NOTE ON ENTREPRENEURIAL NETWORKS AND NETWORKING

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1 NOTE ON ENTREPRENEURIAL NETWORKS AND NETWORKING It s often stated that it s who you know not what you know that leads to entrepreneurial success. Networks provide a conduit for the exchange of information and resources that can enhance the success and survival of the business. Through networks, entrepreneurs gain access to opportunities and resources, save time, and tap into advice and moral support that may otherwise be unavailable. Networks can affect their social, emotional and material well-being. Entrepreneurs not only use their existing social network, but as they acquire information and resources to develop and grow their business, they create new ones. Entrepreneurs with wide ranging, diverse networks are more likely to have contacts that connect them to financial resources and especially the private equity community. Most entrepreneurs start with a built-in-network - parents, siblings, spouse/partner, in-laws, friends and neighbours to gain the needed to access resources. But, to gain a variety of information, it s wise to establish relationships with those outside their immediate circle, those that require less emotional investment. Such individuals can act as bridges connecting them to non-overlapping sources of information or resources. What are networks? Networks are sets of relationships critical to your ability to get things done, get ahead and develop personally and professionally (Ibarra, 1996). There are three types of networks 1 : Task networks- these involve the exchange of exchange of job related resources including information, expertise, professional advice and political access, and material resources. In these networks, you work with people to accomplish a specific task. These networks may be within a new venture, or cross between organizations. Entrepreneurial career networks- are comprised of relationships with various people who offer entrepreneurial career direction and guidance. These individuals offer you access to higher level managers, equity providers, advisors who might assist in helping you to move your venture forward. Mentors, sponsors and coaches may be part of this network as they assist in moving your venture forward. 1 Ibarra, H Managerial Networks, HBS Publishing,

2 Social networks- are relationships characterized by higher levels of closeness and trust than those that are exclusively job or career related. Generally these individuals are people within whom you have common background or interests. Social networks may be inside or outside an organization, and less often determined by formal group or organizational arrangements or membership. Social networks play a critical role in providing information, access to resources and gaining access to advisors and coaches. In most cases, task, career and social networks overlap, and it is frequent that people in these networks may change over time. Networks are comprised of people from different levels (subordinates, peers, superiors) as well as internal and external to your new venture. Further, networks often have different identity groups within these in terms of cultural and interpersonal similarity or differences. Interpersonal attraction that leads to homogeneous networks are more comfortable and pleasant to work with. When networks are made up of people who are alike, who have similar values and interests, they communicate information rapidly between each other and interpreted it in similar ways. They share resources effectively. On the other hand, when the network is made up of people with similar backgrounds little will be gained in talking to more than one person in the network. They all share the same experiences and similar viewpoints. In contrast, when the network is made up of individuals with diverse work and social backgrounds each is likely to bring a different perspective and provide the entrepreneur with new and non-redundant information. Multiple points of view will present more than one solution to a problem. Information useful to the entrepreneur is likely to be wide spread so having more and diverse contacts increase the chances of entrepreneurs tapping into leads on potential markets, business locations, sources of capital, promising business partners or key management personnel. Individuals with social networks that contain a variety of backgrounds, including varying sociodemographic and intra-personal characteristics, enhance the richness of the information exchanged, attitudes formed, and interactions that individual s experience Networks relationships are described as core and extended. Core networks. There are two types of core networks first, those that have long term and high reciprocity ties. These relationships that have frequent face to face contact that are built on loyalty and trust. Second, other core networks may have short term instrumental ties, which are usually related to job function. These are usually dissolved when the relationship has served its purpose. Extended networks. Your extended network includes those distant relationships and acquaintances that you make. These are people you see less often face to face and may have only infrequent , phone or in-person contact. These relationships often provide bridges to new contacts that may provide resources or information for the new venture. For example attorneys, accountants, bankers and technical consultants can also provide bridges into the investment community.

