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Nothing strikes more fear into the heart of an association, especially the staff, than the knowledge that the "cash cow" they always relied on to fill the coffers, is about to run dry. A cash cow can be anything from a healthy membership base that goes into a death spiral because of adverse market conditions, competition from a new or existing association, a regional MLS that takes away your MLS fees, or an out dated product or service that no longer has the profit margin or value it once enjoyed. Whatever the reason for the major loss of an association’s income, the pain is real and the long-term effects can be devastating. But this classic, albeit inevitable association problem, can be managed with strategic planning and creative problem solving. Sometimes it’s even a blessing in disguise. A crisis forces everyone to take a serious look at what they are doing, at what price and for whom! DEVELOP A STRATEGY FOR SURVIVAL The first survival strategy is, don’t panic. The typical knee jerk reaction of insisting that dues be raised, should be avoided. As a matter of fact raising dues should be your last option. Why? It is often unnecessary and the pain involved in trying to muscle through a dues increase during a time of economic turmoil is just not worth the effort. So what can you do? As an elected leader or association executive, you should use this opportunity to work together as a team to find new ways to cut expenses, increase non dues income and re-engineer your association. It can be an exhilarating time for the association as you look for ways to "do more with less" while increasing productivity. It is a time for questioning and analyzing everything you do. It may even be a good time to revisit your mission statement and define who your customers are. Can the association continue to be "all things, to all members," or, should it take a focused approach? During hard times the best and brightest put their heads together and create exciting solutions to nagging problems and concerns. You can do the same. Here are some helpful hints:
ANALYZE ALL OF YOUR EXPENSES Identify all your sources of income - analyze every income stream and increase fees, not dues. Where possible, look for new sources of income. For example, increase application fees, professional standards filing fees and fines, increase registration fees for classes and seminars, increase affiliate member fees, increase interest income by collecting dues early, etc. Remember it is easier and less painful to increase fees charged to only those members who use them, then it is to increase the dues across the Board for everyone. Know exactly how much money you will need to balance the budget - it may be that a slight dues increase will solve your problem but unless you know what the short fall per year, per member is you can’t manage the solution Calculate your new budget without a dues increase but with your recommended increases in fees and then calculate how far off you are from balancing the budget? It may not be so bad! FIND NEW SOURCES OF INCOME - LOOK TO THE PRIVATE SECTOR, FOR EXAMPLES
CUT THE FAT Every association and business have places it can cut expenses, put your Sherlock Holmes hat on and go to work!
DON’T TRY TO DO IT ALL ALONE, EVERYONE IS PART OF THE PROBLEM AND THE SOLUTION The Board of Directors must lead by example in the cost cutting program. Challenge the Directors to decide where they want to cut expenses directly related to their overhead. Make the membership aware of the problem and ask them for their help and advice. Use the talent and expertise of your affiliate members. They are an under utilized resource. The elected leadership and the Association Executive must remain positive and serve as the coaches and inspiration for the whole team of members and staff to follow. ANALYZE ALL OF YOUR EXPENSES
Justify the cost of everything you do, or another way to say it is; "IF THE CASH COW IS DEAD, IS IT TIME TO KILL SOME OF THOSE SACRED COWS?" EXAMPLE - The annual golf outing, cash cow or sacred cow? A true accounting of the income, expenses, both direct and indirect, as well as an analysis of whom really attends the outing and who actually purchases a ticket, may reveal that the entire membership is subsidizing the cost per ticket of affiliate members, non member guests, committee members and staff that and very few REALTOR members are actually going to the outing. Is this a sacred cow whose time has come? Is the entire membership aware that they are paying part of the cost for everyone one who attends the golf outing? The Board of Directors may have to decide that it is time to eliminate this event or raise the ticket price to cover all of the expenses. Do they have the courage to do so? The initial complaints may be loud from the vocal minority but the silent majority will applaud your efforts. Keep looking for those costly sacred cows who enjoyed living off the fat of the land and get ready to send them to the slaughter house. Their time has come and gone! One of the major expenses of any association is the cost of labor. Talented association professionals and their support staff, are worth their weight in gold. Unfortunately there isn’t always a lot of gold to go around in a not-for-profit organization. Keeping talented and well-educated employees will be a major challenge for the entire business community in the 21st century. Associations will not be exempt from this problem. When the impact of the budget short fall is felt many volunteers look to the salary and benefits line as a place to cut. WRONG. While it is true, some positions may need to be cut or consolidated because another entity, like a regional MLS, has taken over those staff responsibilities, it does not mean it is time to cut the staff or salary of those who are providing core services to the membership. There are several ways to lower the costs of staff overhead without a wholesale cut. WORKING WITH THE STAFF
WORKING WITH VOLUNTEERS Revamp your committee structure. Do you have too many committees, meeting too often and draining those precious human resources? Take a look. Often we send out the same old committee sign up sheets each year and ask, or beg, for volunteers. Now may be the time to conduct an audit of just exactly what all those committees are doing, what are they accomplishing and decide if staff or a task force could accomplish the same objectives with fewer resources. Do you really need a bylaw’s committee, a membership committee and a community service committee? The use of task forces and work groups are more focused and efficient. Is it time to invest some of the associations reserves to move the communication strategy away from the newsletter and magazine and onto the web or email? Adopting an association policy that insists that all meeting notices, minutes and educational notices will now be delivered via email saves time and money. It also sends another message to the members that the association is serious about saving money and taking a leadership role in nudging its members toward the use of email as a new communication vehicle.
