Investment Capital - Putting Brand Capital and
Human Capital Above Working Capital or Physical Capital
by Kerri Salls
Published on this site: December 28th, 2005 - See
more articles from this month
When you start your own business, you commit to investing
your time, talent and resources in the business to make it
succeed. You authorize a spending plan; you ask the bank,
your credit card company, friends, family, employees, to endow
the business to follow your business plan and implement your
marketing plan. There's more to it. You need to determine
where you can differentiate your company from the competition,
so where should you invest the most resources? To garner the
most flexibility, I suggest your investment priorities should
be:
Brand Capital, then Human Capital, followed by Working
Capital with Physical Capital at the bottom of the list.
- Brand Capital:
Invest the most in your market and marketing to them. Up
front this could simply be focusing on a small group of
prospects. Do the economics to make them well satisfied
customers. So much so, that they provide the testimonials
or become the spokespersons for your future sales. Remember,
the high value transfer of using relationships.
- Human Capital:
This is your team and their track record coming on board.
Only hire stars, no matter what. Only employ experts in
the key roles of your company. For other positions, look
for great talent you can mold to your vision, and move around
to meet the company's needs.
In addition, build a stellar Board of Advisors or Board
of Directors. A Board of Advisors usually will help you
for free, whereas a Board of Directors is paid. The key
is to engage thought leaders in your niche who become early
adopters of your product or service and advocate for you
to their significant networks.
- Working Capital:
Invest minimally here because there's no added value to
the company or the product. Tying up cash instead of using
credit may actually slow your time to market. This could
be a critical timing mistake if your competition is racing
you to market.
- Physical Capital:
Invest minimally here because bricks and mortar don't sell
product. Yes, you need a roof and windows that don't leak
(I've worked with many startups in the old mills where workstation
layout was based on the leaks and drips.). You don't need
to be a miser. And you need the equipment, technologies
and conveniences that will make everyone highly productive.
Cost- effectiveness should be weighed here too.
Whenever you are investing in your business, recognize that
you cannot manage everything, but you can manage the value
equation of each investment. Be sure the value to your business
is outstanding, so you can win business with every sale.
Kerri Salls, MBA runs a virtual business school to
train, consult and coach small business CEO's and entrepreneurs
in 10 key strategies to make more profit in less time. Learn
more at
http://www.breakthrough-business-school.com/products.html
or sign up for a free weekly newsletter at
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