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Five (5) Important Types of Capital That You Must Have As an Entrepreneur

Munyaradzi Chikomba

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Munyaradzi Chikomba

Munyaradzi Chikomba, 27/03/2021

Many people across the world definitely want to venture into business but the biggest challenge which is stopping them from starting their own enterprises is lack of capital.

It is because that reason that I want to highlight that Start-up Capital does not only mean liquid capital or money.

Yes indeed, you may not possess cash at the moment and yet you may have the following forms of capital which you can actually use to advance your entrepreneurial ambitions.

Relational/Social capital – A relation is defined as the way in which two or more people, groups, and countries, talk to, behave toward, and deal with each other.

In life, you talk to many people and as a business person, you should learn to establish strategic business relationships which will eventually help you in the near future. You should strive to establish, nature and cultivate good relations so that you can in turn also benefit from them.

Good business relations have the capacity to advance your life for the better.

If you borrow money for no interest or ask for a favor from a colleague without paying for it, you would have actually used what is called social capital.

Social capital can also link you to new customers and give you more visibility without incurring serious advertising costs. In business, good relationships are very important, because without them, you will quickly go out of business.

Intellectual capital – Intellect is defined as the capacity for rational or intelligent thought especially when highly developed.

You must always understand that information or knowledge is power and as such, if you can use information to advance your ventures, it will bring you a great return on investment. You actually trade in the knowledge that you have in exchange for liquid capital.

For example, if you are very knowledgeable in a certain field, you can decide to offer tutorials or consultancy in that regard and people will give you money (liquid capital).

Intellectual capital can also save you money especially when it comes to doing some things on your own instead of paying someone to do it on your behalf.

When you lack information, you may end up paying for things that can be possibly be done for free like online applications or submissions for certain documents which other peopl can charge you if you ask them to do it for you.

Skills capital – A skill is a learned power or dexterity of doing something competently: a developed aptitude or ability.

There are those things which you are able to do with utmost easy and yet they have a monetary value.

You may be so good at doing these things to such an extent that it is almost impossible for people to forget you. Such an ability on its own is a form of capital which you exchange for money. It is therefore very important for you to develop your skills.

If you can design fliers on your own, you will not pay for that service and hence you would have saved a few dollars. Your skills capital can save you some money which you can then use for other more important things in your business.

Emotional capital –  An emotion is a conscious mental reaction (such as anger or fear) subjectively experienced as strong feeling usually directed toward a specific object and typically accompanied by physiological and behavioral changes in the body.

Your ability to face what life throws at you is part of your capital because remember an emotionally unstable individual can’t make sound decisions and yet business is all about making sound and profitable decisions daily.

Emotional capital is very important because it defines and determines the effectiveness of every other type of capital mentioned above.

Management of emotions is a fundamental aspect in business because if you can’t manage your emotions, you will make irrational decisions which are detrimental to your company and thus negatively affecting all the other forms of capital.  

People who are familiar with stocks (shares) and investments will tell you that good management of your emotions is very important since it enables you to make sound decisions.

Spiritual capital– The word spirit is defined as a force within a person that is believed to give the body life, energy, and power.

Spirituality in simple terms is knowing oneself deeply and relating it to your daily routine and calls.

This type of capital calls for you to invest in your inner being so that you can be in sync with your creator or beliefs despite your faith.

Spiritual capital is beyond religion because you can be very spiritual but not inclined to any religion. Spiritual capital is very important because it makes you to believe even when there is no or little hope and it keeps you going even in dire situations.

Yes, business may not be anchored on spiritual beliefs since its runs on the laws of commerce but you must understand that businesses are run by people who are subject to spiritual realities.

If you take some time to study the lives of some leading business people around the world, you discover that they have a certain level of spirituality which influences their decisions.

Definitions in this article are taken from the Merriam-Webster Dictionary.

Munyaradzi Zindi Chikomba (The Social Architect) is a Co-founder & Executive Chairperson of Shanduko Foundation. He is a content creator and serial columnist who writes articles on social commentary and social affairs. He is passionate about building and shaping society through digital advocacy and media. He is an Editor In Chief at Peach Media Trust.