Capital, what is it? Many people when asked this question will say that capital refers to the money you need to start a company or the money which you have in a company. Though this is not incorrect, in current times capital has come to mean more than the financial aspect of your company. There are various types of capital. Let us have a look at them.
1. Internal economic capital
This capital refers to the financial capital a company has such as the funds, debt and equity. It also refers to the value of the brand of the company which is consider non-financial capital.
2. External economic capital
This looks at the impact that your company has on the companies that surround it. For example: you may affect the price of property in an area if you build an office park near a residential area. Furthermore, this capital looks at how your company could affect the global economy.
3. Human Capital
Here we look at the value of people’s knowledge, health, skills, motivation and attitude. Often companies overlook the value of people. They are a crucial component in your business and they could make or break a business if you do not hire the right candidates for the job.
4. Natural capital
When we look at our natural resources and ecosystems, we are considering natural capital. For example, if you use a fresh spring to brew your beer and the spring runs dry this may have an impact on how your beer is brewed.
5. Social Capital
This looks at the relationships which people have in teams and how they communicate with each other. It also looks at the combined intellectual property a company may have from the people who work in there. Social media may also be considered under this capital as we use this technology to develop relationships with our customers.
6. Constructed Capital
Material objects, systems and ecosystems that have been created by humans which add value to your company.
As you can see the types of capital which are important to a business has moved from just being an economic one to various other aspects that effect a business. By taking a multi-capitalistic view on our business, we are able to see where we lack resources and how we are able to build a more sustainable business.
Next time you look at your business consider all these facets when you think about the value of your business. Furthermore, consider what the impact on your business will be should one of these capitals not be healthy. It is time we moved away from a view of mono-capitalism where we only considered the economic capital of a company and look at it from a more holistic point of view.
By taking into consideration each type of capital, you will ensure that your company will not fail due to lack of resources in one of these avenues. Go out there today and see how much capital you have in your business.
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