Compound Interests with a different type of capitals
After reading a book, Outliners, and some business books, I was thinking about what increases the likeliness of success and achieve your goal.
Does everyone think more money makes your business or activities successful? Is that true? Is there any correlation between more capital equal more success? Probably, personal level, yes. business/corporate level, if your business is the one that you need to burn cash and get more market shares. The answer is yes. Because more you penetrate the market, it increases the margin of your business. Or more marketing budget against competitors, that increases the market shares too. So, I would be keen to have more capital for business and personal if there is a chance. But, what are other things that would increase your outcome and you can use or leverage for your business.
However, are there other things that we can use or built if someone doesn’t have financial support or capital? What could be other things that may work like money with compound interests?
Here is the list I am thinking about: Human Capital (Knowledge, Experience), Social Capital, Reputation, and Network
Knowledge:
Knowledge capital is the intangible value of an organization made up of its knowledge, relationships, learned techniques, procedures, and innovations. In other words, knowledge capital is the full body of knowledge an organization possesses. Having employees with skills and access to knowledge capital puts a company at a comparative advantage to its competitors. Knowledge capital, sometimes referred to as intellectual capital, is considered an intangible asset.
Experience:
Experience capital refers to those subtle nuances of a method, activity, flick-of-the-wrist, and off-the-cuff imaginativeness that can’t be captured easily into a document.
Human Capital/Network:
Human capital is an intangible asset or quality not listed on a company’s balance sheet. It can be classified as the economic value of a worker’s experience and skills. This includes assets like education, training, intelligence, skills, health, and other things employers value such as loyalty and punctuality. The concept of human capital recognizes that not all labor is equal. But employers can improve the quality of that capital by investing in employees — the education, experience, and abilities of employees all have economic value for employers and for the economy as a whole.
Social Capital:
Social capital is “the networks of relationships among people who live and work in a particular society, enabling that society to function effectively”.[1] It involves the effective functioning of social groups through interpersonal relationships, a shared sense of identity, a shared understanding, shared norms, shared values, trust, cooperation, and reciprocity. Social capital is a measure of the value of resources, both tangible (e.g., public spaces, private property) and intangible (e.g., actors, human capital, people), and the impact that these relationships have on the resources involved in each relationship, and on larger groups. It is generally seen as a form of capital that produces public goods for a common purpose. Social capital has been used to explain the improved performance of diverse groups, the growth of entrepreneurial firms, superior managerial performance, enhanced supply chain relations, the value derived from strategic alliances, and the evolution of communities.
Financial Capital:
Financial capital (also simply known as capital or equity in finance, accounting, and economics) is any economic resource measured in terms of money used by entrepreneurs and businesses to buy what they need to make their products or to provide their services to the sector of the economy upon which their operation is based, i.e. retail, corporate, investment banking, etc. In other words, financial capital is internal retained earnings generated by the entity or funds provided by lenders (and investors) to businesses in order to purchase real capital equipment or services for producing new goods and/or services. In contrast, real capital (or economic capital) comprises physical goods that assist in the production of other goods and services, e.g. shovels for gravediggers, sewing machines for tailors, or machinery and tooling for factories.
How can we use it?
In summary, these things work like money with compound interests. If you have success in your early-career, it works to increase the success for your next thing. Thus, it is always better to focus on the thing and take action as soon as possible to execute the ideas you have. And, learn it as fast as possible and just do it again.
Here is my social media account, if you are interested in this:
Twitter: https://twitter.com/JinHTanaka
LinkedIn: https://www.linkedin.com/in/jintanaka/
Facebook: https://www.facebook.com/Jin.Gino.H.Tanaka
Resource:
- Wikipedia: https://en.wikipedia.org/wiki/Social_capital
- https://www.investordictionary.com/definition/experience-capital
- https://www.investopedia.com/terms/k/knowledge-capital.asp#:~:text=Knowledge%20capital%20is%20the%20intangible,techniques%2C%20procedures%2C%20and%20innovations.&text=Having%20employees%20with%20skills%20and,comparative%20advantage%20to%20its%20competitors.
