Entrepreneurship and Networking

Question: Discuss the personal contact network and entrepreneurship and role of digital technologies in personal contact network. Answer: Introduction A personal contact network is an essential tool for the entrepreneurs for starting a new business. Limited financial resources makes it difficult for the entrepreneurs to obtain whatever is required to set up a new business like, customers, equipment, employees and lab space. Therefore, personal contact network can help entrepreneurs to increase the probability of success by widening their horizon (Autio 2014). Studies have proved that networking is used excessively to support the entrepreneurs to achieve success. Developing and maintaining a proper personal contact network is very important for the development of a startup company. Entrepreneurs mainly use two types of networking which are internal networking and external networking. Internal networking is used within their enterprises. On the other hand, external networking is used to communicate with other parties (Eberhard and Craig 2013). However, having a strong personal contact network is not sufficient to develop a start-up firm unless the position of the entrepreneur within that network is strong. If an entrepreneur has a stable and strong position within that network, then he can implement it efficiently (De Hoyos 2013). On the other hand, if individuals position is not strong within the network then he will not be able to utilize the network resources properly which will affect the growth and development of start-up enterprise. Personal contact network and entrepreneurship Every successful entrepreneur carries a strong interpersonal skill that helps him or her to build a firm and diversified personal network. An entrepreneur must understand that building a company is easy but to run it successfully demands a unified effort of some people like suppliers and investors, customers, peers, public officials, media members, and competitors. Personal contact network can provide help in two ways. First, it helps an entrepreneur to access critical financial and non-financial resources for his business. Second, it allows an entrepreneur to gain information, share experiences, exchange ideas, draw common support and receive suggestions from experts. It also helps to acquire motivation which in turn helps an entrepreneur to save this venture and achieve success for it. An effective personal contact network guides an entrepreneur to respond properly to and engage with the customers, employees and suppliers who are critical parts of a startup business (Bosma 2012). Personal contact networks help an entrepreneur to increase his interactions, which in turn facilitates his ability to understand customer needs perfectly. Having an effective networking skill allows an entrepreneur to build trust and confidence among the customers of the company. An entrepreneur thus can retain his best customers by establishing an emotional bond with them and the market share. As personal contact networks help an entrepreneur to increase his social competencies, he can build a relationship full of mutual trust with the suppliers. For startup companies, it is highly important to create a good relationship with its suppliers as a good connection with them allows both parties to go beyond obligations of contracts which create a long-term relationship. Social competence also allows an entrepreneur to retrieve information from the external networks (Hayter 2013). He can understand the needs of the company and the places from where he can collect those required resources. An efficient personal contact network empowers an entrepreneur to take risks confidently and aggressively by trying something new without the fear of losses and failures. Failure is extremely painful for a company both financially and psychologically. But a strong and flexible network provides emotional support and builds confidence in an entrepreneur at a time of loss or failure. Therefore, it can be said that personal contact network helps to minimize the pain of failure and loss by providing inspiration for fresh business ideas. Personal contact network in Entrepreneurship and its role Personal contact network and entrepreneurship are intimately related to each other. While starting a new company, personal contact network can help an entrepreneur to achieve the following information. Increase range: An entrepreneur must concentrate on a vast range of networking factors as there is no small number of actions which is important enough that the entrepreneur can concentrate on to develop his startup enterprise (Bensaou et al. 2013). Increase reputation: As an entrepreneur, it is important to use personal contact network because it will create a buzz among the competing managers which will make them think that the new company has enough contacts and resources (Arregle et al. 2015). This will increase the level of reputation in the industry. Personal contact network also helps an entrepreneur to contact people outside his enterprise by attending networking events. Building foundation: A strong foundation is essential for any company that is starting fresh. Networking helps the entrepreneurs to find out right people for their organization who can help them to build a strong foundation for the company. Learning: Even for entrepreneurs, it is important to learn new things simultaneously to develop his company. Networking provides the opportunity to learn from the people outside the startup team. Learning from people outside the team helps to leverage the companys network and to increase the reputation of the company. Personal contact networks help the entrepreneurs to collect information from a wide variety of sources which can help them to test their current plans and ideas (Foley and O'Connor 2013). Networks also can help the entrepreneurs to find out proper specialists who can provide them moral support for their business. Besides, networking also serves the entrepreneurs to find out people who might have an interest in entrepreneur's welfare. The self-confidence of an entrepreneur is important to gain networking success. An entrepreneur must understand that learning from people outside his organization can correlate well with the reputation of his organization. It is obvious that an entrepreneur has limited time and money; especially in the early stages of development, it is difficult for them to