SmallBizResource Blog -- Business Know-How

What's A Referral Really Worth?

Posted by Janet Attard, Courtesy of Business Know-How Thursday, Jul 16, 2009, 03:26 PM ET

Business owners often look at networking as purely a marketing activity. After all, getting out into the community or taking part in industry events helps build name recognition and contacts that can lead to new business.

But there's another side of networking, too. It can be a way to locate resources to help your business grow. Go to a business meeting and mention you are looking for a Web designer, and chances are someone will refer you to someone who designs Websites. The same is true if you need a bookkeeper, computer repair person, insurance broker, or hair dresser.

Referrals that come from someone who has actually used the service they are recommending can save you time and effort finding what you need. But, unfortunately, not all referrals are based on personal experience or have your best interests at heart. Sometimes people give referrals because they owe another company a favor, they are friends with the owner of the company they are referring, they will get a commission from the company they are referring, or they hope the company they refer will do them a favor in return.

To help weed out the good referrals from the bad, ask the referrer if he has used the products or services he is recommending. If he has, ask to hear more. For example, "What specifically did Sally do to help your business grow?" "How long did it take John to build the Website for you? And how quickly does he make a change when you need it?"

Research the business before you contact it. Look at its website. See if samples of its work are posted or case studies are available to read. Does the company look professional? Is there a contact phone number and address listed for it? If it will have access to sensitive information or your business property, are they bonded and insured?

Once you do contact the company, ask enough questions to determine if the company has the knowledge and experience to do the work you need done. Ask for references -- and be sure to check them. If possible, test the supplier or service provider with a small order or job first to be sure the work is satisfactory.

Business Know-How