Introduction to Business Networking -As small businesses struggle against larger competitors, differentiating themselves is becoming more and more important. By providing good quality customer service and a 'personal touch', small businesses are more likely to obtain an objective referral from a delighted customer, or like-minded member of a business network. The power of word-of-mouth recommendation from individuals in a business network is a critical area of sales management. This article provides an overview of the principles and practice of business networking. In particular, it summarises the main types of networking, the business benefits to small businesses, the places where business networking occurs, and the skills required to exploit the power of recommendation...
What is Business Networking? - business networking is a term used to describe an exchange of information, ideas and contacts between like-minded business people, for the purpose of generating prospective sales leads. Many business owners network all the time. In fact, anybody who sells a product or service and wants to capitalise on the goodwill generated from existing clients, can encourage their customers to provide referrals. It is not a new phenomenon and has been around ever since commerce began. Today, small business owners who exploit the power of referrals from word-of-mouth can shorten sales cycles and increase their overall sales pipeline. Compared to cold calling prospects, the power of business networking means that the overall cost of sale is reduced significantly, compared to cold calling. Business networking also happens on a pre-arranged formal basis, in the form of business meetings for like-minded groups of individuals. This may revolve around a regular breakfast club or lunch club, in which a speaker talks about topical business issues affecting the group. The network of people at the meeting are all seeking to share ideas and develop new contacts to generate future business.
Typically, business network meetings will be held on a regular basis and be attended by the decision-makers from local small businesses, seeking to develop their own network of contacts. Business networking mostly happens between people face-to-face, in small groups, in business meetings, local clubs, trade shows, business seminars and larger conferences. Since the explosion of social networking websites, many virtual business networks have been created and new ones are being created all the time. These break through the geographical distance barrier, and allow small business people to promote this business and connect in blogs, forums and discussion groups, with other like-minded business people from all round the world. As well as creating new sales opportunities, business networking also provides small business owners with new ideas for the business and helps improve their interpersonal and presentational skills.
Business Networking also provides younger entrepreneurs with the opportunity to learn from the mistakes of older ones, and understand the management challenges and issues faced by like minded business owners. Business networking clubs are usually fairly informal and non-sales orientated, hosted by impartial organisers who arrange the venue and speaker. The networking industry helps break down the barriers of communication making it easier for strangers to come together to form business relationships. The informal breakfast style meeting avoids any direct selling or feeling that members are being 'sold to'. Instead, these meetings provide an impartial environment to glean useful contacts, build trusted relationships and make new friends.
The Power of Recommendation - One of the most powerful forms of business networking is a verbal word of mouth recommendation from an existing customer, to someone they know, who is also interested in buying similar products or services. Personal recommendations reduce the cost of sale significantly, as the prospect trusts the person who referred them. The recommendation is objective and impartial and therefore more trustworthy, than a salesman's 'pitch'. This eliminates or reduces the time it takes for small business owners to convince the prospect they are trustworthy, and their product or service will meet the needs and requirements of the prospect.
The cost of employing sales staff and the time invested in the marketing process is therefore greatly reduced. Referred prospects contact the small business themselves, armed with the confidence created from the trusted referral.. Therefore, one of the primary objectives of sales managers should be convince existing customers to refer them to their own business network of friends and colleagues. This is easier said than done. You will need to actually ask them for a referral, with the confidence that they are already delighted with your service delivery and customer service. Delighting existing customers and capitalising on this goodwill is a critical area of post sales activity. Asking for referrals could be done verbally or more formally using special offer campaign (future discounts on additional business, in exchange for referrals). Other simpler marketing tactics could be to send your existing clients a corporate gift, at Christmas or on their birthday. Always accompany items of this nature with a personalised note to keep you and your company in the forefront of their mind.
Using The Grapevine for Recruitment- The cost of finding the right person for a vacancy can be high in recruitment agency fees, advertising and management time. Using networking is a great source of information regarding possible job vacancies and available candidates. Some industries have a small number of well-known competitors, where each is known and respected by the other. It is not uncommon for one competitor to try and recruit key people from another. Many recruitment campaigns are based on the personal referral by one individual within an organisation, with a personal relationship with another individual in a competitor's organisation.
Where Does Business Networking Occur?- Networking occurs in many walks of life, both formally and informally. The main physical locations are networking are as follows:-
- Breakfast Clubs - there are thousands of breakfast clubs that occur each year, which are facilitated by business networking companies up and down the country. Most are held on a weekly or monthly basis, for local small business people are concentrating on local markets. They tend to be informal, friendly affairs, with a facilitator and a member of the group speaking or presenting on a common theme for discussion.
