- Original Poster
- #1
Dear All,
I would like to introduce myself to you.
I'm Robert, founder of a Glasgow based Travel & Tourism company and on the verge of some very exciting times.
At the risk of breaking rules and appearing to self-promote I will not mention my company or product by name unless asked to do so but for now that is irrelevant as I am seeking some suggestions to help me make a decision on a crucial move that is going to have huge implications on my business over the next few months.
I have developed a discount card and website that is primarily aimed at the tourism sector and over the last 5 months, with the assistance of my brother, home-based assistant and full time office-based telesales team of two, we have signed up nearly 600 businesses ranging from hotels, B&Bs and guesthouses, restaurants and cafes, hair/beauty salons and health spas, activities and attractions, clothes, shoes and outdoor shops to laptop and mobile phone sales/repairs and even car mechanics.
These businesses receive very high quality advertising space on our website in return for providing a discount on their products and services and at this rate by July we will have around 2,000 discounts throughout Scotland before we continue our rollout across the UK where within 3 years we will have over 20,000 discounts.
To get to this point has come at a large cost because we cannot sell our discount card until we have added enough value to it by way of discounts and being primarily targeted at tourists, the Spring is when we intend to launch the card for sale for £14. It will be valid for 3 months and is priced so that that cost can be easily recouped in a single day of use.
Now, the situation that I need your advice and suggestions for is that we are currently facing a major cashflow brick wall having exhausted all of our financing possibilities. We NEED to generate some income before the Spring time or the situation will be truly desperate.
The positive is that currently we do have a fantastic product with some really high quality businesses on board so what I have decided to do is give away 100,000 of our cards to employed people across the Central Belt of Scotland where the majority of our businesses are located. This process will come at a cost of around £8,000 including production and distribution.
Clearly this is a massive risk as it doesn't leave enough money to run the business until the card launches for sale so the decision I need to make is how to generate income from this activity. I am certain that there is a way to bring in income from this, otherwise I wouldn't have reached the decision to do it in the first place so I will give you my options so far which I would really appreciate your opinions on and even better, if you have an improved solution then I will add it to the options.
1) Traditional advertising space.
Local companies can purchase this prime space to promote their products or services. We expect the card will be used on average once a week over the 3 months it is valid and could be seen by upto 14 people including the cardholder, their friends/family who accompany them to the business they receive the discount at and the server at the business at the point of transaction.
By offering an offer to promote themselves, the advertiser (on the back of the card) will improve the take-up rate and is more likely to generate custom from it than without an offer.
Potential Income
This could generate a £30,000 gross profit if sold in 20 x blocks of 5,000 cards.
Current Position
It is going to be incredibly time consuming to pull this off and my initial hopes of using a media buyer/advertising agency to broker the deals has faded after contacting every one of them in Scotland and sending them our professionally produced media pack.
The feedback from them has been positive as to the idea, but that today their clients would favour tried-and-tested methods over risking it on something new. Also, there is not quite enough money in it for them to divert resources into it.
My final option for this is to recruit a self-employed sales person to cold-call every suitable business in the region and while this would cost around £8,000 in commissions, it is an option I am considering.
2a) Charities
As above but instead of business advertising, it would be charities. They could place a text SMS donation number on the card and encourage people to make a £5 donation.
Potential Income
As above although since it would be for charity, we would reduce it to a target of £20,000 gross profit which is what we need from this activity if we are to survive until our product launches and have the funds to properly market the launch.
Current Position
Have contacted a couple of charities directly and the feedback from the advertising agencies is that most charities don't have large marketing budgets and generally get their advertising space for free via partner media organisations.
Personally, I believe that they would generate far more income from this SMS campaign than they would pay us for the space and with a 15% takeup rate of £5 donations, they would receive £75k and pay us £28k (minus £8k in costs gives the £20k we need to raise).
To boost the donation rate, I have considered that instead of giving the card away to employed people via their employers as originally planned, I could target it in a better way for example, for an animal charity, I could approach pet stores to give the card away with every purchase and on the back of the card will be a plea from the RSPCA. This I'm sure would result in a higher takeup rate.
