WHY IT IS NEEDED
Networking is about accessing the people that are important for your business. It is a planned and intentional process of getting to know your potential partners or getting introduced to the people you will be doing business with. Networking is a social part of “selling” your business or its products to a variety of people that can contribute to the success of your business as the growth of your start-up depends on successful involvement of different people (investors, suppliers, clients, consultants). Building a powerful network can become a key asset of you as an entrepreneur.
Networking can help you and your business in a variety of ways:
- to get the new contacts and referrals (e.g. help increase your customer base, potential “leads”), as well as valuable advice;
- to make your business more visible and better known – you never know when an expected opportunity may occur;
- to solve complicated problems by gaining access to a variety of people with different competences and perspectives – you also increase the chance of serendipity (“unexpected solution”)
- developing the start-up can be an exhausting and even demoralising experience – being a part of network of people that share similar dreams and interests can also boost your morale;
- to discover unexpected opportunities and resources for developing and commercialising your business by getting a variety of perspectives and referrals from competent people.
1. Understand the importance of partnership
No business can survive and thrive without a network of partners. Partners – suppliers, investors, lead users – can provide your business with resources, business contacts and competences that can be crucial for your business growth. A great network of partners can save you a lot of time and money, open new areas for growth, and expand your circle of competence. Firms need to build and maintain partnerships for at least three different reasons:
1) Economic logic and optimisation of the value chain. The economic logic of comparative advantage suggests that it always makes greatest sense to focus on the areas that you know best and you are most productive at, and purchase the services / supplies from other firms that are the best at during their job, and can also serve your enterprise at a better cost due to the scaling effects. Thus, building a strong partner network helps you avoid distractions in your activities, while at the same time minimising the cost of operations.
2) Access to resources and competences you may not have. Even the largest companies, not to mention the start-ups, do not have all the necessary resources and knowledge that are needed for growing their business. By relying on the networks of partners they may gain access to the valuable knowledge of the markets and new technologies, use the already developed distribution channels. Start-ups can also access financial resources that are necessary for enabling fast growth. Through the networks of powerful investors (e.g. business angels, venture capital funds) you can get valuable contacts, practical advice and even mentorship for business development.
3) Risk sharing. Networking with partners that possess advanced knowledge / resources in a specific area is important not only for the development and commercialisation of innovative products and services (as no one knows everything). It is also useful for sharing the risks that are associated with innovation-based ventures. As a rule, the more innovative the business projects, the more risky they are. It is hard to predict the actual outcome of innovative projects, so entrepreneurs cooperate with each other to share not only the potential benefits, but also the losses.
Your networking and communication skills determine how successful you will be at building the partnerships that will make your business grow. Let us show you some key principles and techniques.
2. Know principles of successful networking
Networking should not be misinterpreted as a mere exchange of the business cards or as an intentional way of seeking to build connections with the “big names” of the industry during the business events or social gatherings. Nor is it attacking people with e-mails. Many people do not enjoy the “artificial” aspects of networking. Although the access to the professional networks can help you achieve your goals, but, in most cases, building a good network will be the RESULT of your performance, i.e. at first, you will have to show your excellence and the things that you can contribute to other people’s lives before they get interested in you and your ideas. The value you provide is a key to the successful business networking (of course, together with your social and communication skills that come next after that) that can then propel your idea into the new heights. So there is a two-way relationship between your performance and your network, but first you have to show the performance, which will later be positively influenced by the growing network.
The main principles of successful networking that you should adopt:
- You should always promote your idea, not yourself. It is always good to make a lasting positive impression on other people, but you will be better off getting people interested in your idea first. Few things are more annoying than people who only talk about themselves.
- Networking is about communication, and communication is about listening. It is important not “to hard-sell” your idea to the people upon the first meeting, but to establish a connection – listening will take you further than just talking. Show the people that you care about what they have to say – you will communicate your idea better when you know your listener.
- Do not limit communication to the people you already know, seek out their referrals and new contacts. It is common for the people to limit themselves to the “comfort space” they are familiar with, to the circle of people they already know. However, success of networking that leads to new productive collaborations depends on crossing the boundaries and stepping into unknown, talking to people that may be outside your established industry or social circle. It open a completely new potential for innovation.
- Be proactive in the business relations that you build. It means that it is always good to know what you want from your networking. Having a plan, being focused and consistent always helps. You can direct the conversation and get valuable information by asking questions (genuine interest always
- Think in terms of “win-win” when meeting your potential partners. No matter how fascinating your ideas may sound, people will really get attracted to them when they see their potential stake in them. You will achieve more by appealing to other people’s interest than emotions. A visionary solution to some (e.g. social) problem may appear attractive to certain partners, but ultimately closing business deals will depend on the other side’s business interests (not every networking will and should result in that).
- So think what you can give, not just what you can get. You can be the first in the conversation to make a referral to another person, and always try to reciprocate when given valuable referral. The value of networking is not about meeting someone, it is about the possibility of re-meeting when needed. Thus, both sides need to have interest in extending their communication.
- Quantity does not always lead to quality as far as business networking is concerned. It is not about the number of business cards you collect, but about how well the people you meet understand (and care about) your business and proposed solutions, how accurate are their referrals, which you could ultimately turn into the business deals. Thus, you should focus on quality, not quantity of communication while networking – running from person to person is never the best idea – it is better to build deeper connection and mutual understanding.
- Personalise your business connection to make the person you are networking with remember and relate to you, e.g. shared interests and experiences outside your business can be very useful for getting both parties engaged in conversation.
- Do not appear “pushy” and do not intervene into an ongoing conversation between two people that may be important. Feel the context of discussions that are taking place, and whether you belong there. Better meet the people you want to meet another time than at the wrong time.