- Business Seminars - many business training organisations provide business seminars on topical business issues of the day. These are usually hosted in a local hotel or business conference venues. This enables members of different companies to come together in a group to listen, learn and discuss issues of commonality. It also provides a great opportunity to meet people in similar jobs, or in similar industries, to exchange ideas and contact details.
- Social Events - many large organisations budget for corporate hospitality, orientated around popular sporting events and other social occasions. The main purpose is to build upon an existing customer relationship. Customers invited to these events sometimes see them as 'jollies', and the chance to have a few drinks, a nice lunch and enjoy sporting or social occasion. However, the organisers of such events are investing their operating expenditure, in exchange for the opportunity to strengthen their business network.
- Exclusive Networking Events - this is a formal meeting where only a select number of individuals from a given industry or specialist field are in attendance. This provides the individual with an ideal opportunity to provide advice and guidance (in other words low-key self-promotion), to the other members of the group.
- Conferences & Trade Shows - much networking takes place at regional industry trade shows and business conferences. The exhibitors, presenters and sponsors of such events, are seeking to capture the attention and contact details of potentially hundreds or even thousands of visitors. Many such events can seem impersonal, busy and fast moving. Exhibitors pay for a 'stand' at trade shows to promote their companies products and services, provide demonstrations and answer questions from prospective customers. Many business cards are exchanged at such events and subsequent lead generation databases created, for follow-up following the event.
- Online Business Meetings - many business meetings are already held remotely, using videoconferencing or teleconferencing. Some podcasts or presentations are held live using Internet technology and provide a potentially enormous audience, with the ability to listen in or join in with the discussion. Although this is probably the least the most effective form of networking, it is the most powerful method of connecting to an unlimited number of people, over the widest geographical area.
Time management is also an important skill. The more people you speak to at networking events, the greater chances of your establishing a wider network. There is no real etiquette for networking events, other than using your common sense and adopting a positive sociable attitude. Remember to smile and enjoy the occasion. As time is limited event preparation is also an important skill to employ - it is not supposed to be a 'jolly'. Be prepared with your one minute summary of the key points about what's different about your business and how it could benefit them. List some obvious questions before the event so you're prepared to find out is much information, from as many people as possible, in the limited time available.
Types of Business Networking Groups - the main ones are as follows:-
- Small Business Networking - When running a small business, generating new sales leads is one of the most important tasks for a growing new business. Many local authorities, chambers of commerce, and local events organisers, may host business seminars or breakfast clubs to get local small business people together. Most breakfast clubs will be informal, with people speaking at once in around round tables. There may be a presentation or discussion of a particular topic. Make a point of getting to know the event organiser and ask them to make a few introductions at the beginning of the meeting. Speak to as many people as possible and be prepared to provide a brief summary about your business. It is possible that you may not know anyone at the event, so don't be shy or nervous. It is likely there are other people in the same boat. You are all there to the same purpose to exchange ideas and contact details. You should seek to identify as many different people as possible and leave them with a lasting impression of who you are and what you do. It is essential you exchange business cards or contact details so that you have some concrete method of following up in the future (otherwise there is little point in turning up to the event).
- Business Networking for Women - business networks have been created specifically for female entrepreneurs and business women to redress the inequality between men and women in the workplace. There is still pay gap between men and women in similar positions in business. Any women have joined business networks in the hope of sharing ideas, concerns and worries with like-minded entrepreneurs. Some of the issues are naturally different from groups that we dominated by men. In particular the challenges, worries and frustrations of starting up a new small business and raising a family at the same time. These types of issues are more freely discussed by women between women than men, who generally view the discussion of non-business related personal problems as a sign of weakness.
- Minority Business Networking - In the United Kingdom many ethnic minority networking groups have been created. These aim to serve the needs of small businesses and entrepreneurs from ethnic minorities. Many ethnic minorities shockingly still suffer prejudice in the day to day operation of their businesses. This may include some customers unwillingness to purchase, or other companies to provide credit and loans. Business groups aim to help overcome these prejudices by providing valuable advice and useful contacts for its members. Many second-generation immigrants have established communities of family run small businesses. These local communities can benefit greatly from the sharing of resources, contacts and ideas. Government departments such as the 'Regional Development Agency' recognises the problem of discrimination, and have formal programs to assist ethnic minorities.