Imagine, for a moment, attempting to start a business without the help of a single person. Now lets take this a step further and say that you cannot enlist the help of anyone besides yourself for the rest of the life of the business – no suppliers, no employees, no investors, nothing. Having such a stipulation would quite clearly make starting, operating, and growing a business completely impossible: it takes a variety of people to run any business. Although the scenario you just imagined is extreme, it highlights the importance of people and all of the unique value that each individual brings to a venture. This building and maintaining of networks, connections, and relationships with people is called social capital – and it is a vital resource to the entrepreneur who understands how many different individuals it takes to launch and grow a business. Furthermore, social capital allows the formation and growth of a second much-needed kind of capital, namely, financial capital. In the rest of this article, we will more closely examine the importance of both social and financial capital to the entrepreneur and how it impacts their success.
“Social capital is the durable network of social and professional relationships through which founders can identify and access resources” says Noam Wasserman in his book, The Founder’s Dilemma. But now that we know what social capital is, and its importance to entrepreneurs, how can we make increasing our “balance” this resource a daily habit? The Forbes article, 4 Reasons Social Capital Trumps All by Chris Cancialosi recommends “offering advice or resources to others without expecting an immediate benefit.” He goes on to state that this is a prime way of establishing yourself as a trusted individual and a knowledgeable expert. Once these characteristics have been established in the minds of others, you will be able to more easily count on their time or resources in the event that you need their assistance.
One of the results of social capital, as alluded to in the first paragraph, is the possibility of subsequent gain in financial capital. The importance of financial capital when founding a business goes without saying, and can be the difference between actually materializing an idea or driving a startup into bankruptcy. Although raising money for a business can come in several different forms an from countless kinds of people, it is important to remember that in order to negotiate any kind of agreement or deal a relationship (of at least some degree) must first be established. As a result, it really is more important for an entrepreneur to focus his or her efforts on building relationship with others – you never know who you’ll need to count on one day. And remember, it is always wise to think of the accumulation of social capital as a long-term goal. Although you may not need the services of a person today, it is possible that you will many months or even years into the future.
In the end, helping others while expecting nothing in return will grow trust and respect and help us achieve our entrepreneurial goals while first helping others to achieve their dreams. Business really can be a beautiful thing, don’t you agree?
Cancialosi, Chris (2014). 4 Reasons Social Capital Trumps All. Forbes.com. Retrieved from http://www.forbes.com/sites/chriscancialosi/2014/09/22/4-reasons-social-capital-trumps-all/#4ef9760a7b24
Wasserman, Noam (2012). The Founder’s Dilemmas. Princeton, NJ: Princeton University Press