Eight years ago BYU-Hawaii alumni Delbert Kim ('83) and his wife, ClaireSepton Kim ('82), quit their conservative day jobs and went into thebusiness of helping others have fun.
Addressing School of Business students in the weekly entrepreneurship lectureseries on October 11, the Kims related how he quit his job as an insurancesalesman and she left her job as a computer programmer and systems analyst — withdrawingher $40,000 retirement fund — to start Xtreme Fun Rentalsin 1997.
Claire, president of the company, explained she wanted to do something thatwould enable her to stay closer to home to take care of her children andgrandmother.
She recalled her husband, who worked on the side as a party clown, was biddingon a job, "and somebody outbid us because they had a [inflatable] bouncer.We thought we could bring that to Hawaii and be successful," she saidof their initial five inflatables. Today Xtreme Fun Rentals has over 100rides, slides and other devices which attract kids, along with party rentalequipment, 4,000 square feet of warehouse space and 46 full- and part-timeemployees.
"We did a lot of market analysis," she said of the beginning,with the numbers showing there were usually over 1,200 birthday parties everyweekend on Oahu. "Even so, after we started, people just kept callingus up. We were amazed."
"We didn't know if it was going to be successful or not, but wewere willing to fail," she said. "Don't be afraid to takethat first step."
Delbert, the company's vice president, explained they relied on a lotof publicity, which he had learned to generate in the insurance business.For example, by providing free jumpers for the children of the professionalgolfers in the Sony Open tournament, the company got a free ad in the program. "Itwas probably worth $300,000 or $400,000 worth of advertising."
He also wrote a number of press releases that resulted in excellent televisionnews coverage. "You cannot pay for that. It amazes us we got this kindof publicity. The phones would ring off the hook," he said, addingthat many people had never seen some of their devices such as the "toilet-seat" go-cartracers, rock wall climb and "rock-em sock-em joust."
Delbert noted Xtreme Fun "commanded the market place for birthdays forthree or four years, but today there are over 60 inflatable companies ormore. The market is saturated. If we had stayed in the jumper market, we'dbe out of business."
He said their strategy to stay ahead of the curve without competing with E.K.Fernandez since then has been to specialize in the niche market of one-dayevents, such as the BYU-Hawaii Golden Jubilee carnival, "where we takea bulk amount of money."
Delbert added that working niche markets has three advantages: "One,there are more customers. Two, you have qualified buyers. Three, there'srepeat business. Many of our fairs are annual events. They book us for thenext year right after we finish [the current one]."
"When you think about the party business, it's just huge," hesaid.
Claire added because "anybody can start this kind of business," XtremeFun has focused on the rides; but other spin-off services and products includerental tables, chairs, generators, popcorn, and cotton candy. "Entertainmentis a huge market," she said, listing auxiliary sales of sound systems,lighting, search lights, stages, balloon sculptures, balloon making, magic,catering, tattooing, face painting, karaoke, party store and supplies, carnivalgames and corporate conventions.
"You have to keep yourself educated," Claire continued, notingshe and her husband spend $5,000 a year attending trade shows to see thelatest products and innovations. "Don't be afraid to spend money:You have to spend money to make money. The other thing is taking a risk:If you want to bring it up a notch, you have to step out of your box andtake the risk."
Delbert said there are plenty of challenges. For example, competitors havebeen copying their website content word-for-word. "Insurance has alsobeen a real challenge for us. Our industry had a bunch of people fallingoff slides [when they're not staked down properly]. There have beendeaths" (a couple of months ago a woman fell off a rock climb).
"Make sure you're covered, your employees are covered, your autos.Insurance is a key thing," he continued. "You've also gotto keep good credit. Even though we've been profitable every year,nobody will give us a loan without a personal guarantee. No matter what youdo, you have to have good credit."
"You've got to pay your taxes. There's a 10-20% intereston your base, plus compounded interest. I've heard of so many peoplewho have failed because they didn't pay their taxes," Delbertsaid.
Both of them said they now enjoy traveling for several months a year. "Thebusiness gives us that opportunity; but you have to be well organized. Witha cell phone and PC Anywhere™, no one even knows we're gone.It's really amazing what technology can do."
Delbert encouraged the business students to take advantage of all their opportunities. "Younever know how an experience washing dishes might turn into your owning arestaurant, or how being a guide at the PCC might turn into something," hesaid.
"Save your money, learn credit, network, be honest in all your dealings,and find your niche," he continued. "If you don't do it,it's never going to happen."