What is popular is not always right. For small business owners, networking is very popular — but it is often done wrong. This costs a minimum of $100,000 annually.
Consider the following math from Jon Rutenberg, President of the D.C.-based Computer Consultants Corporations and organizer of the Greater Washington Business Roundtable:
- If a business owner picks up 20 cards per week for 40 weeks, that’s 800 cards per year
- It takes an average of eight “touches” to create an effective working relationship
- That’s 6,400 touches per year
- At an average of five minutes per touch, that’s 40 minutes per contact — which comes out to 32,000 minutes per year
- 32,000 minutes divided by 60 minutes equals 533 hours per year
This is one-fourth of the working year. If an executive values his or her time at $100 per hour, this is $53,330 in networking cost, plus:
- the opportunity cost of spending time at the wrong places talking to the wrong people
- the direct financial costs often associated with networking, such as travel, meals, drinks, and event fees
These are very conservative numbers. Add five cards per week, pick up cards an extra 10 weeks per year, or spend more than 40 minutes developing each relationship, and the cost of bad networking is significantly higher. Likewise, if the executive values their time at $150, $200, or $500 per hour.
Great networking requires research and planning. My company’s clients would be ill-served if we placed them in any outlets instead of the right outlets. Smart business owners only spend $50,000-plus on a business development or marketing strategy after identifying their target markets, determining the best way to reach customers, and defining success.
I spoke with several experts about how small business owners can turn networking into company growth.
Be Prepared & Strategic
Keith Ferrazzi is author of Never Eat Alone and founder of the consulting firm Ferrazzi Greenlight. He told me to “be prepared before you go” to a networking opportunity, especially at conferences and larger events.
“Know who you want to meet,” continued Ferrazzi. “While you’re there, hijack the event as your own — invite people to lunch and dinners who are already there. Don’t get on your phone and text and get work done on breaks — work the breaks hard to get to know people. Get a wingman.”
Becky Sheetz-Runkle, author of Art of War for Women and Art of War for Small Business, said networking success starts with looking at long-term strategic goals. “When building your network, look at your strategic goals for the next five years. Are you building the network for today or for 2025?” asked Sheetz. She also advised companies which are expanding into new territories to find “a [trustworthy] partner who understands this landscape better than you do.”
Networking success also takes answering two key questions, said Runkle. First, “are your current/prospective customers there?” Then, if so, “are decision-makers there?”
“If the answer is no,” said Sheetz-Runkle, “ditch the event.”
Place Yourself Around the Right People
Todd Rowley is a senior executive at Old Dominion National Bank and serves as Chairman of the Board for the Northern Virginia Chamber of Commerce. With a budget of over three million dollars, the Chamber is the third-largest in the D.C. region, according to the Washington Business Journal.
Rowley said that he makes “qualified introductions” between colleagues, peers, and professional acquaintances to “remove boulders from the stream of connectivity.”
“Making qualified introductions creates mutually beneficial arrangements and decreases the amount of turbulence before, during, and after transactions,” explained Rowley. “My next job is to get out of the way while remaining a resource.”
Chuck Feddersen, Executive Vice President of Club Operations for ClubCorp, said “the heart of our City Clubs is all about relationships,” noting that he and his colleagues “often say handshakes are our currency.”
Feddersen described networking advantages available to ClubCorp members such as this author. First, “a respite to be known” to friends, colleagues, and clients. Second, diverse networking opportunities “formed over a shared interest” and “shared passions [which] most strongly bring people together.” Third, ClubCorp is “rich with opportunities to…engage in shared community” with those in local regions as well as in the hundreds of ClubCorp locations and communities around the country.
Be Patient
Ivan Misner, PhD founded Business Networking International, which has over 250,000 members worldwide. Misner said that “people tend to use networking as a face-to-face cold-calling opportunity. That does not work. Networking is more about farming than it is about hunting.”
Misner explained that referral and network-based strategies are “about building deep relationships with people who are willing to refer each other. If your network is a mile wide and an inch deep, you’ll never achieve the success you want. You should find a network that is wide and, in some places, deep.”
Technology Can Help
Rutenberg’s firm uses technology to help business owners “focus on the 20-30% of prospects that are most likely to convert to sales and automates 70-80% of the follow-up,” he told me. His team automates e-mail and text campaigns, “freeing up owner and sales executive time for ‘Hi Touch’ targeted prospects.”
