Your professional network can be an extremely valuable resource in starting and growing a company. It can help with some of the most essential functions of business growth: sales, partnerships, fundraising, hiring, and advice. Having existing relationships with customers, investors, hires, etc. is ideal, but having relationships with people who can introduce you to those people is also valuable. Below are several ways your professional network can be helpful in growing a business.
Sales and partnerships
The people you know could become customers of your company, or may know people who could be customers. Having close connections is especially important for finding “early adopters” – your first group of customers that you will get feedback from and build around. Having an existing relationship, or getting a warm introduction from a truster mutual connection is much more effective than cold calling. I think it’s actually best to evaluate startup ideas based on where you have existing relationships. If you know a lot of accountants, it would be a lot easier to start a business serving them, because it will be easier to reach them. Conversely, if you’re selling to fortune 100 CEOs, but don’t know any, it will be very difficult get feedback and your first customers.
Fundraising
Many, but not all, businesses may require or warrant outside capital to spur growth. If you’re a high growth tech startup, you will likely be seeking angel investment or venture capital. Many of these investment professionals will not accept unsolicited cold emails. Instead they expect entrepreneurs to be introduced through someone in their network. Without strong first or second connections to investors, fundraising can quickly become an extremely time consuming process that can take away from growing the business. If you know your business idea will require outside funding, but you don’t have many connections to capital, it might be very difficult and time consuming to start that business.
Hiring
Hiring the right people is essential for building a great company. Finding those great people can be extremely challenging without a strong network. Recruiters charge significant amounts of money to source talent. Getting a referral from someone you trust can lead to higher quality candidates and better cultural fits. If you’re starting a technology company, you will want to have relationships with developers.
Advice
One of the most commonly overlooked benefits of having a strong professional network, is how much you can learn. Running a business requires many different skill-sets and a wide range of knowledge. Asking an expert with extensive experience in what you need, is often a highly effective and efficient way to learn. Examples of areas you may want to seek advice from your network include: how to navigate a certain company you want to sell to or partner with, how to hire, management, fundraising, etc.
Talk may seem cheap, but in the case of getting advice, it can be extremely valuable. Remember, they’ve probably spent years of trial and error becoming an expert in their field. Learning from them can save you time and mistakes, and make you more effective at your job.
Bio: Mike Fishbein is the author of the book “Business Networking: How to Build an Awesome Professional Network” and an entrepreneur in New York City. You can connect with him at www.twitter.com/mfishbein.
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