I will be having more conversations with charities next week to see if I can persuade them that this is a viable fundraising activity.
2b) Charities
Instead of asking the charities to pay us anything up front and therefore risk some of their marketing budget, we could share the risk and we would produce and distribute the cards at no initial cost to them and share the income with them at a rate of £3 for them and £2 for us.
Potential Income
Less than 2a) because people would be less inclined to donate if they know that only 60% of their donation was actually going to the charity.
Current Position
This is messy and I have yet to look into it any further.
As said, less income is likely due to being open about how the donation is split and the only other option would be to work it the other way where they take the full amount of the donation and pay us a commission. It would amount to the same thing but would mean that the full amount goes to the charity in the eyes of the donor.
I do not like this option as it is not an honest way of conducting this activity but on the other hand it would still raise significant money for charity while not putting them at any risk of losing money.
3) Self-Promotion and Crowdfunding
This idea has just come to me today so has not been fully thought through although I am feeling quite positive about it.
Potential Income
£2,000 to £200,000.
If we were to place a really engaging and thought provoking message from the heart that asked for a donation for the free card that we have given to them and they can potentially save hundreds of pounds from using, then could we convince them to give a donation of between £5 and £10?
Current Position
These are purely initial ideas but we could also go down the route of an SMS donation to make it as easy as possible for them to donate.
If they provide their email address then we can engage them further and promise to send them another card worth £14 for free when the card launches in Spring.
This is where the crowdfunding theory would come into play as they would be investing instead of simply donating. Paying £5- £10 for something worth £14 is a no-brainer isn't it?
On this final idea from my collection, I would love to hear if you would/would not crowdfund in this fashion if you were presented with the opportunity. So imagine you were given a free product that has a strong brand identity and saves you money from items that you would have spent money on in your local area.
What would encourage you to donate/invest this small amount and what would turn you off from doing so?
Thank you so much for taking the time to read this post and for hopefully helping me to reach the right decision.
Yours gratefully,
Robert
I would like to introduce myself to you.
I'm Robert, founder of a Glasgow based Travel & Tourism company and on the verge of some very exciting times.
At the risk of breaking rules and appearing to self-promote I will not mention my company or product by name unless asked to do so but for now that is irrelevant as I am seeking some suggestions to help me make a decision on a crucial move that is going to have huge implications on my business over the next few months.
I have developed a discount card and website that is primarily aimed at the tourism sector and over the last 5 months, with the assistance of my brother, home-based assistant and full time office-based telesales team of two, we have signed up nearly 600 businesses ranging from hotels, B&Bs and guesthouses, restaurants and cafes, hair/beauty salons and health spas, activities and attractions, clothes, shoes and outdoor shops to laptop and mobile phone sales/repairs and even car mechanics.
These businesses receive very high quality advertising space on our website in return for providing a discount on their products and services and at this rate by July we will have around 2,000 discounts throughout Scotland before we continue our rollout across the UK where within 3 years we will have over 20,000 discounts.
To get to this point has come at a large cost because we cannot sell our discount card until we have added enough value to it by way of discounts and being primarily targeted at tourists, the Spring is when we intend to launch the card for sale for £14. It will be valid for 3 months and is priced so that that cost can be easily recouped in a single day of use.
Now, the situation that I need your advice and suggestions for is that we are currently facing a major cashflow brick wall having exhausted all of our financing possibilities. We NEED to generate some income before the Spring time or the situation will be truly desperate.
The positive is that currently we do have a fantastic product with some really high quality businesses on board so what I have decided to do is give away 100,000 of our cards to employed people across the Central Belt of Scotland where the majority of our businesses are located. This process will come at a cost of around £8,000 including production and distribution.
Clearly this is a massive risk as it doesn't leave enough money to run the business until the card launches for sale so the decision I need to make is how to generate income from this activity. I am certain that there is a way to bring in income from this, otherwise I wouldn't have reached the decision to do it in the first place so I will give you my options so far which I would really appreciate your opinions on and even better, if you have an improved solution then I will add it to the options.
