How is Membership Killing Association Business Models?

Anytime AENC conducts a survey on challenges being faced by association leaders, one topic always comes-up – How do we define our value proposition to our members?  And in today’s current economy, that has become even more challenging.

For many associations that were started 100 years ago, the only way to get information related to your industry was to attend the Annual Meeting. For those organizations that existed 50 years ago, they could easily boast that their organization was “The Source” for information. Today, information is being produced so rapidly, the organization can’t say that they are “The” source for information any longer.

In addition to that, Associations can’t even say they are the only place to network with peers with the creation of things like Facebook, Pinterest, or Meet-Up. To say that the focus of membership is killing the association business model is becoming more true, every day.

At this year’s AENC Annual Meeting, we will hear from Jeff De Cagna, Chief Strategist and Founder, Principled Innovation and frequent ASAE speaker. Jeff will be doing two sessions – a breakout on Business Model Thinking for Association Boards and CEOs and the closing general session – Why Membership is Killing Association Business Models. Here more about these session in a recent podcast – AENC Podcast w/ Jeff De Cagna.

The closing session will explain five critical reasons why the focus on membership is killing association business models today, and will challenge the prevailing orthodoxy that our organizations must continue to be about membership going forward.

For this and other great sessions, check out the AENC Annual Meeting, June 10-11, 2012, Greensboro, NC.

Click here for more information about this year’s Annual Meeting.

Staying Profitable Through the Recession

By Guest Blogger Dan Fields

Nearly every industry has been impacted by the recession over the past few years and companies have had to re-evaluate how they do business just to survive. In architecture, the recession has reduced our national ranks by about 25-30 percent. To stay profitable in one of the industries hit hardest by the recession, we identified three firm goals that would be critical to our future success: profitability, winning more work, and client satisfaction.

Profitability
Architectural projects and firm operations require a blend of capabilities and experience levels, so it was critical for us to consider the projects on the boards and those potential project types in our future when assessing staffing. We managed to stay profitable by shifting some overhead tasks, such as business development activities, to the professional staff. We placed staff in roles where they can work both up and down, with senior staff increasing their time on project work. Streamlining processes among staff can play an important role in any firm’s profitability.

Building information modeling (BIM) technology factors into our profitability. The value of BIM lies in how it expands what we can visualize for the client. Clients can see their project grow virtually and can weigh options from 3D representation that is very realistic. The technology allows us to collect client feedback and insight faster and more efficiently than we could do before.

Winning More Work
By focusing business development on fewer, more promising targets, we resisted the temptation to chase everything. We have been pursuing opportunities in new markets that have activity (funding) but relate to our core markets of health care and education. Crossing state lines, we have pursued and been awarded projects in South Carolina, and we are building relationships in Virginia with targeted clients. Narrowing our target markets allows businesses the opportunity to fine tune their business development efforts and ultimately earn additional projects.

Collaborative alliances can also help bring in additional projects. At BJAC, we utilize methods such as integrated project delivery (IPD), which allows owners, contractors and designers more efficient, higher-quality processes for design, construction and operations. The goals are to reduce waste, increase value and maximize efficiency. Firms must actively build partnerships with clients and collaborators to seek non-traditional mechanisms for funding and financing, such as grant projects and public/private partnerships.

A recent example of a collaborative alliance was the Rex Holly Springs Medical Office Building, a fast track development of a 34,000-square-foot, two-story medical office building that includes Rex Express Care (urgent care), Rex Family Practice, Rex Pediatrics of Holly Springs, Rex Heart & Vascular Specialists, and an imaging lab. The project was designed for Rex Healthcare, but the owner/developer was Duke Bremner Realty.

The fast track designation, combined with sustainable goals and close communications with the Holly Springs community, required a very efficient, effective design and construction process. To achieve these goals for a diverse group of users and stakeholders we first established the key results (or vision) for the project, clear roles for participants, well-defined milestones and open, distinct and consistent channels of written and verbal communication.

Client Satisfaction
The recession has reinforced our need to understand clients’ business models and their long-term strategy. Most clients are experiencing difficulties due to budget constraints and staff reductions. We are strategically broadening our scope of services to better meet our clients’ needs now and in the future.

Finally, no discussion of the profession and the construction industry can be complete without emphasizing sustainability and energy-efficient, low-maintenance design for all projects. Energy modeling is almost standard for new projects.

Regardless of the industry that you are in, clients expect more from professionals. To survive, all professionals should look at how they can provide more value to clients as part of the work that they are doing—in other words, we need to dig deep to understand our clients’ business, and to think beyond our traditional roles to be a hands-on partner.

Dan Fields, AIA, is principal at BJAC Raleigh, pa, an architectural firm that offers professional services for specialized, complex institutional projects. For more information, please call BJAC at (919) 833-8818 or visit http://www.bjac.com.

