different ways to use gift certificates or advance sales to finance start-up restaurants or stores
leslie schaller commented
If you are running a retail or restaurant operation with a POS (point of sale) system you can run gift cards that have a start and end date time frame. This helps you manage your cash flow, so you are not deluged in the first year.
@Erin: great questions... I haven't been able to find any examples (yet) of this working farther up the food value chain, though I have to believe it could work if you can identify willing customers. FYI one other option for repaying the "loan" that might be better for cash flow (but it would take a lot longer to repay) would be to discount the sale by a certain amount until the "loan" is repaid in full. One additional question that you'd need to sort out with the customers is how to value the goods; it might be more straightforward if this model functioned alongside a contract with a guaranteed purchase price so that the value of the goods is clear up front to all parties.
Erin L commented
Could this also work for non-retail operations, such as a wholesale food hub? For example, doing a restaurant-supported agriculture model of asking restaurants and industrial buyers to invest a certain amount up front, and that amount is drawn down as they order each week. Are there any examples of this? Could it work? Is it legal (for a 501c3)? What might be the pitfalls?
Jess D -- Noodle Girl commented
Yes! We've been thinking about doing this for Neighborhood Noodle (http://neighborhoodnoodle.com) -- There's a local business here in Detroit, Avalon International Breads that started up in part through funding from selling "bread bucks." What are the legal requirements/restrictions on this? Best practices?