• Korian Brady

“Building social and financial capital”

Social capital and financial capital are intriguing dilemmas an entrepreneur will have to face. This dilemma is something many entrepreneurs battle when trying to build their founding teams. For certain, this rings true for myself, as I am in the process of building my founding team. Social capital is the ability to use your network of connections to advance your business. On the contrary, financial capital is fueling the advancement of your business with money. Each source of capital is proven to be successful; however, depending on the entrepreneur themselves it could determine the effectiveness.

Financial capital has many benefits. The entrepreneur has the ability to move fast with financial capital, it enables them to acquire the necessary function needed to run their business. Not only does it enable the entrepreneur to move quickly with their business, having the financial backing or security attracts investors and potential key employees. This is because the financial backing adds a sense of security to the business. As an aspiring employee, it is easier to leave a well-paying job if the founders can offer a salary to support the transition. This side of the dilemma is usually exercised by the more experienced entrepreneurs who has had success in the past, or the older individual who has had time to build his or hers wealth. However, financial capital cannot solve every problem. Money cannot take place of building quality relationship that have trust and open communication, which is key for success. Navigating relationships with your team is a key function that will build a solid foundation for hard times in your business.

This leads to social capital. Like earlier mention, Social capital is the ability to use your network of connections to advance your business. There are advantages and disadvantages to this side of the dilemma. The main advantage is surrounding yourself with quality founders and key employees that you can trust. This trust factor can go a long way. It makes being a leader a lot easier and more enjoyable when you can trust someone with a function of your business without worrying about a mishap. However, this trust is not easily obtained. This is why many young entrepreneurs take this route; there are usually friends and classmates from college that become part of the founding team and key leadership. Many times, these individuals have seen your company begin from the ground up and have a sense of empathy and passion towards your business. This added dynamic adds accountability throughout the whole team; which can be an influence to working harder. Lastly, having social capital for an entrepreneur is an expression of having love for the company. It is not popular to work for free or little money. True passion, dedication, and faith can only enable this type of hard work. This determination can get the company through hard times that were not foreseen.

Finally, social and financial capital is not always autonomous. Many entrepreneurs have a blend of both; however, it is a dilemma that needs to be managed. What do you guys think? Would you rather have social or financial capital?

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