The Value of Joining a Small Business Association – How to Help Your Business Grow

Business networking can be a valuable tool in your business survival and success. One of the most cost effective ways to build strong relationships with your customers, suppliers and other industry stakeholders is to join the right type of association.

Join associations that your customers, or potential customers, belong to; as well as other industry and business stakeholders (such as suppliers, competitors, your community). If your customers sell to others, also look at associations where the end customers participate. Typically the cost of joining an industry association is not that high; and is, in fact, relatively inexpensive when you consider that you will be able to directly reach customers (and often reach them in a way that is more meaningful and effective in building relationships).

Joining an industry or small business association is a highly effective small business strategy and needs to be on your list of top marketing tactics. Once you’ve joined, you need to attend association meetings and participate in association events. To be even more effective: join the association board or an association committee. Get involved. This will allow you to spend valuable time with your customers, or prospective customers, and will also allow you to give back to your industry.

In addition, you will gain valuable contacts and have better access to business resources for your industry. The benefits to members of joining associations include:

  1. Excellent ability to connect with customers and other stakeholders in your industry;
  2. Association membership will also provide you opportunities for contact with potential customers and with suppliers (who may provide you with referrals to prospective customers);
  3. Industry educational programs;
  4. Access to hard-to-find industry research and statistics (these often include invaluable benchmark studies and business performance metrics);
  5. Industry conferences;
  6. Group discounts on business services (such as cell phone programs, merchant discount programs, gas discounts, courier programs, and more);
  7. Supporting the industry association to act officially or unofficially as lobbyists for the industry they represent to all levels of government;
  8. Some industry associations have certification programs for individuals (such as the certified sales professional program) and for companies (such as programs that certify companies that have achieved a certain professional and/or business level);
  9. And, often membership in an association will give you access to the membership list (your new contacts list) once you become a member.

In addition to industry and trade associations, you need to consider special interest group associations (such as women in leadership; professional groups – such as certified general accountant, sales executives etc.). Those associations might not include your customers, but they certainly will include competitors (who you need to learn about and understand). Consider interest group associations as your own small business advisory; ask for help, for information, for access to resources.

Other business associations to consider are your local Chamber of Commerce, your Board of Trade, the Small Office Home Office (SoHo) organization and whatever else is available in your area. These business associations provide you with a broader business network and business community; you need to assess whether or not you can build a partnership or alliance with other business owners for concentrated effort and success (for example, a local business improvement initiative could be undertaken with a group you meet through one of the business associations you belong to).

Of those business owners that join associations, many owners will attend association meetings or events, listen to the speaker, and depart as soon as humanly possible. While they will hopefully have learned something from the speaker, they will not have benefited in the most important way – building their own personal business network or business community. When you build a strong personal business network; your business will benefit from it.

If you don’t join your industry or small business association, you can be sure that one, or many, of your competitors will. Do you really want your competitors to have access to your customers and to be able to build a strong relationship through association participation?

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Business Exit Strategies

It may be time to get out of the business. Maybe you’ve made enough money, or maybe you’re just tired. Maybe you’d like to build a different business. Whatever your motivation, you’d like to pursue this new path while you still have your health and ambition. You need a business exit strategy.

If the business is a good one, you may want to see it survive. Rather than selling it off to the highest bidder, you may prefer to “keep it in the family” and pass the business to your children or another relative, or sell to an employee.

Family succession

Many entrepreneurs dream of passing their business on to the next generation. Unfortunately, family succession usually does not succeed. It’s been reported that 70% of family businesses do not survive the transition from the founder to the second generation.

Family rivalries and other dysfunction often intrude to derail the business. The founder refuses to cede control. Founder/parent installs his favorite child as the leader, who is unsuitable for the role. The next generation leader and managers are poor decision-makers. The sibling denied the role of chief executive feuds with the chosen one.

Founder/parent must take carefully considered steps to create the conditions for second generation success to occur. It will be important to distinguish between company leader, managers and owners and make certain that no one feels devalued. It will be incumbent upon the founder/parent to preserve not only the business, but also family relationships and remember that family gatherings ought to be happy occasions that all family members want to attend.

If you’d like to pass the business along to family members, start by asking them if they’d like to become the second generation of owners. If any or all agree to that proposal, then consult a family business specialist to help with the process.

The ability to groom your hand-picked successor is a wonderful thing and recruiting a specialist to help you choose the candidate who is best qualified to assume the reins will go a long way toward ensuring next generation business success. Check with the graduate management program of a local college or university to find out if a family business specialist is available to help with the transition and follow-up family business coaching.

Sell to employees

If no family members are interested in owning and running the business, you may find that one, or several, of your employees may be interested in buying you out. Don’t be shy about raising that possibility. What better way to boost confidence and morale than letting valuable employees know that you trust them enough to place your treasured achievement into their capable and caring hands?

Selling to employees can be a great exit strategy. The employees will be able to invest in a business that they know and trust. They know the challenges and opportunities that the business may encounter. They know the customers and the customers know them. They have institutional memory and know how things run.

Encourage employees whom you know would make successful business owners to consider a buy-out proposal or an employee stock option plan (ESOP)? Call your business attorney and/or accountant and make sure that you have the best legal structure for the exit strategy that you select.

Exiting the business

If the business has tangible assets and healthy sales, your exit strategy can provide for you either a retirement nest egg or start-up capital to create yet another business. Keep your options open and start the preparations early.

Maintain detailed and credible financial records: demonstrate profitability; show good cash flow; keep your debt to equity ratio low. Expect to show a prospective buyer or your family members 5 years of data. If the business owns property and/or equipment, ensure that all is in good working order.

To sell your business for a price that accurately reflects its value, speak first with your accountant and business attorney, next with a business valuation expert or appraiser and then with a business broker. Your accountant or attorney may also know the right buyer for your business.

An accurate appraisal is a must-have when planning to exit your business. There are three methods to explore:

I. Asset Valuation. The value of the inventory and equipment, business property, the client list and even the company’s reputation.

II. Industry Valuation. Based on the sale prices of similar businesses in your industry and geographic locale.

III. Cash-flow Valuation. Based on the expected future cash flow of the company, as demonstrated by past performance.

Remember that the best time to sell your business is when both you and it are healthy!

Thanks for reading,