Business Relationships: The Key to Success for Small Business Owners
Business relationships are a huge part of success for any business — big or small. For individuals, 15 percent of professional success is tied to technical knowledge or skill. The other 85 percent is all about people skills. These numbers translate to success for businesses as well. How well you manage relationships with co-workers, clients and other businesses is directly related to your growth and profit.
If you aren’t paying attention to how important business relationships are, now is the time to start. Focus on networking and personally connecting with other enterprises and your customers to enjoy better success as a small business owner.
What Are Business Relationships?
There are several types of business relationships, from employee-employee interactions to relationships between bosses, higher-ups and subordinates, and relationships between businesses and other businesses or clients. Moreover, in an increasingly digital era, your business relationships may lead you to interact with clients overseas, managing freelancers around the nation or teleconferencing with suppliers that you rarely see in person.
All of these relationships are important, but they also all present their own challenges.
Why Are Business Relationships Important
Business relationships are inseparable from a business. As a small business owner, you know that life wouldn’t move forward without employees or clients. Loyal employees are central to steady profits and increases, and issues with retention can cost tens of thousands every year. And if you’re in the business-to-business (B2B) market or plan to cooperate with other companies in the future, you know (or will soon learn) that those relationships are key to growth and cost savings.
Types of Business Relationships
There are three main types of business relationships: B2B, business-to-consumer (B2C), and internal relationships with co-workers.
- B2B: A B2B business offers products or services directly to other businesses. For instance, a manufacturer of auto parts may sell its products directly to a company like Toyota rather than to individual drivers. Property management and housekeeping are two other examples — though a person may provide these services to individual clients, some companies focus only on cleaning hotel rooms or managing commercial properties.
- B2C: A B2C business offers products or services directly to customers. Retailers such as Nike and most restaurants are B2C companies. The modern age has made it especially easy for B2C e-commerce companies to deal with individual shoppers directly.
- Internal relationships: All professionals in every company have a relationship with the business owner and with their co-workers. If you’ve ever heard of “the corporate ladder,” you know people skills and networking are vital even inside a business. And even for small business owners, you’ll need to check that your employees are happy and that they have a clear line of communication right to you.
Keys to Good Business Relationships
According to Gallup research, the keys to good B2B business relationships are communication between each company’s senior leaders, a willingness to take chances, transparency, long-term thinking and articulating your shared goals and expectations. Indeed, many of the articles you’ll read about the keys to business relationships revolve around these points. In addition to these tips, aim to solve problems creatively and invest some face-to-face time in order to build your relationships.
Establish Relationships Between Business Leaders
The good news is that as a small business owner, you’re in a unique position to connect with the senior leaders in any companies that you interact with — especially if those establishments are also local and roughly the same size as yours. But even if you have employees who handle B2B interactions with other companies, make the effort to connect with the leaders on the other end. This is critical to all the other tips that this list covers.
Especially in the B2B space, you’ll do lots of negotiating with other businesses. But, this is a pivotal part of relationships in general, so lean into it! Be open about your expectations and what you want out of the relationship and come prepared with a list of your wants and needs — things you can budge on and things you can’t. Don’t be afraid to sacrifice a few “wants,” especially if it means starting a relationship off on the right foot.
Also, remember that both sides are taking risks. Be honest about what you can and can’t do, and be prepared to adjust to unforeseen circumstances on either end to keep the relationship strong.
Be Open and Honest
There’s lots of nuance to negotiating, but always be open and honest. Dishonesty or even deceit will sour your relationship, and it could even seep into your business reputation and affect other opportunities in the future. It’s always better to walk away from a deal than to fudge the truth.
Focus on the Long-Term
You can forge a new business relationship in a few days, but strengthening that relationship, learning to trust one another completely, and even proactively looking after one another’s best interests will take time.
If this is the kind of relationship that you want with clients or business owners, give it time. If your numbers for one quarter are low or a business or supplier lets you down in some way, think carefully about whether it’s better to cut ties and find another partnership or to stick with it and continue building your relationship.
Articulate Your Shared Goals and Expectations
Writing down your wants and needs before meeting with another business is important. But you should also record, in writing, what you hope to accomplish together. Know that your goals, their goals, and your shared goals will overlap and exist independently. And remember that if a long-term relationship is your plan, you may need to sacrifice some of your personal objectives to invest in your shared goals.
