Home > Uncategorized > The Mathematics Behind BNI — Are You Really Profiting?

The Mathematics Behind BNI — Are You Really Profiting?

The other day, I received a telephone call from a client who asked me whether I’d be interested in joining a 40 participant BNI Networking Group as their Title Insurance “guy”.  Knowing that I’d be foolish to immediately turn such an opportunity down, I obtained the contact information of the group leader and contacted her to learn more about the opportunity.  Unfortunately, because I am already a member of a Chamber of Commerce Business Leads Group, I did not qualify for membership into BNI.

Setting aside the fact that BNI is a very serious organization and this particular group has done millions of dollars in lead generation between its members, I was curious about the investment return relating to the two groups.  Using certain assumptions I was able to arrive at some pretty interesting observations regarding the networking opportunities that these two types of organizations offer.  In order to evaluateyour investment return all you need to do is substitute the assumptions listed below with your personal assumptions, etc.

ASSUMPTIONS
1.  40 hour work week
2.  50 weeks worked per year (2 weeks vacation)
3.  Desired income of $100,000 per year (not bad considering the average Real Estate Agent earns less)
4.  Network meeting 24 times per year (Chamber of Commerce) or 50 Times per year (BNI)
5.  1 Hour meetings at the Chamber and 1.5 hour meetings at BNI
6.  Travel time of 15 minutes each way to the meetings
7.  I am a member as a Real Estate Agent in lieu of a Title Insurance Company
8.  I am the owner of a real estate company and do not have to “split” my commission

Chamber of Commerce Findings
Using the above assumptions, I meet with the Chamber Leads Group for 24 hours (annually) and have approximately 12 hours of travel time for a total of 36 hours.  If I desire to earn $100,000 per year then my time is worth $50.00 per hour ($100,000 divided by 40 hours per week @ 50 weeks per year).  This means that the financial cost to my participating in the group is $1800 annually.  If I sell one home per year generated from the group at $175,000 with an average commission of 3% I have a net profit of $3450.  Subtract from this number the cost to participate in the leads group ($500 annually) and I end up netting $2950

BNI Findings
Also using the assumption listed above, I would meet with the BNI Group for 75 hours (annually) and have approximately 25 hours of travel time for a total of 100 hours.  If I desire to earn $100,000 per year then my time is worth $50.00 per hour.  This means that the financial cost to my participating in the group is $5,000 annually.  If I sell one home per year generated from the group at $175,000 with an average commission of 3% I have a net profit of $250.  Subtract from this number the cost to participate in BNI (around $1000 annually) and I end up netting -$750 per year.

Conclusions
It would seem mathematically logical that the prudent decision would be to not consider the BNI option as it appears that I would have to close more transactions with them in order to profit or even break even (in other words do I leave the Chamber where I already have my roots or do I join “new blood”).  It must be mentioned, however, that BNI appears to be a great organization and it seems logical that a fairly active Real Estate Agent should be able to spawn greater than 2 transactions per year from the BNI group.  Accordingly, with BNI, I would be planting roots for future transactions and a strong referral base.  But, whose to say that I would not see the same results from the Chamber (I’m pretty sure that I have).

It all remains a “blur” to me — the only conclusion that I can really draw is that if I were to join BNI as atitle insurance agent, I would have to do a bundle of deals to break even with BNI.

My last comment is that there is a value to the intangibles.  Having an opportunity to be in front of 40+ people on a weekly basis is valuable — to what amount I’m not certain, but it’s definitely valuable!  I’m pretty sure that if the opportunity to join as a real estate agent were available, I’d jump all over it!

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