Melvin Matsuda, a partner with Kahuku Farmers Inc., trims a dead branch off one of his papaya trees in his orchard near Haleiwa.
Entrepreneurs get
helping handA federal program is helping
small businesses grow with the use
of custom-designed software
AS third-generation farmers, Melvin Matsuda and Clyde Fukuyama know about growing produce -- plump, juicy papayas, great big mangos and other choice fruits coaxed from the rust-colored soil of Kahuku and Waialua.
Expert advice
Program: Manufacturing Extension Partnership.What they do: Provides hands-on business mentoring to small- and medium-sized manufacturing and agriculture enterprises.
Who can apply: Entrepreneurs with a marketable product but who need help with various aspects of running a business.
Cost: Varies. A plan tailored to each applicant is devised and implemented and the cost split three ways between the business, and federal and state funding sources.
Contact: High Technology Development Corp. at 539-3702 or www.htdc.org.
But growing a business? It's not really their thing.
"We were at the point where margins were getting pretty thin, close to break-even," Fukuyama said.
The two partners who make up Kahuku Farmers Inc. had dreams of expanding but didn't even know how much it cost to produce each fruit or which was their most profitable.
But with the help of a nimble federal program that aids small businesses, they're implementing custom-designed software that helps them track the cost of everything that goes into their business.
"We knew we had to do something to get more information and technology, otherwise we'd remain really small fry," Matsuda said.
The program, called the Manufacturers Extension Partnership, helps small businesses obtain the services of top-notch, hands-on business consultants by splitting the cost three ways between federal funds, the state, and the business being mentored.
"The goal is to bring expensive consulting down to the small-business level," says Marty Parisien, a small-business marketing specialist and owner of several small businesses who is Kahuku Farms' MEP consultant.
Launched in the 1990s by the National Institute of Standards and Technology to help manufacturing and agricultural businesses, the program has struggled somewhat to find its feet in Hawaii, long considered too small a manufacturing base for a full MEP operation.
But it now mentors a growing number of local entrepreneurs, taking aim at a key reason for small-business failures: entrepreneurs may be experts in their field, but not in business.
Many small businesses become victims of their own success, selling more product than they can handle, says Dr. Phil Bossert, executive director and CEO of the state's High Technology Development Corp., which administers the program locally.
Chris Kamaka puts the finishing touches on a ukulele. The Kamaka Hawaii Inc. family business is now 88 years old.
"So they start hiring people. But they've never run a business before and, if they're a candy maker, they get caught up in all the business operations instead of making candy," he said.
That's where MEP's specialist consultants step in, rolling up their sleeves and taking stock of business operations, looking for ways to trim fat and grow the business.
"Sometimes I even answer the phones, take orders and all that too," Parisien said. "But that's how you really get to know what's happening."
At Kahuku Farms, Matsuda and Fukuyama wanted to expand, possibly into foreign export markets with its papayas, apple bananas, watermelons and other fruits.
"But we needed to know more about what was profitable and what wasn't. Otherwise, we may just be expanding the losses," said Matsuda, who made decisions on "hunches and feelings" in the past.
Parisien enlisted software start-up Primal Cause to modify its existing database program to isolate and analyze every single cost input at Kahuku Farms, right down to the varying productivity of each employee.
Among the findings so far, Matsuda and Fukuyama learned that they were actually were undercharging buyers for their rainbow-variety papayas, which they had been considering phasing out as unprofitable.
Kamaka Hawaii Inc. employees work on ukuleles in the finishing area of the factory. It takes two weeks to produce a Kamaka ukulele, with 20 coming off the assembly line each day.
The program first appeared in the state in the 1990's but only gained a foothold when the University of Hawaii took it under its wing. But Bossert said the program was a forgotten little fish in the big UH pond and HTDC, which offers a number of business development and support services, absorbed it last July.
Since then, the full-time staff has grown to five and the number of companies being mentored has doubled to 11. Five more wait in the wings and 16 are seeking approval. If the program can't help a company here, it helps them tap into MEP's nationwide network of consultancy services.
One of the program's beneficiaries is Kamaka Hawaii Inc., one of the most respected ukulele makers.
When Fred Kamaka Jr. and the rest of the fourth generation of Kamakas assumed control of the company, they took over a now 88-year-old family business but also a production process little changed since the 1950s.
Bottlenecks plagued the assembly line, which took six weeks to produce one of the hand-crafted Kamakas, which fetch $550 to $1,300 retail. There was a two-year order backlog and rising labor and insurance costs were hurting the bottom line.
In 2000, Kamaka Jr. took part in an MEP training course in which participants built a mock electronic circuit, assembly-line style, constantly adjusting the process until production increased.
"It was eye-opening," said Kamaka Jr., who pushed other family members to attend. Eventually, they shut down the factory for two weeks to re-tune the assembly line based on what they learned.
Now it takes just two weeks to produce a Kamaka. Twenty come off the assembly line each day compared to 10 in the past. The order backlog has been chopped to two months and the bottom line is recovering.
"Now we're starting to see some of that money coming in," Kamaka Jr. said.
MEP's own finances look a little less rosy. Its nationwide budget was cut for 2004 but has been ostensibly restored for next year, though anything can happen, Bossert said.
But he is confident HTDC will keep the program afloat through the entrepreneurial spirit of its staff.
For example, the software being developed for Kahuku Farms eventually will be offered for use nationwide through MEP's network, and any money earned will trickle back into MEP here.
