A Tap on the Glass - Vol. 46 - Capital Investment

I recently sat at breakfast with a good friend of mine who helps small business owners succeed.

As we talked about our lives, we discovered that we both work with people and companies who are struggling right now, as well as those who are experiencing higher levels of growth and success than ever.

As we continued to talk, we both noted that the economy's current volatility truly highlights the behaviors and patterns that people tend to have within themselves— even in good economic conditions. From that perspective, we found that the current economic strains that the economy is feeling can actually be healthy, because it causes each of us to re-examine our unsustainable, unproductive, or non-value-producing behaviors.

In addition, we discovered that we were in agreement on several key distinctions that separated the successful group from those who were struggling, and then the notepads came out and we started brainstorming! As an exercise in brainstorming we wanted to determine a set of traits and behaviors that were clearly common in both sets of people; those that were struggling and those that were successful.

The first thing we identified was the difference in each group’s focus. In our struggling group, as you might guess, the focus is on the never-ending barrage of bad news and negativity.

For starters, we identified people spending unproductive hours watching the stock market, checking the Internet, worrying about things beyond their control, or watching the news to confirm their already entrenched belief of how bad things are currently, add to that the time spent in unproductive conversations and discussions that conjure up feelings of fear and helplessness.

As these people project that fear and negative outlook on everyone else, it's no wonder that they experience others as being fearful too. We guessed that if we could listen in on their conversations, we might hear comments like "Nobody is buying houses right now." "There's no money available for credit." Or "Our clients have completely stopped spending money." Ironically, none of these statements are even remotely true.

Our thriving clients, on the other hand, are taking a different approach. They certainly aren't sticking their head in the sand or pretending that none of the financial catastrophes are real. In fact, they are often watching the same news programs and reading the same articles as the struggling people; however, they see the information with a completely different focus. This group realizes that if they can clearly identify and understand the changes that are occurring in other people’s values and priorities, then they can capitalize on an opportunity to realign with what people want and value right now.

Below are a few more traits and ideas that we agreed will help with applying this focus in order to put you in the latter, more successful, group:

First, it is imperative to understand that everyone is an entrepreneur. It is commonplace to think that entrepreneurs are only those who own their own business, but let's examine that idea a little deeper.

Obviously, when you own a business, you are an entrepreneur, but what happens if you work for someone else? How do you view that relationship?

To me, it means that you own your own business, and your boss is your customer.

Ahhh... I saw a few eyebrows go up!

Let’s take it further….perhaps your spouse, your children, or your parents are your customers too! In viewing the world this way, we each have that same entrepreneurial responsibility of maximizing the value we create with our customers—whoever our customers may be. If you adopt this attitude, then the question at hand becomes: What can you do to be productive, to be proactive, and to lend your abilities in a way that creates the most value for others?

In this approach it becomes critical to create more value for your customer than you ask from them in return, and therefore increase your bottom line. This is important because increasing your “bottom line value contribution” causes your “personal stock price” to go up (even if the overall economy is going the other direction). I’ve often quoted Zig Ziglar and one of his favorite sayings plays into this exactly: “You will get the most of what YOU want in your life when you help people get the most out of theirs!”

You see, we think that each of us has our own personal economy that we have an immense amount of control over, and our personal economy is determined more by our personal bottom line and balance sheet than it is by the external economy.

Another key that we saw with our successful people we know in this turbulent market was that they spent a lot of time developing their “capital.” Most people focus on financial capital; however, these people realize that financial capital is the least important form of capital to gain success.

 My friend , a very successful businessman in his own right and a seasoned entrepreneur, was able to identify and name them. In fact, there are three important types of capital that each person should be working on to ensure thriving in this economy:

Mental Capital is our ideas, knowledge, and human ingenuity. It is especially critical to increase one's capacity, leadership, and skill sets in order to increase productive output. While many people tend to get bogged down with the doom and gloom, refusing to spend money on improvement, training, and education, my most successful associates seem to take advantage of those lapses to accelerate their ability to create value. Increases in mental capital contribute to job security and career options.

For some, this may mean examining their career path and deciding it's time to take it in a different direction, or even pick a new path altogether.

Relationship Capital is simply people whom you have a connection with, create value for, or who know and trust you. Investing in these important relationships is paramount to stabilizing your personal economy. When people refuse to invest in personal relationships, they often find themselves in difficult and lonely situations when adversity strikes.

The different ways one might invest in a relationship can be to find out what others might value and to use your mental capital to provide it for them. It might include just keeping in touch and having meaningful conversations. Ultimately, it is helping them solve problems, being of service, and therefore building value or relationship equity (otherwise known as goodwill).

Those who are willing to extend themselves in relationships, and expand their circle of relationships, will fare far better during marketplace downturns. Important relationships should include mentors, teachers, and others who are contributing to increasing your mental capital.

Financial Capital is just as it sounds—money you have access to. While financial capital is important for thriving in these times, I have purposely listed it third because it is not as important as mental capital and relationship capital. Financial capital will expand based on creating more value than you consume and is a byproduct of how effectively you utilize your mental capital to create value for people. The higher the gap that exists between the value you create and what you consume, the more financial capital you will have. One approach (that we don't recommend) for accumulating financial capital during an economic downturn is to reduce consumption. However, that approach ultimately fuels system wide economic distress.

The second (and most recommended) solution is to increase output, production, or value creation. This doesn't mean to work longer hours, but rather to be aware of what others value more highly and to focus on delivering that particular type of value.

As you are able to increase your three forms of capital simultaneously, they will have an exponential effect on one another. This will enable your capacity to create value and therefore bolster your reserves and capabilities even further.

Simply put, the more you have to offer, the more you are able to receive in return. If you follow this principle and always increase your capital reserves, prosperity is an inevitability.

Thanks for reading