How Important is Networking for Small Businesses?
As part of the London Economic Action Partnership (LEAP), I am the Champion for Small Business, guiding the mayoral team in improving the London environment for small and medium sized enterprises – whether in workspace, employment or skills.
This is my latest blog in a series that focusses on some of the most common problems facing small and medium sized enterprises. In the last few months I have written on topics such as business support, staff training and business rates; I hope you will continue to visit the Growth Hub as my fellow LEAP members and I review legislation and best practice, helping you grow and develop your business.
Champion for Small Business, LEAP
For individuals running a small business, wearing multiple hats is par for the course. Advertising, HR, sales and even the receptionist – each of these roles must be fulfilled alongside that of CEO and CFO. As a result, when invitations drop into your inbox for networking events and conferences, it can be easy to focus on the day job, click delete and move onto more pressing emails.
However, the importance of networking for small businesses – even those with an established client base – cannot be overemphasised. While an evening or day spent networking might not immediately seem like the best use of your increasingly stretched time, the activity will allow you to meet and learn from others within your industry, which can be highly valuable. Below, I’ll discuss the key benefits to networking, as well as some tips for how to network effectively.
One of the main advantages to networking is that it enables the growth and development of new business leads and partnerships. Countless studies have shown that business professionals prefer face-to-face interaction over email, phone or webchat, so spending time discussing and understanding your potential customer or client’s priorities and concerns in this manner will be appreciated.[i]
However, networking can actually offer much more than simply new contacts. Discussing industry trends and practices with peers can be invaluable for the success of your company. The key to a successful business – small or large – is agility; knowing when to evolve your offering in line with the economic environment, as well as the vagaries of customer trends. It’s vitally important that small businesses are engaging with the wider industry in discussions around this, and networking events can provide a forum to do just that. Furthermore, a number of bigger businesses are now beginning to offer mentoring programmes for SMEs, which I highlighted in my blog discussing the value of business support. Being present at industry events and getting your name out there might be the first step in finding a suitable mentor who can provide greater insight into your customers and industry, and ultimately help your business flourish.
Networking with individuals and businesses outside of your industry can also benefit your business in both the short and the long run, providing you with exposure to best practices and highlighting skill gaps. Whether an established business or just starting out, small businesses can often struggle to implement management, leadership or administrative best practice due to pressures in other business areas. In fact, the Business, Innovation and Skills (BIS) Select Committee found that this is at least partly responsible for low productivity in SMEs, and is primarily a result of SME leaders not realising they have an issue that needs addressing in the first place.[ii]
Through networking with peers, you will be able to have open, honest discussions with individuals in your situation who will have experienced and overcome similar obstacles, undertaken training or who can simply help you understand blockages in your business that may be affecting your bottom line. A clear example of this is cash flow problems: the second most common reason why small businesses go bust. Even if you have a product that is valued by the marketplace, a cash crisis can quickly spiral out of control.[iii] The process of learning to manage this, negotiating with vendors and establishing a strategy to keep a healthy cash flow can be made much easier by leveraging the knowledge of your contacts.
Making connections can therefore be vitally important to the success of your company – whether sourcing connections for new business and partnerships, or learning from the experience of your peers. The more you network, the more comfortable you’ll be with it, but how do you start?
Networking top tips
Throughout my career, networking has been an integral part of my role, and has led to some great opportunities. However, as with most people, I still feel slightly awkward entering a room where I don’t know anyone. Over the years, I’ve developed a strategy and ways for overcoming any nerves and these tactics allow me to network effectively while having meaningful and beneficial conversations with new and existing contacts.
- On walking into a room, look for individuals who are by themselves, or in groups of 3 or 4. Don’t try to break into a conversation between two people. Look for the person within a group who isn’t in the thick of the conversation, then ask them a specific question.
- Listen: Most guidance will tell you to prepare an ‘elevator pitch’ for networking events – while this is important, it’s far more crucial to show interest in the other person and their job. By doing so, you’ll pick up cues as to how you can offer solutions, share experience and ask relevant questions. Remember, you’re building a relationship, not trying to conduct a transaction.
- Do develop an elevator pitch, but don’t launch into it unless you’re sure other members of the conversation are interested. Keep it short – around 20 seconds – and practice adapting it to the event and different stakeholders you might meet.
- Be yourself: People are surprisingly good at picking up on insincerity and it’s far easier to be yourself than putting on a front each time. Subconscious, non-verbal communications – your inflection and facial expression – will give you away if you’re pretending to be someone, or something you’re not.
- Look for opportunities to help: How can your business help solve the particular problems that your new contact is speaking about?
- Keep an open mind: Not everyone will have the same experiences as you, and hearing about the processes, techniques and challenges faced by other businesses will allow you to see your own in a different light.
- Don’t make an excuse to leave: Everyone sees through the ‘I’m just popping to the toilet’ line – you’ll be more respected if at the natural end of a conversation you say ‘it was lovely to meet you, I should probably go mingle – can I take your business card?’ Make sure you write a note of what you spoke about – whether their football team or business area – on the business card. It can be handy for follow up.
- Consider other networking opportunities: Joining a coworking space, such as Camden Collective, can be a very effective yet casual networking opportunity.
- Follow up! You should make the effort to follow up no more than two days after meeting, referencing a specific thing you spoke about. Whether you’re proposing a coffee or just requesting to connect on LinkedIn, make sure they know you remember the conversation.
- Finally, have a strategy: Spend time working out which people you want to meet, which events you should be attending, and reviewing the guest list for those events. Make sure you’ve identified your reasons to network and review your progress, or attend a networking course, like this one offered by the Business & IP Centre, London. Practice makes perfect, so throw yourself into it, and good luck!
Check out the London Growth Hub for networking events – from Women in Business to a Lunchtime curry, new events are uploaded weekly.
[i] Forbes Insights Survey (2009). ‘The Case for Face-to-Face’. Available here: https://images.forbes.com/forbesinsights/StudyPDFs/Business_Meetings_FaceToFace.pdf [Accessed May 2019]
[iii] CB Insights (2018). ‘The Top 20 Reasons Startups Fail’. Available here: https://www.cbinsights.com/research/startup-failure-reasons-top/ [Accessed May 2019]