get their business off the ground.
Writing a formal business plan will allow you to analyze a number of factors that are critical to your venture’s success, including:
- Who, exactly, are your customers?
- Who are your competitors—and why will people choose you instead?
- What’s the real demand for your product or service?
- How will you get more customers? What will it cost you in terms of marketing and advertising dollars?
- How will the finances work out? Or, in other words, how will you make money? Many business plans ask you to consider three scenarios: conservative, moderate and optimistic so you can explore your finances realistically.
At the end of the day, your business plan acts as a roadmap to keep you focused on what’s going to make your operation successful.
Want some help writing your business plan? There are a number of local resources available:
- Oahu’s branch of the Hawaii Small Business Development Center offers workshops for writing business plans.
- The Big Island branch of the HSBDC also offers business plan workshops on both the Hilo and Kona sides.
- The Maui Economic Opportunity Business Development Center’s Core Four Business Planning Training will teach you how to write a business plan, as well as operate a successful business.
- Kauai Community College offers an online course on creating a successful business plan.
As part of your business plan, you’ll take a close look at your revenue and expenses. However, since expenses are such an important topic in a place where almost everything has to be imported, we wanted to give this area the extra attention it deserves.
#4: What Are Your Real Expenses to Start a Business in Hawaii?
WalletHub ranked Hawaii as the 10th most expensive state in which to run a business, so expenses will be a consideration for any business owner. This is especially true when it comes to the shipping costs around your inventory and supplies.
Our advice? As you put together your business plan, schedule a complimentary consultation with a reputable freight forwarder. They can help you get an accurate quote for what it’s going to cost you to ship in 1) any start-up equipment you’ll need and 2) ongoing inventory and/or supplies.
Look for a forwarder who has experience shipping to your specific island. With this expertise, they may be able to help you cut your expenses by increasing efficiencies. By playing with all the factors—the speed of shipments, frequency of shipments, size of shipments, potential consolidations, etc.—they can help you find a sustainable solution that helps you stay profitable.
#5: Who’s on Your Team of Experts?
In addition to a freight forwarder, you’ll also want to assemble a team of experts who can help you when questions arise. Ideally, you’ll want to fill your bench early on to establish relationships you can count on in case of challenges or, in the worst-case scenario, crisis.
Your particular roster of experts will depend on the type of business you’re running, but you’ll want to consider professionals like:
- A banker: What bank will you use for your business? Will you be approaching them for a loan or to establish a line of credit? It’s good to start thinking about this area sooner rather than later, once you’ve filed your official paperwork. (More on that below.)
- An accountant/bookkeeper: Will you keep your own books? Who will do your taxes? Getting your business set up correctly from the start will save you a ton of headaches down the road.
- An insurance agent: What kind of insurance will your business need? Make sure you get quotes so you can account for these expenses in your business plan.
- A real estate agent: Will you have a brick-and-mortar location? A commercial real estate agent can help you scout for the right one.
- A lawyer: It’s better to have someone you trust in place before you really need a lawyer. Your lawyer can also help you file the legal paperwork to establish the right structure for your business.
Finally, if you’re looking for some mentoring from experts, check out SCORE Hawaii, which has locations on Oahu and Maui.
#6: What Do You Need to Make It Official?
Finally, when you’re ready to move forward, you’ll need to file the right paperwork, both with the federal government and with the state of Hawaii.
On the federal side, the Small Business Administration has 10 steps to get you started.
On the state’s side, the good news is that Hawaii is what’s called a “single agency jurisdiction.” In other words, you file your business registration with the State of Hawaii Department of Commerce and Consumer Affairs, Business Registration Division, and no additional county filings are necessary. Visit the DCCA website for more information.
Once you’ve legally established your company and filed all your paperwork, you can officially take the first steps toward getting your business off the ground.
Starting the Business of Your Dreams in Hawaii
Whether you’re already living in Hawaii and looking to start a new chapter or you’re dreaming of moving to the islands and setting up shop, owning your own business in Hawaii gives you the opportunity to pave your own path in paradise. By investigating these six areas, you’ll give yourself a head start toward success. As the numbers indicate, Hawaii might not be the easiest state in which to start a business—but any business owner in Hawaii will likely tell you that it’s worth it.
Need help quoting or estimating your shipping costs? We’d be happy to help! We work with a number of local businesses in Hawaii to move their goods and supplies, and we’d love to help you uncover the solutions that work for your business—and your bottom line. Just get in touch with us to schedule a complimentary consultation.