Recently an AE from a smaller association asked this question: What are some good suggestions about making our association financial statements available to members?
“Well, that’s easy,” you may say. “Just make a copy and give it to ‘em. After all, they are MEMBERS, and have a right to know.”
True enough. But we have all had experiences when the member with a personal agenda uses the financial issue to further a cause and, in the meantime, incite a riot. I have a not-so-fond memory of a very irate member pounding the counter in the front office because we were cutting back on the doughnuts served at the MLS tour.
Reading financial statements takes some training. Board of Directors have tutorials in this art (sometimes at every meeting…) and even then get a little confused about what a balance sheet really means. Often when the dues are going up, members want reassurance that expenses are going down—and they comb the budget worksheet looking for cuts—likely areas are salaries and travel and, yes, even doughnuts at MLS tour. Sometimes even the ply of the toilet paper becomes an issue: think how much money we would save if we bought 2-ply instead of 4-ply in the restrooms!
So one of the things that’s feared when members grab a financial statement is that some hot button will be pushed, and the association will spend a lot of time doing some destructive things that really don’t mean much in light of the real problem. In other words, if your association has lost 45% of its due-paying income, changing the ply of the toilet paper or taking away a few dollars for doughnuts might not contribute much to solving the membership exodus.
So, how do we answer the AE? How do we find a point which provides members with information they want and need, but in a way that presents truth without encouraging counter-productivity?
My own feeling is that the presentation method is the key. Ask yourself, what does the member really want to know about the association. Granted, some care about doughnuts and toilet paper, but most really want the answers to a couple of questions:
1.How’s our bottom line? and
2.Are the association resources being expended carefully and wisely?
So, how do you answer those questions? I suspect it’s not with pages and pages of reports. I think it’s not with elaborate protection of the information (one association I know only lets the members see the financials in the presence of the association CPA. Another says a member must make an appointment so that the accountant and the AE can be present). No wonder members get suspicious that ‘something is up’!
Why not consider publishing the information on your association website, but do so in the form of graphic presentations? Give the information the member needs, but do so in an easily understandable, quickly scanned format. Then, even have a link where the member can create an email in which he/she can ask questions or make comments.
Here’s a couple of representations of budget presentations, these for the US government, and printed in the Washington Post. Perhaps you’ll see what I mean:
This is a representation of the US budget for FY 2008. Notice there's not a mention of dollars, although if you click on the link you'll see that a simple chart gives round numbers for each category. The pie chart answers the question, "So where's my dues dollar going?" (or tax dollars, in this case).
In the same article, the post has a comparison graph comparing FY 2007 and FY 2008:
Again, the graph is informative and answers the question "are you guys spending a lot more money than last year?" and "What the heck are you spending it on?"
Software to create simple graphs is easy to find. Many times your word processing program has graphing ability, or your spreadsheet program will be able to produce graphs and charts. If that’s not the case, go to one of the software aggregators like CNET.com or Tucows.com and search until you find a program to suit your needs and pocketbook.
Then, create some attractive, easy to understand templates and use them regularly to communicate your association financial position to your members. They will have more confidence in your management skills and more trust in the leadership because of the transparency of the information.
OK, so this financial meltdown isn’t going to be over for a while. Your membership numbers are going to stay low, and the members you have are going to become much more frugal and not so quick to purchase your education programs and other member services.
So what’s an AE to do? You’ve got a three or four year period of this economic ‘readjustment’ in which to continue operations and continue to provide member services. My answer is to take a tip from business (we’ve been talking about “running our associations like a business” for years, haven’t we?) and adopt some of the practices being adopted by small businesses who want to survive.
Your opportunities fall into three categories: managing costs, managing cash flow, and increasing your income. Here’s a list of practices to think about. See what might apply to your association business.
Managing costs
Reduce costs by doing tasks electronically. For instance:
Move routine communications to email or instant messaging.
Bank online for both payments and receipts.
Bill electronically.
Note that in this economy, you don’t always have the luxury of doing ‘what the members want’ in order to avoid change. All around them the world is saying, “This is the way it is. Your bills reach you electronically (or your bank statements or your car repair notices). If you can’t handle this there will be a small fee for a paper transaction (read: ‘that’s the luxury of remaining in yesterday’s world’).”
The same is true of forms and other expensive publications: technology has made it very probable to put forms online, and be able to electronically complete them and transmit them. Paper forms are an extravagance, and should be charged as such to the user.
At an operational level, you should be scrutinizing every expense or overhead line item, looking for areas of waste or opportunities to lower cost:
Examine switching to home working for staff to minimize property requirements and travel-related expenses such as employee parking.
Consider the extent to which you can operate a hot desking program.
Negotiate with your communications carrier ensuring that each category (voice, mobile and data) is optimized for your consumption levels as you reconfigure your office. Consider using an internet telephone carrier.
Review communications consumption with each person who uses company cell phones. In many cases cell phone expense can be minimized, or eliminated altogether.
Switch to low energy lighting. There’s some cost to acquiring the bulbs, but the long term savings usually outweighs the cost.
Request an energy audit from your energy service provider.
As much as possible, eliminate printed material and associated postage. You won’t get rid of it all, but you can almost certainly make material savings. Again, charge extra for paper delivery: it COSTS extra, after all.
