Business Networking (long)

[ShadowHawk 0]

Several folks have asked me about how to get referral business - and what type of entities are available for you to help push your business to have higher sales.

Let me start with a background of my particular situation, that'll give you a "why" behind the decision's I've made for this direction that my business is being steered by me.

Understand also - this is not an ad for the group that I am a member of for business referrals.  It is a motivation for you to take a long, hard look at yourself in the mirror, and see if you like what you see, and what you can do to change it if you don't.

Chapter 1 - My Story

Back in 1998, I was laid off from a corporate job I *hated*.  In fact, I'd had my resignation letter in my briefcase for over a year - but I wasn't a quitter, so I stuck it out... and they finally paid a third of the company to leave at one time.  I worked from before sun-up 'til after sun-down, and only saw my wife and kids late at night, and early in the morning.  Sure, I never had to worry about keeping the bills paid... but at the expense of losing out on family time.  I was unhappy in one of the worst ways.  My wife and I always wanted to be self-employed... so we went to several "Entrepreneur" type of trade shows, and finally picked a screenprinting package to buy and start up a company.

Our first order of business was in sending out 31 letters to people that worked in the athletic departments of cities around our metroplex area.  To our knowledge, we got a return on the expense of those stamps about a month later.  One of the recipients knew another business owner who had won a bid with Nike' - however, they did not do the type of work that they bid upon.  So we agreed to do the work.  For 4 months, we printed Dallas Cowboys jerseys for the NFL Pro Shops.  To put it nicely.. it was a "learning experience".

What did we learn?

a) Don't rely on one big customer to pay your bills.  If you do a bad job, they'll stop using you - and you'll be out of business because of no other revenue flow.

Market to your market.  We were softball players.  We got into the business at the time to market shirts for teams - knowing that we could make money and still provide an affordable shirt for teams.  Every team manager/coach in the 3 biggest cities for softball around us knew that we were the "team t-shirt people" to go to.  We went to the coach's meeting before seasons, passed out cards & fliers between game times at the fields, etc. etc.

During that time, we also placed an ad in the yellow pages.  Over $100/month for a column sized ad.  That ad generated lowball price shoppers.  I know - because I asked every person who called, where they got my number from or how they heard of me.  And for a while I tracked how many of each type of call gained me a sale.

Over the next several years, we slowly got referrals to companies that had anywhere from 5-50 employees.. and the occasional larger odd-job for a company 4th of July party...

All through that time, I still tracked my phone calls, and income.  I learned that the yellow page ad was not paying for itself.. I learned that 95%+ of my business was from word-of-mouth referrals from past customers.

Then almost 2 years ago, I got a reality check....  We were in debt.  Big time (for us).  Our income from the business was paying the mortgage, utilities & groceries, but not much more.  Financially, we were working a "bad paying job" - instead of being owners.  Then more recently, I became a "sole owner" of the business.  Sales revenue ranged from about $38,000 a year to $90,000 a year....  That was in sales - not profits. (and the higher range of income was in the earlier years!)  I needed to do *something* different if I wanted to attack my personal debt, as well as making a future for myself and my kids.

Some of you may be familiar with your local Rotary club, Chamber of Commerce, etc.  These are different forms of "Business Networking" organizations.  You go, show up, meet and talk with other local business folks, and pass your cards out and hopefully make a sale because you showed your face.

I was asked to visit with a group from an organization called Business Networking International. (BNI).  They understand the value of personal, qualified referral business.  In a nutshell - they grow chapter member's business revenues by passing referrals to each other within the chapter.  Not necessarily business from one member to another - but from the member's customer base.  For all intensive purposes, I have 25+ folks keeping an eye out for people or businesses that may need promotional products or screen-printed items.  I attend a weekly marketing meeting with my chapter members, and we make sure each person knows what type of business we are wanting to target.  And I know that I've got 25+ folks that I can refer work to, if I should come across a customer of mine who wants or needs services that my chapter members offer.  (I.e. corporate photography, legal services, real estate, car dealer, mortgage broker, landscaping services, personnel services, and so on, and so on...)

All these folks are keeping an eye out for me, and I'm keeping an eye out for them - each of us looking to pass qualified business to each other.  I hate to call it this - but this is a fantastic form of the "Good ole boy" network.  Only one person from each profession is allowed into a chapter - that way there's no question of who will get the referral business.  There's only 1 corporate lawyer, only 1 roofer, only 1 physical therapist, only 1 computer hardware integrator, etc..

As an example, I got a referral from our chapter lawyer.  This was for someone he knew with another law firm, that was looking to spend some of their (obscenely large) advertising budget.  This company specialized in real-estate law...  Well, guess what... one of my promotional products catalogs has some items that are geared towards the construction industry.  A law firm is buying custom printed hardhats with their logo on them.  "Protecting their customers legally, while they build their future".  Who'd think of lawyers having on a hard-hat?  Most people wouldn't - but once it was tailored to their market - they see the value in using it as a marketing tool to their niche.  They pass out those hardhats when meeting with construction reps, corporate land buyers, etc.

I passed a referral last month to our mortgage broker.  A friend of mine is wanting to buy a house, but has some issues to clear up, so the mortgage broker is helping my friend clear those up - so that he can qualify for the best loan that he can.

So.. that's it in a nutshell.  Qualified referrals.

I've got specific goals for my finances, my business, and my family - and a specific time-frame and a plan for each goal - and the business referrals will help me achieve those goals.

