Mastering the Favor Economy
February 25, 2013
Mastering the Favor Economy

When people step away from a career to start a new venture, perhaps the biggest shock is learning how hard it is to get things done. You no longer have the power to compel others to join your meeting, buy your products or answer your emails. Humbled and alone, you soon understand that relying on the kindness of others is the only way to survive. Veteran entrepreneurs understand one must tap into a complex social system of trading favors.

Trading favors is one of the most important survival strategies in human history. Favors were a form of currency long before the first coin was ever minted. If your ancestor was lucky on a hunt for meat, he shared with his fellow tribesmen, knowing they would remember his gift when they were lucky next time. Some scientists believe our brains grew larger in order to  to keep track of frequent, complex trading exchanges among people.

Even while they are inventing the most breakthrough technologies, entrepreneurs must go back to these social rules to give their companies a shot at a future. Other people hold the key to information or access that could mean life or death for a new venture. With little money in the bank and the clock ticking mercilessly, the favor of an introduction to a potential investor, customer, advisor or new hire can mean everything.

Unfortunately no one teaches these soft skills in business school, and few people openly talk about their strategies for getting the returned phone call or opened door. I have learned a few lessons along nearly a decade of small business trials and tribulations, and I offer these Five Rules for the Favor Economy:

First, you must give favors to eventually receive them in return. Do not even think about starting a business unless you have spent years assisting others. By building relationships and giving proactively, you will not only be in position to ask for help later, but you will learn much through the process.

Second, there is no better time to ask for a favor than when someone has asked one of you. Be sure that the other party knows what is on your “need list” when they come calling. For example, I provided helpful advice for a friend, and at the end of the conversation I asked if he knew any good leads in my industry. A few days later he happily made a very valuable introduction. An exchange of time, advice and contacts allows both sides to win right away.

Third, make it as easy as possible for people to lift that finger of help. For example, give them a sentence or two about your company that they can copy and paste into an email. This not only takes a little pain out of the process, but it shows your friend that you are all over the details.

Fourth, realize that favor trading can run years between exchanges, so be sure to keep old bonds strong with small touches over time. We all hate it when the person we have not spoken to in ten years suddenly sends an email or LinkedIn request with a desire for help.. I like to try to grab coffee with out-of-town contacts when I travel. One friend randomly calls contacts on his commute home each day to keep in touch.

Finally, I am not a big believer in returning favors with gifts. Recently a recruiter that I assisted went out of her way to find a wine store that could send me a gift certificate as a thank you. Fine wine is always nice to sip, but I would much rather have her volunteer to connect me with one of her many Chief Marketing Officer clients. Wine is consumed and forgotten; each favor as priceless and truly improves with time.

Despite thousands of years of human history, trading favors and carefully managing your contact list does not come easy to everyone. However no one can build a business without the non-financial help of others. As long as you remember to give, as much or more than you receive, chances are that enough doors will open for you to get a fair shot at success.

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