1) Traditional advertising space.
Local companies can purchase this prime space to promote their products or services. We expect the card will be used on average once a week over the 3 months it is valid and could be seen by upto 14 people including the cardholder, their friends/family who accompany them to the business they receive the discount at and the server at the business at the point of transaction.
By offering an offer to promote themselves, the advertiser (on the back of the card) will improve the take-up rate and is more likely to generate custom from it than without an offer.
Potential Income
This could generate a £30,000 gross profit if sold in 20 x blocks of 5,000 cards.
Current Position
It is going to be incredibly time consuming to pull this off and my initial hopes of using a media buyer/advertising agency to broker the deals has faded after contacting every one of them in Scotland and sending them our professionally produced media pack.
The feedback from them has been positive as to the idea, but that today their clients would favour tried-and-tested methods over risking it on something new. Also, there is not quite enough money in it for them to divert resources into it.
My final option for this is to recruit a self-employed sales person to cold-call every suitable business in the region and while this would cost around £8,000 in commissions, it is an option I am considering.
2a) Charities
As above but instead of business advertising, it would be charities. They could place a text SMS donation number on the card and encourage people to make a £5 donation.
Potential Income
As above although since it would be for charity, we would reduce it to a target of £20,000 gross profit which is what we need from this activity if we are to survive until our product launches and have the funds to properly market the launch.
Current Position
Have contacted a couple of charities directly and the feedback from the advertising agencies is that most charities don't have large marketing budgets and generally get their advertising space for free via partner media organisations.
Personally, I believe that they would generate far more income from this SMS campaign than they would pay us for the space and with a 15% takeup rate of £5 donations, they would receive £75k and pay us £28k (minus £8k in costs gives the £20k we need to raise).
To boost the donation rate, I have considered that instead of giving the card away to employed people via their employers as originally planned, I could target it in a better way for example, for an animal charity, I could approach pet stores to give the card away with every purchase and on the back of the card will be a plea from the RSPCA. This I'm sure would result in a higher takeup rate.
I will be having more conversations with charities next week to see if I can persuade them that this is a viable fundraising activity.
2b) Charities
Instead of asking the charities to pay us anything up front and therefore risk some of their marketing budget, we could share the risk and we would produce and distribute the cards at no initial cost to them and share the income with them at a rate of £3 for them and £2 for us.
Potential Income
Less than 2a) because people would be less inclined to donate if they know that only 60% of their donation was actually going to the charity.
Current Position
This is messy and I have yet to look into it any further.
As said, less income is likely due to being open about how the donation is split and the only other option would be to work it the other way where they take the full amount of the donation and pay us a commission. It would amount to the same thing but would mean that the full amount goes to the charity in the eyes of the donor.
I do not like this option as it is not an honest way of conducting this activity but on the other hand it would still raise significant money for charity while not putting them at any risk of losing money.
3) Self-Promotion and Crowdfunding
This idea has just come to me today so has not been fully thought through although I am feeling quite positive about it.
Potential Income
£2,000 to £200,000.
If we were to place a really engaging and thought provoking message from the heart that asked for a donation for the free card that we have given to them and they can potentially save hundreds of pounds from using, then could we convince them to give a donation of between £5 and £10?
Current Position
These are purely initial ideas but we could also go down the route of an SMS donation to make it as easy as possible for them to donate.
If they provide their email address then we can engage them further and promise to send them another card worth £14 for free when the card launches in Spring.
This is where the crowdfunding theory would come into play as they would be investing instead of simply donating. Paying £5- £10 for something worth £14 is a no-brainer isn't it?
On this final idea from my collection, I would love to hear if you would/would not crowdfund in this fashion if you were presented with the opportunity. So imagine you were given a free product that has a strong brand identity and saves you money from items that you would have spent money on in your local area.
What would encourage you to donate/invest this small amount and what would turn you off from doing so?
Thank you so much for taking the time to read this post and for hopefully helping me to reach the right decision.
Yours gratefully,
Robert
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