Former sales executive Tom Reda had just finished reading the book “Dig Your Well Before You’re Thirsty” by Harvey Mackay, which stresses the importance of networking in business success, when he was approached with a networking business opportunity.
Kansas City businessman Mitch Miller, who operated a year-old networking franchise called The Small Business Network, offered Reda a license to operate two chapters of the network in Pittsburgh.
For Reda, whose work in sales management required extensive travel, it was just what he was looking for.
“I had some criteria in my mind,” Reda says. “Paramount was no travel. I didn’t mind working 80 hours a week, but I wanted to be in my own bed at night.”
Reda agreed to pony up $30,000 for the franchise license. He got less than he bargained for.
Four months after Reda entered the agreement, the franchiser went out of business, and Reda lost his $30,000 investment. Or so he thought.
But after considerable reflection, Reda says he has come to realize that the seemingly painful loss has turned into the opportunity of a lifetime.
“After I got done beating myself up for giving up $30,000 without due diligence, I realized it was the best thing that could have happened,” Reda says. “Just the idea alone was worth $30,000.”
Reda still had the name and his client list, he no longer had to pay royalties to the franchiser, and he faced no limit to the number of groups he could start under the TSBN name. Under his agreement with Miller, the rights to run even three more groups would have cost an extra $20,000.
The Small Business Network at a glance
Operations
Reda, whom friends and colleagues affectionately call “The Networking Guy,” operates two networking groups, one in the North Hills with 83 members (three to four times larger than an average chapter, he says) and an airport location with 30 members after only two meetings. The groups meet one evening a month for dinner and one morning a month for breakfast, in addition to special gatherings such as golf outings and wine tastings.
Like those of several local networking organizations, meetings consist of meals, followed by a formal time during which he introduces new members, raffles off prizes donated by members and moderates testimony given by members who have benefited from leads given by other members. Members then introduce themselves, and, in 10 seconds or less, describe their businesses and what makes an ideal lead for them.
Speakers sometimes make presentations. And the balance of the time is for informal networking and socializing.
Financing
Reda’s $30,000 investment from personal savings has enabled him not only to purchase the franchise rights, but also to build the organization to its present size.
Sales to date
The cost of membership is $800, with an estimated 120 members. Reda would not disclose specifics about costs or fees.
Sales strategy
“It’s almost 100 percent referral-based,” says Reda of his strategy to attract new members. In addition to prospecting for new members, Reda offers a $50 referral incentive to members who successfully recruit new members.
“My best advertisement is the members,” he says.
Marketing Strategy
Reda readily acknowledges that the concept of formal networking groups is by no means his brainchild, but says his job is to perfect the concept. Perhaps the greatest difference is his own role in the organization. Many other networks have members running the programs, members who, by necessity, are distracted by the needs of their businesses.
“This is all I do,” says Reda. “I spend 24 hours a day, seven days a week bringing value to the group.”
TSBN offers a variety of meeting formats. Some are social get-togethers, while others include formal dinner and a speaker. The night-time setting is advantageous to business people who can’t attend meetings during business hours.
Reda sets no rules — no penalties for missing meetings, no penalty for not bringing a lead. Reda realizes that some days you have a lead and others, you don’t.
Market outlook
Reda sees considerable room for growth in the region, especially since he doesn’t view his competition as competition.
“Everyone should be in a networking group,” he says. “It’s cost-effective, you get warm referrals, you develop relationships. I’ve seen people go into business together, and I’ve seen home improvement people advertise together. In fact, I regularly refer people to other networking groups.
“Networking groups are going through a change analogous to that of selling,” Reda continues. “Twenty years ago, selling was all about closing. There was the trial close, the assumptive close, the tiedown close, close, close, close, close, close. But selling over the years has evolved into a needs and benefits and relationship development and solving people’s problems. Networking is growing away from simply, ‘Who do you know who does this?’ There’s education.”
Greatest challenges
”I’m not going to grow just because I can,” says Reda. “Do I have a master plan where there’s 26 groups? The answer is no. I have two good groups; I’m focusing on them. I have three to four other areas that are targeted where other people have said, ‘Call me when you’re going to start a group here. We’re ready to go. I have 10 people.’
“Maybe in the next two or three years, you’ll see four or five new chapters, but I don’t have a grand design. I just want to continue to be passionate about what I do, continuing to stay focused and to provide new and exciting ways of getting people to network and interact and refer business to each other.”
Reda says he has retained 85 percent of his members after one year. How does he explain that success?
“Successful organizations don’t just happen,” he says. “People make them great. I’ve been lucky to attract the caliber of people who have a ‘givers gain’ mentality.”
Case in point is member Tom Meeder, owner of Auto Service Mall. Meeder got a phone call a year ago that initially left him and his wife reeling.
“We’ve sold your building,” Meeder says his landlord told him clinically, “and you have 30 days to get out.”
Meeder got in touch with fellow member Al Kollinger, owner of Kollinger Auto Body. Kollinger was looking to sell one of his locations and consolidate his operation into his Wexford location. A handshake sealed the deal.
Says Meeder: “I think it was fate Al and I got together.”
“No,” his wife Debi interjects, “it was TSBN.”