Networking is a socioeconomic business activity by which businesspeople and entrepreneurs meet to form business relationships and to recognize, create, or act upon business opportunities, share information and seek potential partners for ventures.
In the second half of the twentieth century, the concept of networking was promoted to help businesspeople to build their social capital. In the US, workplace equity advocates encouraged business networking by members of marginalized groups (e.g., women, African-Americans, etc.) to identify and address the challenges barring them from professional success. Mainstream business literature subsequently adopted the terms and concepts, promoted them as pathways to success for all career climbers.
A business network is a type of business social network which is developed to help business people connect with other managers and entrepreneurs to further each other’s business interests by forming mutually beneficial business relationships. Business networking is a way of leveraging your business and personal connections to help you bring in new customers, vendors or just get great advice for running your business. There are several prominent business networking organizations that create models of networking events that, when followed, allow the business person to build new business relationships and generate business opportunities at the same time. A professional network service is an implementation of information technology in support of business networking. Chambers of Commerce and other business-oriented groups may also organize networking activities. There are multiple different types of networking groups though and the best type for each individuals varies depending on the business they are in and prospects they want to meet.
Networking works in the favour of small businesses as the owners have to dabble with a variety of job functions in a small set-up. When they meet up with like-minded people, they learn from their experiences and get guidance on important matters. They can even find partners and angel investors through a networking group of experienced business owners. A plethora of networking events take place in every country where entrepreneurs can meet, expand their affiliations, educate themselves and feel empowered. Adopting smart tactics can go a long way in securing partnerships, friendships and acquaintances.
Before online business networking, face-to-face networking was the only option for business people. This was achieved through a number of techniques such as trade show marketing and loyalty programs. Though these techniques have been proven to still be an effective source of making connections and growing a business, many companies now focus more on online marketing due to the ability to track every detail of a campaign and justify the expenditure involved in setting up one of these campaigns. “Schmoozing” or “rubbing elbows” are expressions used among business professionals for introducing and meeting one another in a business context, and establishing business rapport.
Networking can be an effective way for job-seekers to gain a competitive edge over others in the job-market. The skilled networker cultivates personal relationships with prospective employers and selection panelists, in the hope that these personal affections will influence future hiring decisions. This form of networking has raised ethical concerns. The objection is that it constitutes an attempt to corrupt formal selection processes. The networker is accused of seeking non-meritocratic advantage over other candidates; advantage that is based on personal fondness rather than on any objective appraisal of which candidate is most qualified for the position.
Many businesses use networking as a key factor in their marketing plan. It helps to develop a strong feeling of trust between those involved and play a big part in raising the profile of a company. Suppliers and businesses can be seen as networked businesses, and will tend to source the business and their suppliers through their existing relationships and those of the companies they work closely with. Networked businesses tend to be open, random, and supportive, whereas those relying on hierarchical, traditional managed approaches are closed, selective, and controlling. These phrases were first used by Thomas Power, businessman and chairman of Ecademy, an online business network, in 2009.
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Ofer Abarbanel is a 25 year securities lending broker and expert who has advised many Israeli regulators, among them the Israel Tax Authority, with respect to stock loans, repurchase agreements and credit derivatives. Founder of TBIL.co STATX Fund.