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A Domain Name Association - part 4

Funding the Association

To be effective the association must have both a representative membership base and also the funds to fulfil the vision and direction provided by the board. There is little point in running an association that either prices itself out of its market or does not have the buy-in of the wider industry at large.

The proposed fee structure is to be based upon the Class and category of membership. Annual membership fees range from as low as $250 for a small individual domain owner doing less than $10K in sales per year up to $25K for a large company doing in excess of $5m in revenue.

By having the annual fees linked to a Class and category (eg. A, B or C) of membership means that the association is affordable to the broad spectrum of the industry. From the previous article I indicated that the members within each of the categories can also nominate for board election to represent their constituency.

There are four major areas of the cashflow.
1.    Drivers – new members and total number of members.
2.    Income from membership fees – other potential incomes have been ignored.
3.    Expenses -  what it will cost to run a lean business with a reasonable CEO package.
4.    Profit and cashflow – results if the targets specified from the above are met.

The drivers outline the targets that the new CEO and board for that matter need to reach in terms of new members by category. After the initial push of gaining 41 members a typical month will mean 10 new members each month for the following 12 months. This will provide near enough to 150 members in the association by the end of 12 months. This does not count the “free” members from the “general user” category that would essentially sign-up for a newsletter.

The above drivers and fees then translate through to the income line of the association.


Finally, the expense are calculated and a monthly profit and cashflow is derived.



As can be seen from the cashflow the lowest point is around $90K positive and by the end of the 12 months there should be near enough to $120K in the bank. The total revenue for the association is $406K with $287K in expenses. This will fund a CEO and membership assistant plus allow ample funds for marketing and traveling to the various conferences around the world. It also allows a not insignificant amount of money for consultants (eg. legal advice, lobbying etc.).

The association will not have an office....I really don't think that it needs one. This avoids a lot of fixed costs and overheads.

So is it financially feasible to build an association based upon these numbers? Although more work may need to be done on the financial model I believe that it does indicate that our industry can support a thriving association. It really comes back to whether the wider community buys into the vision and principles outlined in the initial articles in this series.

There are two keys to building a successful domain name association:
1.    Having a working board – there is absolutely no point in having directors that turn up and haven’t given any thought to the association since the last board meeting. Board members need to be harnessed and put to work for the people that voted them into that position.

2.    Sourcing the right CEO – There are a lot of skills that this person will need to have. Corporate governance, team building, political savvy, respect of the industry and of course an ability to inspire others to join the association. If the wrong CEO is selected then I think that trying to meet the targets will fall largely on the directors…..this may be quite hard.

I know that this article has skirted a number of issues but I believe that it provides the bones from which a good discussion can be had to add the flesh. So please don’t be shy! I’d love any suggestions that you may have and how the association can be given new life and vitality.

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Michael Gilmour has been in business for over 32 years and has both a BSC in Electronics and Computer Science and an MBA. He is the former vice-chairman of the Internet Industry Association in Australia and is in demand as a speaker at Internet conferences the world over. Michael is passionate about working with online entrepreneurs to help them navigate their new ventures around the many pitfalls that all businesses face.
Click here to arrange time with Michael

Domain Association - Part 5
Domain Association - Part 3
 

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Sunday, 22 July 2018
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