I got a call today from a local friend who is part of a large networking organization. She was frustrated. She has been feeling stretched thin for some time now and really debating if she should stay in this group or move on.

The conversation that followed may be of value to you. It is normal to evaluate time and resources on the start of a new year. Many organizations do. So here are some things she considered.

Actual time investment

Some times a networking group seems great, but then over time you go from an hour a week to 3 hours a week and don’t really know how or why. More times than not networking organizations are run on a volunteer committee meaning if you are a member of the organization/leadership team you are required to commit X amount of time each moth to coordinating the group and group activities. This is part of your time commitment to the group and the role you accepted.

Some of these networking groups require members to meet with each other on a weekly bases – the ones that don’t require this tend not to have the same revenue shared among their members as ones that do require this. So now you are looking at group meeting time, coordination time and private one on one meeting time each week.

Wowie! That ads up fast! We haven’t gotten to tracking and reporting yet for referrals given or received, closed business of said referrals.

Financial investment

Some organizations you can join, like the Chamber, requires a fee to be a member and the referral groups are a resource for you as a member for free. Other organizations don’t have a fee at all, like Triad Asso-SHE-Ation. Then there are referral groups, like BNI and Center for Private Business, that require a fee to be part of the room.

So on top of the time investment, which everyone’s dollar per hour is different so I am not going to calculate that, you also have a fee to be part of these rooms. Some times it is small $20 a week, other times it is rather large, up to $1000 a year or more.

This needs to factor in when choosing a networking group to join.

ROI

Now lets look at the return on investment. Let’s pretend 2 scenarios:

1) You are a business owner who sells widgets for $12-$35 apiece depending on the widget. To break even in a networking group you would have to sell 28.57 widgets at $35 each to cover the joining fee alone (without taking into account your overhead on those products).

If you have it figured out that on average you can sell 10 widgets a day (without being part of a group), then it would take 3 days to cover the joining fee.

OK, not bad.

Now factor in your hourly rate. This would be the revenue you made from the business last year, less expenses, divide by number of hours a week worked (times number of weeks worked) = your hourly rate.

Equation would look like:
R-E=A
(A/#H) #W = Hourly rate (HR)

What is that number?

Add your hourly rate times 3 per week (TW) to get the total weekly investment (WI) of the group, then times that total by weeks per year (WY).

Equation would look like:
(HR)(TW) = WI
(WI)(WY) = Total time investment in dollars and cents of that group.

Let’s pretend your hourly rate is $15/ hour (which you wouldn’t be the business owner if this were true) $15 x 3 (time per week) = $45 x 50 (assuming 2 weeks off per year) = $2,250 in time + $1000 annual joining fee = $3,250/$35 = 92.86 widgets to cover the cost of being a member of the room for 1 year. It would take 93 days to generate the revenue to break even selling your most expensive widget.

2) Let’s say you are a realtor (because that is an easy one to calculate). Your average dollar sale is $300,000. The revenue you keep from that sale is usually 10-15%, making your actual takeaway @ $30,000 – $45,000 per sale.

Now lets run the game. $1000 annual joining fee is covered 100% in sale 1. How long does it take to get 1 sale? Depends on the market but in today’s market 3-5 business days, sometimes up to a month.

So the question is, is it worth the investment of time and money to be in a referral group?

Based on our 2 scenarios, if you are someone selling widgets, the only way joining a group is worth the investment is if you know you will get sales right away from the room making the investment a temporary cost that you recoup quickly. It’s possible, but not guaranteed.

Or, if you expect you may get a referral that will place large orders for some function, where you might sell hundreds of widgets at once.

Back to the call today

This friend of mine is someone in scenario #1. To her credit she did her research on the averages of industries that are successful in referral groups before joining.

Perhaps it just wasn’t the right group…or perhaps joining a group at all wasn’t the best decision for her business. She gave it a college try. She worked really hard at it dedicating over 10 hours a week to the group to help move it along.

At the end of it all she had a plan for how she could connect with like-minded individuals that would help her to feel fulfilled and be able to help her grow her business — without the fees or required time investments.

Moral of the story

Don’t do something because someone says you should. Don’t join a group solely because your friend did. Their business is different, and so are their revenue goals.

Think about your core values. What matters to you and your business, and are those things specifically valued in the group you’ve been invited to?

As we saw above, it’s easier to see ROI as a realtor than a widget salesman. If the room is full of realtors, it’s easy to see why everyone is happy. Are there other widget sales people in the group with similar values that have also been successful?

You will feel fuller, happier, and more productive joining groups this way than joining one only because someone you know said you should.