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Gold-Plated Networking Groups

Are they worth the price?
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Networking is as old as business itself. And so are networking groups, those formal or informal gatherings of entrepreneurs who meet to share ideas, strategies, fears, and horror stories. Such groups, of course, are valuable only if their members are smart and seasoned. And increasingly, entrepreneurs are willing to pay, often quite handsomely, to make sure they are. Membership is growing in many high-end networking groups, including elite nonprofits such as Young Presidents' Organization, or YPO, which charges $7,000 to $8,000 a year, and private companies like Vistage, which charges up to $13,000 a year.

In general with these gilded groups, the more you pay, the more personal the service. Young Presidents' Organization offers small monthly forums run by volunteer moderators, in addition to larger events. A nonprofit, it's the oldest and most exclusive networking organization; it accepts only CEOs who have built their companies to $8 million in sales by age 45. Entrepreneurs not eligible for YPO can still get top-notch service from for-profit groups, however. Guy Timberlake, co-founder of the American Small Business Coalition, a four-year-old organization based in Columbia, Maryland, sets up several private meetings a month for his highest-paying clients, all government contractors. And at the Breakfast Network, founder Ed Bogen, a veteran publicist, invites clients to one-on-one sessions with contacts he handpicks, as well as relevant cocktail parties and breakfast meetings. Bogen has about 200 clients, mostly in the Northeast, and charges $8,000 a year and up. Founded in 2001, Breakfast Network used to offer a lower-priced option as well. But a few years ago, Bogen phased out about 700 members to give more attention to the higher payers.

Andrew Schnipper has been attending Breakfast Network events for a year and a half, ever since he sold his first company, Hale & Hearty Soups, and began launching his second. "You're paying for access," Schnipper says. If he needs a lawyer, he can call Bogen instead of spending days on the phone looking for a referral. Schnipper says he has also gotten valuable help from private equity investors, who advised him on finding funding; so far, he has found 75 percent of the start-up money he needs. And he picked the brains of major commercial landlords for advice on where to locate his new venture, an upscale burger joint called Schnipper's Quality Kitchen, and how to negotiate a deal for space in The New York Times' new headquarters. His restaurant is scheduled to open this fall.

Finding the right group can take time. When sales at Bill Greenblatt's company exploded from $10 million to almost $100 million in seven years, the advice from people in his networking group couldn't keep up. Greenblatt, founder of employee-screening firm Sterling Testing, was a member of Vistage, which has more than 14,000 members who meet regularly in groups of 10 to 12. "Everyone else was standing still, so I quit," says Greenblatt. That was three years ago; now, he's in a new Vistage group, which he helped form. It's led by Stephen Baum, a former Booz Allen Hamilton partner, and includes entrepreneurs and executives who run much bigger firms. Says Greenblatt: "I wanted to play with kids who were better than me."

Schmoozing this way isn't for everyone. Members typically attend at least one in-person event per month, which can easily take half a day. Most groups discourage members from swooping in only when they need advice. That means you have to invest a lot of time offering your own advice and expertise to other members. And if you're looking for sales leads, you will probably be disappointed. Many outfits discourage members from selling to one another, on the premise that their members aren't paying thousands of dollars a year to be confronted with the hard sell at a cocktail party. Plus, it's tough to be candid about business problems when there's a customer in the room. "I throw somebody out for breaking the rules every quarter," Bogen says.

Then, of course, there's the price. But if you're not ready to spend $10,000, you may still be able to join. Some groups offer low-priced options for start-ups and small companies. Ann Bouchard pays less than $3,000 a year to belong to Vistage, though many members pay four times that amount. Bouchard owns two companies, Bouchard Communications Group and Matrix Manager, and has 23 employees, but she has chosen to stay in the same group she joined eight years ago, when her company was much smaller. A few years ago, the members walked her through the decision to acquire a small PR firm. "Up until the point I joined, everything was on my shoulders," Bouchard says. "This group is everything for me."




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