Topic X Entrepreneurial

7 Networking

LEARNING OUTCOMES
By the end of this topic, you should be able to:
1. Describe three advantages of having good networking;
2. Explain two types of networking;
3. Discuss six importance of networking;
4. Explain seven techniques in establishing and building confidence in
networking; and
5. Identify five barriers in network building.

X INTRODUCTION
Networking is a business tool that plays a very significant role for the
entrepreneurÊs success. If entrepreneurs have very good networking with both
external and internal customers, it will be easier for them to take advantage of
business opportunities and settle some of the problems related to their business.
Good networking relationships will enable them to gain support and cooperation
from networking circles. Therefore, every entrepreneur should develop
networking skills, as it will act as a catalyst to achieve business goals and
objectives.

7.1 WHAT IS NETWORKING?

Networking is both an outcome of past relationship strategy and a resource
for future strategy. Relationship rights and obligations are the results of the
resources, which the company initially brought to the network, the experience
it has gained and the investment it has made in its relationships. This means
that in addition to the analysis of the companyÊs relationship portfolio and
 TOPIC 7 ENTREPRENEURIAL NETWORKING W 99

understanding of networking, this also involves a listing of those additional

resources that have been built through interaction. These could be analysed using
a conventional view of the bases of power which the company may possess.

7.2 ADVANTAGES OF HAVING GOOD

NETWORKING
The advantages gained by an entrepreneur from having good networking are as
follows:

(a) Accessibility
Networking is very important for the entrepreneur to gain either tangible
or intangible resources directly or indirectly. Among the tangible resources
are financial support, transfer of technology and accessibility in gaining
information to produce the right product at the right cost and the right time
as demanded by the market. Intangible resources are the moral support,
guidance and confidence provided by various groups to entrepreneurs in
operating their business.

(b) Reputation
Reputation refers to the ability of entrepreneurs to exercise leadership, or to
influence the decision making of other network members, based on the
expertise that they have. A good reputation enables the entrepreneur to
attract members in networking circles to give priority to the products or
services they produce.

(c) Expectations
These can both facilitate and restrict the freedom of the companyÊs actions.
For example, network members could have the expectation that a particular
company will effectively set prices for a number of other companies. On the
other hand, a company may be expected not to take advantage of product
shortages by raising prices or to conform to conventional competition or to
set higher ethical standards than others.

7.3 WHAT IS STRATEGIC NETWORKING?

Being a strategic entrepreneur is to envision the future and take the necessary
steps to create that future. Strategic networking, then, is gaining clarity on an
entrepreneurÊs goals and objectives to be achieved in running the business by
utilising their interaction with others and determining the best action that should
be taken. While it is tempting to jump into action, it is essential for entrepreneurs
to understand where they are now and where they want to go. Successful
100 X TOPIC 7 ENTREPRENEURIAL NETWORKING

networking is the result of proper planning and careful construction and

execution. Entrepreneurs need to find ways and means to create good
networking and gain maximum benefit from it. Networking should be one of the
core marketing tactics of most independent professionals and small business
owners. Entrepreneurs may use client-centred networking to lessen their reliance
on cost and time in getting and distributing information. Over time, this business
building strategy will reward the entrepreneur with a steady stream of new
clients, besides maintaining the existing ones.

EXERCISE 7.1
Outline the advantages that an entrepreneur would gain from good
networking.

7.4 TYPES OF NETWORKING

The two types of networking are as follows:

(a) Formal Networking

Formal networking is the existing relationship between various people
who have a symbiotic relationship with the entrepreneur. Those who
have networking correlation are better prepared to take the initiative for
creating business opportunities and solving the problems they face in the
networking chain. Every member in the networking circle is ready to share
his experience and strength for mutual advantage.

(b) Informal Networking

Informal networking is established through relationships with childhood
friends, members of oneÊs family and people sharing common interests or
hobbies. It enables an entrepreneur to discuss his business informally,
without making appointments.

Informal networking provides opportunities for the entrepreneur to gain

new information or exchange of information. Services provided by informal
networking members are usually free of charge or with minimal charges.
Usually informal networking will enable the entrepreneur to get opinion,
advice, moral and financial support. Such support will help entrepreneurs
to be more confident and increase their ability for effective decision making
and minimises business risks. Members in informal networking circles
include friends, mentors and professionals. Figure 7.1 illustrates the
members in an informal networking circle.
 TOPIC 7 ENTREPRENEURIAL NETWORKING W 101

Figure 7.1: Informal networking circle

7.5 THE IMPORTANCE OF NETWORKING

Now let us look at the importance of networking. Figure 7.2 shows the
importance of networking.