I think that if you want to make your business truly a business, and not simply a hobby that pays for itself and maybe a "little more"... then you need to make some realistic  hard looks at yourself, where you're at, why you're there, where you want to go... and what path will get you there - within the ethics that you do your business by.  Then focus like a madman on those goals.

Where are you?  Have your sales plateaued or dropped?  Are you working more hours than you income is paying you for?  Do you really know what kind of revenue your business is generating, and what it's paying for? (and more importantly - what it's NOT paying for).  Do you have specific goals?  If not, why not?

Each thing is a piece of a puzzle.  You may have an idea of the overall picture once you start putting the pieces together - but until you actually put all the pieces into place, see where you're at, and where you want to be - it's hard to fathom what it will take to move you along on to the path of achieving your goals.

I'd like to say that BNI will make my goals happen.  By itself, it won't.  It will, though, offer a more broad spectrum of customers to my business - and I'll provide another band of potential business to my chapter members. 

It's up to each of us to realize and reach our dreams and goals - by taking action to make it possible.  Sitting back, and worrying about where your next bit of income is coming from is stressful.  I'd be willing to bet that more than one of you has been unable to sleep, because you've got a mortgage payment to make, but you don't have any customers lined up for the next few days.  I know - I've been there.  That stress will affect you physically.

To grow your business is really all too simple.  But many business owners fail because they have no personal plan for their business.

a) Know where you are financially

Set your goals (I.e. where you want/need to be financially)

c) Make a plan of action to get to those goals.  This needs to be a realistic adjustment of your actions to get where you want to be.

d) Put it into reality.  This is the final step - the step that so many fall short on.  Sure many come up with a plan.. but actually carrying it through is the hard part.  Forcing yourself to make changes in the way you do business - because it will allow you to realize your goals.

This post is longer than I expected it to be.  However, I think it really gives a perspective on some of the steps needed to evaluate and grow your business.

Rex S.

[bk2design 1]

Great post Rex! Thanks for the info!

[Guest fivestar]

Very good read Rex.  Sounds like you're starting to see the light at the end of the tunnel.  I've been a business owner for almost 20 yrs and yes it is very hard to succeed at business if you are not focused.

[polarkiss 1]

So.... I checked into BNI in Alaska, and there is only 1 chapter here. 

And that chapter is 195 miles away from me.   

I emailed the chapter director about starting one closer to my location. We will see if I get any response.

[Zal 0]

Great read Rex, thanks for the insight.

Zal

[Benr98 40]

Thanks Rex.  That was definitely interesting reading and basically shows what desire and determination and networking can do.

Jenny

[nonabelle 5]

rex, it may be long, but its so real. thanks for taking the time to post it. the read is very well worth it. u hit it, and u hit it on the head for a lot of us. i appreciate it so much. opened my eyes to a more broader spectrum/.

[go hodags 0]

Rex,

I think what you wrote is great.  I see your points and think alot of small business owners need advice like that, I know I do and will use the advice you offer.  However I want to ask a few questions on the pessimistic side.

1.  How does someone get in your group?  Is it by referral from another member?

2.  How do you ethically refer a group member to a friend or client if you know they don't do a great job or you know of someone who does a better job.  In my construction business, its kind of hard to not recommend the best plumber, mason, electrician, etc that I know of to my customer, because I want the best job done as a result of my recommendation. 

I love the idea of the network and good old boys club, but just wondering how you deal with these issues?

Thanks,

Bart

[ShadowHawk 0]

Those are some good questions - and I'm going to preface my answers by stating that I'm probably not a qualified person to ask.  You may want to talk with someone from the leadership team of a local-to-you chapter to get more.  I don't see your viewpoint as being pessimistic - because you already know that referrals work.  you're already doing it with your current contacts.  The only difference I can see is that with an organized group, you have a potential referral force that's as large as your chapter. 

Also - you're only passing a referral - the customer is already looking for tha service, and you're giving your recommendation - essentially saying "Hey - I've done business with this person, let me give your number to them, and they will follow up with you to see about quoting a price for your needs."

1)  People are encouraged to visit a group to see if they feel that there's a good synergy that can be built.  It's important that you pick a group to do business with that you "mesh" with.  Personalities between people can make or break the referral relationships.  Prospective members can visit a chapter meeting up to twice, and certainly can talk with individuals and the membership committee to address questions and concerns.  Different groups choose different times of the day/week to meet.  I can't imagine waking up early enough to meet with the 6:30am Monday breakfast group...  ha!

2) I certainly understand what you're getting at behind this question.  Each member is certainly free to refer business to whomever they want - I suppose theres several different avenues that could be pursued.  Knowing that you'll have a team of people that are also giving referral business to you and getting referral business from you - you'd be hard pressed not to encourage your current contacts to explore the benefits of your particular chapter.  If those profession positions are already filled within a group... Then you can certainly choose whether or not to pass along a referral to the holder of that position... or to give it to your current contact.  I think that quality of work is an important consideration - especially in the construction field.  Trust needs to be built between members in order for you to trust your customers with a referral to someone else for work.  If you don't trust the existing plumber or if there's a quality issue.. those are bridges that need to be built.  Get together one-to-one and see his/her work.  If you still don't feel comfortable referring him/her.. then maybe that particular chapter simply isn't the right fit for you. 

I urge you to research your potential referral field with a group before committing to that group.  There may be another group or chapter that's a better fit for you.

That's not pessimistic.. that's realistic.

Rex

[go hodags 0]

Rex,

thanks for the answers.  That is pretty interesting.  I didn't realize that regions have more than one group.  Thats makes more sense.  After searching online, I found a group in my area looking for a sign maker.  Might just have to email some folks.