It's about exchanging business cards, being part of business-after-hours, and attending functions associated with presentations, conventions and product launches. Called networking, it is no more a corporate sport. It has become a social investment of SMEs for the long-term motive of exchanging business referrals.
A company, at its start-up stage, should identify groups. These groups should consist of firms operating in vertical or horizontal markets, having complementary goals, and are willing to connect with each other for achieving better performance. "With the internet, it's faster and easier to establish strategic relationships globally, and SMEs that recognise this can build sustainable competitive advantage," says Lalit Saraswat, Founder, iTravelMarket & CEO, Sancoale Technologies.
From the economic point of view, SMEs can share costly infrastructures, services and process . In this context Fakhruddin Ronak, Management Consultant, Ronak & Associates, says, "SMEs need to join together and synergise their competencies to sustain in this extremely competitive arena. SMEs offer a pool of opportunities and socialisation can do wonders for them."
"Business and networking go together, particularly in case of consumer products where we see cut-throat competition and in small scale business large budgets are not possible for advertisements," says Shantanu Pansare, Owner, Lucknow Chikan Palace.
In addition, smaller budget restricts the firms from investing in R&D, but they can network for establishing JVs and seeking the M&A route thereby facilitating cash inflow for research and innovation. In fact, as Mr Ronak says, "M&A is the latest buzzword in the corporate world for socialising."
In order to avail the social and economic benefits of networking, the SMEs can consider the following:
Identify the right group or event: The enterprises should participate in trade fairs, conferences and functions that are in line of their business. "SMEs need knowledge and vision to grow and that is where niche based focused networking is important. Attending seminars, workshops and parties gives you opportunities to share wealth of information," says Deepak Shikarpur, CEO, Autoline Dimensions Software Ltd.
Prepare before the event: Go prepared to a networking event. It is always better to get a list of important people and 'Google' about them. "Ninety percent of networkers in Europe and America do Google about the important attendees of an event, before they leave for the same. Therefore, the verb 'to Google' has become a very important part of online preparation of networkers", says Thomas Power, Chairman at Ecademy.
Willingness to connect: Firms should drop the 'what's in it for me' attitude and look towards an interaction. "The best approach is to initiate a conversation with another delegate on something innocuous like 'how do you like the conference' so far," says Akhil Shahani, Director, The Shahani Group. Most of the firms leave behind a cold contact, which does not really benefit them. "For those who believe that exchanging cards at networking events is the only option to build business relationships, they have missed a large wave while others were busy riding it," says Mr Saraswat.
Make a positive impression: Once a co-networker starts taking interest in the business an entrepreneur should put up an impressive personal and business profile. As Mr Power puts in, "What you do, anybody can do, but who you are is a unique thing. Your profile should speak for you and your beliefs. Your business profile should be attractive in itself, including your finances, risks undertaken, ups and downs of business.” A networker can provide his co-networkers with referral or an introduction to a potential client. If one firm brings in business then the associating firm will also be moved to reciprocate by bringing business to it. "Think of some way you can help your co-networker. You should offer that help and make sure you both agree to fix a follow up meeting after the event is over," says Mr Shahani.
Develop win-win relationships: "An SME can develop a beneficial relationship by displaying profitability, credibility and visibility to his conetworkers," says Mr Power. It is very important to build relationship with the co-networker instead of being a salesperson. "Social networking helps you establish strong relationships with your customers, peers and suppliers," says Mr Saraswat.
Follow-up after the event: A firm should follow-up on the next day with an interest to build relationships. A networker should contact his co-networker within two weeks to further relationship building. This will help the firm to learn more about his co-networker's business and the challenges faced by the latter, where the former can find different ways to help his co-networker. "Keep offering help and advice to people in the network. They will then become attracted to you and will themselves request follow up meetings," says Mr Shahani.
Socialising should aim at building a strong network of trusted entrepreneurs who can stand by each other in difficult times. For this purpose an entrepreneur has to attend all the events organised by the networking group and expand the list of quality contacts. "Genuinely getting involved from the grass roots to the topmost level is very important," adds Bela Shanghvi, CEO, Aavartan.
Any investment in social capital through networking would enable firms to improvise the quality of their deliverables. "Networking in the pre-marketing and postmarketing stage is all about R&D. When you are starting, you need to test your business concepts, messaging, pricing and ideas. The power of networking is intelligence, research and getting ahead of traditional marketing," says Mr Power. Thus, it is very important for networking frims to develop trust, cooperation, clustering and innovation, for increasing competitiveness and productivity.