The Importance of Networks for SMME’s

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The Importance of Networks for SMME’s

Networking can be one of the best (and cheapest) ways of marketing your business, but is, sadly, undervalued by South African SMME’s.

Robert Kiyosaki wrote: “The richest people in the world look for and build networks, everyone else looks for work.”

Many business people contend that business networking is a more cost-effective method of generating new business than advertising or public relations efforts. This is because business networking is a low-cost activity that involves more personal commitment than company money.

Many businesses use networking as a key factor in their marketing plan. It helps to develop a strong feeling of trust between those involved and play a big part in raising the profile of a company.

But what is networking?

Sir Richard Branson said: “Succeeding in business is all about making connections”

Networking is the art of making those connections.

But what are these connections? To get to this we need to get a broader definition.

Networking is the process of establishing mutually beneficial relationships by business people and entrepreneurs. The aim is not only to get new customers, but also to recognise, react to and act upon business opportunities, to share information, get referrals and find potential partners.

Social Media, like Twitter, Facebook, Snapchat and LinkedIn, are good examples of online networking, but for the purpose of this article we will focus on offline methods.

Maybe we should first look at what Networking is not:

Networking is not bribery; it is not corruption. Networking is not about using political connections to get an

unfair advantage over competitors. It is not about collecting business cards. Networking is not about arrogance, self-promotion or pretending to be someone you’re not.

And lastly….

It’s not all about you.

To explain what networking, in fact, is, let’s look at referrals as an example.

Let’s say you’re in the construction industry.
You get a contract to build a house. If you have
the right alliances in place, you will be able to
refer the home-owner to a carpenter to do the
cupboards, a plumber to install the kitchen
sink, taps and piping, an electrician to do the
wiring, etc. Now, because the home-owner
trusts you, he will be more willing to take your

recommendation and call all these strategic partners, rather than somebody he doesn’t know. In turn, the plumber, carpenter and electrician will refer their clients to you if the opportunity arises. In this way, you will get clients that you would, most likely, not have been able to reach through normal marketing.

The concept can work for any profession. A graphic designer can network with an advertising firm or a printing works. A restaurant owner can network with guesthouses and B&B’s. Mechanics can network with spray painters and second-hand car dealers. The possibilities are endless.

Let’s look at the benefits of networking for small businesses:

  • 1. People do business with people they know and trust. Most transactions in business are about relationships. So it is important to invest time in making connections, building relationships and maintaining those connections over time.

  • 2. It’s Word-of-Mouth Marketing. It is relatively cheap and it works. Surveys have shown that referrals are still the most trusted advertising medium. Just remember to return the favour for members in your network if you find opportunities for referrals to them.
  • 3. Networking is great for sharing ideas and knowledge. It is likely that someone in your network have already had the challenges you are experiencing. Learning from them helps you to avoid the mistakes they might have made.
  • 4. Networking helps to keep you up to date with developments and trends in your industry and area of operation.
  • 5. Networking will, inevitably, result in opportunities, whether referrals, partnership offerings or requests for your product or service. Be ready to seize the opportunity when it comes!
  • 6. Regular networking builds your confidence
  • 7. It builds morale. Business people are naturally optimistic and positive and this rubs off.
  • 8. Networking will make you more visible and get you noticed. If you attend networking events on a regular basis people will start to recognise you and, if you did the networking correctly, build your reputation.

But how do you get networking right?

Firstly, Know Yourself

You need to know your business, your industry and what makes your business unique. Why would a customer choose you over your competitors? What do you do differently? Why would another business want to partner with you and refer its clients to you? This is called a “Unique Selling Proposition”.

To get to this unique selling proposition, you need to put yourself in your customer’s shoes and ask what they really want from you. Remember, price cannot be the only reason. Somebody can come along that might beat you on price and then you will have to find a new unique selling proposition.

You also need to know what motivates your customers’ buying behaviour and buying decisions. You need to get to the real reason why customers buy your products or use your services instead of a competitor’s. An easy way to do this, is to ask your customers. Or, you can ask trusted people in your existing network. Look at what your competition do…. And what they don’t.

Once you have done this, you will be able to determine how you can make your product stand out – even in a very competitive market.

Secondly, develop a networking strategy.

You develop this strategy by considering the following:

1. Who do you want to meet?

Ask the following questions: Who are your
prospective clients? In which industries are they?
Who are the people I would like to meet to form
alliances with? In which industries are they? Once
you have answered these and related questions, you can look for patterns and trends. Ask people in the know who the people are that you would have to meet to build your network in your selected industries.