Also, make sure everyone on your team is aware of your own goals as well as the goals you’re working toward with your business partner. This will keep everyone on the same page.
Every enterprise faces problems from time to time, but when you’re working on building relationships with another business or with customers, it can be challenging to proceed in a way that continues to nurture these bonds. Be creative with your problem-solving and know when to compromise. If a client is unjustly mad at an employee, for example, you may need to drop the client so that you can preserve your internal relationships.
Schedule Some Face-to-Face Time
It’s easy to get wrapped up in emails and social media, and this is exactly why face-to-face time is invaluable in the modern world. Making time to meet with clients, co-workers and other business owners in person can lead to stronger relationships, better communication and a slew of other benefits. If you can’t meet in person, schedule a video conference to take advantage of these magic effects of face-to-face interactions.
Continue to Build Your Business Relationships
Knowing the importance of good relationships is a wonderful place to start. Now it’s time to invest in solid partnerships that will run the course of your business. A few tips are to know the difference between networking and relationship building, to be consistent in how your company interacts with other business and individuals, and to focus on a few excellent relationships rather than many subpar ones.
Know the Difference Between Networking and Relationship Building
If you attend a business conference and hand out 100 business cards, what have you accomplished? The modern equivalent of this problem is to look at how many followers you have on Twitter or how many connections you have on LinkedIn. Sure, those numbers might mean something depending on your industry, but they might not count for much in terms of tangible business relationships and measurable results.
Don’t just connect with people on social media. If you’re going to reach out to individuals on those platforms, follow up and engage with them. And if you’re attending an event, focus on meeting people and having conversations — authentic discussions — rather than on “networking” or purely making connections. Though social media and networking is imperative, you’ll only get value out of these resources if you use them correctly and remember that you’re dealing with people.
Note that you have special social networking power as a small business owner. One of the advantages to running a local business is that clients can interact with you directly or reach out to you on your official accounts if they have questions or problems. Don’t let those queries go unanswered. Responding quickly, helpfully and personally can seriously elevate your B2B and B2C relationships.
You know that keeping your brand identity consistent is incredibly important. If customers have the same positive experience whenever and wherever they encounter your company, it proves you’re professional and authentic and builds trust. Customers will know exactly what they’ll get when they interact with you. And they’ll know how to deal with your business to get whatever product or service they’re after.
The importance of consistency extends to your professional interactions with other businesses as well.
Maintain Consistency With Other Businesses
Make sure everyone who interacts with your business relations knows how they should behave. You may create individual “style guides,” for example, to ensure that the products or services you deliver to a certain client or business meet their specific needs.
Maintain Consistency With Your Customers
All of your employees should provide the same positive experience for every customer you have. This is obvious in a retail space — workers are trained closely about the importance of things like greeting customers when they walk in, offering discounts and making sure they’re finding everything they need. If your business follows a B2C model, treat interactions with customers with just as much attention to detail.
Whether you have a physical or digital storefront, make it easy for customers to find what they need. Then follow up via email a day or two after providing a service to make sure the customer is happy with everything. You may also consider sending infrequent emails about discounts or special offers in the future. If you think this might be a viable strategy, make these interactions personal. Otherwise, your correspondence will likely be ignored.
Maintain Consistency With Your Employees
Don’t neglect the vital relationship that you have with your employees. Keep them in the loop regarding your business relationships as much as possible, and make yourself visible. Employees should have no hesitation in approaching you if they have a question or concern.
The Benefits and Realities of Business Relationships
When business relationships work out, the benefits are amazing. You can tap into new resources, enter a new market and streamline many aspects of running a business with trusted partners at your side. But not all relationships work out. There is some risk involved in forming a fresh partnership, but there is also the promise of growth and cost savings if you can build healthy relationships.
For example, if you invest in building a healthy business relationship with suppliers and things work out, you can count on consistent, high-quality service and timeliness — after all, they’ll want to keep doing business with you as well. A good supplier can also keep you connected to market trends and let you know if any competitors are offering better prices or new innovations. A supplier you’ve worked with for years may even proactively offer you discounts to keep the agreement healthy.
