If your business is anything like a typical café, you’ve been solicited for donations by all kinds of charities and clubs. It’s important for small businesses to be good neighbors, but you probably can’t afford to write checks for everybody. I have an alternative that will let you contribute and turn a profit.
It’s simple: Host the organization’s meetings or fundraising events, and donate a percentage of the sales that the events generate. A one-time donation of $50.00 is nice, but 5% of a $3,000.00 week is better (three times better, in fact).
Pledging an open-ended donation like that gives the organization an incentive to send customers to your store, and it’s likely that it will be the first time many have visited you. Plus, since you’re hosting the event, you’ll get the benefit of the organization’s publicity for it. You probably won’t have to pay a cent up front.
This arrangement gets decision-makers involved, which strengthens the relationship between your business and their organization, which can lead to larger promotions in the future.
There are four key points to consider when planning this type of fundraiser:
1. Balance your contribution against your profit margin. The percentage of total sales that you donate subtracts directly from your overall profit margin, e.g. donating 15% of sales that normally bring 40% profit leaves you with 25% profit. Don’t pledge more than your average profit margin, or you will lose money.
2. Set clear conditions. The first time you do this with an organization, you may have more luck promising a minimum contribution plus a percentage of total sales if sales exceed a certain amount. If you normally expect $500.00 in sales on Wednesday, set your floor there or slightly higher to encourage more promotion.
3. Get the point across. Write up a proposal for this type of fundraiser that you can hand out to interested parties. Solicitors generally aren’t decision-makers, so written information that they can take back with them will be more successful at getting the right kind of interest than conversation alone. You may want to preemptively post a notice somewhere in your store instructing visitors to ask about your fundraiser program—you never know what connections your customers might have.
4. Give feedback. Your customers and the organization you’re supporting will feel more confident about your fundraiser’s success if you provide accurate, transparent reports. If you’ve set a target sales number, update your progress hourly on a chalkboard or by filling in a drawing of a thermometer. Once the fundraiser has ended, give a concise report of how it performed and how much you’ve contributed. If you want to get detailed, highlight what times and which items generated the most sales so you can get even more out of future events.
This doesn’t have to be a strategy just for the holidays – now is the perfect time for you to start working with extracurricular clubs, summer festivals, volunteer groups, and so on. Look to the long term—fundraisers might not bring in a boatload of profit right away, but they can bring you an installed base of loyal, passionate customers if done right.