How to Start a Trade Association for Your Industry

A trade association could benefit you, your business and your industry as a whole.
trade-associatioin
Starting a trade association can not only benefit your business but help others in your field. (Photo: Jacob Lund/Shutterstock)

If you’re passionate about what you do and want to see your industry prosper, you may be a member of a trade or professional association. Aside from being great for networking, these organizations give small businesses strength in numbers and promote the future of their industry in ways an individual business could not.

If your industry doesn’t have a trade association, you could start one yourself. Not only can doing so benefit your business, but giving back to others in your field can be intrinsically rewarding and might lead to other leadership opportunities in your community.

To learn more about starting a trade organization, NCR Silver talked to Bill Gessert, director of new business development at association management firm Fernley & Fernley.

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Identify the need

Before anything else, said Gessert, you must identify if there’s a real need for a trade association in your field. Ask yourself, “What need can this organization be better at filling than any other source that’s out there?” he said.

Related: How to Make Your Chamber of Commerce Work for You

To answer this question, start with your own experience. What have been your biggest pain points as a business owner? If you’ve found yourself asking the same questions over and over again, “chances are that other business owners are doing the same thing,” he said. “If you can get together with like-minded people and build those solutions, now you have an attractive value proposition for membership.”

Define your purpose

The next step is to define your group’s purpose and write a mission statement — “basically a one or two sentence statement of why you exist as an organization.” said Gessert. “It should directly reflect back to that need that you’re trying to fill.”

Your mission could involve offering programs (such as a cooperative health insurance program or a certificate program), creating best practice guidelines, organizing political lobbying or networking. Essentially, it comes down to identifying what resources your organization can provide — and be the best source of — for your potential constituents.

Build a team of volunteers

team-of-volunteers

Finding fellow leaders to help support you throughout the process of creating your new association is invaluable. (Photo: Viewvie/Shutterstock)

Before diving headfirst into building your association, recruit a strong support network of volunteers who can partner with you in a leadership capacity, said Gessert.

The time commitment required for starting a new association “is probably the single biggest challenge to getting something like that off the ground,” he said. “It can almost to be like starting a new full-time position. That’s why gaining a critical mass of volunteer leaders is so important. You can delegate out the responsibilities and share some of the time commitments required.”

Develop a strategic plan

“If you run a business, you understand the importance of a business plan,” said Gessert. Once you have a mission statement and volunteer leaders in place, you’re ready to develop a strategic plan and bylaws that will govern your organization and keep it moving forward.

Work with your team to ensure your organization is designed to sustain itself long-term and provide the greatest benefit to all your members. This is also the time to brainstorm what programs and services you’ll offer to make membership worthwhile.

Set up a legal entity

Next, Gessert said, connect with a good accountant and attorney who have experience in working with trade associations and can provide guidance on the necessary entity registrations and filings for tax exempt status.

Trade organizations typically have 501(c)(3) or 501(c)(6) designations, explained Gessert. Most use the (c)(6) designation if they’re going to be involved in lobbying or advancing business.

Find funding

piggy-bank-funding

You can’t officially get started without money. Take time to figure out where the startup funding will come from and whether you will need loans or grants. (Photo: HelloRF Zcool/Shutterstock)

Gessert said another “big chunk” of work is in finding funding to start up your association. “It takes money to operate a trade association. Everything from putting up a website and member communications to processing dues and opening up a bank account. You name it — it takes money.”

Consider where you’ll get your startup funding, whether it’s investments from you and other founding members, loans or grants.

Next, determine how you will fund the association after your startup cash runs out. For instance, how will membership dues be structured? Can you charge for association programming, such as certificate programs, publications or trade shows?

“These are really critical things that need to be thought out upfront,” said Gessert.

Determine who’ll do the day-to-day management

“Frequently, a startup association will self-manage,” said Gessert. “The burden of managing the day-to-day operations, communications with members, etc., falls on volunteer leaders simply because they can’t afford any other management options.”

But as the organization grows, you could consider hiring a professional association management company. For a monthly fee, these companies will perform the operational services necessary for running an association, as well as helping with strategy, he said.

“Most association management companies can provide a part-time, allocated executive director to work with the organization. So as the needs of the organization grow, the staffing grows with you.”

Whatever you do, said Gessert, “Don’t go in alone. Get a group of people who are similarly passionate and work as a team.”

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