 Think Tech of Hawaii. Civil engagement lives here. Welcome to Adventures in Small Business. This is a collaborative effort between the U.S. Small Business Administration, the MINK Center for Leadership and, oops, Business and Leadership, the Hawaii Small Business Development Center Networks, and the Veterans Business Outreach Centers. All here federally affiliated programs here in the state of Hawaii. I am Kathy Wiltsi. I'm the State Director for the Hawaii SBDC. And I'm here today to share with you some success stories of businesses, particularly from our Oahu Center. We have very many success stories. And later on we'll talk a little bit about where you can see some more of those. Today we're going to feature three to four, depending on how much our discussion keeps us on or off track. So with me today is Joe Burns, the Oahu Center Director. And he is going to be here to share several stories regarding successful clients that we've worked with over the past year. Just to start off, Joe, can you tell us a little bit about what the SBDCs do and the types of businesses that we talk to? Certainly, Kathy, and good morning. Good morning, everyone. Thank you very much for having us on the show today. So just by way of explanation, the SBDC is a federal state partnership that has been in Hawaii for about 28 years now, well-established program. And probably the best way to think of us is like a management consulting firm, because what we do is work individually with companies to help them improve their performance, whether it's financial performance, you know, getting money into the company through loans or private equity or improving their sales and marketing, their people management. This is what we do on a one-to-one basis with companies. And we're part of a larger SBDC network throughout the United States. There's roughly 1,000 offices and roughly 5,000 employees. So we have a lot of resources that we can draw on to help our clients. And then for Hawaii, of course, we have neighbor island offices. So if you're on a neighbor island, definitely look for the SBDC and they can help you. But we're focused pretty much strictly on Oahu here. We have some training. We have some workshops. We cooperate with a lot of other organizations, not only the ones that you just introduced, but some other ones. Notably, right now, we're doing some things with D-Bed through an SBA grant for exporting, which is the high-step program that's going on now, the last few years that's gone on. So we're into a lot of different things, but it's all really focused on helping our clients to succeed, whether they're startup businesses or whether they're established for a couple years or even well-established. We have probably something that we can do for pretty much everyone. Great. Thank you for sharing all of that. One other thing that came to my mind was we didn't really mention the federal contracting piece. Right. Maybe you can explain a little bit about that. It's recently been an uptake and a new venture for the SBDC. Right. So I did not mention that. I didn't like to say that, but we have just recently started with Hawaii PTAC, which is the Procurement Technical Assistance Center. And the focus of the PTAC is a similar kind of one-on-one focus, but to help clients position themselves and be able to sell to the government, whether it's services or goods and whether it's federal, state, or county and local governments, because as you know, that's not necessarily an easy process. You can't just walk in and basically do a deal. Right. So there's a lot of things that need to go before that in terms of registering, signing up, and being approved to sell. So we have one person on staff now under the PTAC and shortly another person to be able to help companies to do that. And it's a really good model because if someone is working with us and they wish to take advantage of this, they can do so right under the same roof. And we can help them with other parts, let's say their financial management or their capability statement. They don't have to go to another organization or another place. It can all be done under one roof. And this model is something that works in probably 25 other SBDC slash PTACs around the country. Great. So thanks for bringing that up. No problem. Yeah. Since I was just at a recent activity for that, it was top of mind for me. So thanks for sharing. So to our business at hand today, one of the things I wanted to highlight for the audience is the types and the variety of businesses that we deal with. And we can talk more about that a little bit later. But I know that one of the firms that we were going to feature today is an architect. Can you tell me a little bit more of the help we did with that client? Sure. And a lot of these are ongoing, too. It's not necessarily always a one-time deal. Right. So we're still working with this company. But this client was working in an architectural firm for quite some time, a prestigious firm. He became the operations manager and a partner. But a certain part of the business, the company didn't want to do anymore. So they asked him to take it. And he took it and left and started his own practice because there was certainly enough business and his name was well-known enough to do that. And that part was fine. But the part that we had to help with was the business aspects of that endeavor because he had never run a business before. He didn't have to worry about accounting or human resource management or paying GET or any of those kinds of things that a business has to do. That was all taken care of for him. So what we did initially was to help him get a line of credit because as you can imagine, you incur a lot of costs before you're going to see any money of getting paid. He