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Our islands' small businesses significantly impact Hawaii’s economy. They represent 96.4 percent of all employers and employ 54.1 percent of the private-sector labor force. Small businesses are crucial to the fiscal condition of the state and numbered 116,594 in 2010. This makes small businesses in Hawaii our largest employer.
This also shows there is a great deal of opportunity for a small business person to succeed. Hawaii educates a lot of business people in it's higher education institutions but many of them have to leave the islands to get a job on the Mainland. Why? We believe it is because there is a miss match between higher education and the real business world in Hawaii. Our higher education institutions need to offer programs that are relative to their environment, things like entrepreneurship, small business planning, accounting for small business, and maybe even how to own and operate a franchise. "Small Business People" and "Small Business People in Waiting" often get Business Opportunities and Buying a Business mixed up.
Here is a simple way to keep the two separated. Business Opportunities are just that, an opportunity to make a profit. If you are thinking about buying a Franchise for example, you are buying an opportunity to make money. No Franchise comes to you making money unless of course you are buying an already existing Franchise that is making money. A Business is just that...a profitable endeavor which you are buying the cash flow and profits to achieve some type of personal or business goal. Generally speaking, if it is not making a profit, it should be classified as a Business Opportunity even if it has been around for years. Some exceptions do exist, where for example, you are buying an ongoing business that has a large asset value but is not presently making money. In either case be aware of what you are buying. It's value is very much effected by these definitions. In June 2014 Hawaii's Unemployment rate was 4.4% well below the 6.1% National Average. This should tell you that the Hawaiian Economy is doing well. Our unemployment is way down compared to 1999 when our rate was 7.1%.
The Tourism Industry is our #1 employer, #2 is the Military and #3 combined is Hawaii Small Businesses. Now is the time to be in business in Hawaii. Our future indicates more of the same is coming. So if your thinking about buying or for that matter selling your business, this is a great time to do it. Check our listings at www.pacificrimbusinessconsultants.com to see what is available. For you "Mainlanders", start your research on the cost of moving and setting up a business in Hawaii. Get ahead of the game! For our local folks, now is the time for you to start or buy a business...right now...not later! When you buy a business be sure to consider the following thoughts which reflect the experience of those who gone through the process.
1. Often, change of ownership affects the customer base. Look carefully at the customer list and discuss the loyalty of those customers to a possible new owner. 2. Even if you have a great deal of experience running a business, don't hesitate to consult outside experts when you have a doubt. 3. Discuss a transition plan with the seller and don't make earth shaking changes in the operation of the business right away. Employees can be a great help in transition, but turning them upside down and enforcing new rules may back fire when done to quickly. 4. Buyers get to personally involved in various commitments the company may make. Remember you should use the proper legal structure to operate your company. If you are a President and you sign something, make sure you use your title. 5. Regardless, of your position in the market, you must create an "economic niche" You want people to remember your company for something no one else does. 6. No matter how good the fit is for you personally, never let emotion dictate your pocketbook when buying a business. 7. Many sellers will try to convince you that the potential is where the value of the business lies. Base the value of the business on prior performance and how you will manage the business in the future. "Selling a business can be a long, tedious, and stressful process. Hiring an experienced business broker has huge benefits, as they can help guide you through the complicated process of selling your business. Utilizing the services of an experienced, professional business broker allows the owner to focus on running the business reducing the risk of business erosion during the sale process." Courtesy of IBBA, International Business Brokers Association."
Our experience with selling a business bares this out. There is a lot of work needed to complete this type of transaction. Buyers almost always say they have the money only to find later that they had a bit of a "Pinocchio Nose." This situation causes huge losses of time for the owner. A good Business Broker can shorten, if not eliminate potential buyers who are not really qualified to buy your business. As an owner the most important thing you can do is pay attention to your business while your Business Broker is working for you in the background. At some point in the history of your business, you are going to think about selling the business. Your first thought is to sell it to a "friend or relative", ...thinking that it would ensure a future for both you and the business.
