Metcalfe’s law states that the economic power of a business is the square of the number in its network. Not only is this how you can gather new customers, but it also explains how wealth is created. For example, if you have a network of 4 associates, your economic power is 16. If you double your network to 8 individuals or businesses, your economic power is 64. As you can see just by this simple example, building and maintaining a network, or several networks will have a very large and positive impact on your success.
In this article, we will show you why it is so vital to create a network around you and your business, and how to do this effectively. As our opening example of Metcalfe’s law shows, just by doubling the number of people or companies with whom you share common interests, you can quadruple the effectiveness of that network. That is a very exciting concept to consider, isn’t it?
What is a network?
This is an obvious question, to be sure. In its most basic form, and for this article, a network is a group of people who are associated with one another because of a common interest or goal. They share a mutual interest or understanding as well as a mutual respect. Because of this, the network can and most often does look for ways to help everyone in the network improve their circumstances. It’s actually a very basic human desire.
Why build networks?
Aside from our economic example above, there are many good reasons to actively construct and nurture a network, or even multiple networks. For one, you will interact with like-minded people. This has the obvious benefit of providing you opportunities to sell your products and services as well as find trusted resources. Interacting with like-minded people also opens up your mind and helps generate new ideas and creates a sense of excitement in you.
By networking with others, you build a web of trust. You become a trusted member and have access to other trusted members. This gives you credibility both within the network and without. People buy and do business with those they trust.
How to build an online network
In this article, we’ll discuss the two broad areas of networking, online and offline. In today’s business world, it’s necessary to build both. In many cases, in fact, you will have little choice, as these two seemingly disparate forms of networking have become interconnected.
When it comes to online networking, the first things that come to mind are Facebook and LinkedIn. Of course, there are many other social networking websites out there such as Twitter, FourSquare, Pinterest and even YouTube. But of all of the networking websites, Facebook and LinkedIn offer the most powerful and real networking opportunities. They each provide an extensive profile creation system for businesses and the opportunity to share information and associate with groups within the social site’s framework.
Social networking online is vital, not only to your ability to associate but for search engine traffic and online marketing as well. Social networking is a very effective means for business people to share information and knowledge. Links and useful content can be passed through a virtual online network at amazing, almost instantaneous speeds. And with the power of computers, tablets and smart phones, these networks can be monitored with ease and efficiency.
As for how to build these, it’s very simple. You can upload your email contact lists and the systems will represent you with people you know and people they know. You can search for friends, family and business associates very quickly and you can always trade social media contacts with those you see in person. You’ll be amazed at how fast and how large a network can grow. Of course, this doesn’t always immediately translate into economic power. It’s the opinion of this author that Metcalfe’s law does not apply to the virtual social media networking. Does this mean it’s not worth doing? Not at all, it’s only that the multiplicative effect is much smaller. Is there an exact formula? This is hard to say. But it’s a safe bet that to get an economic power of 64, as in our opening example, it would take more than 64 Facebook friends or fans. Perhaps it would take 640. While this might sound daunting, you will be amazed at how fast you can get 640 FB or LinkedIn contacts.
How to build an offline network
This is where Metcalfe’s law really comes into play. The very best form of networking is that which is built face to face. This is where real trust, camaraderie and power is created. It’s why employees join a union or entrepreneurs join associations.
The best way to build a solid network in this fashion is to find at least one local association or local chapter of a national association that is directly related to you and what you do. A niche group is a great place to start building relationships. You may not have quite the number of sales opportunities here, but if nothing else you will build strong and lasting friendships and business relationships that will pay off one way or another.
The next step is to join a business networking mixer group. This is an organization made up of entrepreneurs and small business people from all genres of business. This is an opportunity to meet new faces and to make contacts that may become customers. Of course, everyone in these groups is trying to do the same, so be prepared to be on the receiving end of the sales pitch.
A final note on this, there are many forms of “real world” networking options. Each one will have its own dynamic and a way to profit from it. Some of the best are groups that form around a central goal. Though the members might be from diverging categories of business, they all come together for a single reason. Perhaps a seminar or educational program or to share similar experiences. These are great because they foster a greater spirit of cooperation than a simple social networking event at a restaurant, for example.
Keep in mind that these offline networking options are also great places to link together online. You make a lot of Facebook and LinkedIn friends here as well. You will also probably find a great number of people to follow on Twitter, as well as followers of your own Twitter account, if applicable.
As a final point on this topic, here is a short list of Do’s and Don’ts’s to follow when networking, both online and off:
DO – Make yourself a valuable resource. When presenting yourself online or at a meeting, do so in a casual and unassuming way. Let those around you know you have something to say and are willing to share it for their benefit.
DON’T – Be a constant sales person. If your only goal is to sell your products, services, your company or yourself you will turn people off and they will not want to associate with you. Nobody likes a pushy sales person. Even pushy sales people.
DO – Show interest in others. When talking to them, ask about them. Become interested in what they do. You’ll be amazed at what you can find out by just listening and asking strategic questions. Often people will tell you what they need and ask you to fill that need.
DON’T – Be a big mouth. Those that go to networking meetings and only want to tell you all about them are boring and annoying. Further, when interacting online, don’t just post updates about you and what you offer. Publish information that is generally interesting and useful. Its okay to self-promote, but do so about twenty or thirty percent of the time.
Although this article has only touched on this topic, you can see that by actively building a network, you can virtually ensure your own success. Entrepreneurs and small business people who have built and maintain strong and growing social and business networks will never have to worry about where the next job is coming from or if they will be able to make payroll. Aside from ensuring your economic power, networks can also buffer against economic down times.