Who do you know? Networks Essential to Entrepreneurial Success.

July 31, 2009 at 1:04 am Leave a comment

“Do we know any engineering managers at companies that make trailers to transport horses?” This question came up when I was trying to help a founding team that had invented a tire pressure monitor. In our attempts to identify an initial market, this application – trailers for horses that their owners love (and will spend a lot of money on) – was rising to the top of the list. We imagined that trailer manufacturers would gladly offer this as an option, it would increase gross margin per trailer and would not require any engineering change, only approval. Trailer owners would buy it because the risk of ankle injury while transporting a prize horse would be greatly reduced. We would generate some much needed cash on this small, neglected niche market.
How would we verify if our imagined market was real? By talking to a few potential customers of course. How do we find them? Hence the question.
This scenario is repeated hundreds of times by each startup team, especially in the early days when you are a complete unknown. If you are going after customer capital as your first milestone, then this is even more relevant and urgent. If the founding team does not know someone at a target customer company, perhaps they know someone who does. The more people they know in business, the better their chances of making that connection through a reference, hence the value of networks and “networking”. Of course, there is always “cold calling”.
I’m no expert on networking (see the resources section for a couple of primers) but I have 3 simple pieces of advice to would-be entrepreneurs:
  • Start early, be regular
  • Don’t be shy
  • Be helpful
If you look at advice on personal finances, one thing that you will see invariably is “start early – the power of compound interest is working for you – even if you can only save $100 each month when you have your first job, do it – *every* month”. The same goes for the network of people you know. The longer you have been consciously building your network, the larger it is likely to be. As a young engineer, I was convinced that what I knew was vastly more important than who I knew. Even if I was right, I wonder how much more I could have accomplished if I had seen the value of networks much earlier. Entrepreneur or not, your “rolodex” is a very valuable asset, grow it – deliberately. Start now.
Technical people tend to be shy. I deal with a lot of first time technical entrepreneurs. They tend to be shy too. I can relate to it personally and can tell you a couple of things that have worked for me: a) think if it as testing your ideas, not promoting yourself and b) telling strangers what you have invented or what you are doing gets easier with practice. I have found that people are actually interested in what technical entrepreneurs are doing and where they are going – we are not seen as dorks anymore! To improve your skills at talking about yourself and your startup, join a startup boot camp like the Entrepreneur Boot Camp in Ann Arbor or join a business plan competition like the Great Lakes Entrepreneur’s Quest or look for entrepreneurial networking opportunities like the New Enterprise Forum. Whenever someone asks what you do, tell them – take a couple of minutes to explain; practice; don’t be shy.
Meeting new people and exchanging cards or getting “LinkedIn” is not the end. You’ll want to keep in touch. You want people to remember you and more importantly, you want people to trust you. How do you go from stranger to trusted business contact? One obvious answer is to be helpful. Genuinely seek opportunities to help people you know. With all the social networking tools available today and even with simple unglamorous e-mail, it doesn’t take a lot of time to keep in touch with people, understand what they are doing and try to help them whenever you can, however you can. A simple introduction, a link to a helpful article, an encouraging word when the chips are down all go a long way. It’s not hard, all it takes is a commitment to look for opportunities to help and to do it regularly.
First time, young technical entrepreneurs often have more time than money. Investing your effort in networking is an effective way of turning time into money. Let me know if I can be of help to you.

Resources:
  1. Boston Globe article on Networking for Job Seekers – applies just as well to entrepreneurs.
  2. Barry Zweibel, a business coach’s primer on networking skills.
  3. Entrepreneur Boot Camp in Ann Arbor – 2 day intensive training with pre-and post-camp activities to greatly accelerate the development of your startup. Includes training on elevator pitch and other brief powerful presentations to investors and customers.
  4. Great Lakes Entrepreneur’s Quest – expert coaching on business plan, pitch, a chance to showcase your business in front of national VCs and prize money!
  5. New Enterprise Forum – monthly meetings and veteran coaches who will help you improve your presentation until you are ready to showcase your startup. Annual battle of the pitches – a funny and informative event.
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Entry filed under: new venture, raising capital, startup.

Should I try to get a customer before an investor? How do you find your first buyer?

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