access important resources. Networking helps to acquire both resources and reduction in risk via use of known contacts. It also helps to build a suitable relationship with the people outside of the organization who can assist the company to get direct access to the factors of production and the market (Omerzel and Kuce 2013). Most of all, networking can help and entrepreneur to understand under which environment they must operate and which people they must trust to defend their independence and authority. However, personal contact can hamper the growth of the business too. Building a big network is not necessary for the entrepreneurs. They must be selective about the association they form by knowing what to expect, from whom to expect and how to get it. Besides, spending too much time in networking can take precious time away from focusing on the b usiness. Therefore, it is important for the entrepreneurs to spend their time wisely. Importance of personal contact network in new ventures Business networking via personal contact network is a valuable method for entrepreneurs to expand their knowledge and learn from the success of others (Solymossy 2015). It also helps to attain new clients and tell others about the new company. The important features of personal contact network are mentioned below. Development of business through referrals: This is most important and obvious reason that entrepreneurs decide to participate in networking activities by joining networking groups. An entrepreneur can receive several high quality and pre-qualified referrals from though networking (Ciravegna 2014). By doing proper follow up, that entrepreneur can turn those referrals into clients. Therefore, it can be said that the chances are high that an entrepreneur will get higher quality leads from networking than another form if marketing. Opportunity: The numbers of opportunities a network can offer are endless. For example, proper networking can offer joint ventures, partnerships, business or asset sales and client leads. However, an entrepreneur must be careful while jumping on board with an opportunity (Ionit 2012). It is important to choose the right opportunity. Business advice: Networking allows entrepreneurs to communicate with business owners or managers from the same industry which gives them the opportunity to get advice from them on all sort of things related to his business. It also helps to obtain the very important work-life balance (Arthur et al. 2012). Networking is the only place where entrepreneurs of new startup company can get ideas and strategies they can implement to develop their company. It is impossible to get that type of high quality advice at any other places. Developing company profile: As a startup organization, it is important to get the attention of the customers and other companies to raise the company profile and reputation of the company (Strobl and Peters 2013). If an entrepreneur attains business and social events regularly, then it will help him to get his face known. Then he can build his reputation as a helpful, knowledgeable and supportive person by sharing useful information with others. Influence: It is obvious that the people around a person can create a negative or positive impact on him. While joining a networking event, an entrepreneur also stays in touch with several people. Therefore, it is important that those people are positive and uplifting who can help him to grow as a business owner. Increase in confidence: Growth of business partially depends on how an entrepreneur company communicates with other people. An entrepreneur of a startup company can face difficulties while communicating with others because of lack of confidence and experience (Aaboen et al. 2013). Networking is great for those entrepreneurs, as it will help them to grow and learn how to make conversation and lasting bonds with people they do not know. A framework to establish a personal network Environment: Belief, goodwill, endless information, timeliness of information, Normal Benefits Innovation benefits Sharing of information Finding new peers Motivation, encouragement Product and service ideas Enhancing quality Enhancing marketing properties of products Cost reduction Enhancing production process Table 1: Framework indicating key benefits of networking (Source: Author) Business planning (duration one hour): Every month, an entrepreneur presents a business plan in front of the peers which help him to stay away from daily stress and to receive feedback from those peers (Vissa 2012). Peers provide feedback based on their knowledge and experience. This process not only helps the presenting entrepreneur to but also the entire group to understand business planning and how it should be done. Learning of action (duration one hour): Members of a network are divided into two groups to discuss their common issues, concerns, and hot topics. Both the groups must have a facilitator who ensures that issues are properly identified and tackled in a confidential and friendly manner. Break (duration 15 minutes) Innovative workshop (duration one hour): In this part, important topics identified by entrepreneurs are discussed by expert practitioners and academics based on their knowledge and experience. Topics like marketing, business planning, and finance gets the priority. Conclusion (duration 15 minutes): In this section, entrepreneurs and other participants share their views on that day's workshop and decides actions for next month's networking event by choosing topics and presenters. Role of digital technologies in personal contact network Digital technologies have played a major role in personal contact network. Technologies like social networks and mobile phone have made it easy for an entrepreneur to contact family and friends easily (Turkina et al. 2013). For example, founders of BuckeFeet Raaja Nemani and Aron Firestein messaged their friends and families to buy their shoes when their company just started their venture. Another benefit of the digital network is continuous communication with customers and other important persons. For example, BucketFeet, via their online site can communicate not only with their customers but also with their designers. Customers can buy shoes from that website and can submit their designs to the company. As the company does not recruit designers in their company, and only signs a short term contract with them by buying their design for a