Networking skills

The value of networks for entrepreneurs

Networking is possibly one of the most important skills for entrepreneurs and is one which you have the opportunity to practice on programmes such as Enterprise Tuesday.

Networking involves building and maintaining contacts and relationships with other people. The personal networks which you accumulate over time, both socially and professionally can be an invaluable resource. This applies whether you are an entrepreneur looking to start and grow your own new venture, whether you are looking for a job, or working on a project where external ideas and input can help. For entrepreneurs, a contact made at a purely social event may ultimately help to provide you with one of the key ingredients for the start of the business.

Different types of networks

There are a range of different types of networks from which you can draw:

The social network

Your own personal network of contacts made informally through social or non-business activities. These contacts may comprise family, friends, former work colleagues, contacts made through university, etc.

The professional network

Contacts made through business activities including accountants, lawyers and so on.

Artificial networks

The networks set up within business communities which are open to new members, trade associations, professional institutions, etc. The business community in Cambridge has a number of local networks, many dedicated to high technology and/or start-up companies.

Here some examples of general sites where you can network with other people:

Please note, Cambridge Judge Business School is not responsible for the content of external websites.

Tips for networking at events

You probably already have a number of social and professional contacts and if you have a business idea you may well have already identified where they can help you with the development of your business ideas. For others there may be no apparent fit with your business at the present time, but it will be essential for you to maintain these contacts and build relationships as they may be able to provide help in one way or another in the future.

It is important that you broaden your range to build new contacts and for this you will need to develop and hone some good networking skills. You may have attended events in the past and wondered how some individuals seem to effectively ‘work the room’ and talk to large numbers of people and swap business cards – with practice this is not so difficult to achieve!

Top tips

One of the most important tip is having a one-minute ‘elevator pitch’ about your business idea or a tag line about yourself (a few words you can say after your name by way of introduction). Being able to articulate your business opportunity in a short space of time is essential and many of our programmes involve sessions on pitching your ideas.

Check the delegate list beforehand and decide who you particularly want to speak to and what you want to talk to them about.
Have a one-minute ‘elevator pitch’ ready to describe your distinctive competence.
If you feel awkward, go with someone who is not and ask them to help you.
Arrive early and check the name tags to see who else has arrived.
If other members of the team are with you, work the room between you.
Avoid spending too much time at the bar or in dead areas where it is hard to move onto another person you want to talk to if you get bored.
If you do feel trapped, find someone else that the person you are with might enjoy speaking to.
Ask others to introduce you to the people you want to meet.
Get drinks for people who are having a good conversation.

How can networks help entrepreneurs?

A study in 2000 by Iain Edmondson looked at 3 Cambridge companies and the benefits they gained from networking at 3 different stages in their development:

conceptualisation – the ideas
startup
growth.

The benefits fell into 2 categories:

“harder” benefits – leads to customers, investors, partners, suppliers, employees and technical and market knowledge/information
“softer” benefits – credibility/legitimacy, advice and problem solving, confidence and reassurance, motivation/inspiration, relaxation/interest.

At the conceptualisation stage entrepreneurs tended to cast their net widely to try and establish themselves and their ideas in the entrepreneurial community and pave the way for the development of future business relationships. The role of networking groups here is in providing the softer benefits.

At the startup stage there is a shift towards using networks to gain more tangible benefits to develop new business relationships. Establishment of trust is crucial at this stage in sharing problems and solutions. The role of networking groups here is to provide both softer and harder benefits.

During the growth stage there is no role for networking groups in providing the softer benefits, the focus for the entrepreneur is on PR, gaining new investors, suppliers, customers and development partners.

Read the report

Edmondson, I. (2000) The role of networking groups in the creation of new high technology ventures: the case of the Cambridge high tech cluster (PDF)

Key lessons

In Iain Edmondson’s study on the role of networking groups, he provides some key lessons for entrepreneurs:

Without any prior record, for a new venture an entrepreneur can help establish local business relationships, such as those with new investors, by establishing recognition of himself and his venture within the local community via networking groups.
The benefits of making new contacts at networking groups do not always emerge immediately.
Networking groups are more likely to prove beneficial to entrepreneurs if they actively participate in meeting new contacts.
Networking is based on the perceived balance of give and take. The more successful networkers engender trust in others by:
- Being open minded to other people
- Demonstrating a willingness to learn about and from others
- Being willing to make genuine gestures of good will
- Being willing to invest time in networking activities