Unfortunately, it seems pretty clear that we are in ― or are about to enter — a recession. Though technical definitions of a recession vary, most experts agree that a recession results from a prolonged period of economic downturn. Technically, economists cannot really declare a recession until it is over, but the signs of recession are all around us. These signs include rising unemployment rates, decreased spending, and a contraction of the GDP. Therefore, whether we are in a recession or not, how should companies respond to a downturn? The first instinct is to buckle up, start cutting costs, cap the spending, and go into survival mode. While you should definitely prepare for any sales drought on the horizon, you should also look out for new opportunities that could be a lifeline to your business — by networking.
Identify your needs and look to your network. What do you need right now? Is it just the new clients? Is it someone to help you redefine your business model or restructure your business? Alternatively, is it an investor who can help you out with a bridge round? All these people may be a couple of phone calls or just a few clicks away.
I am certainly not suggesting that this is an easy task. However, if you do not ask, the answer will always be “no,” right? So start reaching out to your network. There may be someone there who will open up a door for you.
Networking Creates New Business Opportunities
As I have said, networking can be a catalyst for business development, financing, or even talent sourcing. A study conducted by Booth Business School at the University of Chicago found that 29% of founders claimed that they raised capital through networking, while 32% actively hired through their network. About 34% even tapped into their network for emotional support, which matters a great deal during tough times.
A great example of the power of networking is the acquisition of the marketing automation company, Eloqua, by Oracle for nearly $1 billion dollars. The determining factor behind the deal was the strong ties Eloqua’s co-founder, Paul Teshima, shared with Oracle. However, this was no ordinary acquisition. Eloqua was purchased for more than 200 percent of its estimated public market value for a $400 million-plus increase in shareholder net worth. All of this resulted from a little networking.
That said, it is important not to limit yourself to your existing network of contacts. A study from Northwestern University suggests that new opportunities and novel information flow in from your extended network. That could come in the form of new business opportunities, new staff, new investors, or even a merger opportunity. So make sure to ask for introductions to that “friend of a friend,” as you never know where it may lead.
Integrate Networking into Your Business Plan
Therefore, networking creates new channels and opportunities. This means it should really be a part of your business plan. With today’s wide range of networking tools — in particular, LinkedIn — the possibilities for utilizing your network are enormous.
Your sales are falling; can you access new verticals or market territories? You need to reduce debt; can you find new equity investors? You need to find a product manager with experience in logistics, to help you revamp your flagship product. Is there someone in your network to assist you in finding that person or to be that person?
Your business plan consists of business decisions that lead your business to its next step. Your network offers the channels to make informed business decisions, and in many instances, it helps execute them as well. For this reason, you must add networking to your daily routine.
Integrate Networking into Your Daily Routine
Make networking a habit by incorporating these three steps into your daily routine:
- Reach out to your contacts and ask for an introduction to contacts that you have not yet met.
- Find the contacts that matter the most and keep in touch with them. Comment on an update they shared. Invite them for coffee. Share an insight they might be interested in. The little things matter more than you think.
- Give back. Make sure that your relationship with these contacts is not one-sided. Offer your help even if you do not need anything in return. Such acts of kindness can build trust and reciprocity in professional relationships.
Final Words
There is no need to be hesitant about reaching out. In the words of London Business School’s, John Dore, “Consider how you’ve responded to a suddenly revived contact from the past? Perhaps it is a former colleague or an alumni contact from university.” Chances are, it was a very gratifying experience for you. You have every reason to believe that your contact will greet you the same way.
Your network is a world of opportunities waiting for you to capitalize on them. Start now.