A FINANCIAL CRISIS CAN BRING OUT THE CREATIVE GENIUS IN US ALL Don’t be afraid to try new ways to do old things. Barter with your members for specialized services, like hosting a web site for free dues, renegotiate all contracts and leases. Go back to all of the hotels and meeting facilities and ask for lower prices in exchange for long term contracts, cut back on the refreshments, use your own A/V equipment, take your own photos, replace the fresh flowers on the banquet table with novelty items from the local craft’s store.
WORK YOUR PLAN IN OVER TIME Slowly phase in price increases and administrative fees, don’t try to do everything at once. Be sure to have your rationale ready to explain when a member calls up and asks why there is now a $25.00 application fee to join the Million $ Sales Club.
DEALING WITH THE POLITICS IT’S PART OF THE GAME No association is exempt from the lobbying and special interest groups that will insist that everyone else’s oxen be gored except theirs. Brace yourself for the loud phone calls, nasty letters and e-mail. It will come, it will hurt, but it will pass. As long as you are equipped with a well thought out plan that puts the needs of the membership first, you will survive the onslaught. Beware the vocal minority and follow the lead of the silent majority.
DEVELOP A COMMUNICATION’S STRATEGY No longer can we rely on the monthly newsletter as our only source of information. Let’s face it we all are suffering from "information overload." Our members are busy people and they want information only when they need it, not when you send it. Develop a multi faceted communications plan, one that uses at least three ways of communicating the information you need to get across. Make sure you have a time-table that delivers the information as close to the time when the members will need it as possible. The communications plan should be in writing and shared with your leadership and staff. With email, web sites, fax on demand, office meetings, committee meetings and chat rooms, we are all going to have to be creative in the ways we communicate, especially to the "DOT.COM generation." Consider cutting back on the monthly newsletter and moving slowly, but methodically to electronic communication. Use "sound bites" and catchy headlines to capture the readers’ attention. The use of graphics is quickly replacing the written word and it usually communicates a lot more than a long involved paragraph. The cover of a magazine will feature a dinosaur on it with a red circle around it and a line across it, with the words, "ADAPT OR DIE" next to the dinosaur. Does that get your attention or what? Does it make you want to read the article that conveys what the theme of the Technology Conference is? You bet it does. The placid dinosaur eating leaves and being blown away and turning into a computer terminal on a web site, will also send a powerful message.
CREATE OPTIONS FOR YOUR BOARD OF DIRECTORS...NOT MANDATES After you’ve done your homework and the time for making those tough decisions has come, a smart association executive will give the leadership options for changes, not mandates. Although it is easy for us veterans to quickly see the obvious solutions, we must constrain ourselves from running to our Boards with the easiest and least painful solution. It can be a recipe for disaster. Unless the leadership of your association "buys into" the problems as well as the solutions, you will get no where. Presenting the Board of Directors with a comprehensive analysis of the problem with a list of options for consideration is the best way to go. It gives the decision makers the facts they need to understand the gravity of the problem, while empowering them with the ammunition they need to initiate changes. Whenever I give a Board of Directors a list if options for consideration I always include the financial and political ramifications of each. Get it out in the open. If a $10.00 dues increase will balance your budget for the next three years but place your elected leadership at war with the majority of the membership, it may not be the best option to adopt. Choose the option that works best in solving long term problems, with a phased in strategic plan. Putting off the inevitable because the leadership or staff is afraid of the backlash or repercussions from members is likewise irresponsible. A skilled and talented association executive knows how to navigate the leadership to safe and untroubled waters. SO WHAT’S THE BOTTOM LINE? As association executives we are faced with problems every day. But, as in life, some are more critical than others. Over the years I have adopted a management philosophy that serves me well when times get tough. Here it is: It’s not my association; it belongs to the members It’s not my money; it belongs to the members You can be a part of the change, or a victim of the change Never say; it’s not in the budget. Never say; it’s not in the strategic plan Remember, you are only in control, if you take control Never allow a "it’s them against us" mentality by your staff Solve the problem as a professional, or become a victim of a much larger problem offer options not mandates doing more with less is a challenge, not a problem live every day as if it were your last. |