- Get back to the key people you met within the next 24-48 hours before they forget about you.
- Do not make a hard work out of networking, it can also be fun. Some of the best relations are built “obliquely” (without a specific goal in mind). Do not let your focus on outcome ruin the process. Networking is not only about “pitching” your idea – it is also about building a human connection that can help your business in ways that you may not always imagine. It is about nurturing your business relations and continuously building your reputation and credibility.
Use the possibilities of online presence, but not at the expense of direct contact when possible. Today’s social media can help make your network much extensive although it does not quite replace the face-to-face contact.
3. Find where to network
There are different venues for networking that have different advantages and limitations.
These are the places where the people with a shared interest in start-up development meet, and this is a pool of competence you can draw from. In the events organized by start-up accelerators you can meet potential investors, people representing different industries yet with high growth aspirations. Through these actors you also access the start-up support and mentorship services.
- It is quite common to build your network in the industry events (e.g. organized by the professional / industry associations, such as chambers of commerce) or business forums. This is a rather typical communication platform where business representatives meet each other. It always helps to revisit the lists of participants before each event and draft your networking plan – what partners are of greatest interest to you? How do you plan to approach them? Of course, you should also remain open to spontaneous interactions. You may also consider joining the board of professional association / chamber of commerce that opens quite a few networking opportunities.
Nowadays, the sites like LinkedIn are very good for the general professional discussions – both learning something new and finding people with similar interests. These sites are no substitute to face-to-face interaction, but can be used as platforms for sharing general ideas, finding people in your area of interest, and possibly agreeing on more in-depth conversation at a later stage. In fact, most of the initial networking meetings (both virtual and physical) are supposed to lead to re-meeting and exploring the potential partnership opportunities in greater depth.
You can also develop your networking when “pitching” your business idea. There are many events being organized when you are supposed to sell (directly or indirectly) your business idea to the potential investors. Make sure you prepare a concise talk that attracts listener’s attention to your idea. During the pitching events, you can also get referrals to the people and organizations that could help you further develop the idea.
These are the organizations that are purposefully created for members to share their contact referrals. They function as clubs and usually meet on a regular basis. Membership to these organizations is not too open, they are quite focused. In the strong contact groups you can meet a limited number of people (e.g. 50), who will be quite dedicated to helping each other, e.g. finding needed contacts or promoting each other’s ideas. To participate effectively in such groups you need to allocate quite a significant amount of your time because you have to be disciplined (i.e. attend the scheduled meetings) and work hard trying to help other member of the contact group. You cannot be a “free-rider” in such group, i.e. getting the benefits without your adequate contribution to other members.
4. Prepare for successful communication
While developing a startup it is important not only to build a network of relevant business contacts, but also to have effective communication plan and skills. The communication is directed not only to your customers, but also to your potential partners and investors. Inadequate management of communication (and understanding of its importance) is one of the key reasons behind the start-up failure. The communication plan has to complement your networking activities as both are in a way inseparable.
First, you need to have a clear message that you want to communicate about yourself and your business. The message concerns your product, company and value proposition. As already mentioned, you need to have a sound product because even the best marketing and communication / PR plan will not be able to compensate for the flaws in your business performance. Communication and PR can help you in a short run, but if you do not deliver on performance, they will be of little use (just as the performance helps you to build network that reinforces your performance). So the message you want to communicate needs to be backed by your actual results. The message you trying to convey should be quite clear and understandable to a variety of people – it makes sense to consult them to get their different perspectives and suggestions. Thus, communication should be two-way and based on valuable feedback that you receive.
Another important aspect of communication is how you convey your message. It is quite a difference talking to different audiences and people you do not know yet. It is always important to be positive and not to appear patronising, i.e. to the point that you are so convinced of your (product) advantages that you appear to belittle the other people’s work. Positivity and respectfulness will get you further than being too critical and negative towards others.
It is also important to keep in mind that success of communication depends on how well you are prepared. When implementing the external communication (e.g. through media networks) you should not start pitching your business without some homework and network building. You should try to get to know the main industry leaders and influencers, opinions and attitudes, follow their work. Your communication (when needed) will be more organic and personalised once you do your homework. In relationships with people from the media you should try to remain neutral and do not give any explicit preference to some journalists / channels over the others. This is not a place for special favours as you want your message to spread as far and wide as possible, and you should not leave some media representatives alienated due to your preferred exclusivity. So neutrality and functional distance is probably the best answer. Your networks, especially the ones related to communication, should be inclusive, not exclusive.
The success of external communication depends a lot on the quality of the internal communication inside your organization. It is very important that your employees communicate the same message to the outside world. It means that employees have to share the vision and goals of your startup and be motivated to achieve them. The most effective communication is when you do not have to do all the work, but your message is transmitted virally through the networks of people and organizations in a spontaneous and self-organizing manner.
Any networking is about building a productive two-sided, interdependent relations with your potential partners. To achieve this productive interdependence, you first need to sort things out in your own “backyard”:
- you have to know what you want from your relationships and how they can enrich you,
- be proactive and focused in seeking contacts and referrals,
- prioritize the most important things,
- understand that the social/emotional aspects play important role even in business relationships,
- be consistent and build you own integrity / credibility in the eyes of your network partners.
The other side of achieving successful interdependence is about how you think, behave and empathise with other members of your network:
- understand the interests, priorities and emotions of other people, and what value you can provide to others;
- understanding that lasting partnerships are based on shared values, interests and thinking in terms of win-win from both sides;
- be ready to synergize with the other side and help them achieve their goals through cooperation.
The quality of your communication depends on the quality of your message and how you manage to deliver it to the different people / organizations in your network. The clearer is the message, the better it is understood by your network partners, the better work they can do for you in getting the message spread, providing you with new referrals and unexpected opportunities.