Launching a startup in the 21st century isn’t really rocket science. However, launching a successful startup that moves beyond the critical survival stage is harder than most people think. There are unlimited ways and strategies that you can approach during the initial stages. However, you can also fail in a million ways before getting it right.
One of the biggest issues that so many entrepreneurs face is the lack of resources. When it comes to growing a startup, the available budget can often make the difference between success and failure.
Since you’re reading this post, you’re probably looking for alternative ways to collect and leverage the necessary funds to ensure proper growth and stability.
Without further ado, let’s explore the main benefits and disadvantages of landing a sponsorship deal for your startup and define the best strategies and approaches that will suit your unique business needs.
The PROs of Sponsorships
Sponsorships provide multiple benefits to both companies and sponsors. Here are the main advantages that you’ll gain through a sponsorship deal:Brand awareness and reputation
Sponsorships can benefit your startup in terms of brand awareness and recognition. If you are getting sponsored by a reputable brand within your industry, your company’s name will be directly associated with the organization that you’re collaborating with. Perceive it as a relevant union that benefits both you and the sponsor.Exclusivity
If you manage to negotiate an exclusive deal with your sponsor, you’ll be able to create a win-win situation that generates positive recognition, demand, and excitement in terms of deals and sales.Flexibility
Landing a sponsorship deal for your startup will presume certain terms and conditions that both you and your sponsor must respect. Some entrepreneurs believe that sponsorships are actually diminishing flexibility, though it’s all a matter of perspective. When you have a solid budget that allows you to experiment with all sorts of branding and marketing strategiesThe CONs of Sponsorships
Obviously, every business decision might bring disadvantages that need to be acknowledged.Development of controversies
The presence of competitors might represent a serious problem for sponsors. If your company is being targeted by more sponsors, the decision that you’ll make might create discrepancies between you and your current sponsors. Unfortunately, any discrepancy will negatively influence both the company’s reputation and the sponsee-sponsor collaboration.The lack of standardization
When it comes to startup sponsorships, the absence of standardization might generate problems for both your business and the sponsor. First of all, the lack of organization might put you in conflict with the sponsor due to ineffective communication. Secondly, if the expectations are different, you will encounter issues at one point or another.No guaranteed returns
When you include sponsorships in your startup plan, you can’t objectively predict your returns. For that reason, it is critically important to ensure that your collaboration provides as many perks as possible.Research, Research, Research
Now that we’ve covered the PROs and CONs, we’re ready to move on to the practical stuff. The first and most important step when it comes to getting sponsorship for your startup is research.Determine the Target Audience
Step one is simple. Just like you’ve defined your brand’s target audience (future customers), you need to repeat the same process and seek the proper sponsors for your business.Begin by identifying brands and companies within your community and niche. Ensure that the companies that you’re searching for are reputable and solid. At the same time, you’ll want to keep in mind that there should be a close link between your startup and the values and culture of the companies that you’re going to approach. Here are some ideas:
- Local corporations
- Branches of huge companies
- Local brands
- Local sports teams
- Local influencers/millionaires
When you’re choosing a sponsor for your startup, you need to make sure that you’re aiming for the right sponsor category. For example, if you had a kids' store, you shouldn’t seek sponsorship from Prada. Nevertheless, a company that sells products or services to parents would be a much better choice.
Find Potential Partners
Finding potential partners can be done in many ways. First off, you should leverage your personal relationships and your professional network. Letting everyone know that your new business is looking for sponsorship might offer you unexpected opportunities.Here’s a good idea:
After you’re done defining your target audience, start looking for companies that are already sponsoring businesses within your niche.Research Individually
Each of the companies that you find must be carefully researched individually. Visit their physical stores, their websites, and their social media channels before making your first impression and before deciding to get in touch.Make a List
Make a priority list. List the most relevant potential sponsors from top to bottom and note down any relevant detail. Contact information, interesting notes, pitch ideas, and so on.Plan Your Pitch
Your sponsorship pitch must be well-thought, well-planned, and well-designed. In order to do that, you should carefully follow the following tips:Understand and Prioritize the Needs of the Sponsors
A sponsorship deal is a business deal that’s meant to satisfy the needs and expectations of two parties. Simpler put, both you and the sponsor must provide value to each other in order for your collaboration to be fruitful.Many entrepreneurs and startup owners forget about the needs of their sponsors. Even though the value they offer is significant, they often forget to put it into perspective when asking for sponsorship conditions.
For example, if you’re contacting a huge corporation and pretend a lot of benefits in exchange for small local publicity, you’ll hardly ever going to witness success.
You must always understand and prioritize the needs of the companies that you’re about to pitch. If your pitch helps your prospective sponsors feel that you’ve carefully done your homework, you’ll significantly improve the odds of landing a great contract.
Get Your Business Plan Ready
Besides the pitch, you must properly prepare your business plan. Normally, you should have a business plan ready by now. If you don’t, that is the first step that you need to take care of before pitching a potential sponsor.Almost every investor wants to see concrete things. They need to know how you’re planning to position yourself in the marketplace. They also need to see your objective projections in order to define their return on investment and make a decision.
The business plan is a simple yet essential description of your business.
- Who are you?
- What are your brand’s values and principles?
- What are your brand’s goals?
- Who is your target audience?
- Who are your competitors?
- What is your unique value proposition?
- What is the basic organizational structure of your company?
When a sponsor takes a look at your business plan, all these details should be present. Make sure to include financial projections for the next five years. If you’re having trouble creating a solid business plan, you can take advantage of a paper writing service and allow professional business writers to enhance the professionalism of your plan.
Craft an Executive Summary
An executive summary is a short piece of text (200-300 words) that acts as a mission statement. The executive summary should tell:Details about the type of sponsorship that you’re seeking (short-term, long-term, event-based, etc.)
The reason why you seek this sponsorship
The main benefits that the sponsors will receive once signing the contractThe executive summary is very similar to a cover letter. It is the document that captures the attention of your prospect, and the document that forges the initial impression.
Make your prospects feel that you’ve taken a lot of time to research their company before contacting them by personalizing each of the executive summaries that you send to different contacts.
Send the Pitch and Follow Up
Your pitch should be comprised of the executive summary and the business plan. After getting everything ready, you should send your pitch to multiple prospects based on the priority that you’ve established.After sending the pitch, you need to follow up after a few days. I recommend you to give it a week. You shouldn’t expect your sponsors to immediately reply, as many of them will either forget or neglect your offer by mistake.
Leverage Crowdfunding
If you’re looking to raise significant capital, you should consider crowdfunding. Platforms like Kickstarter (and many others) are putting you in touch with a lot of potential investors and sponsors.The biggest downside of crowdfunding is that you’ll have to share a portion of your company with the investors that are putting money in your company. There are lots of PROs and CONs when it comes to crowdfunding. For that reason, I highly recommend you do your research before deciding to crowdfund your startup!
