SOCIAL NETWORKS IN STARTUP COMPANIES

There is a big issue today for the success rate Startup companies have had, and why is entrepreneurship so highly promoted if the numbers are so bad, it is said that between 3% to 5 % (Blodget, 2014) of startup companies are successful. This came into my attention and so we have imagined a good investigation if we had unlimited resources for Social Networks Analysis in startup companies. To set an example I will use a very curious entrepreneurship initiative my family had 3 years ago. My sister my aunt and my mother created a new business that provides rental services for parties, they rent everything you would need to have a great party like covers for chairs, tablecloths, Inflatable pools and figures, entertainment, fancy furniture, dishes… among other products. The idea started without any marketing whatsoever in my hometown Barranquilla Colombia; they never used any outbound marketing at all and very little inbound marketing, nevertheless they did offer their products to some clients that initially were very satisfied. The idea therefore had a 3% to 5% chance chance of being successful, but 3 months later they were having inventory issues and all types of requests that only successful companies have, those were great news for them. But how did this happen? It is very unlikely that a business strategy that does not involve long term outbound marketing, or even digital marketing will still today work as business model. Well the answer for this is basically that social networks did their job very well, word of mouth and buzz is one of the most effective marketing in business.

Without having consciousness of strategy they started selling Decorent’s products and services by finding people who were very much likely in the entertainment business or show business, without knowing for real they were creating very strong connections with well-connected people in the industry. Their first event was for a big company that was preparing a party for their employees, after that first party the company kept on calling them on and on and referring them to other companies. Afterwards, other big companies would call them to organize their events.

 

In this company 3 partners and their netowrks would join their efforts and networks to promote Decorents. It is key to understand the context of the place where Decorents was funded.

Barranquilla is the headquarter of the company, and it is located in the Atlantic coast of Colombia where the people enjoy relating to each other and where social networks are very important for business, if a sales person has no relation to top management it is very difficult to close a deal. The 3 partners of the company fortunately are well connected and they used this advantage to generate growth to their business.

Today Decorents is trying to find out why are they so successful and how did they reach it, they believe it would be very useful to know how does the connections made are making their company have such great sales. A Social Network analysis through surveys is possible to do and it would be great for the company. Actually Decorents has Facebook, and to understand a little bit better how does it work we have used the Namegenweb software to understand better how the network is working right now. Previously we got information that many of the clients were already friends in Facebook, for this small company then this network analysis is feasible. If we had enough resources we could find out why this social network is divided in two small networks, what percentage of the friends are actually clients, if this is related to the 3 cities they are attending now, why is one of the networks bigger than others, if the communications or relations in one of the cities is better than the others, and what can be done to have the same success in the headquarter’s city location than in the others.

We believe that with this information, the historical data, and a good HR agency, Decorents could hire the appropriate people for their expansion plans in Colombia. A network analysis would be one of the most important analysis we could make for hiring the new personnel. Also it would be interesting to make a company network analysis to understand how companies relate each other in each city, targeting only the key staff that Decorents could approach for offering their services.

Decorents market is actually segmented this way:

Market Segmentation	Solutions Offered	% Share
High Income Families	Parties, matrimonies, events, cocktails..etc	30%
Governmental  Institutions	HR events, corporate events, cocktails, political events	20%
Private companies	HR events, corporate events, cocktails, parties	50%

 

By doing this research we may find a magical solution to increase the success rates of Startup Businesses in the future.

 

References

Blodget, Henry. 2014. Business Insider. [Online] 2014. http://www.businessinsider.com/startup-odds-of-success-2013-5.