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Members looking to make rain: Growing networking firm aims to be national player

February 25, 2008

A central Indiana business networking company that's on a growth tear.

Rainmakers Marketing Group Inc. more than doubled its membership to 1,100 in 2007 alone, and has added another 200 members already this year. Revenue is expected to surpass $600,000 in 2008.

"The business model is simple," said cofounder Tony Scelzo, 35. "We teach business people about growing a business."

R a i n m a ke r s ' events offer more than talking heads and forced interaction. The group sets up ground rules for networking encouraging members to give in order to receive. For example, newcomers are asked how members can help their business succeed rather than being subjected to a series of sales spiels.

Members also get monthly "lessons," which help them learn to focus on what makes their business successful.

Scelzo is the driving force behind Rainmakers. Back in 2000, he was working as the marketing director for BD's Mongolian Barbeque, setting up and promoting new stores. But he wanted to start a business of his own.

"I made a lot of money for other people and wanted to figure out how to do it for myself," he said.

At the same time, he was attending networking groups to build his Rolodex.

"I didn't like the events out there," Scelzo said. "There were no rules of engagement and it seemed to be a contest to see who had the coolest sales pitch."

When an Internet business he started went belly-up in 2000, he was working a second job as a bartender and ran into an acquaintance who led a software company. Someone else he knew ran an Internet service and was looking for help with software development. Scelzo brought them together and got a "birddog" fee for his trouble. That's when his business idea clicked.

"I liked being an ambassador for people," he said.

Building on that almost-accidental success, Scelzo and friend Doug Edge hosted a networking meeting, in part to drive business to Edge's self-named marketing firm. The meeting went well so they held more and attendance grew to about 200.

"I kept having more meetings figuring the demand would eventually deplete," Scelzo said. Though they incorporated it from the beginning to protect against liability claims, "we didn't plan on it being a business."

Many leaders

In fact, through 2004, it was a moneylosing venture.

Initially, Scelzo and Edge charged a $75 annual fee, which barely covered the plaque and information kits members got (including a copy of Jeffrey Fox's book "How to Become a Rainmaker.") Add in room rentals, speaker fees and catering for special events, and the venture lost money.

The Rainmakers name heralds back to both the American Indian tradition of dancing to bring rain and the inspiration Scelzo got from Fox's book.

"The concept is that one individual has the ability to make a large impact in anything," Scelzo said. "Put those people together and what can be accomplished?"

Edge eventually left the business and Scelzo said he invested about $70,000 and "lots of time" into building Rainmakers. He now runs the company from his home with three full-time employees. He still has a side business, Culture Drive, where he does business coaching, but most of his time is spent on Rainmakers. In the beginning, Scelzo personally set up and attended each meeting.

A turning point for the company came in 2002, when Scelzo decided the best way to expand was to bring on additional leadership rather than try to direct everything himself. He found a president, offering a percentage of all new membership fees. Then he chose chairmen and chairwomen to start new Rainmakers hubs in different areas. Those leaders also earn about an 8-percent commission on new memberships-which cost $449 a year now.

"Little checks are my best marketing," Scelzo said, adding that the company pays out about $4,000 a month in commissions.

That's a different model than other networking groups. BNI International, for example, is a franchise. Most smaller groups, such as central Indiana's Network of Women in Business, are not-for-profits.

NOWIB sets annual dues at $150, but uses all the money to host events and to run a foundation that supports local charities.

But Rainmakers' model has allowed it to grow exponentially-it now has 23 Hoosier hubs and is adding hubs in Westfield, Kokomo and Columbus, Ind., early this year. Scelzo plans to tackle the Cincinnati market in 2008, too. Each hub is different, but membership ranges between 50 and 80 people, including a 15- to 20-person advisory board comprising its most active members.

The company had $400,000 in revenue in 2007 and plans to bring in $650,000 this year, Scelzo said.

Growth plan

The idea behind Rainmakers is simple: Bring together businesspeople who can refer customers to fellow members, remind them that they have to give to receive and throw in some motivational business coaching at each meeting.

The motivational messages usually originate with Scelzo and are passed along to the hub chairs at monthly meetings. Hub leaders then meet with their boards, passing along the month's topic-things like how to avoid networking faux pas or how to check your calendar to see if you're meeting with enough people. Advisory board members, in turn, present the message at group meetings.

The support has kept more than one business alive.

Cindy and Mike Hartman started their business doing personal property inventories in 2005, fulfilling a longtime dream. They thought the inventories also would be a way to help people recover from a damaging fire or storm.

But business started slowly for Hartman Inventory, and the couple was debating giving up. Then Cindy Hartman called a fellow Rainmaker who went through his Rolodex, giving her leads and, more important, hope.

"We sat down over that weekend and decided to keep going," Hartman said. "We thought: 'We owe it to all the Rainmakers who've helped us so much.'"

Fellow member Steve Scalph, owner of Sign Here! Ltd., said he likes being in touch with other owners.

"I love to connect people together," he said. "I love to have customers call me and say; 'I don't know if you can help me but do you know somebody who ... ?'"

About 70 percent of members renew their membership each year. About half of all dropouts come when people change careers or move outside of Rainmakers' current range-from Terre Haute to Lawrence, Fort Wayne to Bloomington.

Scelzo is working on plans to extend that reach much farther. He wants the organization to have hubs nationwide in five years. But tackling large markets like Chicago may take more money.

"We've been committed to doing this by our bootstraps for the last five years," he said. But if we're going to go after a market like Chicago, we've got to do something more sophisticated."

So he's considering bringing on outside investors and potentially new leadership. Scelzo owns 85 percent of the company, while other leaders hold the rest. And he may even give up the reins if he finds another leader who can take the company national.

"I'm more of a facilitator than a founder," he said. "I've been to a couple of meetings where no one knew who I was. That was fun."
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