SMEs must get better at networking, research shows
New academic research commissioned by top 20 accountancy firm Kingston Smith LLP reveals that small to medium sized enterprises (SMEs) are aware that they need to improve their networks and connections to develop their businesses and grow, but do not know how to go about it.
The report, which was undertaken by the Business Schools of the Universities of Surrey and Greenwich, analysed data gathered from a survey of over 1,000 successful SME leaders, as well as from focus groups and in-depth discussions with 25 individual owner-managers.
It reveals that, while 94% of SMEs considered direct referrals important to their continuing success, most regarded social media as “a necessary evil”. Meanwhile, although SMEs considered LinkedIn to be of equal importance to traditional networking events, and nearly 90% used networks and social media, over 35% of SMEs did not consider their use of these to be effective.
Professor David Gray of the University of Greenwich, who co-led the research, explains: “Successful SMEs are mindful of both the potential benefits, and dangers, of spending time networking on social media. While they value LinkedIn for showcasing their business and establishing their brand, they are wary of getting too sucked into discussions, losing sight of the need to find new customers. The same is true of Twitter – it can be a highly effective tool for SMEs when used in conjunction with other social media, such as the business’ website and blogs; but there is the danger that tweeting may replace genuine business activity.”
Meanwhile, the findings are clear that social media are not a substitute for face-to-face networking and events. Face-to-face networks are highly valued by SMEs, both to supplement a social media presence and in their own right. But the research shows that it is vital to be selective about these so as not to suffer from ‘event overload’. Having a clear strategy for networking events is just as important as having a marketing strategy.
Indeed, successful SMEs network with a number of different communities, integrating a combination of both offline and online methods. The challenge is how to integrate the two so that one complements the other.
Study co-director, Professor Mark Saunders of the University of Surrey, comments: “Our research shows that SMEs need to be strategic in their use of offline and online activities to maximise their effectiveness and avoid falling into the time-wasting trap. Social capital – the quality of goodwill created through these activities – provides information and influence from which SMEs can yield valuable business development opportunities.”
The report’s key recommendations are that SMEs should:
- develop a social capital strategy within their business plan
- have an effective policy for, and monitor, social capital based activities
- seek to achieve a realistic return on investment
- consider the wider benefits of social capital and maximise them.
Sir Michael Snyder, Senior Partner of Kingston Smith, comments: “In an increasingly connected world where virtual relationships are valued more highly than ever, it is essential that SMEs take a co-ordinated approach which combines traditional face-to-face networking with online tools such as social media. Devising a strategy that incorporates both online and offline activities is central to SMEs’ business development, particularly if they are to compete with their larger counterparts.”
He continues: “I hope this report will challenge SMEs to seize the opportunities these networks offer, as doing so will undoubtedly yield strong economic benefit in the future.”
A copy of the research report, containing further key findings and recommendations, can be downloaded from Kingston Smith’s website at www.ks.co.uk/smesocialcapital.