Love food and small biz? There’s an app for that

Many small businesses involve food. The baker, the butcher, the coffeecake maker and the farmer-in-the-dell are all likely to be small businesses.

But as small businesses, most of these food-related companies have the same problem: how do their owners get the cash they need to buy supplies before they actually make sales?

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Now, there’s a new app that helps food-related small businesses improve their cash flow and nurture customers at the same time, “Credibles.” The San Francisco-based start-up aims to help small food businesses by letting  customers pre-pay from a growing number of small food companies, essentially setting up a prepaid tab. The businesses then have that money to use without having to take out loans.

“It’s easier to put money into Monsanto and McDonald’s than invest in the bakery down the street,” said Credibles’ founder Arno Hesse.

That’s because you can buy stock in large food companies. But how do avid fans help insure the survival of their favorite coffee shop or cheese maker? With Credibles, they exchange their money for food, not shares.

If customers prepay larger amounts through the app — typically over $100 — they’ll usually earn extra “edible credits,” perhaps an additional 10% worth of food. Then, with their account preloaded with cash, the customer uses their “edible credits” to make purchases at the local café, or of the food product.

From a small business point of view, this is a potential godsend. An independent, local coffee shop can now have the capability of a Starbucks-like pre-pay app, without having to hire expensive software developers to build and maintain it.

The small food producer or vendor wins: The prepayments can let  them make raw material purchases before they make sales, without having to pay interest (except in the form of some extra products).

Money now is worth a lot more than money later. With money up front and cash in the bank, small businesses can hire employees. They can expand their operations. 

And customers win: They get a discount while  making it more likely their favorite companies will stay in business.

Hesse says people often ask why customers would part with their money in advance. Three reasons: 

1. A sense of belonging and connection to community.   
2. The incentives of the additional credits.
3. Convenience of not having to carry cash or a credit card.

Credibles has local providers in over a dozen states, primarily in the Bay Area and New York. The company welcomes suggestions of your favorite small food company, which they will then contact to be added.

Every small business dreams of payment in advance, and for good reason.

Look at Starbucks: In the first quarter of 2016 alone, its customers had loaded their prepaid cards to the tune of $1.2 billion — more money than some smaller regional U.S. banks have on deposit. That mountain of money gives Starbucks immense buying power. 

Credibles is a step — though a small step right now — in helping to even the playing field for small businesses.

Rhonda Abrams is the author of 19 books including Entrepreneurship: A Real-World Approach, just released in its second edition. Connect with Rhonda on Facebook and Twitter: @RhondaAbrams. Register for Rhonda’s free business tips newsletter at www.PlanningShop.com.