Episode 171: “A Business Model That Doesn’t Make Sense”

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Synopsis

Sam Schwartz, National Director and franchise owner for BNI in Israel, Hungary, Bulgaria, and Romania, and the Director of Training for BNI in Europe, joins Dr. Misner on the podcast today.

Any business coach or entrepreneur would tell you the business model of BNI doesn’t make sense. We give our members the power to choose our future clients. We tell successful entrepreneurs, “You have to volunteer your time, you have to help other people to get business, you have to play by BNI’s rules, and you have to pay a membership fee. Not only that, you can’t join a chapter without being sponsored by an existing member.”

But BNI gets results. Not only does it bring its members business through referrals, but also personal growth, knowledge, and all the other benefits of being in a room full of people you trust. This model works all over the world, counter-intuitive or not.

Brought to you by Ask Ivan Misner.

Complete Transcription of BNI Podcast Episode 171 -

Priscilla:
Hello everyone, and welcome back to The Official BNI Podcast brought to you by AskIvanMisner.com, which is a Web site where you can ask Ivan any question you have about networking.

I’m Priscilla Rice, and I’m coming to you from Live Oak Recording Studio in Berkley, California, and I’m joined on the phone today by the founder and the chairman of BNI, Dr. Ivan Misner.

Hello, Ivan. How are you? And I hear you have a guest for us today.

Ivan:
Hi, Priscilla. Yeah, I am doing great, and I have a guest today. His name is Sam Schwartz. Sam is the national director for Romania, Israel, Hungary. Hungary is one of the fastest growing countries for BNI. He’s also the executive director for Northern Virginia, and he’s our director of training for BNI Europe, but most importantly, Sam is a good friend, really great director.

And it’s a real privilege to have you on the podcast with us today, Sam. Thanks for joining me.

Sam:
Thank you for inviting me.

Ivan:
Well, we have an interesting topic with an interesting title, Business Model That Doesn’t Make Sense. And we’re actually talking about BNI, and we want to talk a little bit about why that business model doesn’t make sense, but we also want to make sure that our members get a take-away towards the end of this podcast that will help them understand a little bit more about BNI and why it works the way it does.

So tell me Sam, I think we came up with this topic in South Africa a few months back, yeah?

Sam:
Yeah, we were kind of relaxing on the patio there looking at the beautiful view, and I told you that BNI is really a business model that doesn’t make sense. If you go to a business coach and say, “Hey, I have this idea that I’d like to do,” and you tell them all the things you’ll be doing, they will tell you it will never work.

Ivan:
Tell me what you said that day, because I was like, “Wow, I love that!” Because if you tell a business coach, “Here’s my plan,” and what would they say? What was it you told me?

Sam:
Well, I told them that if I’m going to go to a business coach and tell them that I’m thinking about opening up a business that I’m going to give my clients the power to choose who’s going to be my future clients and I will not have anything to say about it and it will work, what do you think his comment will be?

Ivan:
Yeah, he’d say you’re crazy. But there are other things, too, like you had to follow some rules and pay for it. What were some of the other things?

Sam:
Well, if you think about it, I’m sure that one day there’ll be a study about BNI, because here’s what we do. We take successful entrepreneurs and we tell them that, “You’ll have to volunteer your time; you will have to help other people to do; you will have to play by our rules. And, oh, by the way, you’ll also have to pay a membership for the time you’re going to be a member in our organization,” and yet it does work, even though it’s counterintuitive to any entrepreneur.

Ivan:
I want to hear more, but let me just say one thing about that “play by our rules.” I think it’s important to understand that the “our rules” is really the rules that were created by the members of BNI. BNI created – the members of the organization through the Board of Advisors created the policies. With that said, there’s still rules that people have to play by, and that sounds like a crazy business model.

Sam:
But isn’t that true than any entrepreneur, as soon as they get some rules, they want to break it, because they know better?

Ivan:
Yeah.

Sam:
So we eliminate them, but the question is: If we have all these – and I should say maybe an oxymoron of what we’re talking about, things that doesn’t work, how do they work? And I think there’s only one answer; it’s one word: results. Because if the members wouldn’t have gotten the results they’re getting, they wouldn’t play, they won’t continue doing it. So I thank what’s important for us to look at, even though on the surface, this business model doesn’t make sense, especially when you think about it in a way that I said earlier, we give the power to our member to choose who is going to be our future client.

I, as an executive director in Northern Virginia, cannot go to any of my chapter and say, “You should pick this person” –

Ivan:
Right.

Sam:– “to be a member in your organization.”

Ivan:
You can’t say, “You have to take this person.”

Sam:
No, because they have to pick the people they want to do business with, because they’re going to meet with them on a weekly basis. Every time you pass a referral, a little piece of your reputation goes along with it. And I cannot tell them who they should do business – that’s why the power is in the hand of our members who actually pick the people they want to do business, and it’s true, our old fashioned word-of-mouth recommendation. That’s why you need to have the sponsor.

