Financial Capital

Financial capital is money or access to money. Wikipedia, the free, on-line encyclopedia, says:

Financial capital can refer to money used by entrepreneurs and businesses to buy what they need to make their products or provide their services or to that sector of the economy based on its operation, i.e. retail, corporate, and investment banking.

The Wikipedia goes on to talk about different kinds of capital.

Basically, you have two sources of money: you, and someone else. I call money from other people, OPM (other people's money). If you can finance your venture with OPM while putting very little of your own money in there, that's the best thing. If you have money yourself or are about to get a big inheritance, that's from you. That's the best kind.

Business failure is most often attributed to undercapitalization. That's the most common noted reason, but it may not be the most important reason. It may be a proxy for any number of other things. The entrepreneur's health, for example. Maybe he or she had a bout with cancer and had to entrust his business to a subordinate who ran it into the ground. So this would be lack of human capital which led to the death of the company.

Generally we think of undercapitalization as not enough financial capital relative to the amount needed to fund the venture adequately. However, that lack of funds may simply mask a deeper problem. It could have not enough human or social capital.

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Entrepreneurship informs all of my professional activities. For entrepreneurial real estate, go to www.yourstopforrealestate.com./blog and for entrepreneurial writing, go to www.kearneymusicschoolmurders.blogspot.com