It takes capital to start a new enterprise. Yet capital is more than just money. It comes in several other important varieties too:
How to Unlock the Potential in Those Capital Forms
New organizations have another asset too - one that enables them to maximize the value of the five forms of capital that I define above. This extra asset is sweat equity.
Sweat equity is a catchall word that encompasses all the hard work and time that new entrepreneurs invest in getting their new enterprises off the ground.
There is value, after all, in simple hard work. It can mean working consecutive all-nighters to meet a deadline. It can mean pulling out all the stops to get a meeting with an investor or a new client. It can mean answering your cell phone in the middle of the night to answer a customer’s concern.
If you apply sweat equity to maximize the return from your capital resources, your new enterprise can become a potent new force in the marketplace. You will be starting your new enterprise not from the bottom of the success ladder, but from a leveraged position, well on the way to the top. And what could be better than that?
Editor’s note: For more great insights from Dr. Randal Pinkett, spend some time with his excellent book Campus CEO: The Student Entrepreneur's Guide to Launching a Multi-Million-Dollar Business.
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5 Comments
There are alot of ways to raise capital that would not hurt that person(s) or business. Protect the down-side. To use that knowlege with positive energy!
The Real-World has changed, we try to gain insights and grow. A great article. Look at ways to raise capital with-out borrowing funds. Make it possible to succeed and earn that path.
Thank you for that post! That was one of the best descriptions of capital that I have ever heard. This is exactly what people who want to start a business need to know. We all do these things and never give it a thought as to how important comunicating this to a potential investor or finance person is. Crutial is the key word here, and people who read your post need to know that when writing a business plan, you should embody all of those points and use them to prove your plan is the success that you know it to be.
As a follow up to this I would like to hear how investors view those 5 parts of capital and what an entrepreneur should realize the investor is looking for.
Again, thank you very much for this great post!
Larry Gessner
Brendan Ryan
The Brendan Ryan Company
Houston, Texas