{"id":90070,"date":"2023-02-01T11:40:00","date_gmt":"2023-02-01T15:40:00","guid":{"rendered":"https:\/\/www.shortform.com\/blog\/?p=90070"},"modified":"2023-02-02T13:35:01","modified_gmt":"2023-02-02T17:35:01","slug":"types-of-business-networks","status":"publish","type":"post","link":"https:\/\/www.shortform.com\/blog\/types-of-business-networks\/","title":{"rendered":"The 2 Types of Business Networks Essential for Startups"},"content":{"rendered":"\n

Do you run a small business? What types of business networks can help you gain support?<\/p>\n\n\n\n

Small businesses are hard to keep going if they don’t have enough support. Peter Diamandis and Steven Kotler’s book Bold<\/em> explains how up-and-coming entrepreneurs can attract more people to their businesses by networking.<\/p>\n\n\n\n

Keep reading to learn how to attract support for small businesses with closed and open networks.<\/p>\n\n\n\n\n\n\n\n

1. Build Credibility With a Closed Network<\/strong><\/h2>\n\n\n\n

Your support network will help<\/strong> advance your innovation from the infant stage\u2014a good idea\u2014into a large-scale success<\/strong>: a publicly-endorsed innovation that has changed the world in some way. <\/strong><\/p>\n\n\n\n

We\u2019ve organized the authors\u2019 ideas into two types of business networks. First, create a closed network<\/em><\/strong> of people that you have personal relationships with. These people will help you build credibility<\/a> 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.<\/p>\n\n\n\n

After creating a closed network and accomplishing your micro-goals, create an open<\/em> network<\/em><\/strong> of people who may not know you personally but support\u2014often financially\u2014your 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.<\/p>\n\n\n\n

How to Create a Closed Network<\/strong><\/h3>\n\n\n\n

There are two ways to build a closed network. First,<\/strong> you can recruit in-person members who already know you <\/strong>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.<\/p>\n\n\n\n

Second, you can recruit online members who will work closely with you for a small fee<\/strong>\u2014this is a common strategy called crowdsourcing<\/em>. 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<\/a> or Fiverr<\/a>. <\/p>\n\n\n\n

We’ll discuss the three primary ways you can use your closed network members to accomplish your micro-goals and build credibility.<\/p>\n\n\n\n

Use #1: Critical Feedback<\/h4>\n\n\n\n

The first and easiest way to use your closed network to accomplish your micro-goals is to ask for their critical feedback\u2014their opinions and advice<\/strong>. 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\u2014in-person members, online members, or both\u2014to review the schedule you\u2019ve designed for the conference. Or, you can request that they review and critique your topics for discussion or add topics to the list.<\/p>\n\n\n\n

Use #2: Connections<\/h4>\n\n\n\n

According to the authors, the second way<\/a> you can use your closed network to accomplish your micro-goals is by borrowing their credibility and connections. <\/strong>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. <\/p>\n\n\n\n

For example, members of your network might know important people who\u2019d be interested in your animal welfare conference, such as veterinarians, animal shelter owners, welfare society presidents, farm owners, pet foster parents, and so on. <\/p>\n\n\n\n

Gaining public support from these secondhand connections will boost your public credibility.<\/strong> Some of these connections might even decide to become a member of your<\/em> closed network, extending your web of connections further.<\/em><\/p>\n\n\n\n

Use #3: Resources<\/h4>\n\n\n\n

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<\/em> closed network donate<\/em> resources to your cause.<\/strong> For example, you could request your network members make donations for your conference\u2014money, podiums, chairs, tables, food, and so on. You can also request that specific members donate specific resources\u2014for example, if one of your network members owns a hotel, you can ask to use their conference room for the event. <\/p>\n\n\n\n

Online<\/em> closed members can be recruited to provide resources in exchange for a small fee. <\/strong>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\u2019re not a design expert\u2014you 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\u2019t know how to edit\u2014crowdsourcing allows you to easily find someone who does.<\/p>\n\n\n\n

2. Reach Large-Scale Success With an Open Network of Investor<\/strong>s<\/h2>\n\n\n\n

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. <\/p>\n\n\n\n

This will allow your innovation to reach as many people as possible and achieve true success\u2014the ability to change the world<\/a> in some way. However, the necessary publicity requires more funds than your closed network members can provide\u2014hence the necessity of open network members who\u2019ll invest in your cause.<\/p>\n\n\n\n

When to Recruit Your Open Network<\/strong><\/h3>\n\n\n\n

Diamandis and Kotler state that you should start recruiting open network members when you meet the following criteria: <\/p>\n\n\n\n

1) You have a solid closed network of members who are willing to help you.<\/strong> You\u2019ll need further support while running your campaign to recruit investors. <\/p>\n\n\n\n

2) You\u2019ve completed the majority of your micro-goals and have sufficient credibility.<\/strong> This credibility will be important when convincing people who don\u2019t know you that you and your innovation are worth supporting. <\/p>\n\n\n\n

3) You have a draft model of your innovation and are close to completing the final model.<\/strong> People need to have an idea of what exactly they\u2019re supporting before they commit. <\/p>\n\n\n\n

(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\u2019t always necessary or possible<\/a>\u2014especially if your prototype is expensive and you need outside funds to build it. In this situation, you\u2019ll need two additional criteria before seeking investors. First, you must be able to show investors that you have skilled<\/em> team members with talent and experience in the industry (not just a supportive<\/em> team). Second, you must provide an exact time frame indicating how long it\u2019ll take for you to build a deliverable prototype.)<\/p>\n\n\n\n

How to Create an Open Networ<\/strong>k<\/h3>\n\n\n\n

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<\/strong>\u2014this strategy is called reward-based crowdfunding. For example, if someone contributes $25, they\u2019ll receive a sticker, and for $50, they\u2019ll receive a bandana. <\/p>\n\n\n\n

This technique is beneficial because it tends to attract people who are truly interested in your innovation or purpose,<\/em> 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\u2014either 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<\/a> or Kickstarter<\/a>. <\/p>\n\n\n\n

There are three main tasks for creating a successful crowdfunding campaign<\/a>:<\/p>\n\n\n\n

  1. Determine your financial goal<\/li>
  2. Create a timetable<\/li>
  3. Create a meaningful message<\/li><\/ol>\n","protected":false},"excerpt":{"rendered":"

    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.<\/p>\n","protected":false},"author":14,"featured_media":12100,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[45,79],"tags":[879],"class_list":["post-90070","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","category-entrepreneurship","tag-bold","","tg-column-two"],"yoast_head":"\nThe 2 Types of Business Networks Essential for Startups - Shortform Books<\/title>\n<meta name=\"description\" content=\"Running a business takes time, but it means nothing without support. 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