Welcome to Practical Sponsorship Ideas
Can You Really Afford To Be Sponsored?

Can you really afford to be sponsored?

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Ah, the allure of sponsorship. To have a corporate partner spend a few of their marketing dollars on your passion; to take it to the next level, to go the extra mile, to not have to pay the bills.

To live the dream.

Sounds great doesn’t it? In theory yes, in practice… mileage may vary. If you’re really keen on seeking sponsorship (and I don’t mean a hand-out from your mate who runs a successful spare parts business) you need to weigh up the cons before you’ll see any of the pros.

This may sound a little pessimistic, but I want you to go into the sponsorship game with your eyes open to the realities. That it’s not the goose that laid the golden egg and the answer to all your financial constraints.

It takes hard work, commitment and tenacity to be successful; all of which may take the ‘fun’ out of what you’re trying to achieve through sponsorship.

So let’s have a look and some of the areas you need to consider before embarking on your sponsorship seeking journey…

What’s your time worth – the cost of sponsorship seeking

Time is something each of us has in limited supply. With all the things you’re currently doing, do you have the time to commit to developing a successful sponsorship program?

Think about it. What skills do you currently have and what will you need? How much time do you have to educate yourself? Are you passionate enough to spend your nights and weekends working on sponsorship proposals?

To become a successful sponsorship seeker you’ll need to:

All of these things take time. Do you have enough of this non-renewable resource to maximise your potential of finding that perfect sponsor?

How will sponsorship affect your performance and enjoyment?

Let’s jump forward a little bit here and assume that you’ve been successful in finding that perfect sponsor.

With sponsorship comes expectations. As part of your sponsorship proposal you now have to make good on a number of marketing initiatives and provide a real return on investment.

Can you deliver? It’s an important question to ask yourself. You’re no longer solely looking after number 1. You now have responsibilities to a higher power – your sponsor. These expectations and responsibilities can affect both your performance and enjoyment levels. Things become more complicated and you can no longer focus purely on the activity you’re passionate about.

Using my passion as an example, drag racing looks pretty easy from the outside. All you have to do is drive the things in a straight line. How hard can it be? But most of the work is done in the garage and in the pits, making sure you give yourself the best chance of victory. Now throw in some sponsorship responsibilities like hosting a few key clients on race day, handing out promotional material to race fans or spending your weekends at open days at your sponsor’s regional stores.

Each of these has the potential to distract you from your goal if you don’t manage them properly, and your performance and enjoyment may suffer as a result.

So it’s vitally important that you:

  • Commit only to what you are comfortable delivering
  • Clearly define what your responsibilities are (and are not)
  • Manage and resource the process appropriately

…so you can continue to perform and enjoy yourself. That’s the point isn’t it?

Covering all the bases – your legal obligations

How comfortable do you feel about signing a legally binding agreement? Because if you get involved with a corporate sponsor this is exactly what your going to have to do. If things don’t go your way, you can’t take your bat and ball and go home. There will be repercussions.

It can also take a lot of time to go from conceptual agreement about the details of the sponsorship to actually receiving a sponsorship agreement. As nimble individuals we can move pretty quickly. The same can’t often be said for larger corporations and in particular their legal departments. Expect delays and some argy-bargy before you receive an agreement fit for signing.

And please, before you sign anything, make sure you seek independent legal advice of your own. Never ever sign an agreement without fully understanding what you’re committing to. Good legal advice doesn’t come cheap so you’re going to have to factor this into your sponsorship seeking budget.

As a side note, this is why it’s important to view sponsorship as a numbers game. The sponsorship process can fall over at any point and it’s in your best interests to have a number of potential sponsors in your sponsorship pipeline – from the initial research stage to sponsorship agreement negotiations. You don’t want all your eggs in one basket.

