Networking is the process of intentionally meeting people, making contacts, and forming relationships in hopes of gaining access to such business-related benefits as career advice, job leads, business referrals, useful information and ideas, and emotional support. For example, a small business owner's network might include clients, vendors, fellow members of trade or professional associations, bankers, accountants, professors at a local business school, friends who are employed in similar industries, and other small business owners. Each person that a small business owner adds to his or her network is at the center of their own network, so in actuality the network is expanded considerably with every new member. Ideally, networks serve both social and business functions and are mutually beneficial for their members. The relationships formed in networking help people create a larger world for themselves, with a variety of new relationships, opportunities, and resources.
In an article for the Training and Development Journal, Frank K. Sonnenberg identified three main benefits that accrue to those who practice effective networking: referrals, relationships, and leads. Referrals, which are particularly important in growing a small business, take many forms. For example, a satisfied client might suggest others who may need the company's products or services. Similarly, a network member who is familiar with the company's offerings might provide an endorsement or allow the small business owner to mention his or her name in marketing efforts. It is good networking practice and a matter of professional courtesy to thank the person who provided the referral and to keep them informed of the results of the new contact. In addition, it is important never to use someone as a referral without first securing their permission. If a referral does result in a new client relationship, care should be taken to provide the new client with the same level of product or service quality that was enjoyed by the one that gave the referral. Otherwise, the small business risks ruining both client relationships.
Another benefit of networking is establishing relationships, which can have a number of positive outcomes for small businesses. Forming a close relationship with a client, for example, might provide invaluable insight into their needs. In addition to giving the small business a good opportunity to promote or develop products and services to meet those needs, this insight might also help the small business owner to fix small problems before they escalate into large ones. The insights gained from one client can often be applied to other clients in order to improve those relationships. Close client relationships can also provide information about competitors, their relative strengths and weaknesses, and what it takes to stay ahead of them.
Finally, networking can be an excellent source of leads, whether on new business opportunities, new career options, or further networking possibilities. For example, the head of a construction company that is erecting an office building might share a network with an interior designer. When the building is close to completion, the head of the construction company might provide the interior designer with leads on the occupants of the building and their furnishing needs. In turn, the interior designer might alert a network contact who sells office supplies when the new occupants are preparing to move into the building.
Opportunities for networking abound. One well-known example of a possible contact is the person occupying the next seat on an airplane. But it is possible to take a more organized approach. In an article for Entrepreneur, Leann Anderson outlined several strategies for finding networking opportunities. First, she suggested making a list of specific groups of people that would be helpful to know for business purposes, from potential customers to other small businesses that offer complementary products or services. Then it is necessary to identify where best to find them. Perhaps they are likely to participate in certain activities, belong to certain organizations, or frequent certain places or events. The final step is to become involved in those organizations or activities.
A variety of organizations exist that are dedicated to providing business networking opportunities, like industry trade associations or chambers of commerce. In addition to these traditional groups, which cater mostly to larger businesses, there are hundreds of smaller and more intimate networking groups for small business owners. "Networking groups, from nationwide organizations to single-chapter local outfits, bring together business owners on a regular, formal basis to promote one another's businesses, " Kathleen Less wrote in the Business Journal Serving Greater Sacramento. "The basic concept in all formal networking organizations is that members in a group of businesspeople, each in a different line of work, make referrals to each other from among their own friends, clients, and associates. They not only share customers, but develop a circle of businesses with which they do business and exchange expertise."
Some networking organizations target specific geographic areas or particular demographic groups or industries. For example, there are groups catering to women and minority business owners, and groups consisting of entrepreneurs who run home-based businesses. These small business-oriented groups allow entrepreneurs to form stronger ties with one another than they might be able to do in larger groups with less stable membership. Small business owners can build relationships, provide and receive advice and moral support, and exchange sales leads with fellow members.
An article in Business Week recommended that small business owners begin the process of choosing a networking organization by deciding what their own goals are. They might locate potential groups by talking to other business owners or searching on the Internet. Once an entrepreneur has found several potential networking organizations, the next step is to talk to members and sit in on a meeting or two before deciding whether to join and paying any related fees. Finally, it may be possible to form a new group if an appropriate one cannot be found. Les emphasized that networking organizations have a great deal to offer entrepreneurs: "For small business owners who have little chance to get out of the store or office and interact, networking organizations can offer the regular discipline of meeting with other businesspeople to share free advice and offer support."
Successful networking involves making it a personal practice to view every situation—both inside and outside of the business environment—as an opportunity to meet new people. In an article for Manage, Anna Boe suggested several key points in adding a new acquaintance to the network. First, when meeting people, it is important not to be afraid of rejection, and not to take it personally when it occurs. Second, it is helpful to exchange names, occupations, and other pertinent information shortly after meeting someone new. The best way to strike up a conversation is usually to ask questions to draw people out and get them talking about themselves.
But simply meeting and exchanging information with another person is not enough. Networking is a long-term strategy—not one that should be pursued only when contacts are urgently needed—and networks must be continually formed and improved upon over time. It is important to keep in touch with new acquaintances and nurture the relationships. It is also helpful to grant favors warmly when they are requested, and to be flexible when asking others for their time, information, advice, or a referral. In addition, merely attending conferences or meetings is not enough to establish and maintain a strong network. Instead, it requires one-on-one time with other people. Another factor in establishing networks is to become an active rather than passive participant in associations, clubs, or groups.
Networking has its own rules of etiquette that must be followed if it is to be practiced successfully. Most importantly, networking should consist of give- and-take relationships. People who only want to do one or the other quickly lose members from their networks. Boe noted that giving should be its own reward, and that people who grant favors should avoid the temptation to keep score or expect an immediate favor in return. On the other hand, it is important to allow others an occasional opportunity to reciprocate, or else they will become hesitant to ask for help.
The other common-sense rules of etiquette for successful networking include not smothering people or wasting their time, calling on contacts at convenient times, being reasonable and considerate with requests, spreading requests around among various contacts, not making promises that cannot be kept, and not revealing sensitive information that may be acquired through network contacts. Finally, networking should not be equated with sales. Instead, it should be considered an information-gathering exercise that can eventually lead to new business opportunities.
Anderson, Leann. "Make the Connection: Networking Opportunities Are Everywhere. Don't Let Them Pass You By." Entrepreneur. July 1997.
Boe, Anna. "Making Networking Work for You." Manage. July 1993.
Les, Kathleen. "Networking: Pooled Efforts Help Owners Stalk the Mighty Sales Lead." Business Journal Serving Greater Sacramento. September 16, 1996.
"Schmooze Control." Business Week. March 1, 1999.
Shewmake, Brad. "Secrets of Successful Networking." Info World. July 3, 2000.
Sonnenberg, Frank K. "The Professional (and Personal) Profits of Networking." Training and Development Journal. September 1990.