Forms of Entrepreneurial Capital

Here are the three forms of entrepreneurial capital you'll need to compete as an entrepreur:

1. Human Capital: your skills, talents, and abilities. Your ability to think, write, communicate, inspire, and listen, your personal health, your creativity, your leadership skills, trustworthiness, etc.

2. Social Capital: the number and types of people you know. The more people you know and the better your "crowd," the more social capital you have. How many people do you know? How much can you rely upon them to share with you information about opportunities in your market or to spread the word about your company.

3. Financial Capital: money or access to money. Do you have investments, savings accounts, checking accounts, CDs, money market accounts, etc. you could use to support the business and pay the lender back.

Ron Burt, Hobard W. Williams Professor of Sociology and Strategy at the University of Chicago's Booth School of Business, came up with this stuff. You can find his argument in Structural Holes; the Social Structure of Competition(Boston, MA: Harvard University Press, 1992, pp. 8-9) or read my blog posting for 7.15.2008.

You will need to assess your capital in each of these areas, then go on to look at what you will need to be fit as an entrepreneur.

My goal here is to promote skilled entrepreneurs. What do you think about this? If you have something substantive to add, post a comment.

This is some of the stuff that will go into my entrepreneurship course. The ideas in it supply the life's blood of my professional activities: teaching, writing, and real estate. For entrepreneurial real estate go to www.yourstopforrealestate.com/blog and for entrepreneurial writing to www.kearneymusicschoolmurders.blogspot/com.

Social Capital

The third form of capital, social capital, is basically who and how many people you know. According to Ron Burt:

The player (actor) has social capital: relationships with other players...friends, colleagues, and more general contacts through whom you receive opportunities to use your financial and human capitalStructural Holes; the Social Structure of Competition(Boston, MA: Harvard University Press, 1992, pp. 8-9).

Burt goes on to elaborate:

The social capital of people aggregates into the social capital of organizations. In a firm providing services--for example, advertising, brokerage, or consulting--there are people valued for their ability to deliver a quality product. Then there are the 'rainmakers,' valued for their ability to deliver clients. Those who deliver the product do the work, and the rainmakers make it possible for all to profit from the work. The former represent the financial and human capital of the firm. The latter represents it social capital. More generally, property and human assets define the firm's production capabilities. Relations within and beyond the firm are social capital.

Wikipedia, the free, on-line encyclopedia, says:

Social capital is a concept developed in sociology and also used in business, economics, organizational behaviour, political science, public health and natural resources management that refers to connections within and between social networks as well as connections among individuals. Though there are a variety of related definitions, which have been described as "something of a cure-all" for the problems of modern society, they tend to share the core idea "that social networks have value. Just as a screwdriver (physical capital) or a college education (human capital) can increase productivity (both individual and collective), so too social contacts affect the productivity of individuals and groups".

I'm going to have more say on all three of these forms of capital.

What do you think about this? How's your social capital? Are you flush with it? Post a comment.

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

Connections

For entrepreneurs, nothing is more important than their connections. Dictionary.com, the free, on-line dictionary, gives 18 definitions for connection. Among them:

The act or state of connecting; The state of being connected, as in the connection between cause and effect; Anything that connects, as in connecting part, link, bond; Association, relationship, as in the connection between crime and poverty; A circle of friends or associates or a member of such a circle; A group of persons connected as by political or religious ties; Associates, relations, acquaintances, or friends, esp. representing or having some influence or power.

Connections comprise your social capital, one of the three things the entrepreneur brings to the competitive arena. Your connections supply you with information and opportunity, potential employees or business partners, and a chance to expand your reach. The best way for an enetrepreneur to get his or her products sold is to have them recommended by someone else. That's one area that the power of social capital, or, connections, manifests itself.If you're interested in all the definitions, consult the whole article.

If what I say resonates with you post a comment.

Entrepreneurship informs everything I do. For entrepreneurial real estate, go to www.yourstopforrealestate.com/blog. For entrepreneurial writing, go to www.kearneymusicschoolmurders.blogspot.com.