Thursday, May 10, 2007

Lesson #16 - The Answer is "Networking"

When I am asked by anyone - "How do I _________"? I always seem to answer with "Networking".

The old saying "Judge people by the company they keep" - holds a lot of truth when you are an entrepreneur. There is nothing more important (other then perhaps their reputation) to an entrepreneur then their network. If you do not have a network, then you will have a tough time being an entrepreneur.

Let me elaborate with a FAQ breakdown:

1. How do I raise capital? - Networking. There is no magic to raising capital. Sure, you need to have a good idea, plan and a nice suit - but the main ingredient is connecting to the investor through your network. If you don't know the investor, then find someone in your network that does. If you don't know someone who knows the investor, then you need to work on your network (see my tips below on how to start building your network).

2. How do I close this deal? - Networking. Sales is about having a need and a product, but its also about knowing your customer, building a relationship and creating trust. Anyone who has sold "big ticket" items knows sales cycles can be brutal, and getting to the decision maker can be impossible at times. People don't buy from strangers, and in order to close a deal - you need to know the people who are buying.

3. How do I find a good VP of Sales? - Networking. It doesn't matter who you are hiring - the first place you look is in your network. The entire process of hiring key employees was flipped somewhere down the line - the idea you look at resumes, then interview, then check references - makes no sense. The hiring process should be - check references (e.g. Network), then interview, and then look at resume. What is more powerful? A trusted colleague tells you he worked for a guy who was a rainmaker at IBM and was a great person - or reading a line on a resume that says "Sales Executive at IBM 2001-2003".

4. How do I know if I am making the right decision? - Networking. Everybody makes mistakes. Everybody makes bad decisions. However, not everybody asks for advice (which in my mind is an unforgivable mistake). Any time an entrepreneur feels like a decision can really effect their company or them personally - it is important to reach out and get advice. Unfortunately, rarely do friends or family have the experience - so it is important to have a network of colleagues, fellow entrepreneurs who can give you some feedback when you are faced with a tough decision.

As you can see - Networking is the answer - to a lot of big questions that face an entrepreneur. In the life of an entrepreneur (especially when you are starting a company) you meet a lot of people for the first time, and it becomes very difficult to build trust and credibility each time you meet a new potential customer, investor, employee, etc. The best and most valuable way to build immediate trust is to share a relationship. There is nothing more powerful in a conversation then these words "Oh, you know ____ , too?".

Tips on Building a Network

As promised, I will give you some great tips on how to get started building (or enhancing) your network. I probably should dedicated an entire blog to this - but I will kick it off with my top 3.

1. Network Online - Get started by building your personal brand online. Social Networking has become the de facto way to meet people on the Internet, and here are some great services you need to join ASAP.

- Fast Pitch
- LinkedIn
- XING or eCademy (if you are in Europe)

Start building your network online, and use these tools to meet new people in your community and industry. If you are looking for capital, start connecting to local business leaders, successful entrepreneurs and financial planners/accountants/lawyers.

Remember - this is about building relationships - not about blasting your business plan, or product data sheets to hundreds of people on the first email. Networking is building relationships - NOT - building a contact list.

2. Get a Life :) - I say this with a smile, because when I started as an entrepreneur, I worked 100+ hours a week, never saw the light of day - and it wasn't until after I sold my first company, and started to have a life outside of the office - I started meeting interesting people - and thus -my network started to blossom. In order to build a network - you need to like meeting people, and they need to like meeting you. You can meet very powerful people just through daily activities like going to the gym, going to kid's birthdays, or even at church.

3. Give back. Even if you don't believe in Karma - it is important to give back to your community. Whether it is volunteering at the local YMCA, or sitting on the board of a local charity - investing time in good deeds will not just grow your network, but will also feel good.

I remember once, an entrepreneur approached me after I spoke on a panel about Angel Investing, and he asked "Where are all the angel investors in this town? I spend time at the boat club, talking to guys at the golf course ... but I haven't really met any high-net worth investors?" - and my answer to his question - "If you want to know where all the successful entrepreneurs / angel investors are - they are giving it all back".

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