Starting a Small Business in Paradise
This is a transcript of a podcast posted on November 19, 2007.
 Rich Stim: Hello. We’re here with Michael Molinski, author of Small Business in Paradise: Working for Yourself in a Place You Love, from Nolo.
Michael, first question: if you’re an entrepreneur, and you’re interested in starting a business in a dream destination, do you have to be concerned with overcoming a sense of outsider hostility that locals may resent you for some reason for moving into their area and opening up a business?
Michael Molinski: Well, it’s funny, but I think most small towns, especially in remote resort locations, are actually pretty welcoming to outsiders. That said, I think the key is just to use common sense, and don’t walk into a place like you know everything, because you don’t -- things work differently in small towns and resort locations, people have ways of doing things, and you have to take your time to get accustomed to that, and to get acclimated.
A good way is just to get involved with community events, to support others, to support local charities, before you go doing any of your own planning. Then, once you’ve done that, hosting your own events is a great way to involve the community -- to involve other organizations in the events, to co-sponsor something, is a great way to do it.
Another key thing is the barter system. One of the people that I interview in the book owns a small art gallery in Tahoe, but one of the ways he gets his name out and his services is by swapping things. He’ll offer to put his artwork up for free in a Starbucks, or in a ski resort. It works for both parties.
Rich Stim: Many of the people you interview have actually visited the locations where they’re going to start their business many times before they open up, so I assume that’s a good idea, a way to build up a cache with locals.
Michael Molinski: Right. One of the things I recommend in the book is to take a separate trip once you’ve determined that you want to set up shop there -- not to be a tourist, but to be a local. So, set yourself up as a local, think about how the locals do business, walk around town as a local, talk to everyone you can, get that flavor, and definitely talk to the local chamber of commerce.
Rich Stim: A lot of the small business owners profiled in your book have previously run their own businesses. In order to meet the objectives that you set out in your book, how important is it to have small business skills, and if you don’t have them, can you port them in from some other type of life experience?
Michael Molinski: Entrepreneurship is a skill set, and you have to learn it. But there are other skill sets that are important as well: marketing, service. One of the people I interviewed in the book worked in the hospital industry. That’s a big service profession, so he’s used to waiting on patients and caring for them day in and day out. So he put that to use at his art gallery, in the marketing/retail area, serving clients. That did him really well going forward, but he had to learn the entrepreneurship.
Rich Stim: One of the most common businesses in paradise is the B&B, the bed and breakfast inn, yet they’re almost universally run by couples. Is that a self-fulfilling prophecy, that people expect a couple to run one so they’re always run by a couple, or is there more behind this decision?
Michael Molinski: There’s several reasons for that, and probably the biggest reason is that it’s almost impossible for one person alone to run a B&B. It’s much more than a full time job for one person; it’s a lot of work -- it’s a two-person job, minimum.
Rich Stim: Speaking of families, you wisely advise that would-be entrepreneurs should check with those closest to them before buying a business in a faraway location. In doing your interviews, you must’ve run into the situation where one member of a couple really wants to get to paradise, and the other is on the fence.
Michael Molinski: It’s rare that it happens that both people have the same amount of desire to go to paradise and set up shop. Usually, one is pushing the other, and sometimes dragging the other. Having the right support structure is extremely important, having your family behind you is important, and if you have to drag them kicking and screaming, then it’s just not going to work. So, either don’t do it, or educate your partner, get them acclimated, and make sure they’re on board before you do do it.
Rich Stim: Well, for a lot of couples, it must come down to the risk factor: why risk what you have for something unknown?
Michael Molinski: One of the winery owners we spoke with, in the beginning, his wife hated the idea of moving up to the middle of nowhere. There was really no role for her in growing grapes, which was okay because she had kids to raise, but she wasn’t really involved in paradise and involved in the wine business enough for her to really thoroughly enjoy it. But then once they switched from a grape-grower to a winery, then she found a role in marketing, which she had done previously, and realized how effective she could be, and that had a huge difference on the success of the winery.
Rich Stim: Many of the locations discussed in your book have seasonal boom and bust periods, so that seems to throw a wild card element into the planning and the decision-making when starting a business in these faraway destinations. Does a small business person need to have a nest egg put aside for the off-season? How do you prepare?