 

Turning the Membership Model on It’s Head

This past week I was exposed to an organization that is turning the membership model on its head. Upon studying it further, its the kind of model that threatens the traditional membership organization.

The organization is called the Hospitality Industry Professionals (HIP) Network. According to their website, the network began in 2008 and is the fastest-growing community of meeting, event, travel and hospitality professionals in the US with over 4,000+ members. They produce high-energy events that fuel professional growth, help facilitate durable industry relationships and provide industry resources that complement their member’s ever-growing needs.

While that doesn’t sound any different than the mission of many of our organizations, its what they have done with their membership model that sets them apart.

Can you take a guess at what the cost of membership was and what the member registration was like?

Well, if you are like our organization, and you likely are, the cost of membership is an annual fee of $275 or we also offer group memberships that are more affordable for multiple staff.

And the registration process is fairly simple. You download (or we email) a membership application and then you complete it and return to AENC. Some mail, some fax and some scan. Either way, we get the data and process the application. We process payment and process in database the information and then send an acknowledgement of membership. In a few days we send out a new member kit, followed by in a few weeks a member orientation.

As I said, it isn’t probably very different from many of our member organizations. So, what set the HIP Network apart from any other membership based organization?

As a test, I joined the HIP Network and upon visiting their website, was able to join and receive my membership confirmation in less than 5-minutes. And here is the kicker, there was no charge for membership in the organization as a planner. Nothing, Nada. You get all the benefits of membership like a traditional association, but there is no membership fee.

So, how do they make money. They have increased membership numbers to such a large degree they were able to justify charging supplier members $795. In addition, because of the large numbers and rapid growth, they have been able to garner tremendous sponsor support on their website and through their events. AENC, for example,  is  promoting a HIP Network hybrid event in mid-May.

The organization has figured out how to provide the same products and services as a traditional association and figured out how to allow its primary members free entry. Which begs the question – we all say we are supporting the professions or industry we serve, correct? So, how do we compete with an organization who has lowered two big barriers to membership – ease and cost.

We need to learn to compete with this, it could be the new membership business model.

Employee or Independent Contractor?

By Guest Blogger – Sandy Abalos, CPA

There are times when it seems unclear whether a worker who performs services and is paid by your company is subject to employment taxes. The answer depends on whether that worker is an employee or an independent contractor. Because the determination of a worker’s status depends on facts that may differ in each case, you need to be able to define the business relationship on a case-by-case basis:

• In general, an employee is considered to be someone who works for and performs services under the control of your company.
• An independent contractor is in business for himself or herself, and performs the services free of your company’s control.

When you are determining whether an individual is an employee or an independent contractor, the IRS stresses that you must consider all evidence of the degree of control you have over that individual and the degree of independence that person has from your company.

The evidence of the degree of control and independence falls into three major categories: behavioral control, financial control and the type of relationship between your company and the employee.

1. Behavioral Control

Does your business have the right to direct and control how the worker does the task for which you have hired him or her? To answer this question, consider the following:

• The type and degree of instructions your business provides to the worker. An employee is generally subject to the instructions from the business about when, where and how to work. Even if your business provides no instructions, sufficient behavioral control may exist if you, as an employer, have the right to control how the work results are achieved.
• Any training that your business provides to the worker. If your business has trained an individual to perform services in a particular manner, indications are that person is an employee, since independent contractors generally use their own methods.

2. Financial Control

Does your business have a right to control the business aspects of the worker’s job? To answer this question, consider the following questions:

• Does the worker have unreimbursed business expenses? If so, this indicates independent contractor status.
• Does the worker have a significant investment in the facilities or tools used to perform services for your business? If so, this indicates independent contractor status.
• Does the worker make services available to the relevant market? If the worker performs services for other businesses, this indicates independent contractor status.
• Does your company pay the worker by the hour, week or month? An independent contractor is usually paid by the project. However, some professionals, such as lawyers are paid by the hour and are considered independent contractors.
• Can the worker make a profit or incur a loss on services performed for your business? If so, this indicates independent contractor status.

3. Type of Relationship

The type of relationship between the parties is indicated by facts that include the following:

• Any written contracts describing the type of relationship the parties intended to create.
• Whether your business provides the worker with employee-type benefits, such as insurance, a pension plan, vacation pay or sick pay.
• The permanency of the relationship. Employer/employee relationships generally have the expectation that the relationship will continue indefinitely, rather than for a specific project or period of time.
• Whether the worker provides services that are a key aspect of your company’s business activity. If so, this may indicate an employee status.

Upon request, the IRS will make a determination for you whether a worker would be deemed  an employee based on the information provided by filing Form SS-8 (Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding).

Sandra A. Abalos, CPA is the managing partner of Abalos & Associates, PLLC, a full-service, award-winning CPA firm in Phoenix that specializes in the needs of privately held businesses. For more information, contact (602) 943-1984 or visit the website at http://www.abaloscpa.com.