SOCIAL CAPITAL, WHAT IS IT?

When we think of the word ”capital”, most of us associate it with money. Capital, however, is much more than the financial angle of a business we tend to couple it with. The dictionary will provide you with a host of different meanings for the word. In business, the term capital can mean three different things. These three meanings come from the different areas of a business, i.e., finance, human resources, and public relations. Let’s look at all of these in turn.

FINANCIAL CAPITAL

Finance is considered the lifeblood of a business. Financial capital is a resource that is measured in terms of money and is used by entrepreneurs to make and sell their products or provide their services to their customers. Anything that can be expressed in monetary terms can be accounted for as financial capital. This form of capital can also include machinery, tools, factory, and land used to operate the business. It is almost impossible to start and run an enterprise without money, and this is true for most businesses in the world. The amount of money required by a business might vary in accordance with its nature: for example, setting up a manufacturing unit is more capital intensive when compared to establishing a corner shop on your street or starting a baking business from home. The stage at which you will require the funds may be different for different types of businesses. For instance, a talent-based business will require more money for marketing, a service business will not require much money at the start, and a fashion label will require money at all stages from setting up shop to producing the inventory to distribution and marketing. The source of the capital might also vary from business to business and entrepreneur to entrepreneur. There are so many different ways in which the money required for a business can be raised. The source of funds can be broadly categorized as internal or external. Internal funding comes from the entrepreneur themselves. You might have enough savings to start your business, you might choose to borrow funds from your friends and family members, or you might decide to sell an asset or a valuable personal belonging. Whatever the manner, the entrepreneur makes their own arrangements by making use of their inner circle.

The second option is adopted by those entrepreneurs who require a sum of money that is too large to be collected through internal sources. Some business owners also choose to adopt the external method of raising funds when all of their efforts with the internal method have been unsuccessful. As the name suggests, this method involves approaching people and organizations outside one’s inner circle for investment. One option is to go to a bank for a loan. Many banks out there have funding programs for new entrepreneurs as well as mature enterprises. Approaching high-net-worth indivi