Review the potential to use online storage services such as Box.net. If you’re a small association, this is an ideal way to make electronic files available from anywhere to anyone with a password.
If you buy a new printer, purchase a laser printer. If you have an inkjet printer, lower cartridge costs by using a refillable service.
Cut back on janitorial service. Ask staff to perform routine tasks, like empty wastebaskets.
Do banking electronically. Moving to electronic funds collection and disbursement should reduce costs.
Review all forms of advertising and consider alternative methods of communicating your message. Invest in a blog as a way of communicating rather than continuing to send fliers and other promotional material.
Eliminate all unnecessary travel and ensure that travel costs are optimized. It is surprising how much can be saved by using services like Kayak and considering alternative lodging for conventions and meetings. Consider using a per-diem method of reimbursing member travel expense. Be imaginative about ways to create a quality travel experience for your members without lavish limos and wine-laden dinners.
Managing cash flow
Practice good credit control. Don’t let members operate on payment extensions. Many may be a few cents away from dissolution and the association will bear the brunt of their demise. Members in good financial standing will resent this turn of events. Offer good customers a discount for early payment.
Ask your association accountant for help in managing cash flow. Brainstorm all opportunities to best manage your association cash flow.
Increasing business volume
Increasing business? Enhancing non-dues revenue? In the bleakest of times, there are always ways of doing so. Try to minimize the extent to which your association depends on dues as income. Even the smallest association can create non-dues business opportunities. Examples might be:
Utilizing your association website for income generation. Sell ads to affiliate members and to your full Realtor members. A feature highlighting members listed properties is always popular.
Recruit your affiliate membership. In tough economic times, the ability to target advertising and business networking is enticing to related business. Take advantage of the opportunity to increase your real estate community and your bottom line.
Put your board store and other product sales on-line, and make purchasing and delivery of products easy and efficient, at the same time reducing overhead.
Look at other associations such as chambers of commerce and homebuilders for ideas of new products and services which are economically viable in your area.
Form partnerships with other entities to provide services and co-produce events. Your community college might be a good partner for a homebuyer seminar or a green building program.
Conclusion
Make sure you get the right professional advice for each type of issue you are exploring. Depend on your association accountant: consider allowing him electronic access to your books and records and rely on him for advice. Consider forming a small group of support friends such as other association and business managers in your community, and meet with them regularly to exchange ideas.
Be positive. Members need to benefit from your management example and business techniques, and your positive approach to adopting new ways of doing business to keep your association business strong.
And check out the next issue of the AE magazine for more advice on managing your association through the current economy!
Recently, I responded to an inquiry from an Association Exec in a smaller association who had a question about how to proceed with a member who wanted to change MLS vendors. It seemed this Realtor, a member of the AE’s Board of Directors, had been off to an NAR trade show and seen an MLS vendor demo that he particularly liked. Specifically, he was enamored of one small item in the total package from the vendor, and thought this small software enhancement would solve his personal real estate sales needs, and – to hear him talk – the needs of everyone in the association MLS.
He proceeded to repeat his position ad nauseam at every board meeting and MLS gathering. The issue was that nobody else was dissatisfied with the current vendor, and nobody seemed particularly enthusiastic about the cure-all possibilities of another vendor’s software. But everyone was tired of hearing from this dude, and going on a vendor search might be a way to quiet him down and move on to something else.
“How,” moaned the AE, “can I deal with this situation?”
“Changing vendors, and even searching for new vendors, is a huge undertaking,” I replied. “Don’t undertake this venture unless you believe the pay-off will be worth the investment of time and resources. “
In my answer to the AE, I said, “I can't really tell from your letter if everyone else is unhappy with your current vendor too, or if this is just the whim of someone who happens to like the color of the background screen or some other 'hot button' that is his and his alone. In any case, before you proceed further, my advice is to consider whether or not you WANT to leave your current vendor. Try and isolate that question for the leadership first, and if they are committed to moving away from the current vendor, then begin a search."
“Some questions they will need to think about and analyze before they start the vendor change process are: What is the level of satisfaction with the current provider? (Do a survey.) What will the actual change cost in $$$? To figure this consider the following:
o consultant cost
o number of staff hours involved in secretarial work
o research
o committee meetings
o overhead expense
Ask your Board of Directors to consider the following questions:
How many volunteer hours will we need to do the job right? (Again, total up the number of meetings and demos that volunteers will have to go to, and visitations and calls they will want to make to verify information and present all this as a total number of hours).
What are the retraining costs? (Consider presenting a new system to members, training them, training staff, perhaps certifying members to use the system, calls to staff from members needing support, equipment readiness in the individual offices and with individual members).
In other words, do a business plan for the process of changing vendors. A new vendor may, in fact be less expensive for the members, but you may find the change process hugely draining of all your resources--money, staff, and volunteers. If you find that the case, the question the leadership needs to consider is, "Is the change worth the investment?"
That question is particularly important in a time where the members need many kinds of support to survive the current economy. Is an MLS vendor change the way we want to service their needs?
(Judith’s note: I spend quite a bit of time answering questions from AEs. I’d like to share—anonymously—some of those questions and answers in this blog. If you’ve got a question, or want to discuss a subject further, please don’t hesitate to post a comment or contact me with a question.)
A behind the scenes look at organized real estate--what works in an association, what doesn't, and what a long time AE sees as challenges facing the industry from the viewpoint of its professional organization.
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