I was in a meeting where one seasoned entrepreneur boasted of how he started a multi-million shilling business from scratch with little capital.
However, on analysing his story, we realised that he had several privileges and factors that helped him that cannot be ignored in the entire narrative. In other words, he had other forms of ‘capital’, only that they were not financial in nature.
Quite frankly, whenever the word capital is mentioned, what comes to mind for most people is money. However, in reality, money is just one form of capital and though a key one, it is not solely sufficient to make one succeed in business.
Two other important forms of capital that are often overlooked are mental capital and relationship capital.
Mental capital basically includes what you know and can do. Your knowledge, competencies, education, experience and insights are key assets that can form core business capital.
Most employed and educated people have this form of capital in abundance but often keep looking for money capital instead of using it. For example, instead of seeking employment, you can propose solutions and partnerships with business people who lack the kind of knowledge and skills you have to solve their business problems.
Some of the ways you can increase mental capital include reading, traveling to gain exposure, and interacting with other experts in the industry.
Relationship capital basically refers to the people you know and have a connection of material value.
These are the people who can give you advice, guidance or mentorship. Many may not give you money or any noticeable knowledge that you can apply in your entrepreneurial endeavours, but can connect you to people in their network who can be of use either as financiers, customers or partners.
You increase your relationship capital by choosing your friends well and being ready to help others. When you positively impact on people’s lives, they become your friends and open the door to their other friends.
Financial capital which is known to all of us is the money which you either own or have access to for the purpose of starting or growing your business.
In most cases if you have mental and relationship capital, accessing financial capital will be a walk in the park. If you use your mental capital well, you can create value and positively impact on people and by so doing build relationship capital.
To an extent, lack of financial capital is an indicator that your mental and relationship capital is wanting. Instead of focusing so much on how to get money, focus on acquiring the first two and money will start flowing in.
In other words, the surest way of getting more money is to have more mental and relationship capital.
For instance, a sales person — and all entrepreneurs are — can increase their income by increasing their knowledge and skills in their area of specialisation as well as building relationships with people who can buy their products or recommend them to their networks.
This article was first published in The Business Daily on September 17, 2019.