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Business Observer Friday, Aug. 22, 2003 15 years ago

Chamber Change-Up

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Say goodbye to chambers of commerce that serve the Good Ol' Boy network more than the majority of their members. Sarasota entrepreneur Ray Villares and his supporters push for change.

Chamber Change-Up

Say goodbye to chambers of commerce that serve the Good Ol' Boy network more than the majority of their members. Sarasota entrepreneur Ray Villares and his supporters push for change.

By Kendall Jones

Associate Editor

ay Villares can be exhausting.

He moves, talks and thinks with lightning speed. Ideas bubble out of the 28-year-old faster than he can speak or write. His energy is palpable. He is aggressive, ambitious, relentless.

Villares, 28, co-founder of the successful Sarasota technology company, GravityFree, has a vision: Make the struggling Greater Sarasota Chamber of Commerce the new standard for member-driven chambers of the 21st century.

His vision requires dramatic change, much support and a great deal of dedication. Villares and his team are dedicated, and they have the chamber board's support, too - up to a point.

It won't be easy, though. History is not on their side.

In the past few years, the Greater Sarasota Chamber of Commerce, established in 1921, suffered from the same perception problems as other old regional chambers, plus a few unique ones.

A spot poll of about 50 randomly selected Gulf Coast businesses that are also members of local chambers reveals a common concern. Most rank the overall reputation and prestige of their local chambers relatively high. However, they also say the boards of directors of the local chambers only do an average job of representing them and their business interests.

The perception of most Gulf Coast chambers is that the boards are composed of the elite, big business establishment - the Good Ol' Boys of big bankers, developers, well-connected lawyers and real estate professionals. While that helps the prestige factor, and it gives the chambers a degree of political influence, Villares and other small-business owners say the elite boards don't reflect the true fabric of the business community.

At Villares' request, the Sarasota chamber conducted a demographics survey of its members. The results: 57% of chamber members have five or fewer employees. Another 13.23% have 10 or fewer employees. In other words, more than 70% of chamber members are truly small businesses.

"The perception is - and perception is sometimes more important than reality - that the chamber is really only focused on big business," says Kacy Carla Bennington, who has been heavily involved in the development and continuation of the Leadership Sarasota program since her 1998 graduation from the program. "There is not diversity on the board so it's not reflective of the community. There is a lack of women, of small-business people. We need to bring a balance to that, bring in the different experiences and influences in the community. It's easy for people to get caught up in their own business world, with their own definition of influence and who has it."

A concern expressed by several Sarasota business people is the perceived insider secrecy with which the board's executive committee was created and how the line of succession to the chairman position was determined.

The Sarasota chamber has a board of directors from which a smaller executive committee is formed. Under the board are four major divisions - the Committee for Economic Development, the Small Business Council, the Government Review Council and Leadership Sarasota. While the current executive committee includes the heads of the CED and the GRC, as well as a few other select board members, for some reason, it does not include Villares (the current head of the SBC) or a representative of Leadership Sarasota. The board passed a bylaw prescribing this executive committee makeup about one year ago - that has fueled the perception that the Old Guard is clinging to exclusive control of the chamber.

Plus, the line of succession to the chairman position has been predetermined for the next few years. After current Chairman Tim Clarke completes a specially authorized 18-month term (designed to ease the transition for a new incoming president), Charlie Murphy, president of The Bank of Commerce, takes over for another 18 months. Then Sarasota Herald-Tribune Publisher Diane McFarlin is slated to step in for a one-year term. More than one chamber member complained to the Review that this line of succession was determined in violation of chamber bylaws, an accusation Clarke adamantly denies.

As one member says: "The line of succession was simply announced, which is not a nominating process I am familiar with. And the executive committee passed it. Boom. Bang. That seemed odd to me."

Clarke says the nominating committee, which he selected, looked for dedicated board members who were likely to remain in Sarasota. Plus, adds Clarke, chairmen are selected based on one more factor: "It is a policy decision by the board to engage only the heads of companies, the number one or two person. We want a high level board with influence and a business perspective."

