Networking is an effective tool for small and medium-sized enterprises (SMEs) to increase their profits and reduce costs arising from the operation, according to specialists in the field. This process, which generates and expands contacts through a network, allows not only to offer a product or service, but to receive assistance, information and complementary benefits from other companies, suppliers and customers. Jorge Zuñiga Blanco, an entrepreneur and business strategy expert from Costa Rica, discusses why networking is a fundamental component of any company’s operational model.
Companies using networking can increase their sales by 41%, improve the business process by 55%, and reduce operating costs by up to 24%, according to data from SME network consulting company Angelike. Generating strategic alliances is essential because in the face of the scarcity of economic resources creativity must be exploited, and networks allow to complement and cover the market in a more professional way.
For example, if a company sells food for banquets, establishing partnerships with other companies dedicated to flower service, live music and tablecloths, it will allow it to be perceived by the customer as a larger and more professional organization. However, although this tool is very helpful and free, 90% of SMEs do not know how to take advantage of it due to the low definition of objectives and strategies, specialists agree.
“In order for a network of contacts to benefit a company, it is necessary to identify objectives, the niche of the business, define what is sought (better suppliers, reduce costs or increase sales) and be select,” explains Zuñiga. “Attending all the events in the field does not guarantee success; it is necessary to be selective and align the search with the objective of the company.”
It is essential to do an analysis, for which you need a process mapping and value chain. Examine the business elements, market components and what customers need to see the areas where the company can improve its processes or look for businesses.
Entrepreneurs also need to generate a proposal with options to prepare to offer an alliance. One of the main mistakes of entrepreneurs is that they first look for contacts and then define what they can give them or what they need from them. Ideally, define and based on this, look for the right person.
Once the alliance is prepared, gaps, strengths must be defined and presented to possible contact. This task is easily heard, but a personal encounter or via email is not enough to establish a network. You need to talk and show matches to get real benefits. Adds Zuñiga, “Networking seeks to make these forward-looking contacts suppliers or customers, so it is not only public relations, but the contact has potential benefit to the business.”
Have timely planning throughout the year and in the long term, knowing which events will be attended, that these meet expectations, for example, if you want to export you should focus on suppliers or customers who are within the target market. Make a financial planning to see the cost of assistance and project the profit.
Don’t be afraid to ask, but remember that you should also prepare to give and share, as information is critical as this tool should be useful for both parties.
Appreciation is an important part of the networking process. Asserts Zuñiga, “If someone dedicated ten minutes or two hours, always have a good habit of thanking and following up on what you received or what you committed to. Saying thank you or sharing an article on the subject is always well received.”
Once networking has been established, you must keep it up to date so as not to lose the link. Make periodic contact, even if it’s just to say hello to your counterpart. This involves a lot of effort, but it’s worth it, just like the networking process itself.