- Startups may not have vast cash resources, but a strong network of business relationships can be their biggest asset.
- Business relationship types include business-to-business and business-to-consumer.
- You can build and nurture business relationships through cold calling, giving away something for free, using social media, and settling disputes quickly.
- This article is for entrepreneurs and small business owners who want to develop and benefit from strong business relationships.
It's common for business startups to be short on cash and supplies. However, their most valuable resource doesn't appear on the balance sheet: quality business relationships.
Depending on the business, a strong network may include customers, clients, suppliers, buyers, outsourced service providers, the government, media and even competitors. While the context may vary, every element in a business's network requires a foundation of amicability and trust.
We spoke with experts, entrepreneurs and small business owners on growing, nurturing and even dissolving business relationships.
Types of business relationships
The primary business relationship types we'll look at are business-to-business (B2B) and business-to-consumer (B2C).
Business-to-business (B2B)
The highest-priority B2B relationships are typically those up or down the supply chain. Operations will depend on such relationships; for example, a cosmetics company couldn't do business without upstream suppliers or downstream retailers.
Not every business has such vertical supply chains, however. Horizontal networks also provide partnership opportunities. Horizontal relationships describe connections between your business and others on the same level of the supply chain. A horizontal relationship could be a competitor or a business with similar clients; for example, a wedding photographer and a baker.
Business-to-consumer (B2C)
B2C is a commerce transaction type where businesses sell products or services to consumers. Consumer behavior is the primary driver in these relationships, and building trust with your customers is key.
"Building trust is a critical factor in fostering quality business relationships," said corporate law attorney Emily Brackstone, shareholder at Baker Donelson and vice chair of the firm's emerging companies team. "People prefer to do business with those they can trust to act in furtherance of, or at least not opposed to, their best interests. Once that trust breaks down, it can be difficult to salvage a relationship."
Other important elements of a successful B2C experience are managing customer relationships and ensuring product satisfaction. To guarantee product satisfaction, you must ensure the product or service you provide meets the standard your clients expect, Brackstone noted.
You also want to make it easy for customers or clients to get in touch with you. Being hard to contact can make people doubt your reliability and make them feel less secure about doing business with you.
Customer relationships are business relationships. When you prioritize customer needs over your sales, you develop these relationships and nurture the sales you were hoping for in the first place.
Nurturing business relationships
These are some effective ways to nurture business relationships:
- Cold calling
- Offering free samples
- Using social media
- Keeping in touch
- Building trust
- Settling disputes
Cold calling
There's no secret sauce to building quality business relationships, and while the methods may be obvious, that doesn't make them easy (ahem, cold calling).
"If I was starting a business tomorrow morning, my first port of call would be to contact everyone I know," said Simon Paine, CEO and co-founder of Pop-Up Business School. He recommends drawing up three lists – labeled "must call," "should call" and "be nice to call" – and start dialing from there.
"Some people might consider making phone calls old-fashioned, but this is where your business takes leaps forward," Paine said. "Things happen when you speak to people. Emails and social media are all too easy to ignore."
Offering free samples
Another way to build contacts from nothing is to offer free samples of your work, said Roger Wood, business development director of GSM Finance. "This can be either local people, industry-related people if you're in the B2B space, or influencers in your industry."
Social media is a tool for this strategy as a communication mode and contact source. Wood recommended joining a Facebook group for your industry. Chances are at least one in your area will already exist. However, these are not to be treated as free promotional platforms, Wood cautioned.
"The trick to making the best of these [industry groups] is to always help others more than you promote yourself," he said. "Those who promote themselves or who suck value out of the group without providing their share of input will get a bad name."
Using social media
The advice not to blatantly promote yourself also applies when you're using social media for customer service and other relationship-building efforts.
"There are common mistakes that businesses of all sizes make," Paine said. "They try and sell directly on social media and forget the social part, they don't target an audience and niche down enough – they are too broad-brush – and thirdly, they don't do it consistently." [Related: How to Find Your Business Niche]
Rather than treating social media as a passive marketing tool where ads are blasted every so often and communication is one-sided, view it as an opportunity to interact with your target base.