Clarke admits that by design, the board is primarily made of the local big power players. As for the small-business people who make up the bulk of the chamber membership and the lack of their presence on the board, Clarke says, "That's why we have the Small Business Council, and that's why we have put the bulk of our resources in that area."

The Disconnect

Regardless of its leadership selection, the chamber had to stop its hemorrhaging. In the fiscal year that ended September 2002, the chamber had lost $160,000, despite growth in membership numbers. And the finances were getting worse.

In 2000, a selection committee hired Rex Richards to come in as president of the chamber. Richards was hired after previous President David May left following the dismal failure of Set Sail, a fundraising campaign expected to bring in $2.3 million that only reaped $850,000.

Richards was bright, charismatic and highly qualified. Nevertheless, his showmanship turned off a lot of chamber employees - of the three final candidates, the majority of chamber staffers ranked Richards last.

At first, Richards seemed OK. "Rex did three major things for the chamber," says Bill Couch, interim/acting chamber president for the third time and a highly respected, long-time chamber staff member. "He clearly saw the need for a new facility, and he was able to bring the people together. That resulted in our getting the site and constructing the building we are in now. That issue had been going around for about two years before Rex got here. Second, with the move, Rex was able to raise the money to purchase new computer equipment for the chamber. Before, we had a patchwork quilt of equipment. Finally, he led the way to our becoming Florida Chamber of the Year this year."

In the final tally, Richards had a shortcoming. It is well accepted in the chamber management industry that the best chamber is a member-driven chamber, as opposed to one primarily run by staff.

"Look at successful chambers, such as the ones in Manatee or Venice," says Kathy Baylis, vice president of the Sarasota chamber's CED. "Their initiatives, programs and services are driven by the members. When programs are member-driven, they have a different energy. People are more likely to buy into things if it's their idea, their project. It works much better when it is bottom-up instead of top-down."

Sarasota chamber members interviewed agreed that Richards changed that equation. By the time the board fired him a few months ago, Richards had rendered most member committees impotent. While the executive committee still existed in theory, it rarely met. Other member committees were dissolved.

The change to a staff-driven chamber created a rift between the chamber and its members - both small and large businesses. It also created a disconnection between the chamber and the government entities with which it works. It frustrated and baffled most of the chamber employees, who genuinely want to serve the members and the community. Richards fired some staff members; others quit.

The chamber now has a 75%-80% member retention rate, which means at least 20% of the members don't renew their annual chamber memberships. "Some of those businesses may have failed, and others may have closed or moved. But some of those people are probably just disgusted," says Murphy.

Richards also failed to keep tabs on the chamber's waning financial condition. "We were getting no monthly reports. There was no one watching the finances," recalls Murphy. "We were selling the hell out of memberships, but they were running out the back door. No one was looking at the overall picture. We moved into that building, but there was no structured campaign to raise money for it, no program for naming it, no organized effort. For the chamber to represent the business world and not run a positive - that is embarrassing."

Finally, Murphy, chamber Treasurer Charles Baumann, a principal of KB Group, and Sarasota attorney Michelle Grimes made themselves into the chamber's first finance committee. "It looks like we are going to be in the black this year, just because someone is watching the show," says Murphy. "Each month we ask the managers to justify and manage their expenses. We are being conscientious of the bottom line." For fiscal year 2003, the chamber is on track to have about a $60,000 budget surplus.

With a dire financial condition, a 20% member drop-off and few member-driven programs, how did the Sarasota chamber become the 2003 Florida Chamber of the Year?

More than one person says: "It was packaged well." The chamber had a high number of new memberships, an important factor for the recognition, and its financial problems weren't known until after the Chamber of the Year applications were filed.

Rebuilding Credibility

When Clarke became chairman, he addressed critical functions. He had Richards fired. He formed an active, dedicated and powerful executive committee. He helped form the finance committee.

