Support your local business: Buy part for yourself
More entrepreneurs are turning to their communities for support, and in return for an influx of cash the small businesses are giving credit toward services, among other benefits, according to a CNNMoney.com story. For example, one restaurant owner was giving patrons $600 in credit toward meals at the restaurant for every $500 they gave him.
While it might feel good to support a favored local business, don't expect to get rich, let alone see a return on your investment.
A few favorite used bookstores that I often went to have closed in the past few years, and I would have given some money, say $100 for $200 in store credit, if they would have offered it. But I don't know if I would have gone as far as the 24 people who donated $25,000 to $75,000 each to raise $1 million to reopen Kepler's Books in Menlo Park, Calif.
The benefactors turned into shareholders, although owner Clark Kepler said in the CNNMoney story that the new shareholders of his C corporation are unlikely to ever see a return on their investment.
Along with knowing they helped a bookstore reopen, the 1,500 members who contribute, on average, $75 annually, receive benefits such as discounted books and invitations to private author events.
Beyond the immediate influx of money, another benefit for businesses getting investments from customers is that it creates a larger customer base.
Vox Pop, a bookstore and coffee shop in Brooklyn, had $190,000 of debt, so in January CFO Debi Ryan offered shares for $50 each. Each shareholder will get a small dividend once Vox Pop's debt is paid. Enough money was raised to keep the business afloat -- $64,000 -- and it came with a bonus.
The customers, now shareholders, shopped at the store more frequently.
That may be the best benefit for everyone. The business owner gets more customers coming in, and the customer gets to see his favorite store remain open.
Aaron Crowe is a freelance journalist in the San Francisco Bay Area. Reach him at www.AaronCrowe.net