Iâ€™m wrestling with an interesting dilemma that I thought Iâ€™d share â€“ and hopefully get some suggestions on. Bear with me as I go into the background before I get into the crux of the problem â€“ itâ€™s a little lengthy but necessary to give the right context – it makes for a more interesting problem to solve.
From the outset, Iâ€™ve always wanted WASP Bags to give back. To have a charity or organisation that WASP Bags donates to on a regular basis. I think itâ€™s good karma.
With trips to the beach being the primary intended use for WASP Bags, supporting Surf Lifesaving Australia (SLSA) was an obvious choice. So, I started making quarterly donations of 10% of proceeds from sales through the website.
I made reference to these donations on the website, and put their logo at the bottom of the home page. I also sent them an email telling them this was my intention and asking if there was a formal way to engage in a relationship. I didnâ€™t hear anything back. This was February 2010.
Then, many months later, I got in trouble.
In November 2010, I got a sternly worded email and voice mail message… Apparently I was claiming an association and endorsement with SLSA for commercial gain. And as there was no formal arrangement between SLSA and WASP Bags, this was very naughty. So naughty in fact that if I didnâ€™t remove all references to SLSA from the website, lawyers would come knocking…
Now, I understand that they need to protect their brand and evidently they have many corporate sponsors who pay good money (and lots of it) for their official association who they have to keep onside. But then again, they are a charitable organisation. I had only a few references to SLSA and never did I say they endorsed WASP Bags. It felt that they were being very, and unnecessarily, heavy handed.
Feeling a little peeved, I put my positive hat on and saw it as an opportunity to finally engage SLSA with setting up a formal association. After months of back and forth, I finally spoke to those responsible for this process. The process is arduous to say the least.
Commercial arrangements between businesses and SLSA are basically licensing arrangements. This means that as the supporting business, you pay SLSA a fee to use and benefit from their brand. Benefit is achieved through association and the right to use their brand in advertising material etc. There are no other benefits around being involved in events, access to their distribution channels or anything else. So, thereâ€™s not a lot of ways to derive benefit from this.
Yet, before you can become a licensee, you basically have to submit a full business plan showing how SLSA are going to benefit from having you as a licensee. Thatâ€™s because the fees involved are a 15% royalty fee on all wholesale sales, with a minimum payment of $ 10k per year! So for WASP Bags which has a very minimal distribution network, Iâ€™d be looking at a $ 10k payment to associate with SLSA. There are also a bunch of other requirements that I wonâ€™t go into here â€“ it is an exhaustive list.
So, what started as me wanting WASP Bags to support an organisation through donations, is turning into a massive undertaking, in both time and money. $ 10k for a business at WASP Bagâ€™s stage is a massive amount of cash. And if it was going to return money through access to distribution networks, event sponsorship or something else that could deliver a direct benefit in terms of sales, maybe it would be make sense. But spending 10 grand to basically use the SLSA logo alongside the WASP Bags logo, Iâ€™m not sure that is the best investment to make at this stage. Hmmm, what to doâ€¦
To be honest, I donâ€™t see paying the $ 10k as an option. Even if I had it, at this stage I think there are many better ways to invest that money at this point. However, there are three options I do have:
- Keep donating to SLSA without telling customers or including any reference to this anywhere. Then maybe one day when WASP Bags is big enough engage in a formal relationship. This is the most altruistic of the available options.
- Find another organisation to support thatâ€™s aligned to WASP Bags. Iâ€™m sure there are other organisations out there who, perhaps not as well known as SLSA, are still aligned to the WASP Bags purpose, would be happy to receive support and in turn, let me tell customers etc about it.
- Save the money and only financially support an organisation once WASP Bags is actually profitable. Whilst the least altruistic, makes a lot of sense from a business point of view. I mean, why give away money with the business is not making substantial and reliable profitsâ€¦??
Each has their proâ€™s and conâ€™s. Iâ€™m leaning towards option two as if I can find the right partner, it may actually help further grow the business. But then, SLSA is the biggest and most relevant organisation in this space and continuing to donate could build a strong goodwill base for the future. And then, reducing all costs to get WASP Bags reliably profitable makes a lot sense too (from a selfish point of view).
What do you think?
Hmmm… itâ€™s a tough one, one which I think is made all the more interesting with the back story. Tell me, if you were in my shoes, which options would you go with? Share you thoughts in the comments section below.