But is this really the right thing to do? This idea usually starts with the best of intentions but ends up with many problems. In most cases, owners tend to over value their businesses. When you work with something for a long time, it is not easy to let it go. An overpriced business is not likely to get financing when the buyer goes to the lender. The "friendly buyer" will also go to great lengths to see that the price is reasonably correct. This creates tension, and bad vibes between the two "friends" and is just not a good way to go when selling a business. This is one good reason a Business Broker should be brought into the deal. Let them help establish a fair market price and deal with the other party. Your friendship will stay in place and the buyer "friend" will feel a sense of fairness is in place. Lastly, you may find that your "friendly buyer" is not a real buyer. The result of working with a Business Broker is that you will now be prepared to deal with additional buyers outside the "friends & relatives" market. Have you had a Business Valuation done on your business lately? We recommend the you have one done every five (5) years. Why? Because you need to know the value of your company at reasonable points of time in it's history.
You may be thinking about selling or you have (3) children who want to take over the business and you want to treat each fairly...or you simply need to know the overall value of your estate, including your car, home and personal holdings. All of the above are excellent reasons to get a Valuation. If it is for the sale of the business, it is much better to know it's value than to simply throw out a number...thinking someone will bite! We are happy to help you get a proper Valuation for your company. At the end of the day, you will be happy you did so. When you think of Hawaii, you think of the islands of Oahu, Hawaii, Maui and Kauai. After you visit, you are also more likely to remember the additional Islands of Lanai and Molokai. These are Hawaii's major Islands. Each has it's own economy and holds a place in the overall Hawaiian Economy. But the Island few people remember or know about is Niihau!
It too has it's own little economy. Niʻihau or Niihau (/ˈniːhaʊ/; Hawaiian: [ˈniʔiˈhɔu]) is the seventh largest of the inhabited Hawaiian Islands in the U.S. state of Hawaiʻi, having an area of 69.5 square miles (180 km2).[3] Niʻihau lies 17.5 miles (15.2 nmi; 28.2 km) southwest of Kauaʻi across the Kaulakahi Channel...] As of June 2009, the population was 130.[5] Elizabeth Sinclair purchased Niʻihau in 1864 from the Kingdom of Hawaii and private ownership passed on to her descendants, the Robinson family. During World War II, the island was the site of the Niʻihau Incident: A Japanese navy fighter pilot crashed on the island and terrorized its residents for a week after the attack on Pearl Harbor. The people of Niʻihau are known for their gemlike lei pūpū (shell lei) craftsmanship, and speak Hawaiian as a primary language. The island is generally off-limits to all but relatives of the island's owners, U.S. Navy personnel, government officials and invited guests, giving it the nickname "The Forbidden Isle." Beginning in 1987, a limited number of supervised activity tours and hunting safaris have opened to tourists. The island is currently managed by Bruce and Keith Robinson. (Courtesy of Wikipedia). So...there you have it. Hawaii's smallest Island Economy. Limited Tourism is starting to happen and the United States Navy does have an installation on Niihau. For an interesting up date, see http://abcnews.go.com/GMA/WeekendWindow/hawaiis-forbidden-island-weekend-window-niihau/story?id=11767576&page=4 In the world of Small Business a lot of business owners are eventually going to consider selling their business. Once they make this decision, the next thought is where do I go for help? Many are surprised to find that their Realtor they have known for a long time can't help them.
Realtors are wonderful people but most don't know much about selling a business. A Realtor is a member of the National Association of Realtors and can only use that term Realtor if they are a member of NAR. In most cases, they deal with real estate not the on going business. Some Small Businesses want to sell the land, building and business. In these cases, a Realtor may be able to help. But in most cases, when you want to sell a business, it is best to go to a Business Broker. It is possible for a Business Broker to be both a Realtor and a Business Broker but this is usually not the case. Many Business Brokers are Licensed Real Estate Brokers but not members of the National Association of Realtors. These types of Brokers understand how to sell a business and understand the actual real estate offering as well. This is the case with our company. We are a Licensed Real Estate Broker and an experienced Business Broker. |
AuthorWill Rodgers, Founder of Pacific Rim Business Consultants Archives
August 2016
CategoriesIIUSA NewsSBA News |
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