Often people said that, “Well, if I pay my membership, can I be a member,” and when we tell them, “That’s not enough; you have to go through the membership committee process, and there’s no guarantee that you’re going to be a member,” they look at me, “You don’t want to take my money?”

Ivan:
And that goes back to your business model statement that it’s a crazy business model because, you know, we turn down people with checks in hand, because it’s not a good fit, and we have our existing members select our future clients or members. And that’s a crazy business model, but I think you hit the nail on the head as to why that model’s important, because these people have to do business with each other. And I don’t think – it’s not in a member’s best interest to have other people pick who they’re going to give referrals to. It’s got to come from the member.

Sam:
And it’s also about building long and lasting relationship. Would you like to build relationship with somebody I force on you if you don’t know them?

Ivan:
Yeah.

Sam:
So it’s all about picking the right people to be within your sphere of influence with the people you do business, and it’s also – I think it’s a mindset to say it’s a privilege to be a member in our organization. So the members of a chapter should look at it that they are really doing a favor to anyone that they’re bringing into the chapter. I mean, it’s a privilege to be a member with their group rather than begging people to come and join us.

And you do a great presentation sometimes about how we invite, but I’m not going to go into that, but I think understanding that they have the power to pick and choose who they want to do business with, it’s a very powerful tool for them to recognize and follow through, because that gives them control on who they’re going to do business [with] in the future.

And I think the only reason that works for us and for them, it’s, again, one word: results.

Ivan:
What about results? What are some of the results that we talked about and had discussion in South Africa?

Sam:
The result can be varied, depending upon each person, what the desired result they want to do. You just did a podcast, the last podcast you did, you talked about the added value, the benefits to member over having like a mastermind group, a support group, somebody you can go and ask a quick question and get a reliable answer.

Well, some people are looking at it as a personal growth. Often in BNI, we are talking about the bottom line, the bottom line, you know, money, referrals. If you look at our Web site, we do publish the results of how many referrals we’re giving and how much money that’s created. But I believe these are a lot of added benefits or results to other people, such as the support group, the team, the personal development, the ability to have likeminded people that you know and trust that can give you the true answer to your question.

Sam:
And those results can only really take place effectively when you’re in a room full of people you trust, and that’s why the crazy sounding business model has to be the way it is, which is our clients choose our clients, because the clients are working with each other. And when they’re working with each other, they’re have to have people that they know and trust. And as counterintuitive as the model sounds, it works because of that. And we really don’t tinker with that very much at all.

I mean, I’ve had people that were friends that were not accepted into a chapter because it wasn’t a good fit for some reason or another. And they came to me and they said, “Well, you own the company. Make them take me!”

It’s like, “So, if I go in and I say, ‘Okay, you know that person that you said wasn’t a good fit, well, you’ve got to take them,” how much business do you really think you’re going to get from these people?”

“No much.”

“Okay. Well, let’s find a chapter where it’s a better fit.”

But that’s exactly what happens, our clients pick our clients.

We’re about out of time. Any closing thoughts?

Sam:
Sure. That this crazy model not only works in the United States, but it works globally. It’s overcome boundaries of culture, religion, location, states, and the proof is in the pudding, as they say in the U.K. It works all over the world even though it’s counterintuitive and it’s a business model that doesn’t make any sense.

Ivan:
You’re right, and nobody knows that better than you. I mean, you’re a national directory, co-national director of several countries. You’ve been running Israel for a number of years.

And, by the way, since I have you on this recording, you’ve done an amazing job, you and Yarden, the national director there – your co-national director. You’ve done an amazing job of taking a country that was struggling a few years back and really turning it around, and using this business model, I think, to its utmost.

Sam:
Thank you. I appreciate you saying that. [Inaudible] and I wouldn’t replace it for anything.

Ivan:
And it is a fun business. I love doing it, and I just finished doing a director’s training. We had about 20 directors here going through basic training, and I’ll tell you what I said to them as I wrapped up the training was, you, as directors, certainly as leadership team people, the education coordinators who are listening to this, you’re making a difference in people’s lives. People in a BNI group are making a difference for other people. In these tough economic times, this is a great way – I tell people that BNI is not only a great way to get business, it’s an even better way to do business. And I think the members and directors, like yourself, are really making a difference in a lot of people’s lives, and I really appreciate it.

Sam:
And I believe that our slogan that we came up, Changing the Way the World Does Business, it’s absolutely on the money. We not just changing locally, but globally.

Ivan:
Absolutely.

Listen, Sam, thank you so much for being on my podcast. I really appreciate it. It’s a great concept, The Business Model That Doesn’t Make Sense, but it sure as heck works, doesn’t it?

Priscilla, back to you. Thanks.

Priscilla:
Okay, great. Thank you both. That was very interesting.

I think that’s it for this week. I would just like to remind you listeners that this podcast has been brought to you by AskIvanMisner.com. Thanks so much for listening. This is Priscilla Rice, and we hope you’ll join us next week for another exciting episode of The Official BNI Podcast.