Why Is Business Networking So Important in Entrepreneurship?

Why Is Business Networking So Important in Entrepreneurship?

Creating and maintaining a network of influential contacts helps business leaders in numerous ways. Both informal networks, such as friends and relations, and inter-organizational networks can create marketing opportunities, influence decision-making and operational efficiency, and ultimately accelerate business growth.

According to a 2016 study by the Economist Intelligence Unit, networking is key to entrepreneurial success in 78 percent of new startups. Networking benefits entrepreneurs in a multitude of ways, including:

1. Lead Generation

Attracting new business is typically the main incentive for entrepreneurs and salespeople attending networking events, placing them in a room full of potential new clients.

The advantage of connecting with potential customers with this method is that any leads generated are likely to be high-quality. When a prospect is introduced to an entrepreneur via a trusted intermediary, this pre-qualifies the entrepreneur, enhancing the prospect’s confidence in them.

2. Gaining Insights and Advice

Networking events are an important opportunity for entrepreneurs to connect with other professionals, giving them the opportunity to share business problems, creating scope for collaboration.

For one entrepreneur, a business problem may seem like an insurmountable obstacle. By sharing their difficulties, they can connect with others who have already faced—and overcome—exactly the same issue, potentially drawing on their experiences and benefiting from new ideas and approaches to help them arrive at an effective solution. Asking and giving advice helps build stronger connections, increasing goodwill towards the entrepreneur and enhancing their profile.

3. Building Confidence

Networking pushes attendees to speak to people they do not know, boosting their confidence in the process. Confidence is an important quality in any business leader. The ability to talk to others, make connections, inspire and lead is integral to effective business leadership.

4. Identifying Best Practices

Networking allows entrepreneurs to identify business benchmarks and best practices, learning valuable business strategies from others.

5. Increasing Brand Visibility

By attending networking events, representatives get their company noticed, improving brand visibility. The more events that representatives participate in, the greater the business’s exposure.

Being an active participant in regular events helps entrepreneurs build their reputations in local business communities. When participants help other attendees, they inspire goodwill, respect, and loyalty, as well as building their reputations as knowledgeable authorities.

6. Keeping Current

With markets constantly evolving, effective business leaders recognize the need to keep their fingers on the pulse. By regularly attending networking events and connecting with people, business leaders create opportunities to identify emerging market gaps and trends.

Speaking with people in person enables entrepreneurs to identify market demands. This empowers them to not only improve their pitches, but possibly to make design tweaks to make end products more relevant. Event attendees can gain inside information on new business trends, potentially conferring a competitive advantage over market rivals.

7. Building Relationships

Cultivating the right business connections is imperative for business growth. Whereas lead generation involves identifying prospective clients, to grow connections, entrepreneurs should set aside a focus on target demographics and simply talk to everyone—contributing first, sharing their values, and building social proof, potentially connecting themselves with influencers who can raise their credibility.

Networking is meant to be fun as well as productive, creating opportunities for attendees to not only establish new connections that are good for business, but also widen their social circle by introducing them to new friends.

How to Improve Your Networking Skills

Not every business leader is naturally confident. Networking pushes introverts beyond their comfort zone, forcing them to learn how to converse with strangers, enabling them to make those all-important business connections.

The following simple tips will turn even the most reluctant event attendee into an effective networker:

Avoid Being Pushy.

Immediately launching into a hard sell is unlikely to win any friends. Effective networkers offer their business card at the end of the conversation, not the start, and only after requesting one from their companion first.

Leverage Intermediaries.

Establishing business contacts via introduction from a trusted third party makes a warm welcome much more likely.

Act like the Host.

A great host makes their guests feel at ease, presents a friendly face, and circulates from one attendee to the next. A great networker does likewise. Rather than hiding away in the shadows, they approach other people with a warm smile, welcoming them and making them feel comfortable. This is also an effective method of maximizing the number of potential contacts.

Listen More and Talk Less.

Nothing is more off-putting than an unsolicited, never-ending monologue. Effective networkers ask thoughtful questions, really listening to the answers, showing their companion that they are interested in what they have to say.

Local networking events provide a forum for professionals to connect with others, both within their own sector and in the wider business community, building mutually beneficial relationships. Networking can create new opportunities for experienced business leaders and newcomers alike.

About the Author

Joanna RileyJoanna (Jo) Riley is an entrepreneur, investor, and advocate in technology, and is currently the CEO and Co-Founder of Censia. Jo has a highly experienced background in building and scaling companies, which she attributes to her deep passion for people and building technologies that allow people to be their best selves. She brings her wide knowledge of the industry to better transform the way enterprise companies hire talent. You can connect with Joanna Riley at @joannakiddriley on Twitter or on Linkedin. Read her full bio here.