Growing Business Relationships Grows Revenue
Creating connections that help further your company is as important as creating a product roadmap or a capital plan.
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Have you ever been in a restaurant or tavern where dollar bills are stapled to the ceiling or pinned up behind the bar? How this practice got started is anyone's guess. But whenever I see this type of display, it makes me think about the dozens and dozens of potential relationships that all those bills represent.
Relationships lead to revenue. Creating connections that help further your company is every bit as important as creating a product roadmap or a capital plan. An entrepreneur cannot have too many purposeful business relationships — with the emphasis on purposeful. Here are five suggestions for creating productive and enjoyable two-way relationships that can help your business grow. And, create some fulfilling friendships and associations along the way.
Develop a networking mindset to benefit from networked relationships
Opportunities for making connections with people occur every day. However, intentional business connections require extra focus and a mindset that leads to a plan. Winning entrepreneurs hold these beliefs:
- I need help. I don't know, nor is it possible to know, everything about building a successful business. I don't even know what I don't know. There are many people who have gone before me.
- I will never have all the resources I need — not capital, talent or even energy. I can tap into the experience of others to learn how to stretch. Entrepreneurs like to help other entrepreneurs.
- My business will grow faster with a diversified and inclusive talent strategy. I can't achieve that by talking only to people who look like me.
- Human relationships are two-way. For relationships to work, both parties will recognize benefits. Trust and integrity are paramount. Not every business association results in a friendship, but many will.
Convert connections to cooperation
Human connections come about because two human beings share something in common. It can be coincidental — standing in line in a crowded coffee shop or living on the same block. Or, from common interests — through a professional organization or graduating from the same university. The genesis could even be the infamous six degrees of separation with the family or associates of a co-worker or friend. Regardless, seeking opportunities to connect these routine dots of life into purposeful business relationships can be transformative, for a business and for an entrepreneur. Try these ideas to make connecting to others within the business ecosystem an easy and automatic aspect of your daily routine.
- Make friends with the local banker. Do business with attorneys and CPAs who specialize in serving new companies. Not only will they be tuned to your needs, they can be a pipeline of connections with like-minded business people in the community.
- Volunteer to guest speak in business school classes or to be a judge at collegiate business plan competitions. These activities help a startup establish important talent connections for internships and new hires.
- Take the lead on bridge-building conversations with people who are not technologists, engineers or scientists. People who are twenty years older or younger than you. People who are from completely different backgrounds or industries. You will learn things and open up new avenues of connections.
Related: The Things Successful Leaders Do and Don't Do to Build Relationships
Expand connections with racially and ethnically diverse communities to hire talent that helps companies out-perform their peers
Entrepreneurs who only draw on their own contacts and networks are likely to hire people who have similar experiences and who think the way they do. That is not a winning strategy. McKinsey reports that the business case for diversity and inclusion is stronger than ever. Companies that are in the top quartile of ethnic diversity are 35 percent more likely to have above average income streams. Diversified teams come about through a determined effort to seek out diverse candidates throughout the hiring process. Startups in our region share these tips:
- Reach out to local grassroot organizations and associations that have density minorities and women. Don't just attend an event or two. Make friends. Exchange business cards and follow up. Become involved.
- Attend job fairs that recruit from racially and ethnically diverse communities and historically Black colleges and universities, even if you are not hiring immediately.
- Startup studios, economic development organizations and accelerators are a nexus for the entrepreneurial community with events and services. Many serve diverse industries and broad markets, including a diverse range of entrepreneurs. By getting to know other people, you are becoming part of their networks. This two-way process may position you to advise or mentor someone else.
Make friends and gain allies in the venture community well before the company needs capital
Begin building your personal connections to capital while your business is in the concept stage. You may be surprised at how willing investors are to share what they know with hardworking innovators and entrepreneurs.
- Create a business plan that matches capital requirements with business milestones. Identify the angel investors and venture groups that invest in your industry and stages of growth. Use your network to gain introductions. Be respectful of their time. Be coachable. Ask good questions. Stay connected.
- Community leaders. Successful business people often including cashed-out entrepreneurs looking to give back are always looking for the next wave of leadership. Be part of that wave.
- Mentoring comes first; capital comes later.
Your board of directors: The ultimate intentional relationship
An engaged and connected board of directors is the best advocate any entrepreneur can have. The most effective boards are aligned with the financial and strategic goals of the company. The requirement to establish a board depends on the company's legal structure. The responsibilities of boards of directors are prescribed by law. Learn how to build a board and work with a board of directors by first creating a board of advisors.
- Early in the life of the company, assemble a small group of trusted advisors that are relevant to the business. They may be from industry, academia or exited entrepreneurs. Choose three or four trusted associates who have time to serve. I've always found that entrepreneurs who seek advice before they begin asking people to serve as advisors build better boards.
- Choose individuals who have skills and relationships different from yours. If your skill is technology, choose someone who is great in finance or marketing. Avoid family and friends. Investors will require to be given board seats — another reason it is important to create relationships with VCs before they invest.
- Be clear in your own mind and straightforward with potential advisors about your expectations. Advisory boards aren't for decoration. Create teams one member at a time. Ensure that there are no conflicts of interest.
Related: What's the Difference Between an Advisory Board and a Board of Directors
There are many opportunities to network. An entrepreneur could spend every hour of every day meeting people and making friends at the expense of market validation, lead generation or prototyping. That's not the objective. Intentional relationships are assets that don't appear on the balance sheet.
Relationship building feels natural to some entrepreneurs and less comfortable to others. Either way, the attitudes and behaviors that build strong human connections also build strong companies.
Related: The New Networking: 8 Strategies for Building Real Relationships