Figure 7.2: The importance of networking

(a) Build Confidence

In business, entrepreneurs may face uncertainties, for example, investment,
losses, competitors and products which cannot penetrate into the market.
Good networking can reduce these uncertainties. An entrepreneur may
obtain reliable information on investment opportunities, market share and
product preferences. Networking also helps the entrepreneur to face
changes in business environments, such as:

(i) Changes in competitorsÊ strategies

(ii) Demographic changes

(iii) Changes in customer satisfaction

102 X TOPIC 7 ENTREPRENEURIAL NETWORKING

(b) Reduce Bureaucracy

Rigid bureaucracy delays the process of business activities. Networking
helps to reduce red tape in decision-making by:
(i) Speeding up the application process.
(ii) Saving time, finance and other resources.
(iii) Preventing entrepreneurs from repeating mistakes.
(iv) Eliminating irresponsibility („passing the buck‰).

(c) Increase Information

Networking will build an entrepreneurÊs reputation as everybody in the
networking circle will know what the entrepreneur is doing. At the same
time, information like who is who in the networking circles will enable the
entrepreneur to get the information necessary for successful progress of his
business.

(d) Develop Trust

Trust is one of the most important factors when establishing networking.
With trust, a member in the networking circle will be prepared to give
priority to the entrepreneurÊs products or services. Trust also motivates
people to promote the entrepreneurs products or services by word of
mouth.

(e) Create an Interdependent Situation

SomeoneÊs success might come from anotherÊs contribution. Maybe your
success too comes from someone elseÊs contribution. People, thus, rely on
others. So whatever we do must benefit others. Everybody must react with
a symbiotic spirit. So, the concept of give-and-take is a must for developing
good networking relationships.

(f) Source of Creativity

Networking is also a source of creativity for an entrepreneur operating a
business. Various group in networking circles will help to develop new
ideas to create new products or services, and new ways of producing and
marketing. In addition, members in the networking circle will provide new
business opportunity. All these ideas may come from friends, workers,
customers and distributors. Support and various contributions from
various members of the networking circle will enable entrepreneurs to:
(i) Improve product quality
(ii) Improve distribution
 TOPIC 7 ENTREPRENEURIAL NETWORKING W 103

(iii) Improve techniques of production

(iv) Improve the technique for better after sales services
(v) Suggest new ways of promoting the product

7.6 HOW TO ESTABLISH STRATEGIC

NETWORKING FOR ENTREPRENEURS
There are three ways for entrepreneurs to establish strategic networking as
shown in Figure 7.3:

Figure 7.3: Three ways to establish strategic networking

EXERCISE 7.2

Describe three ways to establish strategic networking for entrepreneurs.

104 X TOPIC 7 ENTREPRENEURIAL NETWORKING

7.7 ENTREPRENEURS AND NETWORKING

To be a successful entrepreneur, one must have the strength to work together
with others. Here are some strategies for developing effective networking.
(a) Ready to listen;
(b) Ready to compromise;
(c) Skills in giving confidence; and
(d) Very much at peace.

When we are ready to listen to other people, we will get some ideas that could
help us change. We need to compromise with others and show our confidence.
Every entrepreneur who wishes to engage good networking strategies must
possess these qualities. Any failure to build good networking will:
(a) Increase cost;
(b) Waste time;
(c) Waste the resources of the company;
(d) Damage the entrepreneurÊs reputation;
(e) Damage the companyÊs reputation; and
(f) Create dilemmas.

7.8 STRATEGIC NETWORKING

CONSOLIDATION
These strategies are techniques in developing relationships between
entrepreneurs and other people to build good networking. Good relationships
with other people could help us to make positive changes. These strategies also
help entrepreneurs to overcome changes. The strategies are as follows:

(a) Strategy for Networking Consolidation

This strategy is a technique for developing relationships between
entrepreneurs and other people who have business experience and those
who will be involved in the business in the future. In addition, the
entrepreneur must also make the effort to keep other people in mind even
though they may not have any business dealings now. There are many
ways to develop strategic networking consolidation. These include:
x Paying visits;
x Participating in formal functions;
 TOPIC 7 ENTREPRENEURIAL NETWORKING W 105

x Networking through third persons;

x Giving souvenirs;
x Sending cards e.g. Congratulatory cards, condolence cards,
invitation cards;
x Writing letters and e-mails as well as replying them;
x Giving out business cards;
x Sending facsimiles; and
x Talking on the phone.

