Networking Effects on Your Net Worth
This may bring you joy and has the potential to grow your financial future.
Last week, I had the opportunity to connect with Latino leaders at AT&T as part of their Latino Collective. It was an honor to support the collective while I was at AT&T. You can read about some of the achievements from the first three years of the collective at the AT&T Newsroom.
Our session was a short, 30-minute fireside chat, which I loved. Keeping things brief and actionable is something that everyone can appreciate. Although the topic wasn’t about professional networks, that’s where the conversation went. I made two comments related to your network being part of your net worth and how every business is a relationship business.
Industries and businesses that can directly impact your net worth.
It’s often said that business is a relationship business, and I believe that trust is the currency of all business transactions, making most industries relationship based. Here are some professional industries where your network can directly impact your net worth:
Business and Entrepreneurship: Having a solid network of contacts and relationships can lead to new business opportunities, partnerships, and investments. With many baby boomers retiring and either selling their businesses or looking for strategic partnerships, this could be a great opportunity for those highly connected.
Venture Capital and Private Equity: Access to a vast network of potential investments and high-net-worth individuals can provide a source of deal flow, funding, and strategic support for startups and businesses. As of December 2022, there is over $2T in dry powder ready to invest. Access to the best businesses and participation in this financial resource is closely tied to relationships.
Real Estate: An extensive network of contacts in the industry can help successful agents and brokers find potential clients, gain access to exclusive listings and off-market opportunities, and close more deals. Building solid relationships with clients, property owners, and other real estate professionals is essential for success in this field. Your peer’s network can become your network if you treat it ever so preciously.
Sales and Marketing: A strong network of contacts in the industry can provide new business opportunities, help a salesperson or marketer reach their target audience, discover new business models, and find new markets for their product or service. Sales and marketing professionals are often very creative and create new sales tactics based on their observations in the field. Their proximity to the market is highly valuable.
Consulting: A large network of contacts can help a consultant or professional service provider find new clients, secure new business opportunities, and connect with other professionals to expand their commercial opportunities while improving client retention. People get paid to refer and are often called Power Brokers. How much depends on the influential nature of your relationship. The higher the leadership chain, the more valuable the referral.
Professional Services: Building and maintaining solid relationships with clients and other professionals is vital for success in the legal and financial services industries. I look for partners with a 20-year time horizon in mind, intending to grow together for the next two or three decades.
Hospitality: This industry is built on strong relationships between guests and staff, as well as with suppliers, vendors, third-party property management companies, real estate professionals, investors, and private equity.
Public Relations and Advertising: Strong relationships with clients, media contacts, and other industry professionals are critical in the public relations and advertising businesses, providing essential and integrated services such as talent, technicians, producers, etc. Storytelling is part of the new economy.
Public Policy Officials: Politicians often need to build and maintain strong relationships with voters, constituents, stakeholders, and other politicians to advance their public policy platform and agenda. Results take years to achieve, so patience in building relationships and achieving results should be kept in mind.
Are there any industries or businesses not based on strong relationships?
I would contend that all businesses rely on relationships or relationship skills to some extent. Let’s take online retail as an example, which is often thought of as a transactional and commodity business. What are the properties of solid relationships and financial sustainability in this industry?
Some may argue that many online retail businesses don’t depend on strong relationships and can be run with a focus on technology, automation, and efficient operations. However, contrary to popular belief, successful online retail businesses are not transactional. Several factors contribute to a company’s success, including:
Strong customer service is crucial to building customer trust and loyalty. Be there for your customers. Email customer support with long delays is the antithesis of this.
Effective branding and marketing efforts in partnership with agencies, talent, and partners are essential to stand out in a crowded market.
Logistics and supply chain management require a team approach with suppliers, manufacturers, and distributors. COVID illustrated the vulnerabilities of our supply chains.
Providing a seamless and user-friendly experience for customers, which requires strong relationships with technology partners and UX employees, and focus groups. For example, Amazon’s one-click solution was a game changer for the customer experience.
Where do you start?
If you’re looking to build your net worth, start by understanding that it depends on your relationships. Financial success relies on trust, which begins with healthy and honest relationships. Here are some critical elements of building and maintaining strong personal relationships that can easily translate to business relationships:
Trust: having trust and faith in each other is essential. This applies to all stakeholders, including vendors, clients, partners, employees, and shareholders.
Communication: clear and effective communication is critical to ensure everyone is on the same page and that expectations are aligned. Open and honest communication when things don’t go as planned is essential for resolving conflicts and understanding each other’s perspectives and needs.
Empathy: understanding each other’s goals and values is vital for maintaining a long and meaningful relationship.
Shared Interests: having common interests, shared values, and mutual benefits can help strengthen a relationship. Shared goals and a common understanding of what each party hopes to achieve from the relationship are essential for success.
Reliability, Consistency, and Support: meeting commitments and delivering on promises are critical for building a successful relationship. Providing support and being there for each other through good times and bad is essential to a strong relationship.
Building and cultivating relationships takes time, so give yourself years to see results. If you are one of those super souls, it may not take as long as the attraction to those who serve others and are selfless is quite strong. Just ensure alignment with your values and goals as well as expect and require open and honest communication. Transparency is crucial for a successful relationship. If things get out of balance, take a pause and seriously evaluate. If things don’t improve, you know what to do.
In Closing
As part of the personal power model framework I developed, I see leaders needing more time and attention to build relationship strength. What action steps can you take to change the degree of your relationship strength?
Consider making a new year’s resolution to expand your network this year by joining an association whose mission aligns with your interests. Who knows? This might bring you joy and has the potential to grow your net worth.