Clarke also put together a search committee to find a new, stronger chamber president. An announcement on the new appointment is expected in the next two to four weeks - the two final candidates were in Sarasota the week of Aug. 18, with a search committee report presented to the chamber board on Aug. 21.

Currently, an economic development study is under way in Sarasota County; the consultants are charged with drafting a five-year economic development plan. They are expected to suggest that the CED be removed from the chamber and placed under county authority. Clarke has taken an active role in dealing with this potentially tumultuous issue - the CED is one of the more respected arms of the chamber.

All of these efforts are key to rebuilding the chamber's credibility in the community. Chamber staff and members express gratitude and respect for Clarke and the work he is leading.

But to fully regain its credibility, the chamber needs another critical element. As Murphy describes it: "I think the chamber has got to get back in the business of getting in touch with the members. It's got to get back to the basics of what a chamber should do - communicate with its members, get them involved. But it's also important to get a new executive director - we've got to have a captain for our ship."

That's where Villares comes in.

While Clarke, Murphy and the other board leaders are looking for a new president and confronting the potential loss of the CED, Villares spends about 25 hours a week developing an extensive plan to reach out to and involve new and existing members. His plan: Attract young professionals and entrepreneurs, groups the chamber has not traditionally reached well. Some proposals have been approved by the board and are already functioning; others await board approval.

Driven to Succeed

Villares is one of those people seeminglyborn with the mark of success stamped on his forehead. In the best sense, he is a Type A overachiever.

When Villares was president of the Venice High School Key Club, it was the largest in the country, with 180 members. He was honored as Key Club Member of Year every year he was in high school, winning an award from the national organization his senior year. While in high school, Villares helped found the middle school version of Key Club called Builders Club.

Even though Villares didn't complete his college studies, he and his business partner, Scott Heaps, built GravityFree into a rapidly growing million-plus dollar technology company. They started the company seven years ago with a tiny office and $3,000 equity. Heaps and Villares recently announced plans to expand the company into both software development and start-up entrepreneur investment and development.

Needless to say, when Villares decides to fill a need, it tends to get done - quickly and better than anticipated.

Villares joined the Chamber's Better Business Council about three years ago. At that time, the BBC basically took consumer complaints against businesses, both chamber members and others. For non-members, it had little enforcement authority. Villares saw the group and its limited role as an opportunity for chamber growth and increased member services and involvement.

In the last year, Villares, now chair of the division, obtained board approval to change its name to the Small Business Council. He kept a complaint function under the SBC, but now it only handles complaints against chamber members. It refers other complaints to the local Better Business Bureau. The group enforces the chamber's Code of Ethics, by which all chamber businesses must abide, and enables members to keep active a dated chamber Seal of Approval by abiding by the code.

But Villares' changes go far beyond the complaint and ethics function of the council. Villares and a team of other under-40 professionals in Sarasota invigorated the Young Professionals Group as a committee of the council. The YPG provides networking and educational opportunities to younger business people in Sarasota, a growing market not targeted by any other chamber function. Started this past summer, the YPG already has more than 300 young professionals in its database, and its functions consistently sell out. YPG supporters are expected to volunteer time to the chamber.

Villares has repackaged chamber programs such as the business mentoring and counseling programs, the business help line and educational seminars and programs, now called Business Academies. He is instituting small-business executive roundtables and small-business financing connections. Villares leads the push to open a Small Business Resource Center, a physical location of resource material for small-business owners originally envisioned by Richards.

Villares and GravityFree have donated about $100,000 of work developing the chamber's website, which now gets about 10,000 hits per month, leading to 5,000 referrals to members every month, with a total 32,000 member referrals so far. By contrast, phone calls to the chamber lead to about 500 member referrals each month. Website ads have the ability to bring about $120,000 of revenue per month to the chamber.

