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Food Small Businesses

Love Food & Small Biz? There’s An App for That

August 2, 2017 //  by Rhonda Abrams

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 does their owner get the cash they need to buy supplies before they actually make sales?

Now, there’s a new app that helps food-related small businesses improve their cash flow and nurture loyal customers at the same time, “Credibles.” The San Francisco-based start-up aims to help small food businesses by enabling customers to pre-pay food in advance from a growing number of small food companies, essentially setting up a prepaid tab. The food 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 does an avid fan help insure the survival of their favorite coffee shop or cheese maker? With Credibles, loyal customers exchange their money for food not shares.

Here’s how it works. Using the Credibles app on their smart phones, customers choose the company they want to prepay. If they prepay larger amounts–typically over $100–they’ll usually earn extra “edible credits”—perhaps an additional 10 percent worth of food. Then, with their account preloaded with cash, the customer uses their “edible credits” on their Credibles app 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 their app. Small food companies get their money up front, well before the customer redeems all of their credits.

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

The customer wins: they get a discount and also help support the local and small food producers and vendors they like, making it more likely those companies will stay in business.

“Customers are 1.5 to 2 times more likely to shop at the local business where they can use Credibles,” according to Hesse. “When you leave the house, you can go left or you can go right, but there is a sense of belonging once you make a pre-commitment to the local business. We call it the ‘Cheers’ effect.”

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. Incentives in the form of additional credits when making significant upfront payments.
  3. Convenience of having a pre-paid app and not always having to take cash or a credit card to your local cafe.

Credibles started in San Francisco, and the service now has local providers in over a dozen states, though 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.

Some companies already participating in Credibles include:

Zocalo Coffee, San Leandro CA

Egg Restaurant, Brooklyn NY

Farmhouse Culture, Watsonville CA

Kriemhild Dairy Farms, Hamilton NY

Our Table Cooperative, Sherwood OR

Local Roots, Orlando FL

Marjorie Restaurant, Seattle WA

Can this truly make a difference for a company? Every small business dreams of payment in advance. That’s because 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. They can purchase much needed new equipment. They can grow.

Consider this: In the first quarter of 2016 alone, Starbucks’ loyal customers had loaded their prepaid cards to the tune of $1.2 billion dollars—more money than some smaller regional U.S. banks have on deposit. That mountain of money gives Starbucks immense buying power, improves their cash flow and makes it easier for them to compete against other coffee shops.

Credibles is a step–though a small step right now–in helping to even the playing field for small businesses. So your favorite local café can get money up front, just like Starbucks.


Copyright, Rhonda Abrams, 2017

This article originally ran in USA Today on August 2, 2017

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Category: Solution CenterTag: Arno Hesse, cash flow, Credibles, credit, food-related companies, rhonda abrams, small business, small business tips, USA Today

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