Do you run a small business? What types of business networks can help you gain support?
Small businesses are hard to keep going if they don’t have enough support. Peter Diamandis and Steven Kotler’s book Bold explains how up-and-coming entrepreneurs can attract more people to their businesses by networking.
Keep reading to learn how to attract support for small businesses with closed and open networks.
1. Build Credibility With a Closed Network
Your support network will help advance your innovation from the infant stage—a good idea—into a large-scale success: a publicly-endorsed innovation that has changed the world in some way.
We’ve organized the authors’ ideas into two types of business networks. First, create a closed network of people that you have personal relationships with. These people will help you build credibility by offering the critical feedback, connections, and resources necessary for you to accomplish your micro-goals. The people in your closed network are specifically chosen by you.
After creating a closed network and accomplishing your micro-goals, create an open network of people who may not know you personally but support—often financially—your innovation. These people will help you achieve large-scale success. Unlike your closed network, any member of the public can choose to join your open network.
How to Create a Closed Network
There are two ways to build a closed network. First, you can recruit in-person members who already know you and who have seen you succeed in the past or want to see you succeed in the future. For example, you could recruit family, friends, colleagues, mentors, or past employers.
Second, you can recruit online members who will work closely with you for a small fee—this is a common strategy called crowdsourcing. The authors note that this technique is especially useful because the internet now allows the average person to hire experts to do small but extremely helpful tasks. They recommend recruiting online members through websites like Freelancer or Fiverr.
We’ll discuss the three primary ways you can use your closed network members to accomplish your micro-goals and build credibility.
Use #1: Critical Feedback
The first and easiest way to use your closed network to accomplish your micro-goals is to ask for their critical feedback—their opinions and advice. For example, imagine that one of your micro-goals is to hold a conference to discuss animal welfare. You can make a request to your closed network—in-person members, online members, or both—to review the schedule you’ve designed for the conference. Or, you can request that they review and critique your topics for discussion or add topics to the list.
Use #2: Connections
According to the authors, the second way you can use your closed network to accomplish your micro-goals is by borrowing their credibility and connections. The people in your closed network have likely built credibility in their own industries and have their own closed network that they can extend to you.
For example, members of your network might know important people who’d be interested in your animal welfare conference, such as veterinarians, animal shelter owners, welfare society presidents, farm owners, pet foster parents, and so on.
Gaining public support from these secondhand connections will boost your public credibility. Some of these connections might even decide to become a member of your closed network, extending your web of connections further.
Use #3: Resources
The third way you can use your closed network to accomplish your micro-goals is by gathering resources. The authors recommend requesting that your in-person closed network donate resources to your cause. For example, you could request your network members make donations for your conference—money, podiums, chairs, tables, food, and so on. You can also request that specific members donate specific resources—for example, if one of your network members owns a hotel, you can ask to use their conference room for the event.
Online closed members can be recruited to provide resources in exchange for a small fee. This will be especially useful to complete smaller tasks that are important but that you might not have the time or expertise to do yourself. For example, you might want to create a poster to advertise your company, but you’re not a design expert—you can hire someone to do this for you. Or, you might want to create a video introducing your innovation at your conference, but you don’t know how to edit—crowdsourcing allows you to easily find someone who does.
2. Reach Large-Scale Success With an Open Network of Investors
The second type of business network to help you boost your company’s success is an open network. Why do you need an open network to succeed? Diamandis and Kotler elaborate that a crucial step to releasing your innovation with high credibility is to capture public attention through excellent advertising and press coverage.
This will allow your innovation to reach as many people as possible and achieve true success—the ability to change the world in some way. However, the necessary publicity requires more funds than your closed network members can provide—hence the necessity of open network members who’ll invest in your cause.
When to Recruit Your Open Network
Diamandis and Kotler state that you should start recruiting open network members when you meet the following criteria:
1) You have a solid closed network of members who are willing to help you. You’ll need further support while running your campaign to recruit investors.
2) You’ve completed the majority of your micro-goals and have sufficient credibility. This credibility will be important when convincing people who don’t know you that you and your innovation are worth supporting.
3) You have a draft model of your innovation and are close to completing the final model. People need to have an idea of what exactly they’re supporting before they commit.
(Shortform note: Some experts agree that a strong team (closed network) and high credibility are necessary before seeking outside funding. However, they argue that having a prototype at this stage isn’t always necessary or possible—especially if your prototype is expensive and you need outside funds to build it. In this situation, you’ll need two additional criteria before seeking investors. First, you must be able to show investors that you have skilled team members with talent and experience in the industry (not just a supportive team). Second, you must provide an exact time frame indicating how long it’ll take for you to build a deliverable prototype.)
How to Create an Open Network
The authors explain that a proven, reliable way to gain support for small businesses is to start a fundraising campaign where each investor receives a small return for their contribution—this strategy is called reward-based crowdfunding. For example, if someone contributes $25, they’ll receive a sticker, and for $50, they’ll receive a bandana.
This technique is beneficial because it tends to attract people who are truly interested in your innovation or purpose, and offering a reward provides them with a deeper connection to your cause. As a result, these supporters are likely to be regular contributors to your cause—either through further investments, by becoming customers, or by spreading the word about your innovation and increasing its popularity. You can recruit these members by posting your campaign on crowdfunding websites such as Indiegogo or Kickstarter.
There are three main tasks for creating a successful crowdfunding campaign:
- Determine your financial goal
- Create a timetable
- Create a meaningful message