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The 4 types of Capital and the 3 that will make you Rich- with JT Foxx

10/16/2012

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Picture
By Stefan Aarnio
Freedomway.ca

Photo left: Build your tribe with the 3 most important types of capital.

In the world of business, capital is needed to fund ventures, purchase equipment, land, product, time, talent, people, relationships and leads. Most entrepreneurs and Real Estate investors chase and compete for cold hard capital all day long and never learn about the "other" types of capital that are often more important and powerful than cold hard cash.

When I began in business, all I could think about was cash, profits and revenues. I couldn't see the bigger social, educational or relational picture that was taking place around me. Consequently, when I began in the world of business, I was isolated, ignorant, alone and broke. In the animal kingdom I would have been eaten by a large carnivorous predator.

Unfortunately for me, my fascination with traditional capital had blinded me from the true wealth and value that circulates every day and pays zero in taxes to the government. I didn't realize that business is a TEAM sport and that you cannot run it alone with just cold hard money - or lack thereof.

JT Foxx, one of my teachers and mentors, showed me the 4 types of Capital, and the 3 that most people don't think about.

The 4 types of capital:

1)   Capital (real money) for business: This is the type of capital that everyone thinks about. It's cold hard cash and most people chase it and compete for it. In my opinion, this type of capital is the most worthless of the 4 types and very easy to obtain if you understand the other 3 types of capital.

2)   Educational capital, money for your education: This is an extremely important type of capital. Many people finish high school or university and then never invest in their education again. This year alone, I have invested 3x my college education in educational capital and will have it all earned back by the end of the year. This type of capital is absolutely required for you to grow your business. The people who avoid this type of capital move slowly through life, cannot expand their business geometrically and cannot collapse timeframes. THIS TYPE IS ESSENTIAL.

3)   Social Capital – investing in causes etc. We've all heard of social capital, but so many people don't build their business around it. People do not buy products and services, they buy what you believe in. Social capital is created when you do GOOD things for your community. Make sure you give back once in a while. Select a charity to either raise for or volunteer for that aligns with your business and beliefs. This type of capital is extremely important because prosperity attracts prosperity. If you are going to succeed, you need to be an attractor of prosperity and not hoard to create poverty. People who fail to invest in social capital become isolated, alone and vulnerable. DO NOT FORGET ABOUT SOCIAL CAPITAL.

4)   Relational capital – between people. Relational capital, like social capital connects us on a greater level. People are tribal creatures and in the tribal days, isolated tribe members were cannibalized by other tribes or predators in the jungle. Today the world is no different. Relational capital is formed when you take care of the people around you and build solid, long lasting, reciprocal relationships. This type of capital is the glue that teams and tribes are built out of. Without this type of capital, you cannot bind yourself to other people or create strategic partnerships or alliances to take on bigger missions. Build your team, invest in RELATIONAL capital or die alone at the hands of a bigger, stronger tribe.

The very interesting thing about the 4 types of capital is; the more you focus on the unconventional types of capital, the more opportunities, people, deals and cash you attract. Recently in my own business, I have focused on the 3 neglected types of capital and my business has exponentially exploded. I work on the projects I want to while bigger and better opportunities fall into my lap every day. I focus on my network, bringing value to other people and creating synergies with colleagues. This is where successful people find true wealth and satisfaction in life. Stop chasing the money... The harder you chase - the faster it runs.

Thanks for reading,
Stefan Aarnio
Freedomway.ca

P.S. Please share this article if you find it helpful.


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    Stefan Aarnio

    Stefan Aarnio is a Real Estate Investor, entrepreneur and artist based out of Winnipeg, Manitoba.His real estate website is Freedom Way Joint Ventures  His art can be seen at http://stefanaarnioart.com

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