Give-and-Take Relationship Emerges Between Associations, Corporations

At the Latin Business Assn. Expo recently, business owners not only perused the exhibit hall, sat through speeches and attended educational sessions, but about 500 met one-on-one with corporate buyers to talk about vending opportunities.

Last year, such talks generated $30 million worth of sales contracts for participating companies, and LBA officials expect the number to double this year.

Such activities are characteristic of a new relationship developing between corporate sponsors and small-business associations. Disappearing are the old days of charitable giving, when big companies were satisfied to get a banner up at an event and their name on a banquet invitation. Instead, true partnerships are beginning to be created in which both sides measure the relationship against the bottom-line benefits they receive.

“In the last 18 to 20 months, I’ve seen a change,” said Terry Neese, corporate and public policy advisor for the National Assn. of Women Business Owners. Corporations “are thinking very strategically. If they’re going to partner with a group, they ask, ‘What does it really mean?’ ”

Previously, corporations regarded small business as part of their charitable community outreach efforts. Whoever was assigned to the community outreach post would establish relationships not only with local youth groups and homeless shelters, for example, but also with small-business associations.

The corporation brought a table to an annual small-business event and then scrounged to have corporate people sit there, all of whom were pretty much bored by the proceedings. They had little realization of the value of the small-business market, including women- and minority-owned businesses.

Now, as demographics have changed, particularly in metropolitan areas such as Los Angeles, corporations have awakened to the size and clout of these markets. Whole business divisions have been created to target small businesses, with serious advertising and marketing dollars.

“The tables have turned,” said Neese, who owns Grassroots Impact Inc. in Washington. “We were selling to them; now they’re selling to us.”

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Money has been shifted out of community outreach and into small-business and ethnic business divisions, but with the added requirement that small-business dollars are now supposed to make money for the corporation.

Hector Barreto Jr., head of Los Angeles’ LBA, said corporations he approached recently gave him the bad news that charitable contributions are a thing of the past.

“But the good news was that they said, ‘If you can show us a way to impact our bottom line, if you make it much more of a business transaction, then we do have money for that and it’s more than what you’re used to in the past,’ ” he said.

This emphasis on return has been accelerated by corporate mergers and the elimination or downsizing of community outreach units, say association activists. For some of the older small-business groups, it has meant a loss of long-term, well-established corporate contacts and a search for creative ways to capture some of the new marketing dollars.

A few of the ways small-business associations are attracting corporate dollars include:

* Defining a qualified audience for corporation sponsors to market to. The LBA surveyed its expo attendees and touted the results: The average business attending was 14 years old and had $2.7 million in sales and 27 employees. Likewise, a survey last year of members of the National Assn. of Women Business Owners found that half said corporate support of female business owners is a factor in their business purchasing decisions.

* Providing procurement meetings between corporations and businesses. That can happen at a conference, online or in smaller meetings.

* Allowing corporate sponsors to speak at educational sessions on various business topics or providing opportunities for corporate sponsors to display and demonstrate products at other events.

* Giving sponsors access to the membership database to offer discounts and products and services.

* Inviting corporations to accompany associations to meetings with public officials.

* Having corporations write newsletter articles on topics of interest to association members.

There are limits, however. Because most associations are set up as nonprofits and can’t take positions on legislation, they must turn down corporate requests to present the big-business side of an issue.

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Not all associations and small-business groups are benefiting from the switch to market-driven support of small business. As small businesses have grown in numbers, size and variety, the number of business and trade associations also has grown, all of them competing against one another for corporate attention.

Some older associations and chambers of commerce with small memberships have been unable to define a distinct competitive advantage that sets them apart from the crowd, and thus they have difficulty attracting corporate support. Some have not caught on to the idea of operating more like a business with income-producing events of their own that can impress corporations. Instead, they continue to follow the nonprofit model, requesting corporate money, spending it all and starting each year broke.

Some don’t even realize the corporate ground has shifted and still make requests for $3,000 to sponsor a lunch with little thought to how the corporation will benefit. These groups are finding it harder and harder to get a corporate yes.

Amid all the changes, there exists the danger that associations may be selling out their members. Sometimes business owners quit associations, saying they grew tired of being sitting ducks for product and service pitches from corporations.

But Neese argues that such partnerships benefit both sides.

“Suppose a woman business owner wants to take her business to the next level and Lucent is sitting at the table and says I can save you 20%,” Neese said. “Boom. You’ve got a woman business owner who saved 20% on $30,000 or $40,000 worth of equipment, and Lucent has made a sale.”

Barreto points to the expected $60 million in sales from this year’s expo procurement meetings, saying, “It’s a win-win situation.”

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Times staff writer Vicki Torres can be reached at (213) 237-6553 or at vicki.torres@latimes.com.