Business groups and professional associations make plenty of noise, but the growth in the industry is slow, according to IBISWorld’s ROBERT BRYANT
By Robert Bryant
Business groups and professional associations make plenty of noise, but the growth in the industry is slow
The power and relevance of Australia’s business groups and professional associations has been a hot topic in recent weeks, thanks in no small part to the elevation of Australian Industry Group chief executive Heather Ridout to a number of government boards and advisory committees.
But the industry is not a fast-growing one. IBISWorld estimates that the sector grew at an average annual rate of 1.2% over the five year period to 2006-2007. Revenue growth was recorded for every year of the period except for 2002-2003, when reduced government spending, the demise of GST information gathering-related firms, and gnawing unemployment were factors.
But while the average industry growth was low, it is believed that some of the sector’s larger players enjoyed stronger growth. For example, professional industry associations such as those of the law and accountancy bodies, which may provide members with bulk buying power and research and data rather than representation alone.
Additional factors affecting growth may include globalisation, technology revolution, the proliferation of free trade agreements, the re-election of a pro-business government, the use of professional associations for social networking and improved self regulation.
Despite this, it is remarkable that a large number of establishments remain small. This allows them to adapt easily to political and economic conditions but increases dependence on a limited group of members, communities and donors. There has however, been an increasing trend toward nationalisation, which has created employment opportunities in the period.
PRODUCTS AND SERVICE SEGMENTATION
GEOGRAPHIC SPREAD 2007
Distribution of industry establishments
IBISWorld forecasts that this industry will grow at an average annual rate of 2.3% over the five year period to 2010-2011, helped by increases in levels of disposable income and the number of leisure hours available to the populace, solid corporate profits and public sector donations, industry awareness of the centrality of transparency, globalisation, lobbying at state and federal levels, nationalisation and the targeting of specific racial, gender and national groups.
Membership may depend upon public trust in large non-governmental organisations and “official” political institutions or whether there is a continuing increase in the use of technology such as internet chat rooms. Employment and wage growth levels may recede but will remain proportionate with revenue growth.
Key success factors for operators in the industry:
- Concentration on core business. An organisation must evolve and remain relevant to the needs, wants and passions of its members. However, with such a large number of business associations, groups should concentrate on core topics.
- Ability to attract local support/patronage. Business associations rely heavily on support from their members. Membership fees account for the majority of industry revenue. Further revenue is earned in the form of donations and gifts.
- Economies of scale. Large organisations can utilise fundraising, marketing and infrastructure at a national and international level.
- Access to volunteer labour. Many business associations use volunteer labour to help achieve their aims. Members’ time and other non-monetary resources are used when organising activities, in exchange for promotion in local publications and organised forums.
- Ensuring pricing policy is appropriate. Memberships to business associations are in most cases optional. Therefore pricing of memberships in relation to the value provided is an important factor.
- Ability to educate the wider community. One of the main industry objectives is to educate the community and politicians about member needs and interests. The most successful organisations keep issues in the news and raise awareness and support for change.
- Prompt delivery to market. Operators must ensure that they reach the market with correct and substantiated products (research) that wins publicity for their cause.
- Having a high prior success rate (including completed prior contracts). Organisations that have successfully affected the kinds of change proposed in their manifesto will be more likely to win members and donations to achieve future goals.
- Ability to control size and growth of internal bureaucracy. The majority of organisation revenue should go to program delivery if the organisation is to have maximum success. Large administration costs will undermine the effectiveness and credibility of the group.
- Having a good reputation. To be successful an association must have a good reputation. A good reputation can be gained by showing independent and accountable research and opinions and providing transparent financial data.
IBISWorld supplies business information databases, including industry reports, company reports and business indicator reports. www.ibisworld.com.au
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