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How Reliable is Your Network?

General Business News

November 2007

How Reliable is Your Network?

Here’s a riddle for you: what is one of the most expensive - yet least expensive - forms of advertising for your small business? The answer: establishing a network of referral sources. It is expensive in the sense that it takes time and effort to establish, yet the out-of-pocket costs are far less than broadcast or mass media advertising.

According to the Random House Unabridged Dictionary, a network is defined as “a supportive system of sharing information and services among individuals and groups having a common interest.” When you think about it, this definition is the essence of what makes a successful business. After all, your business depends on customers that support you by utilizing your products or services. In return, either directly or indirectly, you support them by utilizing their products. The question, then, is: how do you build a reliable network?

Friends and Family

Most people have an established network in the form of friends and family. People are naturally going to do business with people they like. Friends, by definition, fall into this category and, hopefully, so do most of your family members, but don’t expect them to come knocking down your doors with new customers. As with any other business source, you must let your friends and family know you need their help. Don’t be shy about talking up your business at a family gathering or on the golf course. If you don’t, this built-in referral source might assume you have all the customers you need and fail to steer new business your way.

Business Networking Groups

Just about all towns have a chamber of commerce or similar business development organization. Many of them sponsor monthly or quarterly networking functions. Join your local chamber of commerce and any other community organization designed to build your community’s business base. Then, participate in the organization’s activities. Be sure to bring plenty of business cards with you.

If large groups intimidate you, check to see if there are lunch or breakfast networking associations. Generally small in scope, groups like Business Networking International (BNI) bring people in a number of different businesses together to serve as referrals for one another. Just remember, these groups are based on a “what goes around, comes around” philosophy - be prepared to refer business to other group members.

Serve Others

Almost every community has not-for-profit organizations of one sort or another. Involvement in a service-oriented one like the Lions Club, Rotary Club or other similar group is an excellent way to meet people and help your community at the same time. Not only will you be able to market yourself and your business effectively, but you will also gain the satisfaction of helping others.

The boards of directors of most charitable organizations typically include the ‘who’s who’ of the local community. This is especially true of high profile entities like a symphony or community foundation. Chose an organization with a mission about which you are passionate - and get involved. Unfortunately, some people join boards just to build their resume, but fail to attend board meetings and other organizational functions. If that is all you plan on doing, don’t join - while your active involvement could help build business relationships, joining and failing to be actively involved can be fatal.

What’s the verdict?

Now that we have discussed a few ways of building a referral network, we come back to the question of “how good is your network?” While it’s sometimes hard to tell, one way to find out is to ask your customers how they found you. If your network isn’t working for you, try some of the preceding suggestions. If it is working for you, keep up the great work!

Have a happy Thanksgiving!
 

These articles are intended to provide general resources for the tax and accounting needs of small businesses and individuals. Service2Client LLC is the author, but is not engaged in rendering specific legal, accounting, financial or professional advice. Service2Client LLC makes no representation that the recommendations of Service2Client LLC will achieve any result. The NSAD has not reviewed any of the Service2Client LLC content. Readers are encouraged to contact their CPA regarding the topics in these articles.

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