When it does come time to sign on the dotted-line you can typically expect an agreement to include some or all of the following (but not limited to):

  • Sponsorship objectives, initiatives and benefits
  • Time frames
  • Investment and payment terms
  • Geographical boundaries
  • Legal jurisdictions
  • Performance and evaluation criteria
  • Dispute resolution procedures
  • Exit and termination clauses
  • Indemnity clauses
  • Options to renew and first right of refusal
  • Public liability insurance requirements (yes, you will need this and it needs to factored into your sponsorship costs)
  • Privacy and intellectual property clauses
  • And so on until eyes glaze over…

Still interested in finding that perfect sponsor considering some of the legal hoops you’ll have to jump through? You are committed!

Accounting for your sponsorship dollars

Let’s assume that you’ve secured sponsorship and you’re now nutting out the investment details.

Many sponsors will require that you have a separate legal business entity they can deal with and make payments to. Therefore you’re going to have to spend some time and money setting this up. This will vary depending on which country you live in and your local laws.

As an example, I live in Australia and have a holding company which I operate my consulting business through. Costs include:

  • Setting up the original holding company
  • Registering a business name
  • Yearly accounting fees
  • Yearly registration fees
  • Book-keeping fees
  • And so on…

This can cost me a few thousand dollars a year and fills up a few Saturdays of my time. So you’d better be sure you’ve factored this into your sponsorship proposals.

For smaller investment amounts, sponsors may be willing to deal with you as an individual. I assume this would mean any investment would be seen as part of your personal income? I’m not sure, but this opens up a whole can of worms regarding personal liability etc. In my opinion, you’d be much better off having a legal business entity between a sponsor and your personal assets. Once again seek professional legal advice.

Servicing your sponsor

Phew. So we’ve found that perfect sponsor through hard work and commitment, established our legal business entity, negotiated the sponsorship agreement and received our first cheque. Hooray!

Now the real work begins…you’ve got to actually earn those dollars and deliver. And if you’re really committed on delivering, as you should be, this can take up a lot of your time.

Consider the following:

  • You’re going to have to deliver on the marketing plan and unique initiatives you detailed in you’re sponsorship proposal and documented in the sponsorship agreement
  • Next, you may be required to measure the results and provide reports to the sponsor on the effectiveness of each initiative
  • You may also need to make appearances on your sponsor’s behalf
  • During the sponsorship period you will participate in the management of the sponsorship program; from organising events to co-ordinating promotional staff etc.
  • To keep things on track expect to meet with the sponsor on a regular basis and provide updates
  • And so on… lot’s to do and think about

What are your alternatives to sponsorship?

If all of the above sounds like a bit too much, there are alternatives.

The strongest position you can be in is where sponsorship is nice-to-have, not a necessity for you to continue whatever it is you’re doing. This gives you options. And options are everything.

For example, are any of the following applicable and realistic for you?

  • For cause related initiatives is fund-raising, donations or gifts an applicable alternative to sponsorship? The advantage is there’s no expectation of a return on investment or requirement to service a sponsor.
  • Could you start your own business to support your habit? Given the amount of time and effort required to secure sponsorship, could you use this time to create a business that will generate ongoing income and can realistically leverage your ‘property’? I’ve had ideas of creating my own online magazine (I’ve got the skills so it’s a very small capital outlay) and using my drag racing team as an integral part of the marketing strategy.
  • Work harder, get that promotion or get a casual job so you’ve got more disposable income. Concentrate on your career advancement rather than chasing external investment. Developing your skills won’t require annual negotiation and renewals like sponsorship will.

So before you embark on your sponsorship seeking journey make sure you’re fully aware and equipped to handle the associated costs, both tangible and intangible.

Ultimately, for small time operators, you shouldn’t need to rely on sponsorship. However, if you’re committed to seeking sponsorship, be active, be seen, build your brand and generate demand. If you do, sponsorship opportunities are much more likely to come your way.

Until next time (if you’re still with me), happy sponsorship seeking…

Cheers, Kym.

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