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Young: Networking can boost your success
I thought I would broaden the perspective this week about entrepreneurship with an element that relates to one of the important features of behaving in an entrepreneurial fashion—networking.
There appears a revolution of sorts occurring in Europe, Canada and the U.S. That revolution is the formation of “ business networks.”
Is this something that is intellectually original, a new phenomena? No, it is not. Networking has been a conventional business practice in a variety of fashion for many years.
What are business networks? Essentially, they are informal groupings of successful or about to become successful small and medium sized enterprises which come together to form a critical mass in order to compete in a more diversified fashion in the market place.
The management text on our wall tells us that it is similar to a “virtual corporation.”
This critical mass allows enterprises to achieve the ever popular and critical competitive advantage that we love to talk and read about while contemplating our next entrepreneurial milestone.
Such competitive advantages may relate to the following examples:
• Scale—to share complementarities and resources, reduce costs
• Scope—to identify and capitalize on the new market opportunities that may occur and;
• Speed—recognizing that time is an essential factor in being competitive at any level of market entry.
Interestingly, small and medium enterprises can form any type of business network that would assist them to become more competitive and enhance their opportunity for market growth.
In practice, and I do believe strongly, that all of us, regardless of size, can learn and acquire new skills from this description, there are three general categories of networks:
• Horizontal. They are usually in the same industry sector e.g. agri-food, forestry and at the same stage of development within a relatively same geographic proximity
• Vertical. That is where the small- and medium-sized enterprises are suppliers to larger, final-product manufacturers i.e. where the larger source from the smaller enterprises
• Cross-sectoral. That is where un-related small and medium enterprises work as partners with other firms from different sectors often highly productive in innovation and new product development.
These business network configurations enable member firms to co-operate and collaborate in order to leverage the marketplace to better advantage, to grow, to export, to reinvest, to diversify, thus, becoming engines of growth and contributing substantially to building a new economic base for a region - such as the Okanagan.
The process, quite frankly, dear readers, of forming business networks is quite simple in conceptual design.
The first stage involves getting prospective membership together to explore the feasibility of doing a singular project together, such as joint marketing, joint or group procurement, or even forming an export market consortium which would be an interesting venue for many of our smaller wineries in the Okanagan.
The second stage requires the preparation of a business plan putting it all together with the third stage being the actual implementation of the plan itself.
Business networks constantly go through this cycle, refocusing and re-combining with new partnerships to leverage the marketplace.
Several years ago, I had the opportunity to lead the formation of training for 20 business network brokers in Saskatchewan that provided a forum for prompting the creation of many business networks in several sectoral areas.
I think, through the Okanagan Valley Entrepreneurs Society, we could establish that assistance to industry sectors here, as well, and I will plan to present my recommendation to the board of the society later this week.