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Group Dynamics

Joining a trade association could set your business's agenda in motion.

As the first national U.S. standards for organic foods went into effect in October, Dave Alexander was thanking his lucky stars-and his trade association. The Organic Trade Association (OTA), which Alexander has belonged to for five years, spent more than a decade lobbying for the rules. The change is expected to lead to big opportunities for small enterprises like Arlington, Massachusetts-based Global Organics Ltd., the seven-person organic foods importer Alexander founded in 1992.

"A lot of big companies have been eyeballing the organic industry but have been sitting on the sidelines because they didn't feel comfortable with the fact that there wasn't any federal legislation," explains Alexander, 38. "Largely due to the efforts of the Organic Trade Association, there now is."

Tricks of the Trade Group
Big companies hire their own lobbyists to influence legislators and regulators; small companies join trade associations. Small companies also join trade groups for benefits such as networking and low-cost health insurance, and to promote industry education campaigns.

There are more than 147,000 trade associations in the United States, according to the American Society of Association Executives (ASAE). Most are state or local groups. Others are national or international.

How can you decide whether to join an association and which one to join? Start by asking what you hope to gain.

If you're looking primarily for local contacts, start with your local chamber of commerce. Mary Skaggs, 36, president of three-person Alexander Christian Interiors in Lakewood Ranch, Florida, says joining her local chamber has produced many referrals. "That has done more for my business than anything," Skaggs says.

National associations are useful if you're looking for certification, education, or to stay on top of industry trends. Skaggs joined the American Society of Interior Designers, a professional society for decorators so she could put the "ASID" after her name. "Having 'ASID' after your name lends a lot of credibility for people who don't know you," she says.

Many national associations publish newsletters, produce Web sites and sponsor shows and conventions to help members stay on top of trends and contacts. Both local and national associations provide access to discounted products such as office supplies and a wide array of services. Health insurance is one popular benefit. Alexander joined a small-business group specifically to get coverage for his employees.

The Trade-Off
Once you've found what you're looking for, compare the costs with the benefits. "Some of these trade association dues are a million dollars a year," notes Ray Towle, ASAE's vice president for member relations. Most are less costly; Alexander pays about $2,000 a year for his organic association membership. Other costs include the time you'll be away from work attending meetings. Time costs can skyrocket if you join committees or become an officer, Towle adds.

Of course, a trade association can't do whatever you want. Tax regulations, federal antitrust laws and their own bylaws may restrict trade groups from doing such things as providing information on other members' pricing practices or from lobbying for individual laws or candidates. "People often want us to promote their product or business," says the OTA's Katherine DiMatteo. "We can't do that."

Next Step
Check out the Encyclopedia of Associations. This publication has details on 22,000 international, 22,000 U.S. and 115,000 local and regional organizations. Many libraries have electronic or hard copies, or contact publisher The Gale Group at (248) 699-4253 or www.gale.com.

Like this article? Get this issue right now on iPad, Nook or Kindle Fire.

This article was originally published in the December 2002 print edition of Entrepreneur with the headline: Group Dynamics.

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