As local business owners know, managing a business in paradise also presents some unique challenges. From unpredictable tropical weather to the ebb and flow of tourism, Hawaiʻi is a distinctive business area. Remaining profitable and compliant means identifying how these challenges will impact your small business so you can prevent them from holding you back.
Understanding these factors is essential for the success and longevity of any local business. This guide will help you identify and prepare for the specific challenges that Hawaiʻi-based businesses face, allowing you to tailor risk management strategies and insurance coverage to protect your island enterprise.
Let’s look at how you can turn these local challenges into opportunities.
Weather Challenges
If you’ve operated a business anywhere in Hawaiʻi for any length of time, you know the risks of inclement weather and climate changes. Standalone disasters pose a huge threat to business property, assets, workers, vehicles, and more.
The 2023 Maui wildfires are a recent example, having destroyed over 2,200 buildings, claiming over 100 lives, and costing local home and business owners over $5.5 billion in damages.
In addition to singular events, Hawaiʻi business owners face regular weather challenges, especially in areas near the shore, such as along Hawaiʻi Route 30.
These risks include:
- Storm surges
- Tidal waves
- Coastal erosion
- Landslides
- Rockfalls
Knowing the risk profile based on your area is key to understanding the insurance you need. Businesses with property and assets near the coast are more susceptible to geological erosion and other destructive events, including rising sea levels.
Even on the best of days, the heavy wind and rain in Hawaiʻi can damage valuable assets and result in property loss. Consider combining general liability insurance, property insurance, auto insurance, and more to create a comprehensive insurance profile for your needs.
Tourism-Related Challenges
Hawaiʻi is a premier travel, wedding, and event destination. Millions of tourists visit every year to enjoy the businesses, scenery, and services, resulting in increased profits as well as new challenges. In August 2024, business owners spent $1.72 billion catering to the needs of tourists, but what about the needs of the businesses?
The first step to protecting your business during heavy tourist seasons is to identify your risk factors for tourist-related incidents. Examine and compare the costs of repairs and other liabilities at different times of the year; when business activity fluctuates, your risk profile may change.
By determining these patterns, you can create a business insurance profile that changes to meet the needs of each season. Commercial property insurance can help you protect your assets from the risks of vandalism, theft, and damage, which increase during seasons with heavy foot traffic.
However, it is important to remember that your property, vehicles, workers, and other physical assets are not the only areas that need to be covered. The reputation of the business and the costs of potential medical liabilities should also factor into your insurance plans.
Precautionary measures should be taken to prevent accidents in and around your business, especially in the hospitality industry, but you can’t prevent everything. Professional liability coverage steps in to protect your business from costly litigation in the event of an accident.
Even non-life-threatening situations, such as a tourist falling behind on their schedule due to your employee’s mistake, can result in financial liabilities that these policies are designed to cover.
Economic Challenges
Despite being one of the world’s premier vacation spots, Hawaiʻi was ranked last in CNBC’s list of the top states for businesses in 2024. One of the primary reasons is Hawaiʻi’s economic challenges, including sky-high living costs, particularly in the wake of the pandemic.
COVID hit Hawaiʻi hard as it heavily impacted the willingness of many people to travel, mingle, and enjoy the state’s primary attractions. Even Hawaiʻi’s reputation for a high quality of life is now failing to offset its rising living costs, production prices, manufacturing and operating costs, and more, all of which exceed national averages.
Unfortunately, the real estate market in Hawaiʻi has taken a similar hit due to the same reasons, creating even more challenges for locally-owned businesses.
How can business owners face these economic challenges? The first step is to identify the impact of Hawaiʻi’s economy on the insurance needs of your business. Speak with an experienced local insurance provider who understands these specific challenges.
Contact Atlas Today to Prepare for Business Challenges in Hawaiʻi
Identifying and overcoming challenges related to weather, tourism, and economic change in Hawaiʻi requires continuous re-evaluation of your business’s insurance needs. Enlist the help of an experienced local provider who knows the issues faced by Hawaiʻi’s business owners, both in the wake of disaster and on a daily basis.
At Atlas Insurance, our team builds on nearly a century of experience helping business owners in Hawaiʻi match insurance products to their unique risk profiles. Contact our team today to learn how we can help protect your business in 2025 and beyond.