had to pay his people by the time they invoiced and by the time they got paid, it could be 45 to 60 days. So he needed a line of credit. And he had talked to a local bank and right in the middle of that process, that loan officer abruptly left the bank. So he was kind of hanging and he couldn't get them to do anything. So fortunately, I knew someone at a different bank, introduced him to that person who was happy to help and in a short time, they got their line of credit. Part of that process was doing some financial projections. Again, that's not something that this person was familiar with. So we built out a five-year projection based on the numbers in terms of what he thought he was going to be doing and then looking at the costs and the expenses. And of course, the bank would use this in their underwriting process. So that's something we can help people with across the board is as part of a business plan or stand-alone, the bank is going to want to see, okay, what are you going to use our money for and how are you going to pay us back? So this is a helpful part of the underwriting process. So we helped him with that. And then happily he got his line of credit. It's since been increased. And then along those lines, he didn't have a good way to capture his numbers. He started using spreadsheets, which a lot of people do. It's better than a box of receipts on the floor. But it's not as good as a financial management system such as you would have in QuickBooks or Xero. So we helped him get set up on QuickBooks. And I have been working with his office manager to make sure that they can produce the financial results, not only for them internally, but also for the bank or any other third party that might be interested in seeing those numbers. And they've been doing some really good projects. He's hired five full-time people initially. Great. And looking at a couple more, maybe by this time he's already hired those two more. So this was a case of helping someone with the business side of their endeavor that's worked out really, really well. And I think that's an important note for the audience is that many small business owners, especially when they're first starting, may be very good at what they do, but that does not mean that they will be good at running a business. There's so much more to it. So I'm very happy you pointed that out. Right. And you can't blame people that don't have a background in financial management. Of course. Maybe they didn't go to school for it or maybe they don't even like numbers. We know people like that. But we feel it's important for them to have a basic knowledge of what they're doing, even if they hire somebody else to do their numbers internally or externally so that they know what these numbers are telling them and that they can speak with some confidence to let's say a lender or an investor. So that's an important point. I noticed in the success story, and I should mention at this point too, all of these success stories that we're talking about today and in fact many, many more that we've dealt with over the years appear on the SBDC website. That is www.hisbdc.org. I have to say that very distinctly. So if people are interested in more details, but would you mind reading the quote that is in that success story? Well, it's a little bit embarrassing because it's about me. But since you asked me, this client said we are blessed to have many strategic resources in our startup. The SBDC and Joe are the most strategic of all. Joe's deep knowledge of operating a business was a necessity for our company to get off the ground in its inaugural year. Finances, bookkeeping, organization, compliance, and training were among the key aspects of Joe's consultations. Without his help, we would be in startup mode for years instead of months. And that was really kind. That was really a nice statement. We love to see people who are successful and we like hearing how we help them, which is why we do this kind of work. And it's really fulfilling and fun to see a quote like this. So thank you for asking me to read it. I didn't think you'd go there on your own. So setting aside the blush factor, it's very good that you shared that. Were there any other things on that client that you wanted to discuss? I don't think so except that if we don't hear from clients in a certain amount of time, especially somebody active, we'll try to reach out and let them know that we're still here in case they have something. And then a lot of times we'll just say, could you please send in your financial information for the quarter so we can look at it. Maybe you missed something or maybe you didn't look at it. And maybe there's something that we can see. I should also stress at this point, as you know, everything that we do is strictly confidential. Our funding comes from the SBA on the federal side and they're very vigorous about making sure that any information that we get from clients is strictly confidential and well protected. So people have confidence to share that information with us. So we do go back sometimes to see how people are doing on a regular basis and if something has popped out that they might not have noticed, we can pursue that. And it can be confusing, I think, to your clients at some point. If we're actually talking about them on TV and posting them on our website, we actually have their permission. Yes, we do. They have to sign a release to make sure that it's okay. Sometimes we'll do an article, let's say in Pacific Business News, and absolutely we have to sign a release to make sure that they know that this is being done for publicity reasons and we have permission to do so. We wouldn't go talking about people unless they said it was okay. Great, thanks for clarifying that. Just as an