I’m concerned that small associations are facing structural headwinds. It is a critical time for these organizations to undertake a more entrepreneurial spirit. A spirit that I believe can unleash strengths our more diminutive organization brothers have! Look no further than ASAE’s Operational Analysis Study to see what I mean.
While associations are not-for-profit organizations, profitability ratios are a good way to measure how things are going in your organization. It’s a way to measure if people dig what you’re doing and that you have net to fulfill mission critical action. Right now: associations with a $20 million+ budget are showing on average a 9.9% profit margin; $5 to $10 million: 5.5% profit margin; $1 to $2 million organizations drop down to 3.5; and, groups with a budget of less than $1 million are showing a meager 1.7% profit margin.
This trend is nothing new. The bottom line for small associations have been less robust for some time. But, I think their viability is at risk, unless something changes and changes soon. Hey, I’m a small business with a 12-person staff. I understand the challenges of running a small group. I also know you can be so fast – delivering services and content in a way that makes you more robust, enabling you to beat larger organizations to the punch.
But, I have some recommendations:
- Take a good look at those programs and services delivering ROI, developing cash for your association, and enabling you to grow. Double down on the activities which enable them to grow.
- Be very vigorous about your legacy programs and whether those need to be eliminated or not. If they aren’t generating some net profit for you, cut them
- Assign one or two people in your association to focus strictly on revenue generation or find someone who can you help you do it. We need some top-line growth!
Small associations often focus on the programmatic deliverables. The next event, annual meeting or newsletter. Our staff people also tend to wear multiple hats and juggle myriad responsibilities. This scenario hinders us as they are unable to make a push on the things that are the most difficult, like generating new business: membership development efforts, sponsorship sales campaigns, and new registrations for your programs.
Without a doubt, I firmly believe you need someone on staff whose sole responsibility it is to press for ways to generate revenue for the organization. This is priority #1 for at-risk organizations.
And, if you haven’t done so – make every effort to engage the communications revolution that’s taken over and completely changed the way we do business. Facebook Live video is free. This blog I’m writing is free. Overall, posting on social media has no costs. Consider MailChimp newsletters to your membership base – these can be done for free. Take full advantage of these small, low-cost assets to parlay your value prop to members and prospects alike.
The time is now to get after it and we’re pulling for you.
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