Customers already expect a significant engagement level from businesses. For example, they often "at" businesses on Twitter to declare appreciation or, more often than not, call them out on poor customer service.
Social media is a way to meet customers where they are rather than waiting for them to reach out through formal channels.
Keeping in touch
The more business relationships you develop, the more challenging it becomes to properly tend to everyone in your Rolodex. That's why you should make conscious efforts to keep in touch with all your business contacts. You don't have to reach out to them every day, every week or even every month. There's a much more natural way to stay in touch: social media.
When a business connection shares a post on LinkedIn, take a second out of your day to like the post. When they announce a new promotion or job, reach out to them via email to congratulate them and ask them about their new role.
Keeping in touch via social media is quick and easy, and it can lead to new business if you show interest and a will to help.
Building trust
The first time you work with a new business contact, you might not fully trust each other. That's fine, as long as you're not operating from a place of distrust. It's more important to build trust over time to prove yourself as someone reliable and capable.
The stronger the trust between you and your connections, the more likely it is that they will bring you new opportunities. They'll also be more likely to stay in touch.
Settling disputes
During business deals, it's very common for disputes to occur, as the interests of different parties sometimes conflict. When this happens, keep things professional and refrain from lashing out with emotion. Brackstone advises calm, direct communication, preferably in person.
"Getting the parties together face-to-face in a room can often go a long way toward clearing the air," she said. "People often will behave badly over email, or even over the phone, but suddenly become much more reasonable when they are sitting across the table from the person. Be strategic about who is included in the meeting, however, as including someone with bad energy or a domineering personality can set the wrong tone."
The benefits of building healthy business relationships
There are many upsides to building healthy business relationships, including gaining referrals and leveraging horizontal business networks. There's also no limit to the rewards you can reap when nurturing a long-lasting relationship.
Client discovery and referrals
"It's absolutely essential for a startup with limited time and resources to build business relationships," said Alistair Dodds, co-founder and marketing director of EIC Marketing. "They are the key to the discovery and referral business."
Referrals can happen organically when you've invested time and energy into your business relationships.
"Individuals naturally will want to expand the business they do with people they enjoy working with and, in many cases, may even create other business opportunities for those they enjoy working with," Brackstone said. "There is no better source of business than referrals from satisfied customers."
You may be surprised to learn of the advantages of building relationships with competitors as well – if not for intel purposes, then at least for quid pro quo referrals.
"I'd suggest it's better to build [referral relationships] whereby your geography or key services don't overlap," said Dodds, who maintains relationships with other digital marketing agencies worldwide. "We provide leads, intros and new business in the skill sets we know they specialize in and which we don't … they are happy to return the favor."
Maximum use of horizontal business networks
Horizontal networks provide many opportunities. When you build relationships with horizontal network businesses, you have additional chances for referrals, partnerships and support.
Wood refers to horizontal network businesses as "adjacent" businesses. "These are businesses that are not direct competitors of yours but who have a similar customer profile. One slightly left-field example could be a florist and a funeral director."
No limit on use
Unlike cash, strong business relationships are not a diminishing resource; a properly maintained network can only multiply. As long as you continue the relationship, you can potentially rely on the other person for reasonable favors when necessary.
Is it time to dissolve a business relationship?
On the other hand, not every business relationship is worth maintaining.
If it's clear that a business relationship isn't working, the individuals and companies involved should try to dissolve the affiliation without creating further damage, Brackstone said. "They should address the issue head-on, explain what is not working, and suggest a reasonable course for the parties to extract themselves from the relationship."
For the sake of your company's reputation, don't rush out of a bad client relationship without coming up with a viable compromise. Proper resolution of these issues can be the difference between one unsatisfied customer and a PR nightmare.
Max Freedman and Shimon Brathwaite contributed to the writing and reporting in this article. Source interviews were conducted for a previous version of this article.