2. How will you be able to meet these people?

Where do the people you would like to meet get together? Is there a local business chamber? Is there an industry body? Is there another association where they meet? Do you know people who know the people you want to meet and who can introduce you to them? Can you use your existing contacts?

Your existing networks should be the primary source for building new connections. Using these networks for introductions is much easier than trying to build new networks from scratch. Categorise your contacts into three categories:

  • Close contacts (family, friends and close business contacts),
  • Distant contacts (Friends of friends, business acquaintances and people you know but do not often have contact with), and,
  • Target contacts (These are the people who you currently have no connection with but would like to get to know; either because you are interested in them, you would like their advice or feel they can offer you some practical help. Whatever the reason, you have decided that you would like these people in your network.)

3. What do you want from the identified people?

You need to set goals and objectives of what you want to achieve by networking with the different groups you have identified. What can they do for you (and what can you do in return)?

The third step is to prepare your pitch

You need to answer the question: ”What do you do?”

You should be able to answer the question in 60 seconds and leave the listener interested and wanting to hear more. That’s what’s called an elevator pitch. Your response to the question should describe who you are and what you offer in a way that presents you in a positive light, highlights your qualities and captures the interest of your listener.

The pitch is important because in most networking situations you will only have a short time to make an impact. To get this right, you need to spend some time writing and practicing your pitch. This will help you deliver it with confidence.

A good pitch should be short, punchy, memorable and relevant and it must be true!

Think of the unique selling point that you have identified and use that. Also, remember to include a request; either for a meeting, an introduction, advice or whatever you need from that person.

The next step: Prepare

Everything you need is now in place. If you want to get new people into your network you will have to grab every opportunity to meet them – attending events, volunteering to take on new projects, making the most of business meetings and even social gatherings. It does not matter how you plan to meet them, you need to thoroughly prepare. Preparation will give you confidence and help you achieve your goal.

The steps for the preparation are as follows:

  • Consider what you want out of the network opportunity – Consider the outcome you want to achieve and plan carefully. Pick the events you attend carefully. They can take up a lot of time.
  • Can you find someone to go to the event? – A friend or business associate will make it easier for you to enter a crowded room. However, the two of you should split after the entrance so that you do not end up chatting to each other and no networking happens.
  • Are there people attending the meeting or event who you would particularly like to meet? Try to arrange to meet that person at the event in advance or ask the organiser to introduce you to that person.
  • Think about introducing newcomers to people you know. They will be very grateful
  1. Step 5 is to actually attend the event. Here are some pointers:
    • Arrive early. You are more likely to find people to talk to among the early arrivals.
    • Have business cards ready.
    • Have conversation openers ready. Asking “Why”, “What”, “When”, “Where” ND “How” questions will bring you far.
    • Be careful of not being at one group too long. Move on.

  • The last step is to follow-up on your connection after the event If you have met someone at an event who you would like to know better it is your responsibility to take things forward. You need to do some immediate follow-up and put effort into developing the connection in order to turn your new contact into a long-lasting valuable relationship. If you do not follow up they are likely to forget you after a brief meeting. Send an e-mail or call as soon as possible and arrange for a meeting. It can be in the form of a cup of coffee and does not have to be a business meeting. Be careful of not being pushy. You might lose the connection.
  • Co-operatives as an opportunity for Networks A very simplified definition of a co-operative is as follows: A co-operative is a business entity formed by a group of people to pursue common economic and social goals.

The Co-operative Amendment Act allows at least two business entities, five natural persons or a combination of five business entities and natural persons to form a primary co-operative.

You will remember the example of the referrals given earlier. The co-operative form of business will give those business people with their different businesses the opportunity to formalise their arrangement and pursue common interests. If the businesses in our example were to form a co-operative, they will still be able to run their own businesses, but they could also use the co-operative to quote for the whole job, ensuring the work is done by them and the owner do not get somebody else to do some of the work. Forming a co-operative will also allow them to quote or tender for larger jobs, for which they would not have been able to quote or tender as individual businesses.

Co-operatives formed like this will enable the businesses to access a broader market and, if large enough, give them more bargaining power with suppliers. Such a co-operative can also be used to market the different businesses as one entity, giving the individuals a wider scope of work than normal.

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