particular shoe, it is important for them to contact and communicate with thousands of designers around the word. Now imagine, how difficult it would be if digital technologies like computers were absent in present days. Besides, BuketFeet completely depends on their online selling website to sell their shoes. It is easy for any company to establish a startup via online platforms as renting a place and decorating it to turn it into an offline shop is cost effective and time effective (Fernndez et al. 2015). Suppliers are an essential part of personal contact networks, and digital technologies have helped the entrepreneurs to keep contact with their suppliers on a regular basis. Construction and maintenance of a start-up business via personal contact network Benefits and advantages of personal contact network can help an entrepreneur to understand some important facts about his business which help him to maintain and grow his company. Suggestions and advice from other peers in a networking event can guide an entrepreneur to maintain his business using following steps, Expansion: Expanding a business is essential to maintain its growth. From a personal contact, network and entrepreneur can figure out ways to expand his business. An entrepreneur learns that he must research and map out his export journey to find out whether he and his company will be able to bear the costs or not. According to the market condition and customer demands, it is essential to decide here to expand the business (Kuratko 2016). Once decided, an entrepreneur can jump in the new market with both feet but with a target to keep them feet firm on the ground. An entrepreneur must follow his instincts while expanding his business. Establishing personal contact with alternatives, courtesy, and consistency is another lesson an entrepreneur learns from personal contact network which might help him to maintain his business. Financial support: It is not easy to find financial support for a startup business. From personal contact networks, an entrepreneur gets important advice on collecting financial support from various places. For example, an entrepreneur can ask for support from friend and family by drawing up proper documents with a set of repayment plan interests (Kelley 2012). Entrepreneurs are also advised to gain financing and microloans from SBA-backed lenders. Opening another branch: A startup company, who has done well for some time will always consider opening a new branch in the new city. However, it is hardest decision to make. Discussions with peers and experts in networking events can help an entrepreneur to understand the factors of opening a new branch. An entrepreneur must be sure that they are maintaining a consistent bottom line profit, and they have displayed a steady growth over last few years. Besides, conducting a proper market research to figure out current economic and customer trends of that new market is another essential step. It will help the entrepreneur to understand whether their stay in that market will be permanent or short. Before jumping into the new market, an entrepreneur must also develop a full business plan according to that new location. Targeting other markets: If a product attracts teens, then the entrepreneur of that company must promote their brand to college students. Another way is to take retail-oriented product or service and sell it wholesale (Santos 2012). For example, a catering organization can contact a local bakery to sell its goods at a wholesale rate. However, a price that the company will get from the bakery will be lower, but increased sale will generate consistent cash flow on which the company can bank on. Saving money The primary concern of startup companies is to save money. An entrepreneur as gets several ideas from expert managers and other entrepreneurs during a networking session n this topic. He can save money by asking suppliers if they provide any discounts for early payments. If yes, they paying their bills as early as possible will save a huge amount of money. If no, then an entrepreneur can pay their bills including utilities and taxes as late as possible (Manolova et al. 2014). The longer the money stays in their account, the larger amount of interest they will gain. Joining associations also help to save money. Many trades and business associations offer discounts on almost everything like insurance, travel, car rental, phone services and a prescription for reasonable membership fees. An entrepreneur must understand that employees are the most costly investment a company experiences. If an entrepreneur is not sure that, he can afford the costs of a huge number of full-time employees a nd deal with the problems of human resource team, and then he can remove these options or make them alternatives. In this way, he can save a lot of money. Another process to save money is to have a personal distribution chain. Relying on a third-party distribution company will not only increase cost but will also create several problems in future (Ghauri et al. 2014). Joining hands with third party logistic companies can also save cost as they will carefully handle all additional works like communication with customers, delivery of raw materials to the company, delivery of ordered goods to the customers and keeping a full record of all business interactions. Conclusion The report mainly focuses on personal contact network and its relation to the entrepreneurs. Most of the researchers and studies focus on skills and decision making abilities of entrepreneurs while neglecting the important aspect which is their ability to establish a perfect personal contact network. Especially those entrepreneurs who are leading a startup business must follow personal contact networking to gain knowledge of how they can develop their business when they have limited financial and nonfinancial resources. Personal contact networking also helps to build personal attitudes of entrepreneurs by teaching them how to communicate with the customers, suppliers and other peering members of the company. It also draws an outline for the entrepreneurs by telling them how they can spend and save their monitory resources. Therefore, it can be said that personal contact networking can help and entrepreneur and a startup business to develop and grow further to the next level. Bibliography Aaboen, L., Dubois, A. and Lind, F., 2013. 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