An Insider’s Look at the Cost of Networking
If you disagree with the conclusion of my last post, “Relationships: Do They Matter?”, this one may make you want to reconsider.
Similar to other industries, networking events and conferences are essential gathering spots for CRE professionals to meet one another and seek new business opportunities. Being closely integrated with this community for the past 6 years, I have had my fair share of small talk, panel discussions, and pre-scheduled meet and greets. Almost everyone I know that works in commercial real estate goes to these conferences at least 2–3 times a year. Have you ever wondered how much cash this community spends on networking? Well, I did yesterday, so I started digging into some numbers (I know. Another nerd-attack.). Take a deep breath; and let’s do some math:
- Numbers of CRE Sales Professionals (let’s account for only sales right now because they have the most networking-driven job functions): According to the U.S. Department of Labor, there are approximately 421,300 professionals working in the sales capacity for the Real Estate industry. This includes brokers and sales agents. A source from an SIOR conference indicates that about 10–15% of these professionals are within the commercial branch. That gives us 63,195 CRE sales professionals, approximately.
- Numbers of Events: From sources that aggregate CRE conferences across the nation, an average of 3–4 conferences occur on a weekly basis. For the sake of estimation, let’s take away 4 weeks out of the year for holidays and vacations; this leaves us at about 140–190 events a year. It is a legitimate full-time job if your sole function is to attend these events. I know a few people who have this job. (You know who you are.)
- Average Event Cost: The average cost of attending a conference is between $500 to $2,000, depending on the location of the conference and where in the world you live. If you live in Los Angeles, you may as well consider every car trip an equivalent of a flight, both in time (5 mph average speed) and cost (10 mpg fuel efficiency and rim shattering pot holes). Source: personal experience, unfortunately.
With these statistics, let’s crunch some numbers based on various assumptions:
For those of you that majored in English, it means if only 5% of the sale professionals go to 1 event every quarter (4 events/year), about $6.3 million to $25.3 million is being spent on these events each year by attendees. That is an average of $2,000 — $8,000 a year on networking for each professional. Doesn’t seem like that much? Well, let’s put that in perspective. Per the US Census Bureau, more than 50% of the nation’s households make less than $50,000 a year. The estimates then are about 4%-16% of an average annual household income. To add another point of comparison, American Express estimates that an average annual vacation budget for a family of four in the U.S. is $4,580. At $2,000 — $8,000 a year for one individual to network, you are looking at the costs of something between a 3-day family excursion to Disneyland all the way up to an all-inclusive, luxury getaway to the Caribbean. From my own personal experience and surveys with other professionals, the annual budget for networking in our circle ranges between $5,000 — $15,000/year. Keep in mind these numbers are only based on the sale professionals in the industry, at a 5% attendance rate. There are sponsors, equity providers, lenders and a multitude of other third party service providers that also attend these events. The numbers can be exponentially larger when you consider all the players in the industry.
So, what’s my point? Well, the money doesn’t lie. You only spend money on the things that matter to you, especially in business. Regardless of whether you think relationships matter in CRE, a whole ton of cash is being poured into networking and building strong connections with other players in the industry. All these expenses and we haven’t even touched the countless coffees, brunches, lunches, linners, dinners and midnight cocktails that get dumped into the “travel & entertainment” expense line item, or the amount of resources and infrastructure that are spent on sponsoring, hosting and servicing these events.
Networking is a legitimate expense that is budgeted out by everyone who wants to enter the CRE game. Don’t believe me? Start playing the game today. Don’t know how? Here’s a tip: start networking.
This post originally appeared on californialinx.com.