aside also, for compliance reasons and lots of other things for the work that we do, every employee including our interns and volunteers also signed confidentiality agreements. So it's very well covered and an area that clients can be, I think, very comfortable with. Right, because if they're not giving us the information, it makes it harder for us to help them. So they have to have confidence that this is not going to make out anywhere. And just going a step further, if we have two clients that are very similar, we'll make sure that they're with different advisors and not have one advisor for the same type of company because it's very hard to forget something that you've seen and say, well, you know, company A is doing this, you ought to think about this. So we try to have that as separate as possible just for being ethical. Great, okay, we're due for a short break so that's a good point where we can stop and we'll come back after the break and talk about some of your other clients. I'm Ethan Allen, host on Think Tech Hawaii of Pacific Partnerships in Education. Every other Tuesday afternoon at 3pm, I hope you'll join us as we explore the value, the accomplishments, and the challenges of education here in the Pacific Islands. We have the potential to be seriously cool and I want you to come watch my show where I bring in experts who talk all about easy strategies to be healthier, happier, build better relationships, and make your life a success. So come sit with the cool kids at Out of the Comfort Zone on Tuesdays at 1. See you there. We're talking about success stories for the Small Business Development Centers here in Hawaii and I'm going to ask Joe now to switch to a little bit different type of client and to tell us about things that we do in the medical field or with doctors and those kinds of people. Right, well this client, it was interesting because of the social impact that they have and we really like larger projects like this that have some social impact as well as the financial impact. So this was for the Y&I Coast Comprehensive Health Center on the west side of Oahu which serves a medically underserved population many Native Hawaiians and there's no hospital out there. This is the closest thing to a hospital that they have. So a couple of years ago they were building a new clinic at a location where the old clinic was basically falling down. There were days when they couldn't use it because it was leaking from the roof so they undertook a campaign to build a new clinic in that location and as you know the USDA the US Department of Agriculture has some very good programs for rural development. You have to be in a rural area and this was under the Community Facilities Program whereby the USDA will either give you the money in a small grant and or direct loan the money to you or guarantee a loan through a lending institution. And so when they do that because the amounts tend to be a little bit higher they often require a feasibility study and that's something that we do one or two of a year because it takes a lot of time to develop that. They tend to be very long and they tend to be very deep in the research that goes into it primary and secondary research. And so we felt this was a good project to invest our time in strictly because of not only the financial impact but as I said earlier about the social impact of having a better place where people could go and get medical care. So in this case I put together a team we had myself and actually three other people one intern, one volunteer and then another staff member and myself and in this case it was due in a very very short time so we really had a crunch on it and make it acceptable to the USDA and to the lending institution so that they could get it approved and of course all the other approvals that would go along with it to be able to stick the shovel in the ground and start the construction which I'm happy to say happened and it's on the way to fulfilling that purpose of helping the people on the west side to have a good place to go for their medical needs and this was a wonderful project in terms of the social impact as well as the financial impact. That's great. And I know you mentioned that it's largely a native Hawaiian population there. Correct. So do you recall any numbers on how many people they can serve now as opposed to previously? Gosh I don't have that at the top of my head but I know that there were times when that old clinic was actually closed because of trying to make repairs and fix the leaks and this one was larger so definitely the capacity is larger and they're not going to have the challenges with being closed because this is a new building it's actually a shopping center and it's completely new and so I don't think they're going to have the same challenges and they'll still be able to have a higher capacity sorry I don't have the numbers with me. That's okay. Like they say, don't ask a question you don't know the answer to, right? But at any rate, thank you for sharing that story as well. And I guess just to go to a whole another end of the spectrum of clients I know that you've worked with many food type establishments restaurants bakeries, things like that so maybe you can give us that example. Sure. So my impression of the economy here in Hawaii and I obviously haven't studied it but my impression is after doing this work for some years is that our market is very wide I mean we have a very wide variety of companies but it's not as deep as some other places let's say on the mainland just strictly because we don't have the population so for us the challenge is we have to be a lot of things to a lot of people it's not necessarily that many of course when you get into food, food production you know bakeries that