(b) Strategy for Developing Self-confidence

Entrepreneurs must show their capacity, personality and skills when
responsibility is given to them. They should also show their responsibility
and make sure the person who gave the responsibility will be satisfied and
ready to give more responsibility in future. When we make changes, we
must be responsible and do our best, so that our ideas will not fail. Some
important matters for attention include the following:
 Ability to do something which others cannot do.
 Ability to solve problems which others cannot solve.
 Ability to generate ideas constructively when needed.
 Ability to show that we can compete with others.
 Ability to make interpretations.
 Ability to show we are a place of reference for others.
 Always be right in decision-making.
 Make someone comfortable or happy when communicating with us.
 Expression, which does not suggest dominating leadership.
 Ability to control tone of voice when talking.
 Not taking advantage of others.
 Always ready to talk frankly.
 Ready to accept opinions other than oneÊs own.
 Ready to accept and appreciate other people and their abilities.
 Accept othersÊ advice and give advice to others.
 Be able to control ourselves.
 Flexible.
 Give and take when conflicts start.
106 X TOPIC 7 ENTREPRENEURIAL NETWORKING

Such strategies will help an entrepreneur overcome many personal shortcomings

and enable him to conduct his business as smoothly as possible with the people
he is involved with.

ACTIVITY 7.1
You have planned a Thanksgiving party in your house. You have
invited your friends and relatives to the party. Explain how you will
develop good networking with them in the party.

7.9 TECHNIQUES FOR DEVELOPING

CONFIDENCE AMONG ENTREPRENEURS
As an entrepreneur, you must have the trust of many people. People will have
confidence in an entrepreneur who shows that he can successfully do the work
given. These are some strategies that could help you to be confident.

(a) Communicate Effectively and with Full Confidence

An inability to deliver a message or opinion effectively will affect the
confidence people have in you. To communicate well, be prepared with
accurate information and data. Also, keep in mind that your audience may
have a perspective quite different from your own. Face changes confidently
and be prepared to talk about any problems and ideas for solutions that
you have.

(b) Prove Your Abilities to Others

You must remember that people develop confidence in you when they
know that you are capable of doing the work assigned to you. As an
entrepreneur, you must prove that you are capable of managing changes
and guiding others to cope with the changes.

(c) Show Concern for Other People

Show that you are ready to help others. When you are ready to help a
person who needs help, you will make them remember you. You can also
guide the people who find it difficult to adapt to the changes.
 TOPIC 7 ENTREPRENEURIAL NETWORKING W 107

(d) Always be Fair

If you are not fair in your actions, you will destroy the network that you
have built. So, to avoid problems you must be fair when mentoring, as well
as giving help, benefits and attention. You must adapt to changes in a team.

(e) Always be Ready to Admit Your Own Mistakes

Every human being will make mistakes. So when you make mistakes, you
must be ready to admit your mistakes. Such humility will show others that
you are sincere. You must always be ready to ask whatever you do not
understand. Avoid asking questions which purposely test other people.
When you share an idea with others, you help yourself to cope with
changes. This is because you will have many new ideas and thus, you
should be able to make good decisions.

(f) Show Teamwork Spirit

We must always consider ourselves a team member and make sure others
feel they belong to the same team. Avoid being a loner or dissipating
others. We must be friendly with all team members to know how they feel
about the organisation so that we are able to work together to solve
problems and make any new changes.

(g) Be Confident of Others

When we show our confidence in others, they will also tend to be confident
in us. One of the ways we could prove our faith in others is to be ready to
share information. When we show confidence, people accept our ideas
more readily and their co-operation is more easily gained.

ACTIVITY 7.2
You have just been appointed as the team leader in your organisation.
How would you react if your team members do not agree with your
opinions?

SELF-CHECK 7.1
Describe some strategies that you could use to bolster your confidence.
108 X TOPIC 7 ENTREPRENEURIAL NETWORKING

7.10 BARRIERS IN BUILDING STRATEGIC

NETWORKS
There are five main barriers, which must be avoided by entrepreneurs keen on
building effective strategic networking. If we fail to implement an effective
network strategy, we will also fail to adapt to changes. First, entrepreneurs must
take the initiative to identify their own weaknesses. The five barriers are shown
in Figure 7.4.

Figure 7.4: Five barriers in building strategic networks

(a) Emotional
Barriers may arise from emotional flaws apparent in the characteristics,
personality and ego of an entrepreneur. These barriers will create a social
space which will separate the entrepreneur from others. A social space
could cause entrepreneurs to fail to adapt to changes. Emotional barriers
are caused by the following elements or flaws in the personality of an
entrepreneur:
(i) Overly aggressive;
(ii) Fearful;
(iii) Speech which reveals a negative tendency to assume the authority
of a principal leader;
(iv) Carelessness in actions;
(v) Thinking and acting in ways that suggest one is better than others;
(vi) Arrogance;
 TOPIC 7 ENTREPRENEURIAL NETWORKING W 109

(vii) Hypocrisy;
(viii) Being a perfectionist but taking perfection to extremes;
(ix) Indecorous assumption of leadership;
(x) Never punctual;
(xi) Unwilling to admit oneÊs mistakes; and
(xii) Unwilling to recognise other peopleÊs talents and abilities.