Michael Molinski: That’s one of the main reasons why we decided to do a book like this, because opening a small business in paradise is so different from doing it in an urban setting, and seasonality is the main reason for that. Most -- not all -- but most paradise settings have one or two good seasons. So, you’ve got choices as a small business owner: you can try to become a year-long business, and of course the other alternative is to just shut down during the slow season, and a lot of people do that.
Rich Stim: Or, I suppose, you could have a business in a location that doesn’t need to be tied to the seasonality.
Michael Molinski: That’s very true, small business in paradise doesn’t at all have to cater to tourists. Every town needs a bar or brewery, and if it’s big enough, every town needs a marketing executive, and a personnel company.
Rich Stim: Michael, how does the concept of franchising fit within your book’s premise? Can a person have a small business in paradise if that business is Jiffy Lube, or Jamba Juice, or Starbucks?
Michael Molinski: Again, you can do anything in paradise. Most paradise locations have some sort of franchise operations. A lot still don’t, but Starbucks is just everywhere these days, and it’s a good business to do in a place like that.
Rich Stim: One of the many examples in your book is Keith Sabats, who works on Wall Street, and has a one-third interest in a St. Thomas restaurant. His restaurant interest has grown in value, yet Keith has not received any financial return from it yet. What’s the thinking behind including an example by Keith in your book?
Michael Molinski: First of all, he came from a Wall Street, New York background. There are a lot of people out there in professions like his that have the dream of paradise, but just don’t have the time to do it, or the will. A lot of people are interested in paradise, but they’re not ready to make the plunge, so they just want to get their feet wet, and Keith Sabats is a good example. He saw an opportunity, he took it right away, and it’s worked out great for him. It may not be bringing in income yet, but it’s an investment, and it’s a good investment. It’s gone up sharply in value in the time that he’s had it, and he’s gained much more from it than income -- it’s a place that’s his own, and he visits constantly, and whenever he goes there, they roll out the red carpet for him and his friends, and he’s treated like a local. Wall Street burns out a lot of people, and Keith now, whenever he wants to take that into a full small business in paradise for himself, he can do it.
Rich Stim: Michael, in your book you say that starting a business in paradise is not for someone who wants to get away from it all. Yet, in the movies, it’s not uncommon to find a character who does want to get away from it all, and moves to a distant island and opens up a surf shop.
Michael Molinski: But even a surf shop, you’ve got people coming in to buy surf boards, you’ve got business partners and suppliers that you’ve got to deal with on a daily basis, and I think that if there are two things people get out of this book, half of them will read this book and they will say, “You know, I didn’t realize it was so much work, and maybe it’s not for me,” and they won’t do it. The other half will read this book and say, “Wow, there are a lot of things that small businesses in paradise have in common, there’s a lot I have to learn, and maybe this has given me some of the building blocks to go out and do it.”
Rich Stim: A lot of the places that we might consider to be paradise are places where people speak languages other than English, so are English-speaking people always stuck with English-speaking paradises?
Michael Molinski: You know, that’s not necessarily true. One of the people profiled in the book, he didn’t speak a word of Portuguese, but he went to Brazil, fell in love with the place, moved there, bought a little plot of land with an inn on it, and he’s been there twenty years. He’s hugely successful, and he’s found his paradise. He now speaks fluent Portuguese and has a Brazilian wife and family, and he loves the place.
Rich Stim: How does risk fit into the idea of opening a small business in paradise, and are there ways to minimize the risk?
Michael Molinski: This is one of the key questions. Owning a small business by itself is a risky thing to do. However, it’s also, if done right, a way to minimize your overall risk. If you think of your small business as a piece of your overall financial picture of your financial plan, it’s just like anything else – it’s like a 401k plan, or it’s like your stock portfolio, or your bond portfolio. It is another investment, but even better, it’s an investment in yourself.
So it’s important to look at a small business as part of your overall financial picture, and take the risk that it brings and weigh that against your other investments, and determine how you’re going to support yourself going forward. I think a lot of people get scared off by the whole prospect of opening a small business, without realizing that it is a way to give you access to a piece of the American pie, to ownership, and by slaving away at our jobs nine to five in a corporate setting in a city for the rest of our lives we can only gain so much, and opening a small business gives you that opportunity to actually reduce your risk by having a percentage of your investment in yourself.
Rich Stim: Michael, thanks so much for speaking with us today.
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