3 What is Networking? It is an essential communication tool in the world of business. Networking is a tool to develop contacts to support your personal growth and your entrepreneurial venture. It is a process of learning about other people and finding the links and connections you have with them, then utilizing and building those connections. Most important, it is a two way process. Networking basically expands your options, sometimes in unexpected ways ( Through networking, you can increase your visibility, create your own community, and utilize and build on connections that will facilitate your venture s survival and success. Networks are earned not built. Because networking is a two way process, you develop contacts that support your growth, but, you also support others by providing information, mentoring or offering new contacts. So what are keys to successful networking? 2 Commitment- take time to develop the relationship. Giving and getting- both sides need to receive a benefit either now or later. Listening- take notes and really hear what others are telling you. Curiosity- look for clues to stimulate conversation and interest. Follow-up- do what you say you are going to do, when you say you are going to do it Ask for help- be specific about what you need Courage- going solo to a networking function can be rewarding Remembering- people, ideas and resources How do I Get Started? 1. Know yourself, your skills and interests. Reflect on what your skills and competencies are, where you are weak and where you might learn more. 2. Set specific attainable goals for yourself in making contacts. Which organizations, groups and individuals can help? How can you identify them? Who can help? Make a list of all possible contacts. 3. What do you want from your contacts? Advice? Information on their companies? Other contacts? What can YOU offer to these contacts? 4. Approach familiar people first- at the same time, don t be afraid to initiate contact with people you don t know. 5. Think of everyone you meet as a networking contact. Keep in touch with business school contacts, classmates and faculty. 6. Keep well documented records of contacts 7. Be patient and persistent 2 University of Richmond (

4 8. Be thankful and polite- always follow up with a written note. 9. Keep in touch. Managing Your Network 3 Effective networking depends on selectively acting on those contacts most suited for your task. This requires strategic behavior. Remember few transactions are one shot deals. It s always important to treat every relationship and contact as if it could be an important relationship, so that future exchanges can be productive. Reciprocity is the key to successful networking over time. A critical mistake is to become overly dependent on one person or a few relationships as this will limit your ability to access better information and resources. Sample Questions to Start Networking What does your typical day consist of? What do you like most about running your venture? What is your biggest challenge as an entrepreneur? If you were in charge of hiring someone to assist in your work, what criteria would you use to make your selection? Are there any professional groups/organizations that you would recommend I join? Can you refer me to other people in the field who might be interested in talking about their experiences? What was the best advice you received when you started your business? Assessing your Network As you think about the major changes that are likely to take place during this year, and the next few years, what major challenges and/or opportunities do you forsee that you will need to deal with in the next 1-3 years? 2. Given these challenges and/or opportunities, what types of help are you most likely to need? a. Help in getting a job b. Help in defining my longer term career interests c. Emotional support and guidance d. Help in building self-confidence e. Other A. If your major challenge/opportunity is related to getting a job, how well positioned are you to get information, advice, and resources about new opportunities and possibilities? Very well, Okay, Need to expand my 3 Ibarra, This assessment was adapted from an instrument developed by Prof. Deborah Kolb, Simmons Graduate School of Management, and Prof. Kathy Kram, Boston University.

5 network. Who can help? B. If your major challenge/opportunity has to do with defining longer term career interests, do you have relationships with people who can give you advice and guidance for career activities? Will they advocate for you? Yes No. Who can help? C. If your challenge/opportunity means you need emotional support and guidance, to what extent do you have people who can give you support? I have a strong network to help me, I don t have a people who can help me through changes I will have to make. Who can help? D. If your challenge/opportunity means you will need help in building your own self- confidence so that you can get a new job and plan your career, do you have people in your network who can help? Yes No. Who can help? 3. What is your approach to building relationships? How are you initiating these relationships? In what settings are you most comfortable meeting people? a. Joint or shared work/projects/committees b. One-on-one appointments, with specific agendas c. Informal no agenda social settings- going for coffee, lunch, drinks, etc. d. Leisure activities such as golf, tennis, movies, concerts, etc. e. Other 4. What is your preferred style? a. Occasional phone calls or s just to say how are you? b. Phone calls, or visits with specific requests or questions c. Holiday cards/letters d. Dropping in or calling whenever you think of it e. Arranging in advance to get together at meetings or other events f. Relying on the chance your paths will cross g. Inviting people to join you for lunch, coffee, golf, etc. h. Contacting people when you find some information, article, opportunity, etc. that might interest them i. Other 5. Action Planning: What are you going to do, specifically to get these things started? Specify how you will initiate, contact and /or enhance existing relationships. When will you get the process started? What approaches will you use? 6. Map your network.

6 Very Distant Social arena #1 Distant Social arena #2 Somewhat Close Clos Very Close SELF Social arena #4 Social arena #3