USING ADVERSITY TO ADVANTAGE

In previous blogs I’ve recounted the overall success of my small management business, “A Life Fulfilled” (10-14-15), as well as how it all started in “Welcome to La-La Land” (11-11-15).

Now in this third part of my saga, I’d like to tell you how I was able to get my association employer to finance me into my own management business.

After five years in Los Angeles, the family seemed to be resettled comfortably.  We had bought a house with a pool in La Habra, right on the Orange County line, and brought along our beagle named Arrow.

Events at the Electric Association were going quite well.  With a lot of hard work and long hours, our promotions with the 500 plus Southern California appliance dealers to sell more electric appliances had prospered and, as a result of a long range plan, we were now expanding into programs into the commercial side of the electric industry; educational programs, a trade show and promotional programs for commercial lighting and electric heating.

So everything was hunky-dory, as they used to say, until the fall of 1973, when President Nixon told us we were facing an energy crisis.  The lines at the gas stations were long and there was an increasingly dark cloud hanging over the economy.

Since the electric association was so financially dependent on the utilities, it raised a lot of soul-searching questions for me.  The utilities were being pressed by the state regulators to stop promoting increased use of electric energy (our mission) and start promoting conservation.

We launched a P.R. effort in the conservation arena but it was obvious that the fortunes and future of the association were somewhat up in the air.  It seemed to me that I had to look at my options.  Did I want to start looking for a new job?  Should I go back to school to get an MBA in marketing?  Or just maybe this was the time to resurrect an old idea about forming a marketing management business where I could assemble a stable of trade associations and trade shows to forge a profit-making opportunity in the non-profit arena.

After much internal debate, I decided on the third option; i.e., start my own management company with, hopefully, the electric association as my first client.

I started making notes and crafted a somewhat sketchy business plan.  Remember, this was back in the mid seventies and business plans were not as sophisticated as they are today.

With the nucleus of my idea in place, I approached my principal utility member and was able to gain his agreement that my idea offered his company more options and flexibility to bend with the flow of the new regulatory pressures.  At the same time, he agreed this avenue would provide more stability and opportunity for me.

Having his agreement, we set out to introduce and convince the executive committee and then the board of directors on the viability of this proposal.  After eight months of patient planning and discussions, Marketing Association Services (MAS) became a reality in July of 1975.

We took the budget of the league and divided it up.  The rent, staff salaries (there were five of us) and all admin items in the budget became the fee they paid MAS.  All the program items and funds remained with the association’s budget.

So now I had one client and a $6,000 per month fee.  It was a great way to start a business with only about $2,000 of my own money.  From the onset, though, there was one problem looming in the not-too-distant future.

How could we change the monthly fee if the activities of the association expanded as well as the need to adjust for normal inflation in all costs?  To survive, I recognized I had to acquire other accounts as well.  The tricky part was to start doing that only after the new relationship with the electric association was solidified.

After joining a small fledging national group called the Multiple Association Management Institute, I learned from other members that client fees should be based on time devoted to their activities.  Fixed fees were a road to failure.  Now I had the missing ingredient on how to calculate fees, and MAS was really ready to roll.

We took the average salaries for our administrative people multiplied by 2½ (same for staff and executive personnel) and had a formula to apply to estimate the time and cost needed for each project or activity.

We used that formula in making proposals and evaluating each client or project to determine profitability as well as adjusting fees each year.

Over the next 25 plus years, we prospered with an eclectic stable of trade associations, consumer events, trade shows and a regional publication as clients or as self-financed projects.

It was a heady run, supporting upwards of 30 employees at one point with a lot of fulfilling outcomes.  At the end, two employees took over their respective divisions, and the largest trade show was sold to the sponsor.  We found new management for each of the trade associations.

It was now 1997 and I was programmed to slow down and start thinking about retiring.  Over the next 2-1/2 years, I started the slide into retirement with some consulting and exploration of other life choices.

ArtSchwartzSig

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1 Comment

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One response to “USING ADVERSITY TO ADVANTAGE

  1. Don Genovesi

    Always enjoy reading your blog. Don Genovesi

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