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How To Start And Lead A For-Profit Trade Organization

I received an email last week seeking tips for forming a trade organization like IBN. As founder and president of IBN, her email said, I seemed like the perfect person to provide some direction. This is not the first time I’ve been asked this question.

As I started to answer in an email message, I realized I was writing quite a reply, so I decided to turn it into a blog post in case some of you had the same question. While I can’t cover everything in a single post, I can provide these tips to get you started:

  1. Identify a niche with a need. Other than tenacity and dedication, these two things may be the most important of all. Perhaps existing trade organizations are not meeting everyone’s needs. Or maybe there is no trade organization for a particular business group.

    You’ll need both a niche and a need. A niche without a need means no members. A need without a niche means people will be confused. Once you identify a niche with a need, make sure you have the expertise to fill the niche and serve the need.

  2. Establish your expertise. Trade organizations both large and small, old and new, are led by people with expertise in the niche field. For example, a seasoned soap maker, Leigh O’Donnell, is president of the Handcrafted Soap Maker’s Guild. The former head of the Publishing and Interactive for Sesame Workshop now leads The Association of Magazine Media. The chairman of the Independent Baker’s Association is Sandy Whann, head of Leidenheimer Baking Company, a 100+ year-old, baking company in New Orleans. While some of those organizations are non-profits, they are all led by seasoned industry participants.

    People like to connect with experts in their field from all walks of life. This is even more important when they are paying membership dues to be a part of the organization you lead.

    To establish your expertise, you can do things like author a book, manage a blog that offers free resources, host an industry-specific radio show, or publish an online magazine. You can also appear as a guest on other people’s blogs and shows to circulate your name as a person with specific knowledge of the industry you want to serve.

  3. Test market. Once people see you as an expert in the field, you can begin to test market the concept of a trade organization. I did this in two ways. First, I created a basic set of resources and benefits I could offer. Second, I created a website with login access for members to take advantage of the resources. I made the information and benefits available for free for six months to anyone who wanted to join. I let everyone know that, after six months, membership dues would apply.

    Once the six months passed, I notified members that they could continue their membership by paying dues. Many people dropped out. Others didn’t, and some are still members today, including Maggie Hanus of A Wild Soap Bar in Texas, Jean Vavra of Natural Selection Bath and Body in California, and Marge Clark of Nature’s Gift in Tennessee.

  4. Expand your benefits. As you grow, continue to offer more benefits. Drop the ones no one seems interested in or that are too expensive for the membership to support. Conduct surveys to find out what benefits people like most and make them better.

    Be ready for surprises. I’ve offered many benefits I thought would be huge hits, but they turned out to be duds. Be flexible. Change and grow with your members.

  5. Include advocacy. The biggest difference I see between a trade organization and other types of membership-based business models is that trade organizations advocate for members. They write letters, make in-person visits and phone calls, and make themselves available as a spokesperson for the group — a kind of formal intermediary between the agencies with regulatory oversight in the industry and oversight for industry participants. This is one of the most valuable benefits you can offer, and it provides a strong value-added proposition that not everyone has the experience or ability to offer.

  6. Serve your members. In addition to specific benefits like member discounts, make it your business to really serve your members. Sieze every opportunity to make your members look good and help them be successful. At IBN, we feature a member each day on FaceBook and Twitter (examples here and here) and share media leads. We participate at member branded blogs and FaceBook pages. I use this blog to celebrate their amazing successes, like Elin Criswell and her newly published soapmaking book. We’ve hosted live QVC-type shopping shows, and also hosted online site parties like this one. Now, we’re launching social commerce site, INDIEgu, to provide a fun new way to help members increase their sales

    We offer member discounts, a private networking area, and a public social networking site where members can post promotional information, product photos and other promotional announcements.

    You don’t have to launch everything all at once of course. Add things slowly over time.

  7. Keep at it. One of the most challenging parts of launching a trade organization is serving when no one seems to be paying attention. Hopefully, this won’t be a problem after the first year or so. It’s easy to start a trade organization. The real work starts when you must also maintain and manage it. It takes time, patience, and stick-to-itiveness to keep it going.

    If you are determined to serve (as opposed to just generating a profit), it might be the perfect vehicle for you.

While the trade organization business model is not easy (what business model is??!), it is infinitely rewarding for the person who knows an industry (or group of industries) well, who likes to help others, and who embraces the role of advocate.

I am strongly considering creating a training course to help people start their own trade organizations. If this interests you, please let me know in the comments section. If you have any friends who might be interested, please send them my way to let me know. If there is enough interest, I might be able to help others get started too.

Question: Have you ever considered starting your own for-profit trade organization? What questions do you have?

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  • Jonathan

    Donna,
    thank you for writing a great post. I think there might be a need for a for profit trade association for for profits.
    I am establishing an organization that I would consider a “for profit trade organization.” I have not seen much on net about for profit ones. one quick question for you. What type of business entity is appropriate for this? Do you simply have an LLC that you are 100% owner of?

    • http://www.indiebusinessblog.com Donna Maria Coles Johnson

      I chose LLC for ease of paperwork and so I could make a sub-chapter S election with the IRS. I find that this structure works well because I get the limited liability benefits of a corporation with the taxes passed through. LLCs are great for small companies that are owned by a single person, as mine is. Thanks for your question and good luck with your new organization. I’d love to know more!

  • jonathan

    I have another question. On IBN, you don’t say that the association is “for profit.” Do you feel it is not necessary to state if it is or isn’t?

    • http://www.indiebusinessblog.com Donna Maria Coles Johnson

      No, I don’t think it’s necessary to say it everywhere. But I do say it when it’s relevant to a point I’m making. Like in this blog. I also don’t call IBN a trade association. I usually call it a trade organization. When people don’t understand what that means, I’ll compare it to a trade association, but not a non-profit. Then they know what I mean.