(b) Physical
Physical barriers might arise from an entrepreneurÊs personal lack of
confidence in himself or from his inattention to other important matters
with respect to manners and attire. An entrepreneur who has little regard
for his own personal deportment could easily fail to inspire confidence
among his fellow colleagues. People often feel that an individual whose
manners, appearance or attire are wanting will likewise be incapable of
running an organisation well. They will thus have a greater tendency to
resist any changes that such an entrepreneur may seek to introduce. The
following are pitfalls in physical deportment which will raise unnecessary
barriers to strategic networking:
(i) Improper attire;
(ii) Physical appearance suggesting poor health or exhaustion;
(iii) Poor or total lack of self-management;
(iv) Nervous behaviour;
(v) Manners or speech that betray a lack of confidence;
(vi) Habitually avoiding eye contact when speaking to others;
(vii) An unfriendly countenance;
(viii) Overly expressive body language when attempting to communicate
with others; and
(ix) Speaking in an unnecessarily high tone or pitch.

(c) Psychological
Factors and characteristics affecting the psychological make-up of an
entrepreneur will influence his ability to build strategic networks.
Psychological barriers affect an entrepreneurÊs interactions with other
people. If, for instance, he is one who is prone to feelings of loneliness or
inferiority, he will face difficulties building an effective network. An
entrepreneur who is psychologically well-balanced has a better chance of
inspiring support and confidence. He will also be in a position of strength
110 X TOPIC 7 ENTREPRENEURIAL NETWORKING

when attempting to bring about needed changes in an organisation. One

who lacks this balance will instead create a bad impression and face an
uphill battle mustering support.

Psychological barriers include behavioural characteristics indicative of:

(i) Nervousness;
(ii) Indecision;
(iii) Emotional problems resulting in strong feelings such as hatred or
anger towards others;
(iv) Loneliness;
(v) Frustration;
(vi) Failure to achieve goals;
(vii) Shyness;
(viii) Strong need for approval and acceptance;
(ix) Desire to be pre-eminent;
(x) Obsessive passion; and
(xi) Inability to discuss problems.

(d) Behavioural
The way we behave will determine whether we are closed or distant from
others. Good behaviour will help us generate good changes. Bad behaviour
characteristics include:
(i) Slandering other people;
(ii) Carelessness in making decisions;
(iii) Always wanting to be first;
(iv) Always wanting to be the leader;
(v) Teasing other people;
(vi) Making other people appear foolish;
(vii) Pretending to know everything;
(viii) Thinking and acting as if other people were incapable of making
mistakes;
(ix) Reluctance to accept other peopleÊs opinion; and
(x) Not appreciative of other peopleÊs contributions.
 TOPIC 7 ENTREPRENEURIAL NETWORKING W 111

(e) Negative Expressions

Expressions could help build, or spoil a strategic network. The way we
express ourselves, is important. When we are careless about the way we
express ourselves, we might easily offend others. Garnering their support in
a network will then be difficult. Expressions to avoid include the following:

(i) Expressions Indicating Dominance

(ii) Expressions Indicating Ridicule or Mockery

(iii) Expressions Indicating an Inferiority Complex

(iv) Expressions Indicating an Egoistic Nature

112 X TOPIC 7 ENTREPRENEURIAL NETWORKING

An entrepreneur must therefore do his best to avoid the five barriers to building
a strategic network. By confidently applying the knowledge that he possesses,
the entrepreneur should be able to set up an effective network for successful
business. Such a network would be mutually advantageous to both the
entrepreneur and others within the network. The entrepreneur who is keen on
achieving his full potential through a good network will understand that he
cannot strive to dominate others. Instead, it is important to seek cooperation from
all concerned. Also, in any situation where changes need to be implemented, the
opinions of other members must be considered. Treating fellow workers or
associates with consideration and respect yields better results than attempting to
control, intimidate or offend them into submission.

SELF-CHECK 7.2

What kinds of expression should you avoid in order to maintain

good networking?

x Networking is both an outcome of past relationship strategy and resource for

future strategy.

x The advantages of networking include accessibility, reputation, and

expectations.

x There are two types of networking (a) Formal networking and (b) Informal
networking. Formal networking is the existing relationship between various
people who have a symbiotic relationship with the entrepreneur. Informal
networking is established through relationships with childhood friends,
members of oneÊs family and people sharing common interests or hobbies.

x Networking is important because it builds confidence, reduces bureaucracy,

increases information, develops trust, creates an interdependent situation,
and generates creativity.
 TOPIC 7 ENTREPRENEURIAL NETWORKING W 113

x To establish and build confidence in networking, you can apply the following
seven techniques:
 communicate effectively and with full confidence;
 prove your abilities to others;
 show concern for other people;
 always be fair;
 always be ready to admit your own mistakes;
 show team spirit; and
 be confident of others.

x Barriers to network building include physical, emotional, psychological,

behavioural, and expressive barriers.

Formal networking Strategic networking

Informal networking Barriers to network building