They say every entrepreneur needs three kinds of capital: financial, human, and social.
Financial capital is the funding you need to get off the ground, sustain growth, and develop operations. Human capital is the team that brings value to your organization. And while both are essential resources for your business, social capital — the connections and shared values that exist between people and enable cooperation — is the key to entrepreneurial success.
You see, when you’ve developed a wealth of social capital, you can obtain any other resources you need — whether that means gaining investors, recruiting experts, or building your team with the best of the best. Even if you’re earning millions of dollars and have a great team, though, without a network of supporters, the first bump in the road may just send you careening into a ditch.
Here are four reasons social capital is the most important resource your business has:
1. It Establishes You as a Leader
By offering advice or resources to others without expecting an immediate benefit, you cultivate social capital. Giving to and supporting others builds trust and establishes your reputation as an upstanding person who is skilled in your field — two qualities that are critical for buyers looking to engage.
To build trust in your network, do the following:
~Become an active contributor to your field.
~Provide value to your network via social media and in-person events.
~Contribute to dialogue and debate.
~Share the work of others with your network.
~Support others’ endeavors when they need advice or support.
~Be a person who adds value to others by connecting them to people who may help them.
~Be honest with your team. Refusing to hide even the toughest truths will earn the trust of the people closest to you.
2. It Fosters Reciprocity
After you’ve provided wisdom, support, and connections to others in your network, you can begin to count on those people when you need support.
3. It Creates Stronger Teams
Social capital doesn’t simply exist external to your organization. You can also build strong, honest, and mutually beneficial relationships within the walls of your company. And by so doing, you make sure you can count on your people to have your back when the time comes.
This internal social capital is nurtured within your walls every day, but it’s also fed by outside relationships. For example, providing quality internships for local graduate students has led to a tremendous increase in our quality of intern applicants. The universities want to send us their top people in return for offering these positions and providing quality experiences; it’s a win-win.
4. It’s Natural Networking
Traditional networking can be uncomfortable at best and outright torturous at worst. Mark Schaefer is a great example of someone who has fun while building social capital. He used Twitter to completely bypass traditional networking while growing his network online.
To enjoy all the benefits of social capital, though, you have to build it. Start by seeking expert advice in resources like the Social Capital Building Toolkit. Then, more importantly, be patient and let your relationships mature organically. Be honest and authentic, and show that you value others.
So don’t limit these kinds of pleasant and supportive relationships to your personal life. Make the investment in building your social capital, and both you and your business will see the benefits.
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