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8 Reasons Why Early-stage Companies Should Join Industry Trade Associations


The leading companies in any industry have much to gain by exercising their influence and access through trade association membership. These companies protect and grow their considerable investments by leveraging the resources trade associations provide. This state of affairs can deter smaller, entrepreneurial companies from embracing their industry association, but early-stage companies can also realize a unique set of benefits from membership in their industry’s trade association.

John Brown, founder of the Business Enterprise Institute (BEI), offers this big picture advice for leaders of early-stage companies: “Use outside resources—mentors, advisors, friendly competitors. You will be amazed at how little you know and how much others can help.”

He might have just said, “Use your trade association.” Associations are a dynamic ecosystem of outside resources and benefits. Here are eight reasons why early-stage companies should embrace associations.

1. Outside Staff

Early-stage companies typically have limited staff. Industry associations generally provide highly knowledgeable teams with industry-specific expertise. Association staff can provide wisdom from their experience advising other companies that navigated similar challenges—from supply chain difficulties and regulatory dilemmas to marketing advice and customer/client outreach.

With their front-row vantage point of the industry, association staff offer expertise and perspective, as well as leads on where to find information or support if it lies outside the capability of the association itself.

2. The Benefit of Experience

Early-stage companies have a sharp and risky learning curve, often encountering obstacles for the first time. Association staff and members have seen it all, helping other members wrestle with similar difficulties, and can provide non-biased viewpoints. Fellow association members are often surprisingly generous with assistance. With many niches within the larger industry, most other members will not be direct competitors and want to see their market thrive with new, innovative players.

Membership can also provide governance opportunities for executives who participate in association board meetings. Sharing insights with fellow C-suite members can illuminate the latest best practices for leadership and strategic planning.

3. Mentors

In a survey of 200 small businesses, financial technology company Kabbage found 92 percent of them said mentors directly impacted growth and the survival of their business.

Executives of early-stage companies benefit from mentors, and industry associations are a mentor-rich environment. Association executive directors and experienced staff are obvious mentors, but don’t overlook board members, committee chairs, and long-time established members. By seeking leadership positions within the association, most of these executives have self-selected to be collaborative. Some associations, like the Council for Responsible Nutrition (CRN), even have formal mentor programs where a board member volunteers to mentor new member companies.

In his book Five Reasons Why Every Business Owner Needs a Mentor, No Matter How Successful They Are, Anton Lucanas of the Forbes Business Council points out how a mentor’s experience and knowledge can help shorten the learning curve for a mentee. “A good mentor will take some time to find,” Lucanas wrote. “You will need to expand your network and get a feel for your circle and approach someone who you feel reflects your values.”

A trade association will help you find a mentor faster.

4. Acquire Strategic Information

Joining an industry association is a great way to stay on top of emerging trends and keep up to date on information needed to stay on the cutting edge. Associations provide topline insights on industry issues and dive deeper into specialized areas such as regulatory compliance, technical issues, trade barriers, customer expectations and legal risks.

Many associations maintain archives of research, industry statistics and advice. Oftentimes, associations have an assortment of associate members such as law firms, marketing agencies, packaging, logistics services and other specialties which provide ancillary products, services and consulting.

5. Reputation Management

In the business world, reputation is all you have. Most companies want to be recognized for their commitment to quality and innovation. Becoming a member of your industry’s association is your path to build the reputation you seek.

Membership in a trade association shows you are willing to invest your financial, energy and human resources into learning what it takes to build a successful business—a message taken seriously by industry peers, your staff, prospective clients and customers.

The American Society of Association Executives (ASAE) notes that industry associations often create standards, codes of ethics, and best practices that advance the standing of members within their communities, and with customers. When the association is recognized as an official voice of the industry or accepted as establishing guidelines for good behavior, a considerable “halo effect” is conferred on early-stage companies who embrace membership.

6. Employee Morale

Early-stage companies employ workforces that alternate between believing they are about to become very successful or very unemployed. Although a company may be disrupting an established industry, its staff needs to connect to a larger community. ASAE research found associations provide these benefits to a company’s employees:

• Immediate access to tools and resources to help them do their job better and build their reputations as a skilled professional;
• Expanded networks of peers who face the same challenges and can help find solutions; and
• Access to a wide range of professional development and networking opportunities.

ASAE says startup firms who join an association set their organization up for success by “empowering every employee with access to practical, problem-solving resources and a strong community of professional peers.”

In one fell swoop, association membership can make it clear to your team you support their professional development while positioning your company to attract and retain top talent.

7. Exposure to Investors

Associations are an investor-rich environment. Private equity and other investment groups are often direct members of an association or indirect members as owners and investors in other member companies. You may need investors. You may have investors but want more. You may have investors but seek back-ups for “just in case.” Association interactions increase your options.

Discussions with other member companies can also provide a greater understanding of your valuation. In Silicon Valley Business, Lewis Howser discusses how the fundamental valuation method comes from the real estate world of looking at comps, or comparable homes. The same holds true for early-stage companies: “The more similar the startup—be it its sector, location or potential market size—the better.”

In business, your competitors are also your comparables. Trade association membership grants you access to valuable data and to access knowledge of more comps.

8. The Numbers Don’t Lie

According to American Business Magazine, “Approximately 85 percent of all business failures occur in firms that are not members of their trade association.” Why? Connections and access to experienced guidance make the difference.

After mentoring several early-stage companies, one CRN mentor observed, “These companies really want to do the right thing. They just don’t always know what that is.”

Responsible members of any established industry should encourage early-stage companies to join their trade association, not just to bring in new revenue and diversify perspectives, but to ensure the future of the industry, reduce the risk of an avoidable blunder that tarnishes the entire marketplace, and to nurture growth. Industry benefits when new companies make fewer mistakes.

The Bottom Line

While early-stage companies may be initially deterred by the cost of association dues, the advantages more than offset the expense. Like an insurance policy, engagement with colleagues, tapping into networking opportunities and leveraging collective industry wisdom can be money well spent. Trade associations position startup firms for industry success.

Steve Mister and Carl Hyland are, respectively, president & CEO and vice president of membership development at the Council for Responsible Nutrition, a Washington, D.C.-based trade association representing more than 200 dietary supplement and functional food manufacturers, ingredient suppliers, and companies providing services to those manufacturers and suppliers.