At Your Business Matters, you won’t be surprised to hear that we believe business networking is essential for small businesses looking to grow and thrive. It provides a great way to meet amazing people, build relationships, and increase your visibility, helping you find potential business partners and opportunities. We would encourage everyone to find the right opportunities to network for their business growth – but how can we be so confident?

In this blog post, I’ll discuss the benefits of investing in business networking, identifying the many opportunities you’ll find for profitable growth for your business.

It’s Not About the Sales

Business networking is about building relationships with other professionals and organisations; yes, this is so that you’ll generate business leads and opportunities but it’s not just that.

You’re connecting with people from different industries, attending meetings and events, to form mutually beneficial relationships – it’s those relationships which are important and something we’ll talk much more about. It is also a great way to establish your position as an authority in your industry, build trust with potential customers, and find valuable business partners.

While networking is an integral part of a small business’s growth strategy, it’s important to understand that the investment will only pay off in the long term and it’s not without its challenges. It takes time and effort to create connections, build on those relationships, and it can be difficult to find the right people to network with. However, when done right, business networking is a great way to unlock profitable opportunities for your business.

Benefit from Business Networking

The value you’ll get from networking can be seen in:

• Increased visibility – within your industry and others, as well as connecting with potential customers.
• Stronger relationships – regularly attending events and putting effort in outside the meetings will help strengthen the connections you make.
• Expanded reach – by connecting with people in your own and different industries, you will create opportunities to reach new audiences.
• Access to resources – through networking you’ll find potential partners, investors, and mentors to provide valuable advice and support giving us great opportunities to learn from others.

You’ll see we haven’t included sales in this list because your business sales will come through these other areas, this is one of the reasons why understanding the value and profitability of your networking is so hard.

What is Return on Investment and why is it important?

As a business owner, the money you spend should be generating profit and it’s important to understand how much. Additional profit generated by an investment is the Return on Investment (ROI)
Investing in the marketing of your business – which is what you’re doing through networking – has only been successful when you generate more money because of that investment.

How is ROI calculated?

Simply, the profit you bring in must be more than you spent – calculating this as a percentage looks like:

(Total Return – Total Investment)/ Total Investment

Not surprisingly though, the actual calculation isn’t that simple.

With networking your return isn’t the sales you make to people within a room, you’ll need to consider any referrals and collaborations on top of this as well as the other ways in which your business has benefited from these connections. Consider:

• The lifetime value of all these customers, every order from every customer however they are related to that group.
• Your expanded network – not only your connections and their referrals but even further with the impact of conversations and social media engagements too.
• Business developments inspired by your networking, including mentorship and guidance as well as product and service development.
• Brand perception and reputation are difficult to put a financial value to.

In fact, even the investment calculation for networking is complex, including:

• Meeting costs and membership.
• Other expenses such as travel and refreshments.
• Time invested not only in the meeting but any preparation and other activities.

So, how do we know it’s profitable?

We’d advise you to track your numbers, recognising as many of the variables we mentioned as you can.

Consider too that business growth depends on relationships and connections. Each of the benefits we identified earlier as coming from networking will strengthen your business. Establishing a trusted brand and a network of people to champion you are both incredibly valuable marketing tools, and – no matter how hard they are to quantify – we’ll come back to some numbers later in this post.

The 4 Networking Relationships

So, I know I’m repeating myself, but building relationships with the people in your group is the essence of networking, and these relationships will differ depending on what you offer your connections and what they offer you.

I like to identify four types of relationships you are likely to encounter in business networking groups, each providing their own significant value:

1. Collaborative Relationships

Where two or more business owners with complementary services (for example a website developer and copywriter) can collaborate, working together to secure larger and more lucrative projects. Consider who may be useful collaborative partners for your business, we talked more about this in the post Strategic Partnerships and Why You Need Them.

2. Client Relationships

Where attendees become clients, this will only happen once trust has been established and a real understanding has developed of the businesses involved. While finding clients through networking is great, these relationships will take time to develop.

3. Referrer Relationships

Where attendees become each other’s unofficial ‘fans’, referring business to each other. Having established the “Know, Like and Trust” factor, people are happy to refer contacts to you and vice versa.

4. Mentor Relationships

Learning from each other is a huge benefit of business networking. Whatever your skills, there will be elements of your business administration in which you don’t excel. You may benefit from a more experienced business owner sharing their learning, or a knowledge swap where – for example – you as a social media manager exchange tips and techniques with an accountant to both of your benefit.

There are so many ways we’ll learn from each other, directly through presentations at events or in conversation with peers, this learning is invaluable.

Do Relationships Equal Return on Investment?

Although the benefits of networking extend further than your balance sheet, this post is specifically titled “How to Unlock Profitable Networking for Your Small Business – Benefit from Business Networking” because your business activities need to bring in money.
So, does networking do that? Here’s some feedback from our member, Rebecca:

“Approximately 20% of last year’s revenue for my business came from clients I’ve met through the group or were introduced by members of the group.” Rebecca Taylor, Parfitt Taylor

The relationships built through networking will support your business growth. You might see mentoring relationships help you to increase your visibility and profile, collaborations allow you to bring in bigger projects, and those trusted relationships you’ve built result in referrals and direct paid work.

You won’t be surprised that we believe business networking is profitable for small businesses, we hope you agree and would love to hear your experience.

If you’d like more tips on getting the most out of your networking meetings, download our ebook “How to Make Networking Profitable for Your Small Business”. You’ll recognise some of the thoughts I’ve shared here, but this guide also includes tips on how to find the right group, how to prepare for meetings and follow-up for the best results.

If you’d like to find out more about what Your Business Matters could offer your business, get in touch here.