December 18, 2019
What Are Trade Associations & Business Networks?
As businesses look to enter new markets and expand their customer reach, many are turning towards professional partnerships with complementary organisations.
Whether it’s referring international clients to overseas partners or building brand exposure as a member of a recognised network, different partnership arrangements will be more suited to certain organisations.
Many organisations find they work best within formal networks, while others opt for trade associations to avoid legal commitments with other parties.
Whichever route they choose, professional partnerships of all shapes and sizes can help businesses ‘go global’ by joining a ready-made alliance of firms to put them on the map.
Join us as we explore the benefits and drawbacks of both business networks and trade associations for small to medium-sized businesses.
What is a Business Network?
Networks are formal and tightly integrated groups of firms who share similar business models and functions.
Member organisations tend to be larger firms which collaborate with other members to deliver cross-border services to international clients.
Crucially, all members are accountable for delivering the same high standards and are liable if any party doesn’t make the cut.
What is an Association?
Business associations tend to be less formal referral groups which attract small to medium-sized firms.
Unlike networks, association members have more autonomy and independence as they’re not required to maintain the same level of operational consistency.
Associations rely on referrals from members to boost the geographical reach of each firm and help smaller firms spread their wings to international markets.
Terry Snyder, President and CEO of Allinial Global, a global accounting firm association, explains how their group of international firms “share education, marketing resources, and technical knowledge in a wide range of services and sectors to help each other answer important questions.”
Key Benefits of Associations & Networks
Trade associations and networks are often composed of market leaders and set benchmarks for industry standards and best practices.
Here are some of the key benefits for small to medium-sized businesses partnering with groups of organisations who share mutual goals.
- Stay up-to-date with the latest industry information. Whether it’s tracking changes to government policy or complying with new legislation, associations and networks help to keep individual organisations in the loop.
- Develop skills with training programmes. Combining the resources of multiple organisations is a powerful way for smaller businesses to train their workforce with the latest skills.
- A collective voice. Associations and networks bring together the whispers of multiple parties to form a collective voice for all to hear. Smaller businesses no longer have to suffer in silence if they have the backing of numerous partner organisations.
- Access to discounted resources. Whether it’s signing up to events or gaining access to research papers, associations and networks make it easier for businesses to access valuable resources at a reduced cost.
- Networking opportunities. Crossing paths with leading industry experts is a powerful way for smaller businesses to expand their reach and open doors to new opportunities.
Things to Consider When Choosing Between Networks & Associations
There is a time and place for both trade associations and business networks.
Many business owners make the mistake of thinking one is better than the other. The truth is, it all depends on what a business wants to get out of the experience.
Join us as we unpick the defining characteristics of both associations and networks to help businesses decide what type of partnership is right for them.
1. Legal Accountability & Responsibility
When a business considers expanding its reach and resources by joining a partnership of multiple companies, legal accountability will be at the front of their minds.
Many businesses are hesitant to join business networks as they could be legally responsible for the actions of other organisations in the network. These actions are often beyond their control and could be incredibly damaging to a company’s reputation or financial standing.
Although networks are composed of multiple parties, they’re often considered a single legal body in the eyes of the law.
Companies can feel the pressure of this added accountability from two angles. Not only do they risk damaging their own reputation, but they must also operate within specific guidelines to avoid disappointing other members.
The legal responsibilities of international networks often involve complying with international laws which can stump the growth of individual businesses and limit the services they can offer clients.
Unlike a network, the informal nature of associations means businesses operate as separate legal entities. Reduced accountability gives smaller companies the freedom to push boundaries without coming under fire due to another organisation’s actions.
2. Operational Consistency
Typically, business networks expect a much higher level of operational consistency across their members than associations.
Consistency across the board is the key to measuring the performance of each organization, hold organisations accountable for any errors, and uphold a certain reputation.
Some businesses view the expectation to meet prescribed guidelines as a positive driver. Joining a network can motivate firms to streamline their operations and achieve an overall facelift to make the grade.
If every organisation in a network meets the same standards, members can refer each other to international clients in the knowledge that other members will deliver a certain level of quality.
Most networks conduct global audits on all its members to ensure everyone is carrying their weight and meeting an agreed set of expectations. Although international audits are costly, they’re the only way to keep tabs on standards across a multinational group of organisations.
3. Differentiating From Competition
Many businesses fear that having to meet an agreed set of conditions within a network will limit their ability to build a brand that stands out from the crowd. If all businesses in a network follow the same set of guidelines, what separates them from one another?
In an attempt to resolve this, most networks offer some form of territorial exclusivity to ensure members have their own ‘patch’ to avoid poaching each other’s clients.
Geographical exclusivity can help differentiate businesses within the same organisation.
On the other hand, the informal nature of associations allows businesses to enjoy the collaborative benefits of international partnerships, while also having the flexibility to operate under their own rules and offer a unique service to clients.
Unlock the Power of Collaboration
Whether you’re looking to win new clients from overseas or to stay up-to-date with the latest developments in your industry, collaborating with multiple organisations is a powerful solution.
Both associations and networks have benefits and drawbacks, which will vary from company to company.
Businesses who partner with organisations that share mutually-beneficial goals can unlock valuable resources and opportunities to scale their business to new heights.
As professional networking platforms continue to connect business owners and promote collaboration across the globe, companies face endless opportunities to join forces and share their expertise.