I'm sure all entrepreneurs have heard of financial capital,
but many may not have heard of social capital. Social capital is,
in fact, very similar to its monetary sibling. It, too, is
accumulated by an individual or a business and used, or is
available for use, in the production of wealth. Put more simply,
it's the accumulation of resources developed through personal
and professional networks. These resources include ideas,
knowledge, information, opportunities, contacts and, of course,
referrals. Just what do you need to keep in mind when thinking
about building your social capital?
Social capital is built by design, not chance. According to
Wayne Baker, author of Achieving Success Through Social
Capital, "Studies show that lucky people increase
their chances of being in the right place at the right time by
building a 'spider web structure' of relationships that
catch information." Furthermore, according to Baker,
"Success is social; all the ingredients of success that we
customarily think of as individual-talent, intelligence, education,
effort and luck-are intertwined with networks."
Thus, a key way that social capital is acquired is through
networking because successful networking is all about building and
maintaining solid, professional relationships. The trouble is, we
don't live like the Ingalls in Little House on the
Prairie anymore, and we don't have the natural
community-like business relationships that existed before. Many
business owners hardly know their own neighbors, let alone the
local businesspeople in town.
Content Continues Below
More than ever, networking is critical to an individual's
success in business. A strong contact network, also known as a
business development network, where one person from every
profession is actively seeking business from and for one another,
can help create a virtual Main Street for businesspeople. It
provides an environment and a system for a 21st century approach to
the traditional model of doing business.
Formal, structured networks like this provide the mechanism for
accomplishing the shared objective of business development within a
particular community. According to Eric Lesser, author of Knowledge and Social Capital,
"Without a shared understanding of common terms, activities
and outcomes, it becomes very difficult to reap the benefits
associated with building social capital." Herein lies the
incredible power of structured networking programs. They provide
the "common terms, activities and outcomes" (or system)
that lead to building substantial social capital for the people who
use the program effectively.
Effectively developing your social capital can be a daunting
task. However, doing so within a structured, organized networking
framework will leverage your efforts and help you begin building
your balance of capital to positively impact your bottom line. Here
are some keys to creating social capital that will help you form
the foundation of your business endeavors:
1. Plan your word-of-mouth. Having taught strategic
planning at a California State University over the past decade,
I've learned a great deal about planning and starting new
businesses. Many years ago, it used to surprise me that 50 percent
of all businesses fail after only three years in operation.
However, now that I know how little planning many businesses do,
I'm surprised that only 50 percent fail.
If you want to be successful in business, it's critical that
you plan your work and work your plan. Furthermore, part of your
plan should involve your strategy for building your business
through word-of-mouth. In my book, The World's Best Known Marketing
Secret, I talk at length about the importance of what I
call your "Word-of-Mouth Business Acquisition Tactics"
plan, or WOMBAT plan. Completing the WOMBAT plan will help you
achieve the results you deserve for all the hard work you do as a
business owner.
2. Give referrals. Every day, week and month,
entrepreneurs strive to build their businesses through referrals.
Part of this process is to build a team of people whom we recommend
and refer. This is part of the process of building your social
capital.
If you're not already a member of a strong contact network,
find a chapter near you and get started. There's no better way
to systematically develop a solid base for building social capital
than in an organization dedicated to helping you succeed in this
endeavor.
3. Show professionalism at all times. Being dependable,
delivering a product on time, meeting appointments consistently and
treating others with courtesy will give you a professional
reputation and cause you to be remembered by those you wish to have
become a contributor to your social capital.
It's a dog-eat-dog climate in the business world today.
Competition is fierce, and some entrepreneurs employ down-and-dirty
tactics. Studies have shown that one of the most important factors
in doing business by referral is someone's
"professionalism." By remaining professional at all
times, you'll rise to the top of the barrel and succeed where
others will fail.
As you invest your time in developing your social capital, know
that you are, in fact, increasing your bottom line. Strive to make
the most effective use of this investment by doing everything
possible to thoroughly enhance the relationships you develop in the
coming months and years, because social capital definitely leads to
improved financial capital.
is a New York Times bestselling author and founder
and CEO of BNI,
the world's largest referral organization with over 3,100
chapters in 17 countries around the world. His new book,Masters of Successcan be viewed at www.MastersofSuccess.biz. Misner teaches business at
Cal Poly University, Pomona and resides in Southern California with
his wife and three children.
The opinions expressed in this column are
those of the author, not of Entrepreneur.com. All answers are
intended to be general in nature, without regard to specific
geographical areas or circumstances, and should only be relied upon
after consulting an appropriate expert, such as an attorney or
accountant.