Most small-to-medium size companies (SMEs) nowadays have or need to have a Twitter account, Facebook page and a social media engagement strategy. But are these companies truly maximizing the benefits to be had by leveraging social networks? Is this engagement giving them a good return on investment? These are all important questions that I think SMEs need to think about.

When discussing the topic of SMEs and social networks, people usually focus on issues related to the fields of communication or marketing. They talk a lot about the opportunities of tapping into “the wisdom of the crowd” and the challenges SMEs can face of having to maintain a 24/7 social media engagement on shoestring budgets.

But I want to explore this topic from another angle, looking into the significant benefits that SMEs can get from building their business models around social networks.

Building relationships

In my experience as a Web 2.0 entrepreneur, social networks provide SMEs with the opportunity to get real traction and impact with customers by building on the fundamental concept behind them – trust.

I first experienced the impact of effective social network engagement when studying at London Business School where I saw how easily people with common values were able to connect and build trusted relationships. This was when the idea behind my company for short-term rental solutions was born. But compared to other ventures that at the time were exploring the market for social travel and places to stay, I decided to build my company’s business model around the dynamics of trust supported by social networks.

The concept was simple: leverage existing professional and business school networks by allowing hosts and guests to communicate with people they find trustworthy As a result, we’ve been able to expand the social travel market in Europe by 80%!

And this is only one example of how well the power of social networks can work when properly maximised. Apart from my experience, using social networks to build a business model focused on trust has proven effective for a few new ventures, including a start-up, which connects fellow business people when they are on the road and a company like Prodigy Finance, which offers a platform for finding financing opportunities for tuition fees.

Improving daily operations

Existing SMEs can also leverage social networks to improve their daily operations. Let’s take recruitment for example. SMEs’ largest resource of new employees is the founders’ and managers’ personal and business social network. However, most companies still spend time and effort on proactively going out to the wider market by posting an ad, reading submitted CVs, and interviewing all appropriate candidates that have applied for a given position.

At the end, these companies end up hiring the very first people who were recommended through the founders’ and managers’ personal and business social network. The question here then becomes – why are they wasting all their time, money and effort to advertise an available position to the wider market, instead of targeting it to people from already familiar to them social networks?

It is undeniable – the power of social networks, if harvested properly can bring great returns to SME companies. For some, like my company, social networks provide a dynamic of trust, which lies at the heart of my, as well as a number of other growing business models. For others, social networks can be helpful in streamlining business processes, and targeting initiatives to save time, money and effort.

For all, the social networks world is a yet-to-be-explored gold mine of business opportunities for growth and development.


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