kind of thing there's definitely a good number and so our challenge is to be a lot of things to a lot of people so in this situation I had a client that I'd been working with for actually a couple years and she had been looking to buy a business she was in a food business and was not really able to do her own kinds of ideas do her own things that she wanted to do she was looking to buy a business and we had strategized for a long time about what type of business was appropriate what would be good for her to start and then by luck someone referred to me someone who I knew but wasn't a client said hey I want to sell my bakery business so the light went on I said okay you guys have to talk to each other so there was a negotiation for several months we decided not to get the lawyers involved initially but have come to a purchase agreement where the seller had the things that he wanted in the agreement and the buyer had the things that she wanted and then at that point the lawyers were brought in to make sure it was not unfair to one side or the other and both sides were having their interests protected and so they signed the purchase agreement and through an SBA loan courtesy of Central Pacific Bank the transaction went through and she has been operating the business now a couple years successfully and then part of that engagement other than the buy-sell part was making sure that her financial reporting system was robust because when you have a retail establishment you have a lot of small daily transactions how do you account for those and make sure that everything is hitting your books and you really understand your costs and that you have some profit at the end of the day this is why you're doing this one reason anyway so part of that was that and then renewing a lease, looking at the lease terms making sure that there was nothing in there that was going to be not advantageous to her and when you get a 60 page lease sometimes you don't know what's in there you don't know what the owners have maybe they lived in there inadvertently or not so you certainly want to go through that and make sure that your interests are protected and then the other things we worked on were some of the ideas about social media marketing effectively, segmentation who are your buyers how do you reach them, what is the message that kind of thing and she was successful in selling to one of the larger department stores and I mentioned earlier about the step grant and she's actually supplying many cupcakes to the working sessions, to the workshops there so that's kind of nice too so that's been a very successful and happy kind of a situation where you have a business transitioning from one owner to another and we've seen more of that in the last few years I'm not sure why but perhaps it's that we're becoming more known as somebody that can help or during the recession in the 2008-2009 there was some pent up demand and only now is that coming out when things are improving banks are a little bit more disposed to lending when the economy is better although they certainly make their individual decisions and so there's a few things that are maybe happening and I think last year we probably had four or five business transitions like this either to another owner completely outside the company or to another generation that kind of thing that's very helpful we're getting a little bit close to the end can maybe we talk about just in general the range of clients what kind of people you see and what's most prevalent if I look at our NAICS numbers the codes we actually work with manufacturing companies more than anything and that's a little bit surprising here in Hawaii but if you think of a small food manufacturer or a soap manufacturer or a candle manufacturer those are definitely manufacturers somebody that's producing food manufacturing or making food is considered to be a manufacturer as well so we probably have quite a few like that then you have accommodations we have a lot in the accommodations area whether it's support for the businesses that are guest oriented tours that kind of thing we do that we have certainly a number of retail establishments which just runs the range and then of course we have some in the medical area where we have doctors dentists who are starting a new practice and they don't necessarily have the financial background to do that so we'll help them the SBA has a very advantageous loan for fixed assets as you know called the 504 program and we've helped a number of doctors, dentists physical therapists to pay for their equipment because it's expensive to start a practice sometimes over a million dollars just to outfit an office and they can get a very advantageous loan from SBA that is made for long term assets usually the down payment is less the terms are very favorable so that's another option for the medical people just along that line we also did a couple of urgent care clinics one on Kauai one here that's another way that people can save money not necessarily going to an emergency room or a hospital or something that could be taken care of by acute care in an acute care clinic so it just runs the gamut I should say very interesting I guess the types of businesses that we think of here often are not quite what you might expect but thank you so much for being here today I'm very happy that we had the chance to share some of our success stories and again please audience please be sure to check our website www.hisbdc.org on there you have the ability to find out a lot more about us all of the centers statewide you can sign up for counseling or for our workshop so please take a look at that website and seriously think about coming to talk with us in person thank you Joe thank you Kathy thanks everyone bye bye