Ask any small business about keys to growth and they’ll likely bring up cash flow.
Making sales is tough enough.
Making sure cash flow meets the needs of a small business that’s growing can be scary.
Laguna Beach-based Auri Inc. recently offered an example of the lengths some small businesses are willing to go when banks aren’t lending.
The shoemaker went public in an effort to raise money by acquiring North Carolina’s Wellstone Filter Sciences Inc. in a reverse merger.
Wellstone holds a patent for a cigarette filter and has no revenue.
It does have a listing as a public company on the low-profile Bulletin Board exchange, a potential avenue for raising money.
“I wanted to make sure that we didn’t run out of capital resources,” Auri Chief Executive Ori Rosenbaum said in an earlier interview with the Business Journal. “The worst thing is to have a product going gangbusters and not be able to supply it or do those things to support it from a branding and marketing perspective.”
Cabo Foods Inc., a Laguna Hills-based maker of organic tortilla chips sold under the Cabo Chips brand, is reviewing its options as it seeks cash flow to support growth.
“We’re looking at a traditional bank for a line of credit as a temporary holdover, but I think to compete with big brands we need marketing support with in-store reps, a budget for store advertising and so on,” said cofounder Christian Bunte. “So we’re looking to an investor deal for that.”
Bunte would prefer a strategic investor with experience in the food industry.
“I may only be 27, but I know the industry pretty well,” he said. “That said, a strategic investor will be able to provide the direction we’re looking for.”
Cabo Foods has laid a base for growth.
The company’s chips are sold in upscale supermarkets such as Bristol Farms, Gelsons and Whole Foods, as well as Ralphs and warehouse retailer Costco.
Distribution covers markets west of the Rockies and Michigan.
Sales last year were around $500,000 and the company is on target to double that this year, according to Bunte.
Cabo Foods still needs cash to foster its growth and compete with big brands, such as Frito-Lay.
The company hopes to have a deal worked out by the end of this year.
“We have a lot of brand awareness and distribution right now, so it’s a great opportunity to build off of it with additional marketing support,” Bunte said.