However, a relationship with a supplier may not work out. Poor quality or blown turnaround times can be very damaging to your company, and in many cases, it’s not worth continuing the relationship. Know the value of forgiveness and the importance of long-term cooperation, but also know when you could do better by finding a new partner.
Small Business Mentorship
Ever since Socrates mentored Plato in the academy at Athens, and likely for centuries long before that famed relationship, intellectual and business leaders have been mentoring each other. Although these relationships have their roots in ancient times and beyond, their relevance continues through today and, as a fledgling entrepreneur, you can gain a lot from a mentoring relationship. Here are seven benefits to having a small business mentor.
The traditional mentor-mentee relationship consists of someone who has already made a splash in business helping someone who is just getting started. Mentors are experts in their fields, leaders in their communities or, in some cases, just general business gurus. Regardless of the category into which your mentor falls, he or she is poised to give you expert advice.
Better than the advice you’re likely to get from friends or family, their advice is objective, well-seasoned and based on tried-and-tested business methodologies and practices. A mentor is someone you can consult anytime you have a question on anything from funding to marketing to hiring your first employee.
When you look at a business problem, it’s easy to get bogged down in the personal, distracted by emotions or clouded with fear. However, when you take the same problem apart with a mentor by your side, you’re likely to come up with new ideas and innovative solutions. Mentors expand your viewpoint, helping you to see multiple perspectives on problems, and that can help guide you toward a long-standing solution that ultimately encourages your business to grow and succeed.
Part of the success of your business depends on strong, productive relationships with other businesses and consumers in your community, and in that regard, mentors help by introducing you to their network of contacts and associates. To facilitate that, the majority of mentorship programs are run through local organizations.
For example, SCORE is a non-profit association devoted to helping small businesses emerge, survive and thrive. The organization has over 11,000 volunteer mentors spread throughout 320 local chapters and across 62 different industries. Fintech lenders like Kabbage partner with SCORE to provide their clients the educational tools and connections they need to thrive, as well as the capital they need to move forward.
Because of that, many people pursue mentorship relationships almost exclusively for the networking opportunities. If you’re looking for a vendor, an investor or a supplier, your mentor may know exactly who to call, and because of their importance in the business world, their call is likely to get returned. On your own, you may not be able to get as far.
Whether you are developing a network of professionals, leveraging the unique perspective of your mentor or using your mentor’s advice to find success, you are likely to find that all of those elements have a direct impact on your bottom line. Unfortunately, it’s impossible to quantify the long term profits created by mentor-mentee relationships, as these relationships are older than trade and commerce, but in 2012, one survey of business owners who used a mentoring service revealed that mentoring had a direct effect on the bottom line.
In particular, those who received mentoring reported their business revenue increased by 106% or $47,000. In contrast, those who did not receive mentoring only reported a 14% or $6,6000 average revenue increase over the same time period. In other words, the mentored business owners saw a seven to eight-fold increase in revenue compared to those who were not mentored.
While a boost in revenue is always amazing, it is surprisingly not the biggest benefit of having a mentor. In fact, an increase in revenue brings a bevy of questions and concerns along with it. For example, you may wonder if the revenue has increased enough to warrant hiring more people, whether or not you need to refine your supply chain, or if you should tweak your marketing, rent more warehouse space or address other concerns. Answering questions like these relies on a certain level of business experience and acumen, and a mentor can help you hone those skills until you’re ready to deal with questions like those on your own.
When you are starting or in the midst of running a business, you have to deal with countless questions, and you often have to just dig in and trust your gut. A mentor can encourage this process. They can act as the champion you need in your corner, and that can be an invaluable contribution on your journey to success.
Finally, one of the biggest benefits of a mentor relationship is that it’s completely free and risk-free. You’re not paying for a class, buying a book, signing up for a seminar or spending money on a consultant. Rather, you are identifying yourself as a business beginner who is curious and interested in learning from those who have gone before you
If you need help with finding the capital to invest in a new partnership or transition to a new supplier, look into an online lender. Small business loans and similar resources are available at very competitive rates, and they can help you build a strong foundation to meet shared goals with a new business partner, pivot to enter a new market or attract new customers, or simply stay competitive and do what you do best.