There are unique parts of Villares' plan that have not yet been approved by the board. For example, he envisions a program called "Jump-Start," designed specifically to attract entrepreneurial start-ups. The program would provide these new chamber members with a discounted first-year membership fee in exchange for volunteer hours. It would also provide specialized education courses targeted to new and growing businesses. Jump-Start would produce a countywide entrepreneur database and enable multimedia member access to interviews and insights from area entrepreneurs.

Baylis and chamber staff member Ron Turner were looking for a way to provide more services and exposure to small business. "We knew Ray Villares was the right person at the right time to make this happen," says Baylis. "With Ray, there is a lot of energy around this plan of action. We saw in Ray the ability to make this a real member-driven success. We need to give Ray as much rope as possible. He knows a lot of people in the community, a lot of young professionals. He is pushing some non-traditional chamber programs, but the chamber did not appeal to these groups, the traditional chamber networking functions did not work for them."

Old vs. New

Villares also sees the need to restructure the chamber's internal organization to improve efficiency and communication, a proposal other board members agree is valid.

But Villares' enthusiasm and new ideas may prove difficult for some board members. "There is a tension and a balance between the old guard and the new guard," says Bennington. "I've been encouraging Ray to develop his relationship and communications with the other board members. Ray's young professional generation does everything by e-mail. But the old guard likes face to face. Ray moves very fast, and that can be challenging because others make their own plans and have their own vision. Ray has real goals, valid goals."

Old guard board members deny speculation that they feel threatened by Villares and the next generation of leaders. Clarke calls Villares' energy "contagious," saying he's only seen support from board members for Villares and his plans.

Murphy says he admires Villares' enthusiasm, "but things are not going to happen overnight. Ray has determination and ability and some terrific ideas, some of which may need to be incorporated for the chamber as a whole, not just in the Small Business Council."

Asked whether the Sarasota chamber will be the standard by which other chambers are measured - the chamber Villares envisions - Murphy responds: "Two years from now, we will have new processes in place. We will be on the road. Will we be there? No. Will we be close? Yes."

Chamber Success Story

Maryland Chamber of Commerce President and CEO Kathleen Snyder recently took that chamber through internal restructuring similar to the process Sarasota is facing. Here's how she described the experience and the outcome:

"Our chamber went through a strategic planning process facilitated by one of our members. We identified strategic priorities that focus on making a significant impact over the next three to five years. The plan was developed over nine months of professionally facilitated meetings. Forty of the 58 members of our board of directors participated in a two-day planning retreat; another 12 joined the chamber chairman and me in a teleconference call to gain consensus on priorities and strategies.

"At the retreat, we redefined our mission to maximize opportunities for our members to grow and prosper. Next, our board outlined strategic goals to help the chamber achieve its new mission. These goals include enhancing the effectiveness of our advocacy program, concentrating on our signature events, improving our value-added services, and growing our membership. While these are simple goals shared by most chambers, our board defined measurable outcomes and developed action plans to build on the chamber's recent accomplishments and to position the chamber for improved success in each of these areas.

"We provide updates on our Program of Action strategies at each of our quarterly board meetings to keep the chamber on track. Overall, the program has helped board members to take greater ownership of the chamber and its future. We're seeing increased participation in special events, increased membership activities, and more sponsorship revenue.

"My advice (for other chambers interested in going through a similar process) would be to use a third-party facilitator who would structure the entire process to ensure that it isn't staff driven. Staff is so focused on the day-to-day operations of the chamber that they sometimes fail to see the big picture. Obviously, the staff and the board must play a major role in any strategic planning process, but using a third-party facilitator enabled us to gain a new perspective on our overall structures, processes and member perceptions.

"A second piece of advice would be to energize your board. This goes hand in hand with creating a sense of ownership among board members. We feel that an energized and involved board is essential to the success of our strategic goals. Keeping them actively involved and informed will be critical to the growth of the chamber."

Source: The United States Chamber of Commerce

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