Acronym

“It was the best of times; it was the worst of times.” Remember that famous opening line from Dickens’ A Tale of Two Cities?

I turn on the TV at my lunch break and the Dow is down, or when it up, it doesn’t seem to stay up!

Everybody is talking about how awful things are, but strangely in the association management company business that seems not to be the case--at least based on my experience over the last couple of months and most especially the last couple of weeks.

Seems like every few days I get another call from another struggling association looking to cut costs by going with an AMC. The reasons for their troubles are as varied as the associations, but the common denominator is, they have to reduce costs! And the word is out--association management companies can save big money.

The AMC model, of course, makes lots of sense, especially for smaller organizations. Economies of scale, reduced overhead, shared resources, and smart use of technology can make the difference between folding and flourishing.

I think that those of us who run AMCs need to brace ourselves for a sudden influx of new clients--especially if the economy continues to tank for an extended period. What was a slow moving trend has become a potential tidal wave. We had best be prepared!

Some AMCs will choose to say “no” to prospective new clients because they simply can’t reconfigure their operations quickly enough to take them on. Others will be highly selective, only choosing those organizations who are the best fit. Still others will take on as many clients as they can, and worry about how to service them later. I plan to be in yet another group with a flexible operational model, access to skilled contractors to add quickly to my team, and good tools for assessing compatibility between our firm and the prospective clients.

For each day that the Dow falls, some board president is looking at an income statement and saying, “We can’t go on like this!” And some task force is comparing operational models and concluding, “Maybe we should get a quote from an association management company.”

I suspect, however, that we will not be simply seeing an increase in organizations wanting full management. What I am seeing is organizations that want to outsource some of their functions, while maintaining some staff and/or having volunteers take on more jobs.

The wise AMC will work closely with the board to define staff, board, volunteer and AMC responsibilities. The new economy will make “strange bedfellows.” The key to sanity has to be clearly defined roles and responsibilities and strict accountability of all parties.

We also must understand that the clients we get in times like these may be in an apparent death spiral. Some we can save, and some simply can’t be saved because they have become irrelevant. In my experience, organizations that are really desperate start to clutch at straws. They have a new idea a minute and want staff to implement each of them--at no additional fee, of course.

For an AMC, scope creep is the enemy of profitability. We are doing ourselves and our clients no favors when we spend our time in a reactive mode. In order to really help our struggling clients we must focus their energy and our energy on the things that really can make a difference to the client's bottom line.

While AMCs may not suffer the usual ravages of a failing economy, we have our own unique set of challenges. The test will be how we react, both as individual firms and as an industry.

(Note: This post was corrected thanks to a commenter's sharp eye. Thank you!)