How corporations are partnering with entrepreneurs
By Lindsey Giardino
For years, Cabin Coffee used Inbru Coffee Flavoring to boost its coffee drinks.
Say a customer ordered a small caramel-flavored coffee at one of Cabin Coffee’s multiple locations: The barista would then prepare it using Inbru, which infuses flavor through rice hulls added to ground coffee.
Inbru’s flavorings were such a mainstay at Cabin Coffee that when Robert Barber, the second-generation family owner who manages operations, learned that the company was planning to close in 2020, he knew something needed to be done. That realization kick-started the process of acquiring Inbru, bringing value not only to Cabin Coffee but also to the Inbru brand itself.
Small businesses and startups like these have long been the backbone of economic growth, but their success often hinges on access — to capital, resources and mentorship. Increasingly, corporations recognize the value of supporting small businesses, not just as customers but as partners in innovation.
Principal’s approach to supporting small businesses
Small businesses are economic stabilizers. According to the U.S. Department of the Treasury, they created over 70% of net new jobs since 2019.
And they’re innovating, too.
Amy Friedrich, who oversees Principal’s relationships with U.S. small business owners, points out that when people think of innovation, they often think of startups. But that’s only part of the picture.
“The factual basis of innovation is coming from small and midsize businesses hitting an inflection point in their business,” she said.
At Principal, the company has assembled a variety of resources to support these businesses because they understand the economic power of investing in them.
“If you can unlock business growth with those smaller employers, you can help stabilize entire communities,” Friedrich said.
Principal’s approach to supporting entrepreneurs is built around three core areas: products and services, insights and research, and funding and investments.
Principal works with more than 130,000 small and midsize businesses to ensure their employees have access to the same financial security as those at larger companies. By offering benefits and retirement plans tailored to their organizational size, Principal helps these businesses attract and retain talent while providing financial protection for their workforce.
In addition, recognizing that financial barriers often prevent small businesses from scaling, Principal directly invests in venture capital and accelerators to fuel their growth. Specifically, they contribute to initiatives like the Global Insurance Accelerator and venture capital funds — some local, some national — all aimed at helping founders and small business owners gain access to capital and mentorship.
Through the Principal Foundation, the corporation also provides entrepreneurship support by grant-making, including to the Cities for Financial Empowerment Fund. In February 2022, the foundation awarded a $1 million grant to the fund to launch the Small Business Boost initiative in five cities and counties, including Polk County. The aim is to help the municipalities improve their finances to better position them to access capital and achieve their business goals.
Insights that help
One of Principal’s most significant impacts is providing small to midsize businesses with access to insights and services. Its Elevate platform serves as a central access point where small businesses can find resources to meet their needs, including legal services and marketing support.
Additionally, Principal recognizes that data-driven decision-making is key to business success and provides insights through proprietary research and indexes, including the Principal Financial Well-Being Index, Principal Business Owner Insights and Women’s Business Owner Insights.
Through this research, Principal has found that almost 70% of owners of small to midsize businesses say they need greater access to capital. Four in 10 business owners report that a lack of capital prevents them from planning for their company’s financial health. Women business owners, in particular, are less likely to access capital through traditional loans.
This is concerning for many reasons, not least of which is the fact that gaining access to capital helps small businesses innovate, create jobs and grow, Friedrich said. Yet, businesses in the midcycle phase — no longer startups but not yet large enterprises — often don’t receive the attention, funding and resources they need to continue evolving.
“That’s who we focus on,” Friedrich said.
Despite all the challenges, 64% of small businesses remain optimistic about the next year (according to 2024 findings in the Principal Financial Well-Being Index). Another key trend Principal is tracking is that small business owners feel more confident in their local economies than in the broader national or global economy.
“Innovation begins to bloom when people begin to see the economic power behind the companies that are fueling those innovative ideas,” Friedrich said.
Cabin Coffee’s entrepreneurial approach
Cabin Coffee’s acquisition of Inbru is an example of how small to midsize businesses can act like startups by identifying and capitalizing on opportunities.
In 2020, Cabin Coffee was presented with the opportunity to purchase Inbru, the coffee flavoring product they had used for years. At the time, Inbru was asking for too much money, so the deal didn’t go through.
A few years later, Inbru was heavily discounted, and the team at Cabin Coffee, including Barber, who manages operations, seized the opportunity and officially made the purchase in 2023. The acquisition process turned out to be an enjoyable — and valuable — experience.
“We’re always trying to be on the forefront of the next popular thing,” Barber said. “Since we’re a small business, a lot of times we follow the Scooters and Starbucks of the world, but we try to be innovative on our own.”
Acquiring Inbru has allowed Cabin Coffee to expand its product offerings and diversify its revenue streams beyond coffee sales, as the product is also available online. It has also added a layer of innovation to their specialty coffee business.
Barber shares that the company is committed to continuing this innovation by experimenting with new menu items, like avocado toast, to address changing customer demands. They’re also testing drive-thru-only models in larger markets for franchise expansion.
“It’s a cheaper ‘in’ for the average person who wants to own their own business,” Barber said.
For Barber, constantly finding new ways to satisfy current customers and attract new ones is all about innovation.
“If you’re not adapting, you’re dying,” he said. “If you’re stuck in your ways, you’re going to fail.”