Entrepreneurs and politicians have something in common: A large and diverse network of contacts increases their chances of succeeding.
When Barack Obama was a graduate building up a career in Chicago in the 90s he was keenly aware of this fact. “He understands how you network,” a Chicago politician told the New Yorker in 2008. “I remember our first few meetings. He would say, ‘Do you know So-and-So?’ And I’d say yes. ‘How well do you know him? I’d really like to meet him.’ I would set up some lunches.”
Obama understood the importance of networks and built up his own meticulously. By the time he first ran for office he had ties to so many people that mattered that the local press described him as “a well-connected attorney”. The rest is history.
The same goes for any career. Here are 5 reasons why the quality of your professional network can make or break your prospects.
1. Opportunities come from sources you least expect
“The more I practice, the luckier I get,” a golfer once replied when someone remarked on how lucky he was to hit a hole-in-one. Kathryn Minshew a Y-Combinator graduate and CEO of The Muse puts it like this: Never say no to networking. Ninety-seven times out of a hundred an encounter at a networking event brings you nowhere – but meeting three important people got her a partnership with Yahoo.
2. Your network is the best way to hire – or get hired
Fred Destin, a VC at Union Square Ventures, posted recently that an entrepreneur’s and his teams’ networks are “the most obvious but also often the most fruitful source of talent.” You shouldn’t just build up your own network – encourage your colleagues to do the same.
3. Your network can help you validate your product and raise investment
The Wall Street Journal recently published a piece on the importance of the alumni networks of accelerator programs such as Y-Combinator or TechStars. Through them “entrepreneurs say they gain access to dozens or even hundreds of fellow company founders who regularly provide references to potential investors and customers, or help test and market products”. Don’t worry if you’re not an alumni – it’s only a shortcut to a destination you can reach by building up your own network.
4. Early partnerships are almost always the result of a personal recommendation or friendship
When you’re starting up and you aren’t yet an established brand, finding companies to forge partnerships with is done almost exclusively via your network.
5. Your contacts will recommend you to their own network
Inbound leads are often generated via word-of-mouth. An effective way of generating that word-of-mouth is by building up a network. If you cultivate your network by staying in touch with valuable contacts, they are more likely to remember you when someone they might send your way approaches them.
Most importantly: Keep in touch
It’s important to note that dormant contacts are not as valuable as active contacts. If someone hasn’t heard from you in a year they won’t remember to send business your way.
We feel so strongly about this that we built our own CRM app (called Five Hundred Plus) specifically to make sure the most valuable people in our networks remain strong contacts. Cultivating your contacts methodologically can bring great rewards. When someone you’ve been in touch with recently randomly meets the CEO of a Fortune 500 company, who just happens to be looking for a solution similar to the one you happen to be flogging, they’ll know where to send him: To you.
Geir Freysson is the CEO of the digital asset management service Brand Regard. When he and his co-founder realized just how important it is to maintain a strong network of contacts, they built Five Hundred Plus to help them maintain it.